Compare Example A with Example D. The difference in these examples shows a fourfold improvement in your business income. That’s a really big number that’s very hard to ignore. Let’s talk about four different ways you can sell more to existing customers.

Four Ways to Sell More to Existing Customers

Strategy #1 : The Up-sell

The first way to sell more to an existing customer is to offer the customer an up-sell of a larger quantity of what he just purchased immediately after he agrees to the initial order. The simplest example of an up-sell is one that I hear at McDonald’s. After you order a soft drink or a side order of French fries, the cashier immediately asks you, “Would you like to supersize that for only 45 cents more?”

When I go to the movies and order a small popcorn, the person taking my order always asks, “Would you like to upgrade to a medium popcorn for only 25 cents more? It’s twice as much popcorn for only 25 cents.” Considering my small popcorn costs $4, getting twice as much for a quarter seems like such an irresistible deal, I say yes.

On a side note, for a long time I wondered why I would go to the movies intending to spend $8 but walk out having spent $20. I started studying popcorn and soft drink prices at the theaters and noticed that over the years, the theaters have deliberately engineered their prices to make the up-sell more attractive. They raise the price of the small popcorn to make the price difference between small and medium look very attractive, and they sell a lot more medium popcorns than they used to sell.

The easiest way to implement an up-sell is when you take a customer’s order, whether it’s at a cash register, over the phone, or across the desk, give your customer the option to buy a larger quantity of what he or she just ordered. Make it an irresistible deal.

• An up-sell can work in almost any business.
• If you sell tax preparation services, sell the customer next year’s tax return service on the spot for a discount.
• If you run a restaurant and someone orders a steak, offer him or her a larger steak for just a few dollars more.
• If you’re a retailer, offer the customer a “buy two get one free” deal, or a “buy five get one free” deal.
• If you provide consulting services, offer to extend your contract for an extra month and provide a financial
incentive to do so.

In my own use of up-selling, I find that between 10 and 35 percent of customers will take the up-sell and pay for the higher-priced option of what you’re offering. Keep in mind: The extra money from the up-sell is almost free money. All it takes is quite literally an extra 30 seconds of your order taker’s time to offer the up-sell, and you’ll get a few customers who say yes.

One more thing I’ve also found from my own extensive use and tracking of up-selling is that customers who take the up-sell tend to refund less often than those who don’t, and they also end up spending more money with you over the next few months. I’m not 100 percent sure why this is the case, but my own tracking of my sales has proven this to be true for my business. In addition, my comparison of sales measures with other businesses I’m familiar with, that also track their sales, shows the same thing. My best guess is that by taking the up-sell option, it deepens customers’ psychological commitment to your business and makes them better customers. After all, the only logical reason they would take the up-sell from you is if they mentally decided yours was a company worth doing business with.

Strategy #2 : The Cross-Sell

The next strategy to sell more to existing customers also happens within seconds of their agreement to make their initial purchase from you. In this strategy, rather than offering customers more of what they just purchased (as in an up-sell), you offer them a related product instead.

The classic example once again comes from McDonald’s. When you order a hamburger, the cashier asks, “Would you like fries with that?” That’s a cross- sell.

There is a lesson here. McDonald’s became a Fortune 500 company for a reason. One of the reasons is it has mastered the art and science of up-selling and cross-selling.

Another example of cross-selling occurs when you go to a car dealer to buy a new car. These days, consumers are so savvy with figuring out dealer costs that they negotiate hard on the selling price of the car. You haggle with the sales rep. He calls in his manager, and you haggle some more, threaten to walk out, talk to the manager some more, and after three hours of tough negotiations you settle on a price. The sales rep then shakes your hand, tells you that you worked him over good, that he’s barely making a profit on this thing, and to go talk to Joan in the back office to take care of the paperwork.

You’re patting yourself on the back, excited that you got a great deal, and as Joan hands you the paperwork, she asks, “Would you like the leather seating option?” And you say, “Oh, yeah. Sure, why not?” Then she asks, “Would you like our no hassle, no maintenance package? We’ll pay for all your oil changes and wash your car for two years,” and you say, “Oh, yeah, that sounds great. I’ll take it.” Then Joan asks, “Would you like to add an extended warranty for a total of seven years of no repair bills?” Of course, you say, “That would be great.” Then Joan asks about financing packages and offers you insurance for your car.

