- Pricing psychology and how to raise your prices by 10%
- Assets that everybody has that can easily be deployed
- 3 things that are very easy to implement that can have a dramatic impact
- How to lose 40% of your revenue and still maintain the same bottom line profit
- Why you can’t be the low cost leader
Dean: I’m Dean Jackson, he’s Joe Polish and this is the I Love Marketing podcast.
Dean: Hey everybody, it’s Dean Jackson
Joe: And Joe Polish, the Joe Polish
Dean: Joe, the world, you’re stealing that from me because you know my twitter handle is TheDeanJackson.
Joe: Oh, I didn’t know that. Well, see mine says Joe Polish because no one even needs to distinguish between me and.
Dean: That Joe Polish?
Joe: Right. Because, I mean, there’s a million Dean Jacksons in the world but there’s very few Joe Polishes, not just a name.
Dean: So listen, you’ve been like a travelling fool.
Joe: Yup, and that is the honest truth.
Dean: Where in the world has Joe Polish been, I mean, when does, I think yeah it’s been crazy.
Joe: I’ve been actually a travelling idiot, I mean like no person in the right mind travels as much as I travelled in the last month and a week. I, you know, we’ve talked about tearing my meniscus at Brendon Burchard’s studio, over a month ago and then, you know, went to Necker island and then went to Ted Ned and went to Robin Robins’s event and spoke. You know they really seem to like that because I used the F bomb a couple of times during my presentation.
Dean: Oh boy.
Joe: Five hundred people but you know, and it was good but other than that I’m, you know, very pleasant, very caring, gave the audience some great strategies and stuff. I had dinner with Lou Ferrigno that Robin Robins set up, went to Strategic Coach, met with my buddy John and Missy Bucher. You know, they own Precious Moments, the Figurine Company and then Life Book, which is a great organization, one of the coolest personal development things on the planet you know, mylifebook.com. And then, what else, and had dinner with Dan Sullivan at Babs twice. While in Chicago, went to Strategic Coach. What else? Went to Peter Diamandis‘ XPrize Foundation and that was completely bad-ass. You know, we did a coaching call earlier today for our Platinum 2.0 folks and I mentioned, we talked about pricing which I want to talk about on today’s call because it’s.
Dean: Yeah I think we should talk about that.
Joe: It’ll be a good follow up for all of our Platinum 2.0 members and for people that are not in our group and don’t pass large sums of money to, you know, do thinking exercises and meet in person and all that sort of stuff, which is just foolish if you ask me. But you know, people that don’t do that or not aware of that, we talked a lot about pricing on that particular call and we take people through these tools and exercises that we have and, you know, I mentioned at the XPrize foundation for Peter, you know, the author of Abundance and the founder of Singularity University and Zero gravity flights and that sort of stuff. Yeah, he just had all these just amazing tech people. Paul Allan from Microsoft was there and Arianna Huffington is going to come and speak at my August 8th and 9th annual event that we’re doing for 25K members. That’s a $10,000-person event we’re doing in New York and Peter’s speaking and Peter Diamandis and probably you, we’ll probably have you say a couple of things there, and Dan Sullivan and all that.
Dean: I’ve got some things to say.
Joe: And the guy I was really impressed with was who, I would like to say we kind of hit it off and became friends was Graham Weston who is the founder of Rackspace and I just really liked his views on.
Dean: You know, I love, we both use Rackspace and we’ve talked about that but, you know, my thing, that’s pretty exciting because their commitment to fanatical service, I think that’s, you know, that kind of, that’s a power word, isn’t it? “Fanatical” service.
Joe: Yeah. Yeah, yeah, and I mean they got 43-hundred employees, they’re in San Antonio and just, just a smart dude and really focused on taking care of people and, you know, Hugh Macleod from Gapingvoid and you know, wrote a couple of great books called, you know, Evil Plans and Ignore Everybody he draws like really cool art on the back of business cards and his books are fantastic. I think everyone should read them, you’d find them really just kind of cool, some of my favorite books.
Dean: We need to get him on here.
Joe: Yeah, yeah we do, we do. Maybe we’ll send this episode to him, and we can, he can hear us talk about him, but yeah Hugh’s a smart guy and his artwork is really cool, check out gapingvoid.com if you’ve never seen it or read it, it’s very clever. His artwork is really super cool and it’s just, you know, lot of profound statements that he makes, and yeah. You know, hung out with Quincy Jones and we had a whole bunch of marketers that have been.
Dean: I saw that picture with Quincy Jones.
Joe: Yeah there’s pictures, maybe we can put some of that stuff on this episode or something I don’t know.
Dean: Okay. Send me whatever you’ve, whatever you want to.
Joe: A collage of pictures of me at I Love Marketing.
Joe: We should have a photo section on I Love Marketing just so people can follow my daily antics. We could take pictures of me eating breakfast.
Dean: A photo a day.
Joe: Tearing my meniscus, getting rehab, and massages, pedicures once in a while.
Dean: It’s like being Joe Polish. That’s what we could do.
Joe: Because I do have a smiley face on my toe. I have a smile. Yeah. And so for those people that like.
Dean: That’s like when we went to get the couple’s pedicure in Toronto.
Joe: Yeah, we did. What did you think about that?
Dean: It’s so funny because you were talking about tearing your meniscus at Brendan’s studio and I was with Brendan in New York, we went to the Mandarin Oriental spa and on the 35th floor of the Mandarin Oriental Hotel, it’s the number one spot in New York City. It was fantastic, it was really great.
Joe: Well here, look, I was with the lovely and beautiful Renee Airya at Brendan’s studio apartment.
Dean: She is both of those things.
