Discover How To Find The Customers That Are
Five Times More Likely To Purchase Your Product
-- And Get Them To Buy More!
Have you ever
heard of the "Pareto Principle"? If you haven't, you are missing out
on one of the MOST EFFECTIVE routes there is to bigger profits.
Also known as
"The Vital Few and Trivial Many Rule," the Pareto Principle was
named after the Italian economist who observed in 1906 that 20% of
the Italian population owned 80% of Italy's wealth. He then noticed
that 20% of the pea pods in his garden accounted for 80% of his pea
crop each year. Coincidence? Well, it got him thinking...
Pareto applied this 80-20 rule to pretty much everything -- and
whether or not you agree with it is your prerogative. But when it
comes to your e-business, you're missing out on a lot of profit if
you don't realize that...
your customers are responsible for 80% of your sales!
applications of the Pareto Principle, it's often impossible to
determine the accuracy of the ratio (i.e., 20% of the food you eat
is responsible for 80% of your health). But in your e-business, you
can easily track which customers are buying customers...
little-recognized fact that at least 20% of people who have
purchased from you once will buy from you again... IF you follow
up with them. One-fifth of your customer base is just waiting
for you to offer them something new.
So if you are
not following up with your customers, you're actually ignoring
80% of your business' profit potential.
1. Follow up with your key customers
If you don't
follow up with your customers, you are losing a lot of profit
-- it's as simple as that.
The fact is,
when a person trusts you and likes your product or service enough to
buy from you once, they'll often buy from you again and
again. Your existing customer base is four or five
times more likely to buy from you than a "cold" market...
and the "lifetime value" of these customers is one of the greatest
assets of your business.
can be so profitable that some people even offer their product or
service below cost on the first sale -- just to get their
potential customers to buy (think of all the mail-order book clubs
and CD clubs that let you purchase 11 books or CDs for a penny!).
Because once people have bought for the first time, at least 20% of
them will buy again...
backend market should be where you focus a good deal of your
already cultivated a relationship with your customers -- you have
put in the time and money to get their attention, establish
credibility, and close that first sale. That's by far the most
difficult part -- not to mention the most expensive. Think
of all the planning, advertising, and promotional activity that goes
into getting those initial sales...
you've acquired those customers, you can develop their "lifetime
value." Show appreciation and offer special incentives to them. Send
them "thank-you for your purchase" messages, renewal notices, and
free information. Reward them for being loyal customers and they'll
become even more loyal.
them more products. If they liked what they bought, they'll buy
from you again.
2. What to offer
brilliant thing about follow-up offers is that they don't
cost you a single red cent. You've already dealt with the
salespeople, the brochures, the mailouts, the ad placement, etc.
But now that
you've made those initial sales, and in the process collected the
e-mail addresses of your customers, you can simply e-mail
all of your previous customers your special follow-up offer...
so all of the sales you garner are 100% pure profit!
Of course, you
have to ensure that what you're offering is something your customer
base is actually interested in -- so the kinds of follow-up items
you offer will depend on your business. But consider the following
types of offers and think of how they could apply to your
Offer products that complement your initial product. For
example, if you sold golf clubs, you could offer customers a golf
club bag to carry them in. But it doesn't have to be quite that
closely related -- for example, if you sold memberships to fitness
programs, you could also offer fitness clothing, fitness books...
you could even promote daycare programs to provide fitness moms
with more options!
Even if you have to struggle to come up with an idea for a
complementary product, it will be well worth the effort. You've
already got the interest of your customers, so at this point you
have to think of any way possible to keep them buying, because
buy they will... unless you don't offer them anything!
Sell more of the same product at a discounted price. Show
customer appreciation by offering them a "special discount" on the
product they're already buying. If your product is refillable,
you've got it made. Your "Vital Few" customers will purchase the
product repeatedly over a lengthy period of time -- and this gives
you a legitimate reason to get in touch at regular intervals.
But even if your product isn't refillable, you can offer upgrades,
newer versions, improved models, or add-ons to the original
product. And each time you contact your customer, you can offer a
special discount on a new or related item also -- even offer
something free to maintain their interest!
newsletter subscriptions as up-sell or backend products.
Once people trust you enough to buy from you, they'll likely be
interested in hearing more of what you have to say. Newsletters
are also an excellent way to stay in constant communication with
your customers, answer their questions, respond to their concerns,
and provide them with the kind of knowledge they'll need if
they're using your products.