It only occurs to you after the fact that Joan cross-sold you left and right and made a profit of thousands in the process. Actually, many years ago I had a client who was a major lender in the automobile financing industry. And if I recall correctly, at the time, auto dealers made very little profit on the sale of new cars. They made one-third of their profit from “finance and insurance” (e.g., from Joan), another third of their profit from “service and repairs,” and the final one-third from “selling used cars.” The core business of selling new cars was simply a break-even business that fed customers into the cross-selling of finance, insurance, and repair.

For auto dealers, none of the profit comes from the actual selling of new cars. All the profit from new car sales comes from the cross-selling of related offers, but not from the car itself.

Once again, the easiest way to implement a cross-sell is to make customers an offer for a related product immediately after they agree to the initial order. This can happen over the phone, in person, at the cash register, or across the table as the customer is signing a contract. Whereas the up-sell only works in some businesses, the cross-sell definitely works in every business.

Here are a few examples:

• If you sell a tax return service, sell a tax reduction planning program to help customers prepare their taxes for next year.
• If you install air conditioning systems (or any kind of equipment), offer an extended warranty or a “we’ll do it for you” maintenance program (just like the auto dealers).
• If you run a restaurant and someone orders an entrée, cross-sell wine, appetizers, side orders, dessert, and coffee.
• If you sell a professional service or consulting services, when your client agrees to hire you to solve problem X, ask him if he needs help with problem Y or Z too.
• If you’re a retailer, offer the client something that is used with the product he just purchased. If it’s an electronic device, cross-sell batteries, a carrying case, A/C adapter, or car power adapter. If it’s a shirt, cross-sell the pants, a tie (if it’s for a guy), or a necklace or earrings (if it’s for a woman).
• If you’re a dentist fixing someone’s cavity, have your receptionist cross-sell the next checkup and get the client to pay for it in advance (reminding him that if he hadn’t skipped his checkup, he wouldn’t have had the cavity).
• If you run a bagel shop, cross-sell a cup of coffee.
• If you’re a travel agent, cross-sell trip insurance along with any tickets you book for your clients.
• If you’re an insurance agent, cross-sell auto insurance and life insurance.
• If you sell lawn care services, cross-sell an option to re-landscape certain parts of your customers’ lawns.
• If you sell plumbing repair services, sell a plumbing problem prevention service, audit, or evaluation.

The possibilities are endless. If you’re still scratching your head wondering what you can cross- sell, here are a few tips:

• Think about what activities your customers engage in immediately before using your product/service. What products or service do they use to perform this activity?
• What else do they need when they use your product or service to make their experience easier, faster, or better? Could you provide that product or service too?
• Think about what activities your customers engage in immediately after using your product/service. What products or service do they use to perform this activity?

If you only sell one product or service, consider partnering with providers of a related product or service and cross-sell their offer for them in exchange for a financial incentive. Or you can flip it around and have the partners cross-sell your products or service to their customers.

There is a lot of money to be made in cross-selling, and I strongly encourage you to think about the infinite cross-selling opportunities that are readily available to you in your business.

Strategy #3 : The Immediate Follow-on Sale

Another strategy for getting more sales from existing customers is to make your first-time buyers an offer a few days after they make their initial order. If you’ve ever bought anything via mail order or on the Internet and the company shipped you a box, you’ll notice that oftentimes inside the box is not just your product but also a flyer or even a catalog of other things you can buy from them.

That’s an immediate follow-on sale.

Generally speaking, after customers make their initial purchase from you, there’s a window of opportunity where they really like what you have to offer. Take advantage of that opportunity and make it easy for them to buy more stuff from you.

Pretty much anything you can cross-sell at the moment you take the customer’s order, you can also offer as an immediate follow-on sale a few days later.

If you’re the auto dealer and the customer didn’t take the hassle-free maintenance package from Joan, you can have Joan call a week later, thank the customer for his business, and offer the hassle-free maintenance package again.

This same immediate follow-on sale can be used by a dentist to presell the next checkup, the tax preparer to sell a proactive tax planning service, the restaurant to presell a special event it’s having next month, the insurance agent to sell a life insurance policy a few days after selling an auto insurance policy.

This works for several reasons.