Joe: We were both doing P90X when I actually tore my meniscus, not because there was anything wrong with P90X, it was just because I was a dumbass and I shouldn’t have been like doing Plyometrics with a, like a knee hurting, but I didn’t think I was hurting it, I just, you know, it was already hurt and I just kind of took it over the edge. And so, but Renee, awakenyoursource.com by the way, see I’m just going to do product placement for people I talk about, we start charging them a fee.
Dean: That’s fantastic.
Joe: We got thousands, and tens of thousands of listeners here and all these website plugs, these people should be paying me. I mean, alright so for all those people that are like Joe and Dean should shorten their free, let me mention free, podcast to 30 minutes so that you can get it down. I mean, those are the people that obviously don’t like any of our commentary, any of our goofing around and you know, we’re not here to cater to those people. We’re here to cater to our fans and true lovers of marketing that realize marketing.
Dean: Marketing lovers.
Joe: is about the setup. It’s about the setup in order to sell some stuff. So, what are we going to talk about today, Dean? What are we going to go over?
Dean: You know, I think we should talk about some immediate money things that are available in everybody’s business right now. Kind of they’re already there. They’re hidden things that are assets that people have that can easily be deployed for virtually no money and I think it would be a good idea to start talking about some of those things.
Joe: Well, you begin.
Dean: I think, okay so I think that we, let’s set the stage then because there are three things that we were talking about before this call that are very easy to implement that can have a pretty dramatic impact and we both believe that everybody should do this. Number 1 is raising prices.
Dean: We just spent a whole more than 90 minutes, we did our Platinum 2.0 call tonight and one of the things that we really talked about in depth was raising prices.
Dean: And we talked about pricing psychology and then, so maybe we could kind of talk a little bit about that. Because I love the math of what, you know, we talked about raising prices by 10%. What that actually does to your bottom line and, you know how you can overcome the fear that everybody’s, you might lose customers by doing it.
Joe: Right, and you will, because you know, if you raise your prices, three things will happen. Your sales will either go up, your sales will either go down, or your sales will stay exactly the same. And so, a lot of times people are searching in their companies for ways to, you know, make more money, get more clients, and sell more stuff because they think that is what they need to do in order to make more money. But what if you, like, could only generate the amount of business you’re getting right now?
Now, of course, this is going to seem like a weird thing for someone that yet doesn’t have a business, just starting out in business, or like, literally has like, two clients or something. Now, assuming you have a little bit of traction, a little bit of movement and what if you could only survive with the amount of clients that you currently are getting right now? Meaning, you couldn’t get any new clients. Well how could you maximize what you’re getting? Well you either get those people to buy more frequently or you get them to buy more or you charge them more money, right? So, you know, there’s a guy years ago when I had my carpet cleaning company. And before I started selling stuff to carpet cleaners, marketing information to cleaners back 1994, 1995, I was learning, I was going through the educational process, learning the most effective way to sell anything by not selling, which is what marketing is; selling in advance using direct response.
And so I was reading Gary Halbert, Dan Kennedy, studying, you know, implementing, trying things out, testing things and one of the books that I came across was called How to Sell at Prices Higher Than Your Competitors by a guy named Larry Steinmetz. And still to this day, fabulous book on pricing and margins and so I ended up interviewing Larry years ago and I became friends with him. And I had him do some analysis because he was really familiar with how banks create risk factors for who they loan money to and industry sectors and various things and how service businesses work and margins that are typical, average, above average, below average, etc.
So, I’d sent him, you know, I think it was a fax because it certainly wasn’t an email. Sent him a fax with some data that he asked for about carpet cleaners and then he was going to compare it to banking standards of carpet cleaners based on how they loan people in the cleaning industry money and stuff like that. So, he basically found that, I went in more detail in our coaching call, I’ll just sum it up, basically a highly profitable carpet cleaner can afford to lose 43% of their business and still maintain the same net bottom line on profit with a 10% increase. And an average carpet cleaner can with a 10 % pricing increase can lose about 39% of the work and still make the same amount of net bottom line profit. Not gross revenue but net. And so, say you’re bringing in $10,000 a month, and out of that 2500 of it is net that you actually get to keep as a carpet cleaner.
Now, obviously if you’re a bigger company, you may be operating on 5% margins, 3% margins, 10%, whatever. But the thing is that carpet cleaner can literally with a 10% price increase, generate $6000 in business, lose 40% of their revenue sales and still maintain the same net bottom line on profit of $2500 a month. And obviously there’s, I don’t want to get too much into the numbers because that’s not a 100% completely accurate on all levels across all businesses, but just from a service business example, a carpet cleaner can literally afford to lose 40% of their revenue and still maintain the same net bottom line profit. and what I discovered with my work with Larry is that applies to a tremendous amount of businesses including boys and girls that are listening to us right now with a 10% price increase, are you really going to lose 40% of your customers? And if you would, then basically you probably wouldn’t want those people anyway because the only reason their probably doing business with you is low price. And when marketers talk about unique selling proposition, you know low price is not a unique selling proposition. It’s more like a universal selling proposition. And if the only criteria or the best criteria that you’re offering people in the market place to do business with you is a low price, that’s a really shitty position to be in.
Dean: Right. Unless you’re going to go all the way.
Joe: Yeah, I mean you’re not going to keep compete with Wal-Mart or IKEA.
Dean: Well, like South West. And like the companies who are completely organized around the idea of being the lowest price. And you know, that’s kind of we talked about that. That it’s never a mom and pop or an independent operation who can lead on the lowest price. It’s always a huge conglomerate. It’s always a big well financially backed company that is doing that. And it’s very expensive to be the low cost leader.
Dean: You have to have deep, deep pockets to be able to operate on razor thin margins.
