In this section we are will be looking at generating more leads for our business.

As you have seen up to now, we have concentrated solely on optimizing our existing business to squeeze as much revenue out of it as possible, usually with the only cost being some of our time.

In most businesses that have not been optimized in the ways we have discussed up to this point, its very easy to increase profits up to 50% by implementing the previous steps.

Now that our back end and conversions are up to scratch, we can concentrate on generating more leads with the knowledge that we will be converting the greatest amount of those leads as possible, while at the same time generating as much revenue down the line as we can from those exact same leads.

You can’t buy that kind of piece of mind.

So without further delay, lets look at our first lead generation source, referrals.

If you already have an existing business that is not entirely internet based, then this is almost always the case.

The incoming call is your first contact point with a new prospective customer and is extremely critical in obtaining the desired result.

In most cases, a sale is not made over the phone, but every business has a desired action they would like the customer to make, as a result of the conversation. Eg. Go to the physical store, got to the web address, fax an order form here, request a brochure etc).

This means your conversation needs to be scripted to maximize the number of customers that take your desired action.

A call conversation is just as critical as your advertising, or any other marketing materials you may have. There is no point in getting leads if you can get them to take your action once they have made the call.

If you are not already aware, copywriters who write advertising, as well as advertising firms get paid a lot. This is because ad writing is a skill, a unique talent that not everybody has.

Good advertising makes business big money, and that’s why business pay them big money in return.

The reason why I stress this is because you need to think of your incoming call as an opportunity to leverage a well written conversation script that gets the caller to take your action.

You need to think of it as a very valuable marketing contact point, and you should invest in it as such, exactly like you would with any advertising or marketing materials.

Its very common for a 2 page incoming call script to be sold to companies for up to R50k, simply because the ROI is worth it.

Now of course you may not be in a position to buy a custom script, or have one professionally written, but it was important for me to stress the importance of your call script, and the massive impact it can have on your sales.

Now, I’m not a copywriter myself or a professional salesman, so I won’t presume to tell you how to put together a good sales script. For now I will simply provide some resources where you can get once written specifically for your business.

So far we have gone over how to increase the lifetime value of each customer by increasing the number of purchases (part 1) and then we discussed increasing the value of each sale (part 2)

Part 1 and 2 focused on great cost effective ways to leverage your existing business to increase your profits and I hope you got some great ideas already, but more importantly, I hope you have taken action on what you have learned so far.

Part 3 will be looking at leveraging existing lead generation sources such as advertising or referrals, direct marketing etc (don’t worry, well discuss those in part 4) and increasing the number of sales you get from existing leads.

You may have wondered previously why generating more leads has been the last section we discuss and the simple reason behind this is that generating new leads and prospects is the most expensive and time consuming activity in your marketing plan.

Additionally there is much less value in generating new leads if you have no back end sales funnel to generate additional sales from these new customers, no sale value increasing strategies in place to maximize the value of each sale, and lastly, no optimized sales process to maximize the percentage of new leads which convert to sales.

You see, once you have the first 3 steps implemented & optimized you will have much more leverage and power when it comes to lead generation, since you will be able to spend much more on advertising and other lead sources simply because you now make much more revenue per new customer than ever before!

So, let’s begin with your incoming call script.

Pricing can be an incredibly advanced and complicated topic that has many books completely dedicated to it, but don’t let this scare you away.

The question most people ask themselves is:

“Do I price my products low, to get more sales volume and increase my profits that way, or do I price my products high, taking advantage of perceived value and thus increase my profits in this manner?

There is one really simple answer to this. It’s to TEST.

There are many different pricing strategies and models out there, and we will be looking at many of these in future, but right now the way to gain the most benefit for the least amount of time spent, is to test different offer prices.

There really is no way to know how your specific market and customers will respond to different pricing. When you make assumptions about pricing, in many cases you are leaving money on the table. The reality is that most people actually price their products to low.

The truth is that unless you are selling a commodity product that needs to compete with rock bottom prices, then you really do have a lot of flexibility when it comes to your pricing.

As we have mentioned before, your customers perception of your product or service will play a part in determining their own opinion of the “correct price”. There is usually a sweet spot which is the maximum value you can raise your price to while maintaining the same quantity of sales.