If your products and services are really good, the new customers will only figure this out for themselves after they make the initial purchase. Whereas they weren’t 100 percent certain about the quality of your product or service when they bought it, after using it for a few days they really love you and your company. Because of this, sometimes customers are more likely to buy a few days after the sale rather than taking an up-sell or cross-sell right at the point of the initial sale.

Another reason is sometimes it doesn’t occur to them initially that they need this additional product or service. Maybe you offer a cross-sell when they make their initial order, but they don’t take it. But a few days later, they say to themselves, “Hmm … actually, that wasn’t a bad idea. I see how that could help now.” Only a few people would go out of their way to contact you to get whatever it is you offered them. However, if you made it really easy for them to get a “second chance” offer, a lot of them will take it.

There is a lot of opportunity to make a lot more money with the immediate follow-on sale. The latest opportunity I’ve spotted has to do with children’s shoes. We have a young daughter who’s growing really fast. One of the consequences of this is that she’s constantly outgrowing her shoes. We visit the shoe store every few months.

It’s a big pain for several reasons. Most of the shoes aren’t comfortable – they’re too stiff, too tall, and too bulky or have some extra flap in the wrong place that makes them uncomfortable to wear. So we have to get my daughter to try on many different pairs. A few months later, we have to repeat the process. But to make things worse, a year later when we need a similar type of shoe for that season (like winter shoes), all the models that were around last year have been discontinued. So we have to repeat the whole process again.

My wife started doing something that I thought was very clever. Once we find a shoe that my daughter likes, she buys the exact same shoe one, two, and sometimes three sizes larger. That way we’ve got the shoe thing covered for the next two to three years. Sure, there is some risk to this approach, but we just hate shoe shopping so much that it’s worth it.

That got me thinking that, knowing my wife, she came up with this idea all by herself. But why didn’t the shoe store itself offer us this idea? We don’t buy shoes for our daughter; we’re buying “protected, comfortable feet” for her. Had our shoe store called us a week later, asked us how the shoes were doing on my daughter and whether we wanted the store to ship us the next three sizes to save us the hassle of coming back over and over again, there’s a very good chance we would have said yes. Instead, my wife just found the same shoes in the larger sizes and ordered them on the Internet to avoid having to make the long drive to the shoe store, which, as you guessed, she and I both hate doing.

That’s the immediate follow-on sale. It’s a “hidden” profit opportunity that most businesses never use because it’s not always obvious. However, now that you’re aware of it, I would encourage you to find ways to offer an immediate follow-on sale to your customers.

Strategy #4 : The Continuity Sale

The final strategy for making more money from existing customers is my hands-down favorite. This one strategy has been responsible for more of my net profits than any other and requires very little work once you get it set up. It’s called the “continuity sale.”

The continuity sale is simply to provide some product or service on an ongoing basis via a monthly subscription. The product or service is provided continuously to your customers until they cancel it. The advantage of continuity sales is, with continuous delivery of products and services to your customers, you gain the enormous financial advantage of automatic, recurring, continuous billing of your customers.

Your cable, telephone, and electricity bills are all continuously delivered services with continuous billing. If you’re familiar with the fruit of the month club, then you’ve seen a continuity sale. If you’ve seen the 12 CDs for just one penny music club offer that sends you a new CD each month, then you’re familiar with another continuity program. The same goes for the book of the month club. The great thing about these programs from the business’s point of view: Once you get customers in there, they are in there forever or until they cancel.

More recent innovations include NetFlix and Blockbuster introducing their video rental membership program. Rather than renting a video one at a time, you are charged a monthly fee, and you can borrow as many as you want for a fixed, monthly, recurring charge.

Earlier in this chapter, I walked you through examples of the extraordinary profit increases that can come from selling to existing customers. You’ll recall that the second and third sales are often five times more profitable than the first sale – particularly when you consider all the advertising and overhead the first sale must support.

The reason I recommend finding ways to incorporate continuity or recurring revenue programs into your business is that it stabilizes operating cash flow. It makes a portion of your revenue very predictable – a nice thing to have in a recession.

In addition to stability, continuity programs can provide incredible profits to your business. This is because properly marketed and designed continuity programs get more return out of your initial investment to acquire a new customer.