Joe: Yup, exactly. So, here’s the deal if you don’t want to listen to the rest of this episode, where we’re going to, you know, talk about all this stuff. The one thing that would really be beneficial for you is to figure out how to raise your prices 10% and not lose more than 40% of your clients and preferably, if you raise your prices 10%, your sales may actually go up because that does happen in situations. A lot of times it’s because, you know, perception, oh it’s more expensive it must be better. And sometimes your sales will go down, but if they go down 40% then you really need to take a look at the quality of what it is that you’re delivering. I mean, if there’s such a differential at that rate between pricing and you know, the quality of your service, I mean you need to improve the delivery. You need to improve the product, you need to improve the service, you need to improve the customer service related around it, you need to improve the likability factor and the bonding and those all different scenarios.
But it doesn’t always need just better marketing to make more money, simply it’s just raising your prices and people always say well, you know, how much do you charge? You know, how do I know what to charge? And the way that most people determine what to charge when they start business is they look at everyone in their industry and figure out what they’re charging. The chiropractor looks at the chiropractor down the street and sees what he’s charging to crack backs and snap necks. The dentist is looking at what does this dentist charge for teeth cleaning. The carpet cleaner looks at what this guy’s charging per square foot, per room, the real estate agent is what percent is commission; the graphic designer’s looking at what’s this person charge per hour, what do they charge for a logo, you know, and on and on and on and on. And that has nothing to do with reality.
I mean you think it does when you’re first starting your business but what you learn if you end up studying marketing is that the formula for how much you charge for something is based on your ability to sell it. If you want to know what to charge, the answer is it’s based on your ability to sell it. One of the things I talked about, on the call, I said I charge $6000 an hour for consulting in minimum blocks of 2 hours. And I preferably, you know, refer people to hire me for 4 hours for half a day for $25,000. And even before we even go to that, I only want to do consulting if it just has to be such a specific thing because I really want people joining my 25K group because I actually make more money when I do that and don’t have to work as hard. But you know.
Dean: And they may get more out of it.
Joe: Right, exactly, they get more out of it. They get 6 days with some of the top entrepreneurs in the world over a 12-month period and all the benefits and all that stuff. But, you know, the thing I said is like why would a guy that has no college degree that was pretty much a derelict for a good portion of high school and growing up. I don’t know if derelict if that’s a proper way to describe me but it’s funny.
Dean: Yeah, yeah. That’s a perfect word describing you, you mean?
Dean: What’s the definition of derelict?
Joe: I don’t know. Whatever. You can pull it up online and you can tell me if I’m accurate.
Dean: I’m going to do that right now
Joe: And it pisses people off that went to college for, like, 10 years and you know, you can hire some of the greatest attorneys in the world for a hell of a lot less than what I charge for marketing per hour, but why do I charge that? Well for one, I can. Secondly, I have a very unique sort of skill set delivered in a manner that literally no one else in the world does it quite like I do.
Dean: With approvable, and that’s the thing, doing what we do and knowing what we know and being able to apply it to somebody’s business for any amount of money, there’s a quantifiable, measurable, ROI on the money that they’re spending. They’re buying money at a discount.
Joe: Exactly. And I’m glad you said that. Because that’s a great, since I used lawyers as an example, you can hire them, one of the best attorneys in the world and at the end of it, half the time you’re still going to be out of money. You can give me large sums of money and most cases if you follow my advice, it will never cost anyone a penny because when people give guys like you and me money and they follow our advice. And you know, it’s got to be a right fit. I mean one thing I will do, if people come to me with a problem that literally they need a different type of marketer for, I’m not going to take their money. I don’t want it. You know? And you know, I have a whole website set up called hirejoepolish.com which actually is my filtering mechanism for people that, should they hire me, should they not hire me, that sort of stuff.
But basically, yeah. You know, I mean, it’s all what you’re delivering. One of the like price defined mathematically is it means how much does one of those things cost? Value is what you get in relationship to what you’re paying for. So, what is price, what is value? And it’s, literally, one of the things I said earlier today is that the market place takes you at your own appraisal. You know what I mean. If you think about appraisal, you take a piece of jewelry to get appraised, you appraise a house, how much is it actually worth? Well, you know, depends on what’s someone’s willing to pay for. Depends on how you package it, how you communicate it, how you sell it, how you instill value, and if you’re not getting paid by the market place what you want for whatever it is you’re selling, is it because of what you’re selling or is it because of how you’re selling it? Or is it because of you? I mean it’s maybe a little bit of all those things, but marketing absolutely shifts and changes the perception. and you can have the greatest thing in the world if you do a poor job of presenting it, communicating it, educating people on it, specifically matching it to people that want it, need it, can be helped by it, etc. etc. then, you know, it’s not the market’s fault, it’s your fault. It’s entirely up to you, you’re responsible for making your case. And, like the [inaudible 00:22:00] seminars ad in airline magazine says, you know, in life you don’t get what’s fair, you get what you negotiate.
Dean: I love those. Alright here’s what, it’s a derelict, the adjective use of derelict is in very poor condition as a result of disuse and neglect. I think that was pretty much.
Joe: That would, yeah. That would be, I would say in my youth, that would be the reason. If I had a pie chart I would give a pie chart slice of percentage, yeah derelict would probably be part of that pie.
Dean: And look at you now.
Joe: Look at me now.
Dean: Look at you now.
Joe: New and improved or just better packaged and marketed?
Dean: Probably a little of both.
Joe: Yeah, who knows? Who knows?
Dean: Little of both. So Dean, I know you’re going to have, I’ll philosophize during this and maybe you can bring some, you know, land to plane and create some reality around it?
Dean: Well, what would it take for people to raise their prices by 10%? I mean.
