How to Increase Your Profits By 20% In The Next 90 Days

Let’s say in your backyard, there was a huge amount of oil under your ground. We’re talking millions of dollars worth.

Would that make you rich? Not if you didn’t know about it! You could live your whole life sitting on “liquid gold” and be none of the wiser.

However, if I came up to you and told you about it, and showed you beyond a shadow of doubt that there was oil… and you drilled for it… then you’d be filthy rich.

In most small business, there DOES exist a situation that is similar to the oil well example I gave. Often times, most business owners are sitting on a potential fortune and don’t even realize it.

In this article, I’m going to share with you perhaps the single most effective strategy for mining the “hidden gold” that is likely to exist in your business.

The Forgotten “Rule” Of An Obscure Italian Economist

In 1906 a man by the name of Vilfredo Pareto discovered something unusual about the Italian economy – 80% of the wealth was controlled by 20% of the population.

Was this just an anomaly? Turns out it wasn’t. He found in Britain the same thing to be true… and in pretty much all economies. But what’s interesting is that this unequal distribution exists outside of economies. For example, studies have shown in general that:
80% of you traffic accidents are committed by 20% of drivers
80% of crimes are committed by 20% of the population
80% of a companies output comes from 20% of its employees

and most importantly of all…

80% of your profits come from only 20% of your customers!

This is almost always true. So what’s that mean for you? Simple: if you can isolate who those “20 percenters” are, and then come up with a marketing plan that will attract more customers like those “20 percenters” and also create additional products, services and offers to your “20 percenters” than…

You should be able to, very easily, add 20% to your bottom line profits within the next 90 days.

Where To Start

In an ideal situation, you’ve kept track of your past customers purchases, so you can access their records. What you want to do is go through and first isolate customers who have spent the most money with you.

Now, that doesn’t necessarily mean that they are your most profitable customers. They are just your highest grossing customers. And unfortunately, gross does not always mean more profitable! However, it’s a good place to start.

After you find your highest grossing customers, then analyze your profit margin on those customers, to narrow it down even more. To make it easy for you, come up with your 50 “highest grossing customers”, and out of those 50, arrange them in order of most profitable, in terms of percentages.

Now take your 20 “Most profitable” customers, and analyze them. What we are looking for is demographics and psychographics.

Demographics are things such as:
Size of Household
Annual Income Earned
Age
Gender
Geographical Location?

Psychographics are:
What clubs they belong to
What their hobbies and interests are
Their Values
Their Opinions
Life style attributes & other behavior attributes

In other words, you are trying to isolate their “culture” if you will.

How can this be helpful to you? Well, let’s say you analyze your results and find out that your most profitable customers are typically:

White, aged 45-50, have 2-3 children, are married, live on the northeast side of town, make between $75,000 to $100,000 a year, are active in the community, especially with charitable events, typically play a lot of golf and/or tennis, are conservative republicans, and often take 2-3 vacations a year.

That’s some valuable information! For starters, did you know you can rent a list in your area with those “selects” (select is just a fancy term for different attributes).

Yes, for a fee you could get a list of all the people in your city that are between 45-50, living in a certain zip code, making an annual income of $75,000 to $100,000 a year. And that’s just a few “selects” you can specify. You can even go deeper if you wish.

These are the type of prospects you want to spend your money marketing to! While past results do not necessarily guarantee future behavior, they are about as good of indicator to go by as any. The point is, if that type of customer was profitable to you in the past, it stands to reason similar people who fit that description will also be extremely profitable for you NOW.

Then what do you do? The best thing is to create a direct mail campaign and send a letter to each name on the list you rented making them a special offer.

You want to write an advertisement that is personable, explains the benefits of your services, and makes a special “introductory offer” to get them into your place of business.

Even better is if, in those advertisements, you talk about things like golf and tennis, taking vacations, saying things that conservative republicans are known to agree with, and talking about charitable events… this helps build rapport with the prospect. You just have to tie those things to your sales message and offer in some creative way.

And that’s just one simple example of how to make the “80/20” rule work in your favor.

Here’s an even better example: Look into your customer records of your most profitable customers and ask yourself… “What services and goods can I offer them that they don’t currently have, but would be complimentary to purchases they’ve made in the past?”

If someone is a very profitable customer to you, it usually means that they like doing business with you, need a lot of what you have to offer, trust you, and often think of you as the “go-to” solution for problems related to your area of service and expertise.

So if you have a good recommendation that could help bring them value to their life, and is a perfect fit for something you’ve offered them in the past, you’re likely to meet with success.

Here’s how you want to maximize your efforts. Start with your first 20 customers. What you want to do is write them a PERSONAL letter each. Start with talking about how you were analyzing your past records and noticed that they have been a very good customer, and that you value their business. Then say you also noticed something that may be a benefit, and since they’ve been a good customers, you’re going to give them a special deal next time they come into the store and purchase something for you. Give them specific examples, such as…

“I noticed you purchased X for us.. Well a new product we just got rights to compliments X perfectly, so if you come in within the next 2 weeks I can give you a special deal of 40% off the shelf price. Just my way of saying thanks for being such a valuable customer…”

Another strategy to consider is the referral strategy. Think about: people typically hang around others who share their same values and beliefs. This is a perfect way to attract new customers who are likely to be just as profitable as your past “most profitable customers”.

In this case, you’d send them a letter, and let them know that you’re making them a “valued customer special offer”, and that’s if they recommend someone to you, that you’ll give them a “preferred VIP discount” or “preferred VIP treatment”, since they came from a highly valued source.

People love to refer when this is the case. It makes them look good in front of their friends, and a lot of people get value in that. It’s also great for you, because word of mouth advertising is some of the best advertising there is. Also, if you can just get them into the door and have them start a buying relationship with you, chances are they will continue to buy from you in the future, so you get more than just a one-off purchase, you’ll get a customer who usually has a high life time customer value.

There are several other strategies you can use to get a lot of profits from a little list of “most profitable customers”. This is one of my specialties, and I am open for a free strategy consultation if you’d like to explore this idea further. Just contact me.

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