If you have an existing business making sales from an existing lead generation source (advertising for example), you can easily begin to test your current pricing by slowly increasing your price until sales start to drop.

The volume of sales you have will determine the duration you test a particular price. For example if you have many sales within 1 month, you could test a new price each month and have enough sales data to make accurate decisions, however if you have a high priced product that makes say 1 sale each month, you may only be able to test new prices every 6 months or so.

In most cases you will find you can increase your price a reasonable amount before you have any noticeable reduction in sales. This is already a quick win for you and will increase the value of each sale with very minimal effort.

Once you are ready to proceed, you can begin increasing your pricing, (making sure to track the results of each price point!) beyond the point where sales begin to drop, until you reach the point where revenue is exactly equal to your original lower price before testing began.

You will then analyze and graph the data and will easily be able to tell at exactly what price/volume ratio point you hit the highest revenue.

By doing this easy pricing test you can easily increase the value of each sale up to 50% in some cases over a small period of time, depending on your sales volume.

This would have cost you nothing but time, since you would have stopped the testing once you hit the revenue you began with in the first place. Except now, you have effectively increased the value of each sale in future indefinitely all else remaining equal.

Always keep in mind your profit margin when it comes to selling physical products or services.

Lets say you are selling a physical product and your test results in R20000 revenue at R200 per item and R20500 revenue for R450 per item. Obviously the R450 price made less sales then the R200 price to equal out at almost the same revenue, however the R450 pricing made exceptionally more profit since it would have a higher profit margin per item, and is thus the price you want to keep.

The other side to this is that you are not taking into account the back end sales, which we have discussed in part 1. For example let’s say the highest price made higher upfront revenue, but a lot less new customers, we may actually be making less in the long run due to less customers entering our back end sales funnel and taking advantages of our back end offers.

Thus it’s always best to test pricing and take into account all revenue generated for that customer BEYOND the initial sale. Or lifetime customer value (link).

This can take some time however as you need to track results over a long period of time.

To get the quickest results it is recommended to stick with price that gained you the highest number of new customers to revenue per sale ratio. If price 3 earned you R50k and got 200 customers, and price 2 earned you R35k but got you 800 new customers, price 3 may be the better option to stick with as long as you have a good back end sales funnel.

These simple tests can have incredible impact on your bottom line with very minimal effort, and no additional cost.

Once you have completed you price testing for your first initial sale, you simply begin the same exercise for your back end sales products, to further increase your revenue.

This may sound very simple but so many business simply don’t do this type of testing and will miss out on the easy rewards, so make sure you start doing this in your business right away.

Here are some tests and explanations from marketingexperiments.com

Experiment #1:

In our first experiment, we worked with a leading psychiatrist and author to determine how to maximize the online sales of his newly published book.

The three price points we tested were:

1. $7.95
2. $14.00
3. $24.95

Which price point was best? Which price point yielded the most revenue?

To answer these questions, we conducted a simple three-day pricing test. We drove a large volume of traffic to our site using just five search terms on Google AdWords. Using an A/B/C split test, we evenly distributed this traffic to three pages showing different pricing information.

Here are the results of this three-day micro-test:

What You Need to UNDERSTAND: Based on number or orders, it appears that the $7.95 price point was perceived as a lesser value and that the $24.95 price point was too high. The $14.00 price point generated significantly more orders. But because of the larger price point, the $24.95 offer actually generated the most revenue.

An important additional point: the higher price on the same book created a much higher profit margin, which resulted in greater profit generated on less physical units sold.

KEY POINT: For physical products, profit margin should always be taken into account. For subscription-based services, this is much less of an issue.

However, marketing costs should always be taken into account. In our next experiment, we weigh the pay-per-click (PPC) marketing costs against the revenue generated.

But first, one final note on this test: It is important to weigh the benefits of additional new customers against that of higher revenue. In the example above the additional 180 customers at the $14.00 price point may actually be worth more in the long run than the additional $765 of immediate revenue generated at the $24.95 price point. In other words, the additional revenue made in subsequent sales to these customers may more than make up for slightly less revenue on the first sale.

KEY POINT: It may be to your greatest advantage to select a price that generates slightly less revenue if that price also generates significantly more new customers. The average lifetime value of your customers and your ability to make additional sales to them will be the determining factors here.