Joe: That’s a good question. Well, here’s the thing. I used to teach a seminar on pricing. Not like a whole day, but like, 2-hour segments I would talk about it in the context of the seminar I used to do years ago called How to double your business in 6 months or less. And many people can double their business, literally in a matter of weeks if they do the right thing. Hell if they have the right sales letter sometimes ten times their business, now with online they can do it in three days, but that sounds hyped and unrealistic and stuff. Possible, not probable for most people but possible. But price-cutting is a self-inflicted wound.
I mean, you’re competitors do not raise your prices, you do it. You write what you charge, the bid, the estimate, the whatever. You publish the price, you put it on your website, you put it in your ads, and if your competitor’s prices are lower than yours then that’s their problem, it’s not yours unless you want it to be yours. And you’re the one that tells the printer or the web designer or whoever prints your menus if you own a restaurant what to put on the area where you say price. Your competitors do not raise your prices, and if you don’t believe me, then call all of your competitors and ask them if it’s okay if you can raise your prices. I mean, you know, it’s silly. So, you know, people do it to themselves, that’s the first thing to come to grips with. So, your question is, well how do you go about doing it?
Well first you’ve got to realize that you’re the one that picked your price. You’re the one that states it. And so, you’re going to have to, you know, fish rots from the head down. And so, you’ve got to improve your perception of yourself if you don’t think your worth what you charge, or you actually have to improve the service. And so, one of the things we actually talked about on our Platinum 2.0 call, and I’m going to keep saying that because people need to get that in their head Platinum 2.0, Platinum 2.0. If you really want to accelerate, if you’re getting a lot out of I Love Marketing, again I mean look listen to I Love Marketing, listen to all of the past episodes. If you’ve listened to just what we give out and never give us a penny, you’re still going to know 99.999% more than pretty much all businesses on the planet and most people are not really good at marketing because they won’t take the time to do it. but I can assure you, the thing that has allowed me and the most successful people that I know to do really well is making great margins with great marketing and great pricing and great packaging and great delivery.
And I use the term delivery as the way that you actually deliver the service. And if you screw up delivery one time with your best customers or clients, they’re going to be looking for a different source to get whatever it is you’re selling. And if you want to lose sales then screw up delivery, and that doesn’t matter if you’re high price, you’re low price, if you screw up delivery, if you screw up doing something to somebody, you either better make it up to them, give them their money back so that, you know, they can give you another shot or you know, you lost. And if you want to sell at premium prices then you need to make your delivery problems go away. And if you want to clear up a delivery problem
Dean: Sometimes Joe that is the problem in itself.
Joe: Yeah, yeah and that’s what you were talking about
Dean: Sometimes the problem is that their prices are too low, the prices are too low to be able to really fulfill. And sometimes raising the prices can eliminate the problems of being able to fulfill because you have more money to actually do what it is, more money to play with, to serve people
Joe: Right. Right. Yeah. And so, if you want to clear up a delivery problem then raise your prices because most of the delivery problems that are experienced are aggravated and created, like you said Dean by prices that are too low. And people don’t think about that. It’s like, well shit man I can’t, and it’s like people that are paying premium prices they have a different set of expectations and nobody pays premium prices for delivery problems. I mean I will pay more money for convenience. You know? I like flying South West Airlines.
Dean: That’s one of the things that people will pay. That’s one of the things that people will pay more money for. They’ll pay more money for convenience; they’ll pay more money for speed; they’ll pay more money for a more comprehensive solution to what they have.
Joe: Yeah, and I put all that under the area of delivery. If you go to Amazon, you want to book overnight, you’re going to pay more money but you know what? There you go. Zappos, which is owned by Amazon, you know, it was kind of interesting. Oh by the way, I was with Tony Shay, who’s a friend of mine for the last 2 and a half days at the XPrize Foundation thing. And we hung out with Quincy Jones, which was really super cool and then, I’ll figure out how to name drop and make it look like I’m cool because I know famous people or whatever in between this. But you take an example of like, Amazon, which is really low prices, you can get really good prices, you can get even lower prices at Costco. What’s always fun to do is you go to Costco and you look at stuff that’s being sold there and you actually, you know, which I think Costco just does a phenomenal job, they’re again like you were saying earlier it’s like you know, you have to have a lot of money to sell at low prices but you take something like Zappos.
Dean: You really do. It’s very, it’s expensive.
Joe: Right, right. Zappos is, you know, more expensive than buying many of the same products on Amazon although Amazon owns Zappos. Right? But Zappos is focused on really meticulous, amazing customer service. So, you know, many cases, you pick one or the other. You can send back any pair of shoes from Zappos if you don’t like them. They encourage you to do it. I mean, why? Because they want you to know they care about you and that you’ll like them and stuff like that. And so, South West Airlines, very low price carrier, really like that airline though. Simple, why all the other airlines do not model many of the things that South West does is beyond me.
I mean, you know, I fly first class when I typically go, United or US Airways, you know, I live in Phoenix so there’s, you know, they don’t have Virgin America flying out of Phoenix so I can never fly Virgin flying out of Phoenix. But you know, South West, Jet Blue, you know, great. But South West is like my favorite, I mean they’re just the easiest airline. I was flying back from LA yesterday on South West Airlines last night with my girlfriend and you know, I get a text that they had a gate change, I mean, I never had been on, not that other airlines don’t do it but I’m not aware of it because I fly all kinds of different airlines and South West is the only one that will text me if, you know, if the flight is delayed or if there’s doing a gate change. And see here’s the thing, you can still pay for the fly-by lane which cost 10 or 15 dollars more on a low price airline so even a low price carrier like South West still has the ability, if you pay more money to have a different sort of a delivery where you can actually go through the lines.