Most business owners don’t focus nearly as hard on getting the second sale (the most profitable sale) as they do on the first sale (the least profitable sale). As I mentioned earlier, getting second, third, and fourth sales from a customer you’ve already acquired with your investment of time and money is critical to generating the maximum cash flow from your business. This is especially crucial in a recession. You can’t afford to not get the largest possible return on any investment you make in your business.

When your business offers a continuity program of some type and you have a deliberate approach to get your first-time customers into it, you set yourself up for significantly higher profits, greater income stability, and less work.

If there were ever an example of working smarter and not harder, continuity programs would be it. Here’s the key insight to keep in mind. The most difficult, most time consuming, most expensive activity in your business is acquiring customers. The least difficult, least time consuming, least expensive activity in your business is selling more stuff to customers you’ve already acquired. It’s simply an inefficient use of your time and money to focus exclusively on new customer acquisition at the expense of serving existing customers. The whole purpose of going to the effort to acquire customers is so you can do the easy part of selling more to them.

Here’s another way to think of it. When I was growing up, my mom would not let me eat dessert until I ate my vegetables. To this day, I still prefer eating ice cream to asparagus. When you structure your entire business to focus on customer acquisition, it’s like eating asparagus for every meal and deliberately declining the ice cream treat afterward. The whole point of eating the asparagus is so you can eat the ice cream. You tolerate the asparagus to get to the ice cream. It makes absolutely no sense to tolerate the asparagus and not eat the ice cream. As my daughter would say, “That’s silly.”

So don’t be silly! You need to find a way to sell more to existing customers, and implementing continuity programs is hands down the single most profitable, easiest way to do that.

Getting Started with Continuity Programs

Let’s say you’re interested in continuity programs and the recurring revenue stream they provide, but you can’t possibly see how your business lends itself to a continuity program.

Let me show you several examples of ordinary businesses that can be converted into continuity income businesses. For each example, I will show a specific business and one option to generate a continuity income stream from it. Then I’ll extract the general lesson from the example that you can apply to your business.

Example #1 – Same Service, Same Price, Predictable Purchase Schedule

I get my oil changed at a local oil change shop. I try to get in there every 3,000 miles like they suggest but I often don’t get in until 6,000 miles. Sometimes I might be on the road when it occurs to me to change the oil and instead of going to my local oil change place, I might just use a competitor if that happens to be near when I remember I need the oil changed.

To this company’s credit, it puts a little sticker on my windshield to remind me of when I need to come back and usually sends me a postcard with a coupon every 90 days. But, if the shop looked at my service record, it would know that between the two cars we own, I’ve done business with it 16 times in the past four years. If it also looked more carefully, it would have noticed that had I done business with it exclusively at the recommended times, I should have done business with the shop 32 times!

Instead of trying to resell me on using its oil change service every 90 days, it should just enroll me on an “oil change subscription program” or “oil change hassle free maintenance program.” Instead of trying to get $60 out of me every 90 days (which it is rarely successful in doing), it should offer me a discount to become a member where I pay $17 per month per car for up to four oil changes per year included for free.

This kind of program “locks” me into doing business with it. Once I’m a member, it would be foolish for me to go get an oil change somewhere else when the oil change is “free” at my favorite oil change place. Using this approach even with the discount, it would generate $204 per year from me for four oil changes whereas now it only gets two oil changes a year from me for $120. That’s a 70 percent increase in revenue right off the bat. In addition, “members” tend to be better customers and buy other products and services too. Once it has got me coming in regularly, it can up-sell me on upgrading wiper blades, maintaining the radiator, and whatever other stuff they do to make my car run trouble free.

This is essentially a maintenance contract that is very common among large companies that have expensive equipment that needs to be maintained. If your business provides some type of service that is performed regularly for your customers, you could very easily use this model. Here are several businesses that could use this model:

• Barber
• Hair salon
• Beauty salon (manicure, pedicure)
• Heating and ventilation contractor (duct cleaning)
• Maid service
• Carpet cleaning
• Window cleaning
• Car wash
• Dentist (2 times per year teeth cleaning plus annual checkup)
• Health club
• Yoga studio
• Tax preparation services

When I mention this list to many entrepreneurs, they are initially surprised because they didn’t think of these businesses as lending themselves to being a continuity income business.