Experiment #2:

In this test, we used three different price points for a paid-subscription site. Again, we split the traffic evenly between three landing pages. The only thing that was altered was the price.

The three subscription price points we tested were:

1. $10.00 per month
2. $12.50 per month
3. $14.95 per month

Here are the initial testing results gathered over a four-day period:

What You Need to UNDERSTAND: The $10 price point generated 33% more revenue than the next best price point.

Here is an ROI analysis of all three price points based on a $0.09 average CPC:

What You Need to UNDERSTAND: While the PPC campaign remained profitable at all three price points, the ROI generated on the $10 price point was more than double that of the next best price.

When ROI is calculated, it becomes even more obvious that the $10 price point is significantly better than the more expensive prices. And these numbers do not take into consideration recurring revenue.

These results are even more dramatic when you factor in recurring revenue:

What You Need to UNDERSTAND: At a 4.5-month average subscriber lifetime, the $10 price point generated 32.8% ($38,981.25) more revenue than the next best price point. However, because of the increased retention, the $10 price point actually generates closer to 77.0% ($91,631.25) more than the $12.50 price point.

What’s important here is that in addition to generating more sales, the lower price point also increases retention, which creates even more profit over the long term.

KEY POINT: For subscription-based sites, consider selling long-term memberships as well. For more on this topic, see our report on Subscription Revenue.

Even with retail sites, the lifetime value of a customer shouldn’t be ignored. The additional sales you can make to existing customers may be significantly more valuable than the immediate additional sales.

In these two tests, we have seen that intuition cannot be relied upon to predict optimal pricing. Sometimes a higher price creates more revenue, while other times a lower price will generate not only more immediate sales, but more recurring revenue as well.

We have provided a downloadable spreadsheet tool that helps you calculate your revenue and profit for a number of price points:

MEC Price Testing Analysis Tool

In our recent web clinic, we covered the functionality of this spreadsheet in great detail. Download the clinic recording, Price Testing Clinic.

While testing your product or service pricing, keep the following key guidelines in mind:

1. If you are selling a physical product, you will need to know what your competitors are charging for the same or a similar product, and get a feel for whatever “added value” a prospect might perceive when buying from you instead of anyone else. Is your brand stronger? Is your reputation stronger? Do people trust you more? Is your service superior? Do you provide services or bonuses along with the product? Do you offer better deals on shipping costs or warranties? All these elements can influence the perceived value of your products.

For retail products, one excellent way to see what your competitors are charging is to go to a price comparison site like http://www.PriceGrabber.com/

1. If you are selling a service or subscription, it is harder to make such a clear comparison with competitors. The perceived value of your service will depend on many factors. In the case of a service or “soft good,” like an ebook, you should test a much wider range of price points.
2. For a product, a service, or a subscription, one key goal is to find the price that is “too high.” In other words, keep raising the price until the results clearly show you are charging too much. Then slowly inch back from there until you find the highest price the market will bear, giving you the highest revenue on sales.

However, note that this highest effective price point, which will have the highest profit margin, may not necessarily be the best way to generate the greatest amount of new customers, as has been noted above.

KEY POINT: If you haven’t overcharged at least once, you may not be charging enough. Always take a price test beyond where you think the consumer’s threshold is. The only way to zero in on your ideal price is by elevating it beyond the optimum and nudging it back down.

1. Conduct reliable A/B split testing on your pages, and test for a long enough period to be sure of the validity of your results.
2. Once you have found your optimum price point, try testing it again a few months later. Markets keep changing, and today’s best price may not be the best price six months from now.

When evaluating your offer price, intuition will usually fail to deliver the ideal results. Testing is the only way to determine which approach will produce the most profit: a lower price that drives more traffic and buyers, or a higher price that may attract fewer buyers but deliver more income per sale. Every business is unique, and the above testing guidelines will help you determine your own ideal pricing structure.

This is 1 of 2 articles that focus on marketing metrics and the value of analyzing and measuring all your marketing efforts and customer data.

Once you understand your marketing metrics and customer data you are in an incredibly valuable position whereby you can tell exactly what works and what does not, what you should do more of and what you should stop doing with regards to your marketing spend.

The lifetime customer value metric aims to calculate how much each of your customers are worth on average through a certain period of time, usually a year.