Dean: Well that’s the thing. I mean, you and I both always do that if, you know, flying, because South West doesn’t have first class they have their Business Select class which lets you get on faster. Remember when we were flying back from Ben’s wedding, remember we were number one two and three. On the boarding thing and we got that whole exit row with all the extra leg room
Joe: Yeah because I didn’t want to freaking be cuddling with you on a damn plane. That’s especially, you know, that’s uncomfortable. Yeah so the point is, if you raise your prices it affords you the ability to do a lot better marketing, a lot more marketing, delivery problems can go away because you have enough margins.
Dean: But that’s a good model. I don’t want to fly-by that. Do you like that? The fly-by lane, I don’t want to fly-by that without, that is a good way to raise prices without raising them across the board is offering a little higher level. And you go even go with a 50% premium on things that some of the people who really would want that would be more than happy to pay that.
Joe: Yeah, exactly. And here’s another thing too, like, when you take South West because it’s a great example, you know the most heinous thing that you can do to your customers is to fail to deliver correctly and on time. And the most grievous thing that your suppliers or your vendors can do to you is screw up delivery for you. Like, anyone that’s ever relied on printer or a web designer, or a phone company, I mean an auto mechanic, you know, an airline to get you somewhere on time and they don’t or it’s late, and they don’t take corrective action and you get annoyed.
And then if it happens over and over again, you become very annoyed and you quit doing business with them unless they’re literally the only option. And the airline industry, many of the airlines have become, and this reason many of them don’t make a penny is literally they forget that the customer is where the revenue comes from. And, we’ve gotten to a point where certain sort of industries are so despised, and the airline industry’s being one of them, not that people don’t want to fly and not that they’re ever going to stop because they’re not, I mean it’s fantastic that planes exist. I mean I’m actually quite grateful for the fact that, you know, flight and everything exists, I mean, it’s awesome, it’s just the amount of crap that certain airlines put you through because they’re so oblivious to, customer service, and it’s now become accepted that flying sucks, airlines sucks. And even the motto we’re saying, airline industries, we’re not happy ‘til you’re not happy?
Dean: ‘til you’re not happy
Joe: And it’s like if you actually charge people more money and really made a great effort to say we’re going to always do our best to be on time and when we’re not on time, here’s what we’re going to do for you. I can guarantee you there are enough people out there that would pay probably double fees to just not have the stress and the angst that goes along with.
Dean: To a take away uncertainty.
Joe: Right. Now, not a lot, but see as my example is, if you raise your prices 10%, you can lose 40% of your business like in the cleaning industry. Now I don’t know how that applies to the airline industry or many other different industries, but the point is there’s a large segment of people, I mean just look at first class, and see that’s the bummer because I do fly first class quite a bit whenever the flight are over 2 hours I will typically, fly first class unless there’s a difference
Dean: It’s completely crazy, I know.
Joe: Yeah if it’s 4,000 or 300, I’m probably going to pay 300 but, there’s many case, but there are times where I’ll fly private just because I don’t even want to deal with the aggravation. And there’s been entire industries, built around catering to high end. and you know the difference is, I mean you look at people that shop at Wal-Mart, people that shop at Target, people that shop at Nordstrom’s, people that shop at Neiman Marcus, there’s a whole different type, you’re not going to see people in Neiman Marcus walking around in flip flops carrying big bottles of Mountain Dew. And not that there’s anything wrong with that, it’s just personally Dean, I don’t know if you walk around with flip flops and Mountain Dew, we should try that actually, we should do videos of you walking around Neiman Marcus looking like you just came out of Wal-Mart, what do you think? You up for that?
Dean: That would be perfect.
Joe: We could do Awkward Moments with Dean Jackson.
Dean: I’m going to be in Phoenix, I’m going to be in, we’re going to be doing our Platinum 2.0 meeting in May.
Joe: Yeah, yeah. We should do a field trip to dollar stores and stuff if people and see what happens.
Dean: We should do a field trip to the iPic Theatre because there’s another example of charging premium prices.
Joe: Yeah, me and Dean go to the iPic Theatre we pay $186. Was that right? I think it was the first time we went there.
Dean: It was about that, $186 for the two of us and my wife.
Joe: I apologize. I should have, if I was a more caring human being, I would have remembered that. So, let’s see, I want to go back to if you raise your prices, three things will happen, your sales will go up, your sales will go down, your sales will stay the same. And so the point of this episode of I Love Marketing is to get everybody to raise their prices 10%. And if you raise your prices 10%, I would be curious to have people literally try this and then post at ilovemarketing.com what happens. Did your sales go down, did your sales go up, did your sales stay the same? And really look at how it affects your net bottom line profits, because business is a game of margins.
Dean: I think that’s a scary thing. When we were just talking about this idea, given the choice across the board raising your prices, which is very scary to people even if you raise minimally. You know, I’m thinking that I’m liking as a strategy offering a premium level as an intermediate step. Like as a very completely risk-free way to charge more money. Because when you think about that, just like you said, the fear that people have is that if I raise my prices, I’m going to maybe lose customers and maybe they will. If you offer a premium level to what you’re already doing, and more than 10%, 20%, 30%, 50% more, double maybe, depending on what you can do. There’s virtually zero downside to that. Because the only downside will be that nobody takes you up on it.
Joe: Right. Yeah, exactly. No one takes you up on it. And the fact is if you actually have people that like you and you really, you know, I should pull up that blog from Seth that I read earlier. You mind if I read that? Let me see.
Dean: Yeah, I’ll read it. I’ve got it right here.
Joe: Okay, go ahead and read it.
Dean: Okay. So, this was the one that Seth sent a couple of days ago and the title is “If you think that’s what we want, why don’t you give it to us?” I love how he’s pretty clear, right? So, here’s what he says, the sign in front of the breakfast bar at the hotel says from garden to table. Really, virtually every item I see has been processed four times, steamed, stored, and steamed again. Marketing pitches are finally attuned to resonate with the audience in mind. Too often though, the marketer’s only in charge of the pitch and someone else in the organization has to make the thing.
