Show me how you could justify ME giving YOU a $4,997 set-up fee plus $1,497 per month

[Dexx]

Originally Posted by AP

Let's work through a real life example.

So many members here seem to get caught up in the "Are my fees justifiable mentality" so I need to respond.

Instead of giving the answers I would like everyone to go into Deep thought and exchange places with the Business owner.

You now own his business and some Hotshot Internet Marketer walks through his doors to market his business.

This will be the scenario: I get a lot of these.

Service type (repeat biz) business: Dentist, Carpet cleaner, Pest Control, Plumber, HVAC, etc... Mom & Pop type biz

Gross Sales: 1.2 Million in 2008, decreased to 1.1 Million in 2009, sales have Flat-lined. Incorporated for over 5+ years. Has 4 employees, spouse works part-time helping out.

• Client has a nice website, ranked page 3 Google. His domain listed Page 3 Google is his entire Internet presence.

• Advertising/Marketing budget per year is roughly 5% of sales $50,000

• Spends 80% of his advertising budget ($40,000 year) on Yellow Pages

• The balance of 20% ($10,000) is spent on Spray & Pray type marketing

• Has a database (Names & Addresses only) of 2,000 past & current customers

• Gross Profit margins are 25%

Now you make this statement:


Mr Business owner, "If I could show you a way to cut the Fat & Waste from your marketing budget and at the same time Increase your sales by 30%, would you be interested?"

Show me how you could justify ME giving YOU a $4,997 set-up fee plus $1,497 per month (starting in 30 days) 12 month agreement. Total price is $23,000.

I want YOU to show me what you could do to "Cut the Fat & Waste in my Advertising budget and Increase my sales.

In addition, I want to see ALL the Benefits to your plan even if I just Break even with your fees vs my increased profits and the end of 12 months.

End
************************************************** ***

I would like to see all thoughts. There shouldn't be any criticism from anyone, we are all here to learn.

I am willing to bet that I have (2) answers that no one will come up with. I've picked my brains for years justifying my prices to clients.

Let the games begin.

~AP

P.S. If you need more info let me know, but I'm going to be very conservative in my replies.

I implemented the Exact case for a client back in Oct 2009. The fee structure was a little different. $20,000 paid over a 6 month period. A Minimum of $997 to $1,497 dependent upon the services the client wanted at that time for continuing consulting. I can tell everyone the client is Extremely happy with the results in only 3 months. He has given me (3) referrals since we met. I will give details when all is finished.

BTW, the client is one of the above categories.

[dremora]

First thing I would do a keyword research and see how much their main keyword gets searched (a keyword like pediatric dentists in Dallas). Hey mr. business owner, this many people are seraching for this in your town every month and you are not getting any of them. Look here, your main competitors are running ppc campaigns, they have youtube videos that got several thousand views, one of them has a few press releases going on, I can show you how to tap into this and get more customers. Right now, there could be dozens of potential customers running a google search and calling your competition. We can utilize free advertising resources for you, rank your site from google page 12 to page 1,

I would also show them the local maps results, sometimes it's sobad when you search with the town name, you get the providers in other towns cause no one in the correct town has done the map entries right (or done it at all). See, people run local search, get no results in this town so they go to the next town.

If you show them all the facts they become receptive.

[mktmkr]

Here's my take:

• Cut the YP advertising, or significantly reduce it and do tracking

• Cut the Spray & Pray

• Identify all upsell and cross-sell opportunities inside and outside the business

• Train staff on dealing with customers (phones and in person) so that it's geared towards more sales (improve scheduling, promotions, upsells)

• Attack Google page rank with articles, backlinks, videos, social media

• Create report or other "freeline" offering on website optin

• Local domination with Google Business listings, local directories, Yelp, UBL

• Reignite list of current & past customers with direct mail, get as many onto autoresponder system as possible

• Use signs, merchant receipts, and incentives to get people onto autoresponder system

• Use incentives to have clients give feedback on directories, social media, local guides

• Increase "authority" ranking with published book, use as gift, bonus, lead generator

• Create continuity program (VIP club) to leverage repeat business

Thank you for this exercise, AP! After I settled into "just come up with as many solutions as you can", they really started popping into my mind. It's even more apparent to me now that mindmap is a PERFECT way to capture and present a solution.

