I love visual metaphors and analogies so when I heard about John Jantsch's use of Hourglass Marketing in his Duct Tape Marketing system to combine the ideas behind the sales funnel with the concepts to building the profitable back end of a business, I knew I wasn't going to be able to resist telling you about it.
It puts the entire business concept in such dramatic focus and emphasises where you will really make your money.
The First Part Of The Hourglass - The Sales Pipeline or Sales Funnel
The First Sale
If you read my earlier article on the sales funnel, you will be familiar with approach to work down from your potential universe of potential customers all the way down to people who actually do buy from you.
In the diagram above, the shaded green section recognises the money being generated from the customers in a one time sale.
Nice and simple but the funnel V represents a lot of cost and energy to attract these customers and the green cash block is not very big.
Upsells & Cross-Sells
So if the business introduces options as Stage 2 to upsell or cross-sell on the first purchase, the we can add another green box to represent the extra profits.
Since the all the overheads and selling costs are covered by the first purchase, the extra profit that can from as simple a cross-sell as "Do you want fries with that?" could double the profit on the transaction.
The Second Part Of The Marketing Hourglass - The Back End
More Regular Purchases
Stage 3 is to start conditioning your customers to buy more often because it is in their best interests to buy more regularly or because you add other products and services to your range that they want.
You can start adding many more boxes of money if you can turn a one time customer into someone who buys twice a year, every quarter or even once a month and when buying becomes a habit, it rolls into the following year as well.
Finally you bring in the Stage 4 and the power of referrals from your happy customers to their family, friends and colleagues which can add an even big box of money provided you a) offer great value and service and b) you have a systematised referral process.
You now have a true "marketing hourglass" where you have filled your business with cash and as a result, it is a much more stable business.
You can continue to add new customers from traditional lead generation sources but the Marketing Hourglass is the best mental picture I have seen of the process of adding profit through backend marketing.
Is Your Marketing Hourglass As Full As It Could Be?
So how far does your "Marketing Hourglass" go down?
Have you explored all the possibilities for upselling and cross-selling to make sure that you sell what the customer really wants to buy in rather than what the customer thinks they should buy? There is an important difference and you are the expert.
A doctor wouldn't trust a patient's self-diagnosis and nor should you.
Have you concentrated on provided a great service (and yes that all starts from making sure the customer buys the item that will provide the benefits required) so that the customer is happy to buy from you again? Have you conditioned the customer to expect your future offers or educated them on exactly why it is so important, for their benefit, that they do buy again?
Have you then made those offers to encourage your customers to buy more and more often?
Have you then explained why its in the customers interest and that of the people he or she knows to make referrals to your business? Do you have a process to remind your customers to give you referrals?
Your customers are the source of potentially big hidden profits in your business.
Jay Abraham has built his "megastar" reputation and career on finding and exploiting these opportunities and has spawned a wide group of marketing coaches and consultants who recognise that while the glamour may be in attracting the new customers, the real money is in the backend.
With the estimate that it costs on average between 500% to 1,000% more to sell to a new customer than an existing, happy customer, you have to turn your attention to deepening these customer relationships and filling your Marketing Hourglass.
What You Can Do To Fill Your Marketing Hourglass
It's only right that I tip my hat to John Jantsch and his Duct Tape Marketing book. It has a very good chapter on referrals but it focuses more on attracting people into the sales funnel than filling the bottom of the Marketing Hourglass.
This is Jay Abraham territory and I always pick some extra special nuance when I listen to his Mastermind Marketing System.
Even better in my view because it takes you through the step by step process of implementation is Scott Hallman and his Small Business Growth Club (affiliate link) (see my review of How To Increase Profits Quickly & Easily).That training has now become expensive for many small business owners so my main recommendation is to try Profitable Growth Strategies. You get 30 days access to all the business growth training for 30 days. This is plenty of time to decide if you want to stay a member and pay the small monthly membership fee.
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