So the marketer brags about how tasty the food on the airplane is or how reliable the cell phone service is or how magically transporting the aromatherapy of the soap is. And then someone else, someone under different pressures and constraints has to deliver and they rarely do. They rarely do because the paying customer isn’t their customer. Their customer is the quality control department, the accounting department, and the don’t-rock-the-boat department. Marketers need to spend less time making promises and more time keeping them.
Joe: Yup, exactly. And then he shows a sea monkey ad which is like the old original sea monkey ad that says, “enter the wonderful world of amazing life sea monkeys. On a bowl full of happiness, instant pets” and it’s only a dollar 25. And then I remember as a little kid seeing this and actually ordering them and it says free a one year supply of growth food, 2. living plasma, 3. water purifier, 4. magnificent fully illustrated manual of sea monkey care and raising, training, and breeding, our famous growth guarantee in writing. You know, blah blah blah.
But it was very hypey ad but it was funny and it was very clever and stuff but the point is, like today, you don’t make promises to people, charging them a bunch of prices and then deliver crap. I mean, there’s things called Yelp, and there’s reviews and on Amazon and on EBay and everywhere else. And basically, if you’re going to charge higher prices you really need to deliver value because perception is reality. And, if you’re going to deliver sub-par stuff, then sell it really cheaply. but if you’re going to deliver something that’s a great product, combined with great service, set it up so that you are the Four Seasons choice if you really want to live in that world.
And even if you don’t want to live in that world, even if you don’t want to be the best, the top, the most expensive, etc. You know, you will still be well-served to, like you mentioned Dean, offering a premium option, still raising your prices, doing a better job of educating people because, you know, we talked about this earlier in our Platinum 2.0 call but the four words I always think about when it comes to volume. People are like, oh, you know, I just want more business, I can get more volume, I’m going to, you know. Volume means more work, put that up on the wall somewhere, volume means more work. I don’t want to do more work, I want to do less work and I want to make more money, and I want to have the very best clients, and I want them to be very happy, and I want to have enough margins so that I can deliver really, really good stuff and people walk away with an awesome experience and they want to tell other people about it.
And you know, that’s the deal. And that’s why I think it makes a hell of a lot of sense to really think through how to look at the before, during, and after units of your business. And I think if you read the Breakthrough DNA report, which is available for the very high price of free at ilovemarketing.com, you can opt-in and download that report and read it. And as you’re reading it, think through not only the marketing activators but how the pricing and raising your prices actually affects all of the different A-profit activators. I think that alone will be a great way for you to really think about how to add more value, real value and perceive value, how to educate people more, how to communicate with them more, how to bond with them more, and it will change your business.
And you know, I mentioned a quote on the Platinum 2.0 call today, Owen Young, who originally built General Electric, said “it’s not the crook we fear in modern business rather it’s the honest guy who doesn’t know what he’s doing”. And that’s the saddest thing about people that really work hard, really have good stuff, want to do good, want to make people a good price, and they just, you know, they don’t know what the hell they’re doing and then they go broke. And they screw up the market place for other people because they just simply, there’s a quote by Cletus Peatchia [inaudible 00:44:18], if your customer truly needs low price, you can’t afford to sell. You know, if you are dealing with people that truly need the lowest price then you know start a charity. Because you don’t want to play that game. I mean, you can play that game if you want, I would just say that when I say don’t play that game, it’s not a command. It’s just that you’re just going to suffer
Joe: And if you don’t want to suffer, don’t get into the price game, because Gary Halbert, you know, one of the favorite quotes I got from Gary Halbert long time ago was a lot of games in life, you only win if you don’t play. And the price game Is a game I don’t think…
Dean: Is one of those games
Joe: …anyone should ever play
Dean: So, let’s sum up our pricing recommendation. Do you think it’s fairly clear to people where we stand on that?
Joe: Yeah, I think so. We can beat it a little more but I think that’s clear.
Dean: I think it’s clear, so we promised that we’d talk about three ways to get some of that hidden money that’s already there in your business. Doesn’t really cost anything, this is just a decision to either raise your prices across the board or offer a premium level of service. Offer something extra to everybody and you know, you notice that it certainly some number of people, some percentage of people I would guess 20%, 30% of people would take a higher option if you offer it to them just because there are certain people who will only get the best of everything.
Joe: Yeah, I mean heck, I even teach carpet cleaners how to package their services, which is a great way to raise prices just do packaging, you know? Models of bronze, silver, and gold, you know, good, better, best, you know, premium, you know, etc., etc.
Dean: Well let’s talk about some of the other things then because one of the things that everybody has are clients, customers, patients, whatever it is that you call whoever your customers are that have stopped doing business with you at one point and maybe are inactive and that is a potential gold mine for you. It’s a strategy that you can, or it’s a group of people that you can strategically communicate with to reactivate those people at a very low cost. And instantly get cash going in your business.
Joe: So, yes. What do you think are some of the strategies that you would suggest?
Dean: Well, I think just asking them to come back is one. I mean, giving them an opportunity, if anything has changed, if anything has changed in your business, it’s a great opportunity to send them a letter with a gift certificate or with some kind of an incentive or offer to come back and experience it again. If it’s something that you got somebody or a business that people repurchase on a regular basis, if you can reactivate somebody, it’s worth using the cost of one time, one visit, or one, if you’re a massage therapist and somebody used to come to you every week, and they came and came and came and then they stopped coming. You can send them a letter inviting them back, and offering them a free massage to come back and see them again. There’s a great opportunity that some of those people who come back will continue again then to come back on a regular basis.