At the end of this I've come to two realizations:

1. My solution above is worth well beyond the $4997 setup and $1497 monthly
2. I really AM an expert that can provide value and deliver on all the solutions!

Action, baby!

[Vitto]

First thing I would do is help him re-define his USP/Unique Selling Proposition or EVP/Extra Value Proposition

Once we create a good USP we'll make sure his staff understands and believes in the USP as well.

Integrate the new USP on to the Website and implement lead capture w/ auto responder

We'll also put lead capture in the office @ point of sale.

Put together a "widget" as DK calls it, or a new package that is congruent with the USP.

Send a letter to all 2,000 of his current and past clients with the new usp letting them now that we appreciate their business and for that purpose we've created a special package for them.

Once clients come into the store we can then capture new info, email + phone numbers

Once that is in process we'll create multiple videos which would include training sessions on the owners expertise and use as traffic generators on the web. If client is interested we can then start webinars on popular subjects were clients and prospects can dial in and learn the 5 best was too..... featuring the owner

We'll also do in-store trainings like Apple does, like once a month to help with community status

Implement joint-ventures with other similar companies in the area, that we can create discounts and coupons.
"Buy a message from our office and get a 10% off of botox treatment from the dermatologist"

Along with JV business, also hold trainings with JV partners.. Like they do in the IM world.

I would use a connect that I recently made with a Freelance writer for major newpapers to help push the offline PR about the trainings being held by the company and owner.

Get a neighborhood celebrity to take pics with the owner to help boost the owners celeb status

oh yeah, up transaction values, by up selling and cross selling, and the prices... think I said that already.

And while all of this is going on, I'd have my VA staff creating online articles, Videos, Podcast which will help with the rankings, traffic and backlinks.

then rinse and repeat.

[JaySimcic]

Here is what I would say to justify my price based ONLY on what I know so far.

Mr./Mrs. Business owner. You have a database of over 2,000 pas and current customers. The first thing we'll do is to reactivate dormant clients and reinvigorate your current customers into spending money with you.

Second, we'll evaluate your YP results. We need to know if you $40k a year spending is getting you back to break even. If it's not then it shouldn't be used and those marketing dollars should be used somewhere else.

Third, You'll need work done to boost your page results in google. This alone can be the cause of an influx of new customers with very little effort. Did you know that 80% of all searchers don't go past the first page of google. Your page 3 rank needs to be improved.

Lastly (which would probably be first), we will evaluate your current pricing structure and how you upsell, cross sell, and downsell your current customers. This alone could increase your revenue by 10% or more in a matter of 30 days.

Now, let's just assume that you break even in the first year with my fees. You will have a new system in place that will pull back in clients who have left. You'll have a systematic way of upselling, cross selling, and downselling your current clients for nearly instant revenue. You'll even have a system in place for connecting with partners in your local area that you'll be able to leverage to bring in new customers cheaply.

Now, Mr/Mrs. business owner, if increased revenue, a system that you can make work for you, and an overall boost to your bottom line is not for you, then we can cut this meeting now and part ways.


Ok... those are my thoughts... your critiques are welcome.

Jay

[Tanner]

AP, here is my proposed method for this scenario:

Ok, to narrow it down a bit for me and make it easier to design a plan of attack, I am going to assume that the business in question is a home services business (HVAC, carpet cleaner, Plumber, Pest control)


Immediate implementation (all taken care of within the first month):

• Stop all Spray and Pray spending – Benefit is money can now be saved and used only in trackable ROI marketing campaigns.
  
