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5 Ways to Increase Your Income

August 1, 2007

Don’t make business difficult. There are only a limited number of ways you increase your income. If you’ve ever listened to Jay Abraham, he talks about the 3 ways to grow a business:

1. Increase Number of Customers
2. Increase Your Average Transaction Value
3. Increase the Number of Times Your Customers Purchase from You

If you have 100 customers who spend $100 with you twice a year, you have $20,000 in sales. If you have 200 customers who spend $200 with you four times per year, you have $160,000 in sales. By doubling each number, you experience geometric growth across the board. Just concentrating on adding more customers is a recipe for failure in any competitive marketplace…and the Internet is becoming more competitive all the time. The key is improving in all three of these major areas.

I take this a little bit further and focus on five primary areas with my clients:

1. Traffic (or leads, or visitors, whatever you want to call them)
2. Conversion
3. Average Dollar Sale
4. Number of Transactions
5. Multiplication Marketing (referrals, affiliates, viral, etc.).

It’s the same basics, but it allows me to focus on a few additional areas. I want to increase the number of leads coming in…and my conversion of those leads. Plus I want to turn my customers into referrals in some way. Offline we usually call these referrals. A client refers you to two or three of their friends. You spent whatever marketing expense to get them as a customer…and now you generate three additional leads for free (where the conversion rates will be higher because of the relationship). Online this is often called “viral marketing.” Your marketing message spreads like a virus by your prospects and customers for you.

I don’t like being involved in any type of business where there isn’t a multiplication approach occurring, either through referrals or viral marketing of some type. Spending money for every single lead gets expensive in any profitable marketplace. If you know every new customer you pay to bring in is worth two additional customers, and all of them will buy four more times this year from you, you don’t sweat it for a second when you lose money bringing in that customer. If it costs me $100 to get a new customer to buy a $100 product, so what if I also know they will refer two other new customers…and all of them will continue buying from me?

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Written by Terry · Filed Under Strategy 

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Comments

One Response to “5 Ways to Increase Your Income”

  1. Franck Silvestre on August 4th, 2007 7:54 am

    Terry, you opened my eyes to the backend. Before starting any business now, I will think first about the backend.

    Thanks.

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