Same thing if you owned a restaurant, and somebody hasn’t been in in a long, long time and you send them and you send them and bring them back and they start coming back regularly. Or you had some kind of a subscription service and they were subscribers and then they stopped being subscribers and you’ve made changes over that time, you can invite them back to try it out again. It’s such a winning strategy and low, low cost. Low risk.
Joe: Yeah, and I mean, see that’s the beauty of a sales letter. If you’ve got a great communication, and you’ve not talked to people or they’ve not done business in a while, you just call them, you mail them, you email them, you send them a video, you text them if you get their text.
Dean: You don’t even have to be a great copy writer to write a letter or like that.
Joe: Well, no because you know, in a lot of ways, you’re already dealing with someone that already has a certain level of rapport with you.
Dean: Well, they already know you, like they trust you. I mean, that kind of thing, it’s way more important what you’re saying than how you say it, you know. I have a really great example of this. Did you ever see that show the Shark Tank with the investors of Mark Cuban and Kevin O’Leary and Barbara Corcoran and Daymond John. That show where entrepreneurs come and they pitch their idea to these sharks and the sharks then will, you know, they are looking for funding and they’re trying to convince the sharks to invest in their business.
And this one lady was on and she was so excited about her product and she hadn’t really made any money yet and, but she had a lot of passion and they weren’t really hearing anything, she hadn’t really made a big success of it yet. And they were about to kind of turn her down, and you know why should we invest in you? And she was saying about how she wanted her daughter to see that her mother really made something of herself or to be a role model for her and then just as she’s about to like give up, it dawned on her and she pulls out her pocket and she goes, oh and I’ve got this million dollar order from Wal-Mart and I need money to fulfill the orders. And all of that stuff, no matter what she said, now all of a sudden, every one of the sharks is completely interested in her.
Joe: Yes. Because
Dean: Completely turned it around with just those, “oh and I’ve got this million dollar order from Wal-Mart and I need the money to fulfill the order.” I mean, all that other stuff, all that pitch, all the drama, all the presentation that she went into really selling them on her product and on her and it all came down to, “oh and I’ve got this order from Wal-Mart,” fascinating.
We’ll keep talking about some of these other strategies that we can use because so much of this is really about looking at the opportunities that you have, looking at what you’ve got, and being able to deploy just easy strategies to harvest that money really, that’s kind of sitting there. We talked about raising your prices as an easy way to do that. What we’re just talking about now is reactivating your people who have been doing business with you who stopped doing business with you for whatever reason and you make them an offer to come back. You know, it’s a fantastic thing, we did that for years, for 2 or 3 years with, we used to do big real estate seminars all over the country, had a coaching program. And we would invite people who were part of the coaching program and then for whatever reason, had stopped being part of the coaching program, invited them back to see the new event, to see the new stuff that we had implemented. And 40% of the people who came back decided to re-join the coaching program so it was a very, very low risk, high profit venture. It was something that we could do that took advantage of the asset that we already had, which was the names and the relationship, and the history with the people who already know us, like us, and trust us. So, if you’ve got that kind of a list, if you’ve got that kind of situation, it’s something that’s really worth taking advantage of.
Joe: You know, just by doing the call we did earlier today, the Platinum 2.0 one, I actually realized that with a reactivation campaign with the amount of clients that I have, I’ve literally got about 5 million dollars sitting there, unrealized unrecognized, and obviously it’s like the John Lennon and Paul McCartney conversation, let’s sit down and write ourselves a swimming pool. So, I got to sit down and obviously create a communication.
I want to do a video, I want to do a, like a, Paula Abdul talking card, I have one maybe, you know, people don’t know what I’m talking about, if you go to I Love Marketing and type in, you know, Dan Kennedy’s, you know, you can see this speech that I gave at Dan Kennedy’s event. It was the most successful speech they ever had at Glazer-Kennedy history in terms of selling and stuff. The whole presentation is up there on I Love Marketing and I have this talking card from, Paula Abdul endorsing, you know, my 25K group. And, you know, basically it’s a great strategy that anyone can actually use a similar methodology like that to go out to clients.
One of the things I will say is you just got to make sure that your clients really like you, you have to communicate with them, you have to determine what they really want, what they feel that they must have, and just call them, mail them, email them, you have to fish. You’re not going to catch fish if you don’t throw out the bait and if you don’t bait the hook and you don’t put it out there so. The time that someone loses a customer to a competitor is when they typically allow the competitor to pay more attention to the customer than they did. And so, make sure that you’re paying attention to them, and if you’ve not paid attention to them in the right way, this hopefully will be a wakeup call to remind you of, the opportunity to do that and do that right now. This very moment, before the I Love Marketing, before it even ends
Dean: There you go. So let’s talk about real quick the third thing which would be going back to leads that have been unconverted. Every business has prospects that they have spoken to, given a quote to, who have come in for a consultation, who’ve talked on the phone, who made an inquiry, who’ve been sent materials, who have been in some manner considering being a customer of your business and for whatever reason, have not yet done that. And sometimes, what businesses get so busy working on dealing with all of the people that they’re actually working with in their during unit that they often forget or don’t take the time to go back and try and reactivate those unconverted leads.
Joe: Wait, wait, wait. I’ve got a great strategy, though, for that Dean. If you’re a realtor, you can actually send out an email that says “are you still looking for a house in Georgetown?” That is the magic formula.
Dean: Let me write that down. What is this magic formula that you have again, that’s really.
Joe: It’s a special 9-word magic email formula that I invented? No, I’m kidding. See that’s where Dean was getting ready to go and give every. No, this is actually brilliant. Dean came up with it, I deserve no credit whatsoever. Yeah, go for it. Explain this because this is a great reactivation model that if you know, if people pay $10,000 to hear this, it would still be a damn bargain. So, you’re getting it today for the low, low, low price, here we are talking about. See, we’re not even charging any, I mean raise your prices? How the hell do we raise prices on a free podcast?
