There are hidden profits in your business. And failing to recognize them is costing you serious cash.
As business owners, we sometimes don’t see ourselves within the bigger picture of our customer’s buying behavior.
We just see their interaction with us and market ourselves to acquire more and more customer interactions.
There’s nothing wrong with that of course.
But when we start to look at the bigger picture, we can start to uncover profits that were previously hidden.
It’s like finding a $50 bill in a jacket you haven’t worn in a while but on a much bigger and more profitable scale!
So here’s three ways to uncover the hidden dollars.
STEP 1 (FIND THOSE HIDDEN PROFITS): WHO HAS YOUR CLIENTS BEFORE YOU?
If you want to find your hidden profits you need to think about who your customer does business with.
Your’s is one of many transactions they’ll make that day.
Before shopping with you they did business with someone else. And after you they’ll do business with someone else.
The transactions may or may not be related. But one thing is for certain – someone had your customers before you did. In all likelihood, they spent a good deal of money on sales and marketing to acquire that customer.
Finding other complimentary businesses that your customer deals with before they deal with you can help you uncover untapped profits in your business.
You don’t just have to rely on word-of-mouth marketing.
Setting up a joint venture (JV) arrangement with one or more of these businesses that is not in direct competition with you can be a cheap or free source of leads.
If you’re a lawyer, an accountant might make a great source of new leads. If you’re a car detailer, a mechanic could be your source of leads. If you’re a pet food retailer, a vet might be your ideal source of new customers.
While this may seem obvious, it’s rarely done and it is even more rarely done well.
Read on and I’ll share with you some strategies you can use immediately.
STEP 2 - HIDDEN PROFITS: GIVE AWAY SOME OF THE PROFIT FROM A SALE YOU'D NEVER HAVE HAD
Another great way to uncover hidden profits is to set up a JV arrangement. And this can be tricky.
The most obvious and direct route is to pay either a finders fee or a commission for incoming leads or sales.
Some business owners don’t feel comfortable taking cash for leads they send you. And in some industries this may not even be legal.
While it’s smart to pay for leads of known buyers who are “hot”, there are other less direct ways that work just as well or better.
AN EXCELLENT JOINT VENTURE EXAMPLE
One awesome strategy involves creating a gift card or voucher for your products or services. Let’s say for example you’re business is “Mike’s Pet World” – a pet food retailer.
You could create an arrangement with a local vet. Find out what pet food this vet recommends to his clients. Then create a voucher or gift card that he can give away to new clients.
The beauty of this is that it’s good will all round. No sales pressure. No conflicts of interest.
The vet could say something like, “I recommend XYZ dog food. You can buy it at most pet food retailers. Because you’re a good customer, here’s a $50 voucher for you to redeem at Mike’s Pet World who are down the road. They always carry plenty of stock of XYZ dog food”.
It’s a win-win for every party involved.
3 WAYS JV'S ARE WIN-WIN SITUATIONS
Carrying on with our above example, here are three ways joint ventures are win-wins.
- The vet creates massive goodwill with the customer because he is essentially handing them $50.
- The customer receives an unexpected discount.
- You, as the owner of Mike’s Pet World, acquire a new customer who’s lifetime value is potentially huge in exchange for a voucher with a face value of $50 (and a wholesale cost which is much less). You also get transferred much of the goodwill the customer already has with their vet.
Now it’s true not all customers will redeem a gift card or voucher.
But the vast majority will. It feels too much like throwing out money to throw out a voucher or gift card that you know has a monetary value associated with it.
Let’s say that you conservatively calculate that the average lifetime value of a new customer at your pet store is $5,000.
You’ve given away a part of the profit from a sale you would have never have had. Genius!
STEP 3 OF UNCOVERING HIDDEN PROFITS: DETERMINE WHO HAS YOUR CLIENTS AFTER YOU?
Flipping it back the other way, to figure out where your hidden profits lie, you should analyze who has your clients after you.
You’re sitting on a gold mine. The by-products of your business are valuable to someone else. Don’t let them go to waste.
After you’re done servicing your customer, there’s likely someone in a complementary line of business that would be willing to pay handsomely for hot, qualified leads.
This can be a great secondary source of revenue while increasing the value of your offering to the end customer.
START FINDING THOSE HIDDEN PROFITS
Stop leaving money on the table. Start accessing those hidden profits.
Offering or referring complimentary products and services can enable you to offer a more complete solution. Your customers will thank you and so will your banker!
But before you start approaching complimentary businesses make sure you have your marketing plan mapped out. Does your target market really shop at these businesses? Have you got a offer that’s going to convert?
Once you’ve got this all figured out, you can start looking at which businesses to approach about setting up a jv.
If you enjoyed this article, you may also enjoy our article, “What is Direct Response Marketing?” As a small business owner, it’s the smarter way to market your business.
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