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Case Study Beauty Salon with Adrian Ulsh

by | Adrian Ulsh, In the Magazine | 0 comments

As business coaches and consultants, we’re always looking for new and innovative ways to generate more sales and revenue for our clients. Here’s a tactic we recently used with a beauty salon that increased their profits by 30% instantly.

Obviously customers LOVE to feel like they’re getting a great “deal.” On top of that, customers love it when they win something. That’s because most of them never do. They go through their entire life and never win a thing. When they do win, you can bet they will take full advantage of their good fortune. Here’s how you can capitalize on that human behavior by giving every one of your coaching client’s customers a “win”… and possibly doubling your client’s profits in the process.

Help your client implement an upsell / cross-sell strategy. Let’s start by explaining the difference between an up-sell and a cross-sell. In essence, an up-sell involves offering the buying customer at the point of purchase more of what they just purchased. You’re getting the customer to purchase a larger quantity or a higher volume. When you super-size your fries at McDonalds, that’s an up-sell. When you buy socks at the store, and the clerk convinces you to buy a dozen more to get a special discounted price, that’s an up-sell. You’re purchasing more of what you were originally buying.

A cross-sell involves offering the buying customer at the point of purchase an additional product or service that’s related to what they just purchased… typically something they need or want but didn’t think about purchasing at that time. The quality of the salon equipment you use affects the service you give to customers. After you super-sized your fries at McDonalds, the person helping you asked if you would like an apple pie to go with your meal. After you agreed to the dozen socks, you also agreed to buy a new pair of shoes as well. These are all examples of a cross-sell… you’re buying a related product or service.

Statistics show that 30% of customers will purchase an up-sell/cross-sell item if you simply ASK them to. That’s pretty simple isn’t it? And yet the vast majority of business owners NEVER ask.

With the help of the up-sell and cross-sell strategy, we’re going to tap into human nature and skyrocket the profitability of your client’s business by using a tactic we call the “fishbowl discount tactic.”

Begin by asking yourself what other products or services would compliment or add value to your client’s current customers when they buy what your client sells. Create a list of potential up-sell and cross-sell products or services. And by the way, they don’t have to be your client’s products or services. Naturally it’s much better if they are theirs, but many businesses today simply don’t have complimentary products or services.

If that’s the case, find other businesses that do… and create an affiliate relationship with them. Tell them you want to start selling their product or service to your customers, and negotiate a fair percentage of the profits from those sales for your business. Most affiliate fees today run between 10% to as much as 50% of the sale, depending on the margins involved.

Once you have your list created, be sure to calculate your gross profit margin for each item. Since these will be additional add-on sales, you don’t have to worry about your net margins. All of your business expenses are typically covered in the initial sale.

Now ask yourself what percent discount you could give to a customer buying a specific product or service. So for example, you discover that you have a 50% profit margin on a complimentary gadget, so you could easily offer a 25% discount and still make a nice profit.

Now that you know how much you can discount the item you’re promoting and still make a comfortable profit, here’s what you do. When a customer makes any purchase whatsoever, always ask them if they’re interested in buying anything else. Once they say no, the sale would have typically ended there and they would have left.

But let’s use human nature to get them to stay and buy from you. Tell them that you’re running a special promotion this month and that they have just earned an opportunity to draw a number from your “fishbowl”… or whatever receptacle you choose that would be similar in nature. Explain to them that the numbers in the fishbowl represent special bonus discounts ranging from 5% to a maximum of 25%. Remember that the discounts you offer in your fishbowl will be determined by your gross margin. In other words, don’t offer a discount where you end up losing money.

Now listen to this. If you decide you could discount those products or services by as much as 25% and still make a nice profit, then label ALL of the numbers in the fishbowl 25%, but don’t tell the customer that. Use folded pieces of paper so the customer can’t see the numbers until they make their selection and open it. When they draw their number, congratulate them on being one of the very few to win the maximum discount… which they can now apply toward the purchase of a select list of products and services. Hand them a list they can select from that contains various products or services with high profit margins.

Now remember, they were NOT going to buy anything additional from you that day anyway, which is why you ALWAYS ask them first if they’re interested in buying anything else, so this is a way you can increase your sales of a high profit item. And by giving them 25% off, that discount is almost too compelling for them NOT to use it.

Now naturally, not everyone will use the discount and buy that day, but the average percentage of those who do will range between 40% up to 70%. And since the up-sell or cross-sell is gross profit, you could effectively double the profitability of your client’s business using just this one tactic. If you don’t, you simply selected items with too low of a profit margin. Find something else and test it, including affiliate items with substantial profit margins.

And one more critically important point. How much did this strategy cost you to implement? The answer… ZERO! In fact, all this takes is fifteen seconds to explain the fishbowl drawing to the customer and hand them the list of goodies they can select from.

There is also a second variation to this tactic that you may want to test. Instead of all the pieces of paper in the fishbowl having the maximum discount written on them, try writing the minimum discount of them instead. In the example we used, that would be 5%. After they draw their discount from the fishbowl and show you that it says 5%, take it from them and with your pen change it to the maximum discount.

Give them a wry smile and a wink and tell them not to say a word about what just happened. You’re now tapping into the reciprocity factor which is a tremendously strong persuasion technique in human nature.

But make sure whichever method you use, test, test and test.

 About Adrian Ulsh

Adrian Ulsh is the CEO for Leader Publishing Worldwide, the largest online provider of coaching services worldwide. Adrian currently works with more than 500 coaches in 24 countries advising them on building 6 and 7 figure coaching practices.

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