  
• Sit down with owner and figure out a reasonable LTV for his customers – Benefit, allows us to forecast and better plan future marketing campaigns
  
  
• Find out when YP contract expires – Benefit so we know when to address the various issues associated with his YP Ad
  
  
• Go through financials with owner to see where he is spending his money in addition to his marketing budget. His GPM is fairly low for a home services business and I want to see what could be attributing to that. – Benefit is that we will both have a better understanding of where money is going and it will help me in making further calculations and adjustments.
  
  
• Sit down with owner and work out his company’s Breakeven numbers I need to know what his breakeven is per day, per hour and per minute. – Benefit is that I can use information to find out where money is being wasted in relation to time and I can also use these numbers to build an effective price point for his products and services.
  
  
• Find out when the last time he raised his prices to account for inflation. – benefit is that it will let me know if he has ever raised his prices to keep profits up.
  
  
• Look at their current service/product prices and see what they charge compared to what they offer and see if there is room to bump the prices up a bit (10 - 15%). – Benefit is instant increase in profits for no additional work.
  
  
• Find out what their current close rate is for prospects to customers and see if we can enhance that through better training, scripts or product/service offerings – Benefit is better utilization of existing incoming prospect, which means more customers and more money.
  
  
• Sit down with owner and develop several different service options and packages to allow for quick and easy upsells. – Benefit is more money earned from each customer
  
  
• Train estimator, service technician and phone operator/scheduler on how to sell the newly created packages and how to push the service options as upsells. – Benefit increased profits from each job.
  
  
• Train the people who answer the phones to ask how the prospect heard about their company. Implement immediately – benefit instant ongoing customer tracking.
  
  
• If they give estimates in person – train the person giving the estimate to ask how the customer heard about them and then write that down on our copy of the estimate sheet. – Benefit instant and ongoing customer tracking.
  
  
• Find out how they currently schedule jobs and how they distribute the work to the various work trucks/crews. The purpose is to look for any inefficiencies in scheduling, job assignment, to see where money is being wasted – The benefit is that we can make their service calls more efficient and maximize revenues on a day by day basis.
  
  
• Train the people who answer the phones to ask how the prospect heard about their company. Implement immediately – benefit instant ongoing customer tracking.
  
  
• If they give estimates in person – train the person giving the estimate to ask how the customer heard about them and then write that down on our copy of the estimate sheet. – Benefit instant and ongoing customer tracking.
  
  
• Implement a Thank You card campaign that sends out a thank you note after completion of service. Thank you note will also contain referral coupons. – Benefit satisfied customer who will stay customers and potential of additional referrals.
  
  
• Go through and have them sort customer list into the following groups: current customers, customers who haven’t had service performed in 1 year, customers who haven’t had service performed in 2 years or more – Benefit is that it lets us know who our sales are coming from, and shows us who to try an reactivate into a paying customer first. We work newest to oldest.
  
  
• Isolate a list of the company’s golden 20% - the 20% of his customers who spend the most money with his company. – Benefit – we can now give these people special treatment and turn them into devoted referral machines for us.
  
  
• Set up an ongoing Criss Cross new customer campaign with 3 part direct mail series – The benefit is a steady flow of new business from areas you already provide service in with a very low investment.
  
  
• Install analytics tracking code on his website. – benefit is that it lets me know how many site visitors he’s getting and what they are looking at.
  
  
• Look at customer list and determine what the percentage breakdown of commercial clients to residential clients. – Benefit is that it shows me what market the company is stronger in and what area may have been neglected. This is helpful for deciding on what market our direct mail campaigns should focus on.

That’s all for now, as we first have to enhance and modify the foundation to ensure that it will be able to capitalize on the growth that will occur later. If you don’t fix things first there is no reason to spend more money on extra or improved marketing.

