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Better Business Idea #15

Use Your "Back End" to Build Business Profits

© 1998 by Michael C. Gray

July 27, 1998


During our stay in Sweden, we visited a small rural town, called Tannas. In addition to agriculture, the town is a resort that appeals to snow skiers in the winter and hunters and fishers during the summer.

A small restaurant, called Tannasgarden, serves the town. I was very impressed with the service at the restaurant.

When we were seated, the hostess told us about the specials of the day and gave a dessert suggestion. "You'll want to try our ice cream with cloudberry jam!"

After dinner, our waitress reminded us, "Would you like dessert? A scoop of ice cream with cloudberry jam is wonderful. You really should have some!"

"Would you like to book a time with us for breakfast?"

As we prepared to pay our bill, we admired the display table of gift items. "Have you seen our Troll post cards?"

Here was an operation that knew and trained around maximizing the value of (and for) each customer. There was no particular pressure involved, but pleasant suggestions were made to encourage customers to do the right thing.

The hardest sale we make to a customer is the first one. Once we make that sale, we provide a service to the customer in enhancing their enjoyment of our offering (enjoying dessert) and saving them time (buying gifts here instead of "shopping around" and pre-arranging breakfast).

Once the initial sale is made, most businesses have, or should have, additional ways they can serve their customers. Usually, the profit is significantly higher for the subsequent sales, because the marketing cost for repeat business is much lower than for the initial sale.

In direct mail, a "bounce back" offer is often sent to the customer, which is another offer or catalogue included with shipped goods to encourage another order from the customer.

The Hard Rock Café makes at least as much profit from the gift items that they sell, including tee shirts and caps, as from food sales.

Do you have a "back end" strategy for your business? Are you maximizing the value of and for each customer? Would you like someone to "bounce ideas" off in this area? We would be glad to be your sounding board. Call Mike Gray at (408)918-3161 for an appointment.

For new articles about how to improve your business, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight!

How to build business profits by maximizing the value of (and for) each client.


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Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128
(408) 918-3162
Fax (408) 998-2766
email: info@profitadvisors.com
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