Let’s say on average each customer spends R4000 with you over a period of 1 year. What can you do with this information? Well, this number tells you exactly what you can spend in acquiring each customer.

Most businesses only focus on generating more profit from the first sale then they spend on advertising or other lead generation sources.

This does not take into account your back end sales.

So, let’s say that as a personal trainer you begin a new lead generation campaign for R4000 each month and get 10 new customers at R300 each, for your fitness training program. That would be R3000 revenue off your R4000 advertising spend.

Initially this would seem like a loss, and most business would stop this advertising immediately.

What’s not being taken into account here however is the value of these customers after the initial sale. Now after our previous tutorials on back end sales, you understand that these customers are not only worth their initial sale, but any sales you can make to them in future.

So, let’s say you had a good backend in place and and know that 50% of your customers will make 2 additional purchases from you over the next 2 months at R400 each.

So now we know that the 10 customers we acquired with our new campaign are actually worth the R300 initial sale (10 * R300 = R3000) PLUS 50% * backend (5 * R400 = R2000) = R5000.

So, in reality the advertising campaign is profitable and not the other way around, as we initially though.

(By profitable make sure you taken into account any additional costs in acquiring those customers, that may not be covered by the cost of the lead generation campaign)

By understanding this metric, it opens up many more avenues of advertising and marketing that you would not have considered before and gives you the power of knowing exactly what you can spend to acquire each customer.

This calculation does require you to have certain data on hand, and most businesses won’t have the customer data on hand to make this calculation right away. You may have to start going over purchase records to be able to put this data into a usable form.

Actions:

What I would recommend however is begin tracking the correct data from today.

Make sure you track each customer, what they buy, when they bought and at what price over a period of at least 6 months.

Make sure you implement a good back end sales process and optimize it to your satisfaction.

After 6 months of tracking your customers and sales that have resulted from your current front and back end sales process, you will now have the data to calculate lifetime customer value.

The calculation: Simply take your total revenue for the 6 month period and divide it by your number of customers. This will equal your average customer lifetime value.

Now you will be able to compare the results of all advertising & lead generation campaigns against customer lifetime value and have an accurate picture of which campaigns are profitable or not.

You do this and you will be be able to run profitable and successful campaigns in many mediums and locations that you competitors wont, because to them it will seem like an unprofitable endeavor. It will leave them mystified on how you could possibly be doing what you are doing.

The sad thing is that most small business owners simply don’t understand most of these strategies and many even think of marketing as handing out fliers or branding coffee mugs.

In so many cases understanding these fundamentals can be the difference between running a successful profitable business or failing miserably.

This course will contain easy to understand actions you can implement to obtain measurable results in your business, so I implore you to read through it all carefully and TAKE ACTION by implementing these steps.

The course is broken up into 4 parts, which, incidentally, are the only 4 ways you can possibly grow your business:

1. Generate more sales from existing customers
2. Increase the value of each sale
3. Convert more leads to customers
4. Generate more leads

We begin with part 1 which covers leveraging your existing business to increase revenue generated from existing customers.

Its a well known fact that it can be up to 10 times easier selling to existing customers or those that have purchased from you before, then it is to obtain a new customer.

This means that the fastest way to grow your business and increase revenue right now is to focus on generating additional sales from existing customers.

In part 2 we focus on increasing the value of each sale. By doing this we attempt to get prospects who have already decided to buy from us, to spend more then they may originally have intended.

Part 3 focuses on converting more existing leads into customers. This leverages existing lead generation sources such as your current advertising, and attempts to convert as many of these leads into paying customers as possible.

By doing this we generate more sales and profits with a minimal increase in marketing expense.

Lastly we look at generating more leads for our business.

You will see that our initial focus is maximizing our return on current business, customers and marketing spend, before we invest any additional spend in generating more leads.

This allow you to easily increase revenue sometimes up to 100% without spending a single cent more on lead generation then you are spending right now.

This also means there is no longer any excuse to not implement these steps right away, since most of them can be done with only time invested, and not cash.

Now, before we begin with Part 1, we need to first take a look at your offer as well as your USP (unique selling proposition). Every bit of our marketing will be leveraging your USP and thus its critical that we get this right first.

CLICK HERE TO CONTINUE WITH PART 1 – UNIQUE SELLING PROPOSITION