In the process, you will establish yourself as an expert in your
industry and a reliable source of information.
splitting up your current product and selling it as
separate segments. For example, if you were selling a book on
research methods on the Internet, you could offer a basic version
for $9.95 to generate a large volume of sales at a low price.
Then, 30 days later, you could offer them an advanced version for
$29.95 or even $39.95, and increase your profits dramatically!
You could sell the smaller, individual parts of your product
separately, but also offer a package deal with everything included
for a bit of a discount. That way, you'll cover a couple of
different price points and appeal to a wider range of customers.
selling your customers an upgrade to their product. If
they've used and liked your basic model, they'll be open to
suggestion, provided that you can show them why and how the
upgrade is better.
Offer someone else's product! I know it sounds a bit odd,
but as long as the product or service is not in direct competition
with your own, you can make a good profit (and further develop
your relationship with your customers) by offering a great backend
item as an affiliate.
Joining affiliate programs can be a very lucrative way to increase
your sales. With an affiliate program, you have the opportunity to
give a highly credible personal recommendation to your customer
base (which is one of the most effective sales techniques) and
claim a percentage of each sale... without having to develop a
new product of your own! This can be an enormous timesaver
and, done right, can make up a significant part of your business.
In fact, many people earn considerable online incomes these days
just by promoting affiliate products. You have to do your research
accordingly, however, and only recommend products that you truly
believe in before you can make a business of selling them. Also,
keep in mind that selling too broad a variety of products as an
affiliate will do nothing but confuse your market -- and lose you
sales. Keep your focus narrowed and your niche well-defined.
If you are interested in checking out affiliate programs, the
following are a few good places to look for the programs that are
right for you:
Offer incentives and information to keep your
business in your customers' minds. You don't always have
to be pushing products -- in fact, if you try the hard-sell
approach each and every time you contact your opt-in list, they'll
start to see you as a nuisance.
So offer a "tip of the day" or contest entry to entice your
customers to your site. Stay in touch through newsletters and
discussion groups. Observe holidays and special occasions... (you
could tie in promotions to these events).
Because while you certainly want to sell more products or services
to this lucrative group, you also want to balance sales with
relationship building... developing more trust, credibility, and
customer loyalty each step of the way.
3. Automate your follow-up
Okay, maybe I
was wrong... maybe this is the most brilliant part about
follow-up offers: Not only do you not have to spend any money to
make follow-up offers -- you don't even have to spend any
automate the entire process using autoresponders that will...
- Send a
"thank-you for your purchase and order confirmation" type of
message -- you could also offer a discount on a related item in
instructions for use that may also mention your newsletter or
discussion group (you probably wouldn't want to include a "hard
- Follow up
with a message a few days after the purchase that asks how things
are going and then offers a discounted related item
another message a few days later to remind your customer of the
discounted offer and urge them to buy before the offer ends or the
product runs out
- Send "time
to refill" reminders or "time to upgrade" messages as appropriate
If you use
autoresponders in this way, you can start confirming orders
automatically... providing instructions automatically...
and generating huge profits in follow-up sales --
Important Note: Using software such as
Mailloop, you'll have access to unlimited autoresponders.
This means that you can easily use Mailloop to e-mail your past
customers… with only a few clicks here and there.
better, Mailloop will allow you to automatically
personalize each of your messages, so that each
customer is greeted by name and receives a personal e-mail
tailored with their purchase date, product bought, etc… You can
even send HTML e-mail that'll increase your response by as much
And when you automate your mailings, you'll not only tap into the
20% of your customers who will be responsible for 80% of your
profits -- you'll also save yourself an incredible amount of
time in e-mail chores and customer service!
your "Vital Few" customers is the best way possible to increase your
sales through your backend products. Once you've done the initial
promotion work and made the first sale, promoting to this highly
responsive group is FREE... and once you've automated the process,
it won't even cost you any time to do it!
As you can
see, putting an automated follow-up system in place is hardly the
most difficult aspect of Internet marketing, though it is
definitely one of the most profitable techniques out there --
and one of the most often overlooked.
But now that
you know how profitable it is to follow up with your key customers,
and now that you understand how the Pareto Principle applies to your
business, you can start running your promotions more effectively and
increasing your profits exponentially.
knows... maybe you can start getting more peas out of your garden,