Dean: I think we just raise them by 80% right now. So 80% on top of free. You know? It’s 80% freer.
Joe: My friend Robin Robins says never complain about a blessing, you know. Anyone that ever bitches about I Love Marketing, they’re just complaining about a blessing. They have no idea. Simply ungrateful people. “Oh you should include these, you should improve the recording quality, oh you should make this shorter, Joe talks too much shit and babbles too much, we could’ve said the same thing in 10 minutes.” It’s free, free.
Dean: Amen. But priceless.
Joe: I’m just bantering here. Alright let’s go through that process because this is about to change some lives of the smart people that hear it and actually do something with it.
Dean: Well, here’s the thing, I’ve had so many real estate agents who have used this strategy and I call it “The amazing 9-word email that revives dead leads”. And it’s a very simple strategy, when you go through your desk, you email, your computer, all the pieces of paper that you write phone messages on, or quotes on, whatever method you have of collecting new information from people who are potential prospects. When you go back and you gather all those up and they’ve been kind of in that limbo for 90 days or more, and you send them a simple email with just their name in the subject line, so it would say Joe, and then on the inside, the message would just say 9 words. “Are you still looking for a house in Georgetown?” That’s it!
And the temptation that you’re going to have is to want to add more to it. You’re going to want to solve the mystery for people. And you’re going to want to say are you still looking for a house in Georgetown because if you are then blah, blah, blah and that’s going to solve the mystery for them and there’s no need for, not necessarily no need, no compulsion for them to respond. If you send a message that has an open loop like that, an unsolved mystery, your mind can’t really abide an unsolved mystery so it’ll rattle around in there until it’s resolved. So when you send out that message “Are you still looking for a house in Georgetown?” IWt’s almost like you can imagine yourself saying that to somebody in person. If you looked at somebody and you said that to them and you’re standing there, it would be very, very difficult for them not to reply.
Dean: It would be very awkward. It would be very awkward, so, you know, we talked about that with Tim Paulson, you know, whatever the business, we’re talking about hair transplant, or hair restoration prospects and what would you.
Joe: Yeah, Hair Club for Men because he used to be the vice president of marketing for Hair Club.
Dean: Exactly. Or we talked about, for carpet cleaners saying, you know, “are you still looking to get your carpets cleaned?“ That kind of thing, whatever it is, what would be the question that you could ask that would re-engage your prospects into action. If you’re a graphic designer, “are you still looking for a logo design?”
Joe: Yeah, so the chiropractor thing goes like, you know, “does your back hurt?” Does your back still hurt?”
Dean: Yeah. Whatever it is, if your business, if there’s something, what would be the most appropriate question that you could ask that would re-engage your prospects that you’ve already deemed dead? That you’ve already closed the file on those, you weren’t hoping to reactivate them. There’s big, big, big opportunity in that.
Dean: And you know every time I send out that message about that strategy to my realtor list, they always reply back and tell me about the responses that they get immediately. You know, people that they had given up hope on and it’s fascinating.
Joe: Yeah. It is, it totally is. So, how we going for time Dean? I’m not looking at the clock
Dean: We’re over. We’re giving them more than what they’ve paid for right now. We’re in extra innings.
Joe: Okay, so here is what I would like to do. I would love to get everyone’s feedback about pricing, about results you’ve got from listening to I Love Marketing, if you’re brand new to I Love Marketing then, listen to past episodes, thanks for listening. We do this because we love marketing, we want to obviously help the good ethical business people in the world be more effective at marketing. And obviously be more successful and profitability in their business, which is why we did this particular call on the subject. It’s entrepreneurs that make the world go round. They are the ones that employ people, they’re the ones that provide the jobs, they’re the ones that provide innovation. And if they’re really good people, hard-working, value creators, innovative, you know, they deserve to get paid for what they do.
And you know, the market place takes you on your own appraisal. So, we want you to be more valuable in your own mind first because you know, most, if not all of price resistance is in the minds of the seller and not the buyer. And people will make excuses for them, think differently, but it’s, you know, almost all buying resistance could be overcome if you’re targeting the right people, if you’re setting it up so they know they can trust you. If you’re making irresistible offers, if you’re offering things that they really want and need, and you know, one thing that I do want to mention too, if you have any challenges with raising your prices, or people have any sort of, “well you know you’re charging this much, how do I know it’s the right thing, guarantee your work” I mean, take all the risk out of them doing business with you.
I mean, because if you really did work for someone or sold them a product or service and they weren’t happy, and you would give them their money back just because it’s the right thing to do, like, if you really didn’t deliver on it, then you’re already offering a guarantee, you’re just not getting any value out of it by using it as a marketing technique, as a marketing methodology. So, really understand that, you know, the number one question in all people’s mind is who can they trust? And if you don’t have strong enough trust and rapport but you know you can solve their problem, you know that your product or service is the right fit for them, guarantee it; because competency starts with guaranteeing your work.
mean, it really does. If you want to be competent, if you want to be well-paid, if you want to be one of the top, then, you know, do it right. Because as my friend, Ken Glickman says, you do not to get the proverbial cigar in life until you do it right and never before. So, you know, do it right and part of doing it right is really getting the message right, communicating it right, thinking ROM Return on Marketing dollars not RR in terms of response rates and focus on just raising your prices and delivering exactly what you say you will do, and if all else fails blame Dean because it’s his fault.
Dean: I’ll take the blame.
Dean: That’s true. Yeah. Alright** Joe
Joe: That’s it man. So, until next time, Dean.
Dean: That is it.
Joe: That’s it. We’ll talk to everyone later. Happy day
Dean: Batman and Robin.
Joe: Bye bye.