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...
Vilfredo 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...
20% of your customers are responsible for 80% of your sales!
With other 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...
It's a 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.
Repeat sales 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...
And this backend market should be where you focus a good deal of your attention.
You have 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...
But once 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.
And offer them more products. If they liked what they bought, they'll buy from you again.
2. What to offer
The most 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 business...
And, of course, you can always join the IMC
Affiliate Program. We offer excellent promotional tools and other
resources... and some of the highest commission rates in the industry.
Go to http://www.marketingtips.com/assoctrac/t.x/837528
to see if this opportunity suits the needs of your business and your
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 time!
You can automate the entire process using autoresponders that will...
If you use autoresponders in this way, you can start confirming orders automatically... providing instructions automatically... and generating huge profits in follow-up sales -- automatically!
|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
Even 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 as 40%!
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!
Focusing on 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.
And who knows... maybe you can start getting more peas out of your garden, too!
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