What most of these businesses have in common is that most of the clients have a preferred vendor, someone they usually do business with out of habit, loyalty, or laziness. What these businesses also have in common is most of their customers don’t do business with them as often as they could or should. For example, I try to get a haircut every three weeks, but I don’t. I try to get my car washed every month, but I don’t. I try to work out every day, but I don’t. In all of these situations, I actually prefer to spend money with these businesses, but for a number of reasons I don’t.

The more forgetful I become, the busier I become; and the more lazy I become as a customer, the less money each of these businesses makes from me. Now let’s flip it around. If all these businesses had membership programs and provided an incentive to join them (either a one-time gift just to try it, or some type of ongoing financial incentive), there’s a good chance I would join several such programs.

Once I become a member, the more forgetful I am, the busier I am, the lazier I become, instead of the business making less money, the business actually now makes more money. That’s because they make their money off of my monthly membership fee instead of when I visit their place of business or engage them in doing business with me somehow. It’s like the local health club – their most profitable customers (usually me!) are the ones who pay every month but do NOT go in to work out.

Example #2 – Different Products/Service, Different Prices, Frequent but Irregular Purchase Schedule

Continuity income streams can also be developed for businesses where what customers buy, how much they spend, and when they do business with you varies a lot. A fairly typical example would be that of a restaurant. Every meal is different (sometimes it’s two people, other times it’s three or four people); what the customer orders is different; the check amount is different; and customers usually don’t come in on a set schedule. A situation like this can still lend itself to adopting a continuity income stream.

You could create a frequent diners program or a VIP diners program. Your clients pay you a $100 per month membership fee, and in exchange they get $110 in gift certificates each month, preferred seating/reservations and one dessert or appetizer per meal is always free. They are getting a great deal and 80 percent of the time they’re going to spend more than the $110 in gift certificates each month anyway. For the restaurant, if they could sign up just 70 customers into this program, that’s $7,000 in credit card revenue they generate on the first of the month – that’s a pretty good way to start off the month!

For a customer who likes the restaurant, it’s a great deal all the way around. It also provides a big incentive to keep going back to the same restaurant whenever you’re going out. Frankly, I hate the conversation I have with my wife every weekend that goes like this, “Where do you want to go out to eat?” “I don’t know … where do you want to go out to eat?” Invariably, it’s a 10-minute discussion, but if we were members somewhere and had a “default” choice, we’d probably just go there.

You could use a similar approach for any retail store – clothing, toys, groceries, auto parts – you simply provide a monthly membership program where the customer’s first $X of spending is free (and usually equal to their monthly membership fees) then provide them with some additional one-time or ongoing incentive where it makes more sense to join the program than not join it.

Examples of businesses that can use this approach:

• Any retail store that sells consumables or frequently used items (pet store, groceries, auto parts, crafts)
• Any restaurant
• Any mail order business that sells consumables or frequently used items

Example #3 – Product or Service Business with Infrequent Purchase Schedule

Continuity programs can also be created for service businesses where your clients use your service infrequently. Examples that come to mind are real estate agents, mortgage brokers, consulting firms, attorneys, and auto dealers. The customers don’t require your product or service very often-typically, it’s for a high-ticket transaction. In these situations, the business makes so much money from the one-time, infrequent transaction, that it usually generates more income than a continuity program.

In these cases, the value of the continuity program has less to do with the income from the continuity program itself and more with making sure you get the next big transaction from those customers when their next big purchasing need comes along. The key to becoming the default provider, or the person the customers refer their friends to, is to stay in front of the customers constantly.

An easy way to do this is to start a monthly newsletter that covers topics that are of interest to your best customers. For example, if you’re a real estate agent, you could publish a monthly newsletter about your favorite restaurants in the area, review local businesses (e.g., best hair salon, best car wash), tips on how to increase the value of the person’s home, how to sell or buy the customer’s next home (with you, of course!), and how to refer clients to you.

The great thing about a monthly newsletter program that provides some personality and professional advice is it accomplishes two things. First, it helps the customer get to know you better – and people like to do business with people they know. Second, you continually establish and reinforce your position as an expert. Every month customers get to see firsthand how good you are at what you do.

You could offer this newsletter for just a few dollars every quarter or every year, and set it up so the subscription auto-renews on an ongoing basis until canceled. If the average ticket size for your service is really profitable, you might even want to provide this newsletter to your previous customers and hottest prospects for free. In this case, you’re giving up the continuity income, but you’ve got a fantastic marketing program.