Secondary Implementation will include new direct mail campaigns, customer retention programs, customer reactivation programs, YP redesign, website, internet marketing, email capture, excreta … All of this will come later on after all of the above items have been taken care of as I cannot effectively plan out new marketing campaigns, strategies or budgets without a lot of the above information.

[easycash]

If the biz makes 1 Million and you increase 30%, you get 300k extra, that was easy to figure. So 25% profit margin from 300k are 75k.

You ask for 23k a year, 5k upfront and then recurring, what will leave the biz a profit of 42k, or roughly 2x what you ask for.

So after preparing to get a good grip of the market the biz is into with some about potential, competitors etc. I would justify the price with above mentioned 2x1 split of the extra profit.

Any sane person will see the benefit of this.

The hard part is to make him believe that you are ABLE to do this, after all your PROMISE cost him 5k ??

So here is IMO the hurdle you have to jump over.

How do I make him trust me that I can make those 30% profit increase to get the 5k I ask. Maybe you shouldn't claim much in figures or numbers like

- get on Googles first page
- 30% increase in sales
- double your clients in 12 month

or similar.

The more you promise the more you can get yourself into troubles with this. Why not PROJECT the clients position where it COULD be if he would use your service, but without that you give him any promise to get exactly there, explaining that this is a ongoing process and that his competitors as well don't sleep and that ultimately the one which runs first and better will win the race.

So you promise results WITHOUT any figures. Better in my opinion.

G.

[davyboy]

This was very interesting to read. Just one thing, with the last posting done in February,
the promised "I will give details when all is finished." would hopefully enlighten us all

Thank you,

David

[drdan]

Thanks for re-posting this here. I needed to hear this since I have a challenge with asking for more money. I wish I could give everything for free. This forum rocks and since I found it, I havent been on the warrior forum fr over 1 week! Thanks Dexx.

[Bryan Dennehy]

Here's what I would do,

1. Identify profit leaks with client using questionaire (95% of businesses have profit leaks)

2. Create USP (if there is none) or re design old one to differentiate the clients business.

3. Integrate USP into all current successful marketing campaigns and sales processes.

4. Exponential marketing.

5. Form alliances, either from within the database or look to outside the database.

Cost of above to client, zero (well apart from your cost), potential impact on business, tremendous

Implementing some or all of the above successfully, should see a increase of sales/profits of 25% or more without spending any aditional money on advertising.

Then when when you introduce online marketing, direct mail campaigns, community relations marketing etc, this is when you start to see exponential growth and it becomes much easier for the client to pay for advertising, especially after you've just grown his business
by 25% - 100% whithout spending any money.

~Bryan

[Don Alm]

Thanks Dexx....

[tanya7zhou]

First of all do a consultation and go through the questionnaire to identify hidden assets within their organization.
Say goodbye and go home or your office and go through the questionnaire, quickly identify fast cash strategies like past customers etc in order to establish yourself as a business growth expert quickly.

Write a report, make it very long suggesting new ideas and pin-pointing areas of concern and how you propose to fix it. Many times business owners come back to me saying, I didn't expert to get this much for 7 Grand UK pounds. "Sure you exceeded our expectations" they usually say.

Start by articulating their USP. As far as I am concerned, business is all about fulfilling your USP promise. Everything in the business is engineered to fulfill the organization's USP.

Integrate the USP in everything, I mean everything. Advertising, Marketing, Sales training, employee training, team building, customer service, etc

Work through the database to see if everything is inorder and begin using the database to Market to their clients. There are so many things you can pick up from their database.

Begin setting up alliances for the clients, creating Joint Venture deals while creating new relationship for the business and you can even joint venture to create new products between companies. The possibilities are endless

Then there is community marketing, direct marketing campaigns, social media marketing, Internet, etc

Also there is new product creation, blogging, article writing, etc

I can go on and on

[rocketman]

Extremely helpful thread, thanks!

[iMarketingNinjas]

I think that some of the ideas here are simply genius. Love it.