A friend of mine used to own a Taylor Freezer ice cream machine distributorship. For those of you who don’t know the business, the last time you had a soft ice cream cone or a fast food milkshake the odds are pretty good it came out of a Taylor machine. To own a Taylor requires an investment that is substantially higher than does their
competition. The premium gets you a much more dependable machine
that produces a tastier more consistent ice cream. But I’m not here to sell ice cream. I’m here to talk about how I was exposed to the “profit story” sale.
Upon initial inspection who really needs a $4,000.00 ice cream
machine? I mean you sell a $1.50 cone where you may make a $1.00?
That’s 4000 cones a year or 333 a month just to break even in the first year. But the vendor used to break it down into cash flow for the merchant. The lease on the equipment was around $200.00 per month, with electricity you’re at $230.00. So now your 333 cone sales (which is only around 10 a day) turns into $100 per month in positive cash flow.
I’m going to put together a series of articles over the next few months that will bring you a profit story from someone who’s very successful using this type of closing technique. I’m going to do one
for each of the many products or services we offer in our industry.
I discovered an excellent example on Gift and Loyalty by Mark Rault in an industry online forum.
Here is a good example of how not to sell based on price.
- This merchant processes $18,000 a month in volume
- Average ticket - $23.00
- Type of business - could be any retail or restaurant.
The Benefit Analysis:
- Total Number of customers/day - 26
- Number of customers/month - 780
- Average Ticket - $23.00
Gift and Pre-Paid Cards Incentive
After you present the impact and benefit of gift cards and their impact in today’s consumer environment: birthdays, anniversaries, holidays or any day of the week, ask your prospect what percentrage of his customers will purchase this wonderful product. For example:
- Merchant answer -“25% of my customers would buy a card”
- CardsSold - (780 x .25%) 195 Cards
- Sold Card Value $50.00 (twice the avg. ticket)
- Extra Cash Flow/month -$9,750.00
Loyalty Cards/Rewards/Incentive
- Total # of customers/month - 780
- Minus the Gift/Prepaid cards sold - 195
- Remaining INFREQUENT CUSTOMERS - 585
In this scenario, ask your merchant, “What is the minimum purchase your customer would have to make to receive a free rewards card?” And the merchant answers, “$50.00 or more!”
Estimate the percentage of customers that qualify. In other words, how many of the 585 infrequent customers will spend more if given an incentive. Usually the answer is between 30-50%. For this one lets say 30%.
The Benefit Analysis:
- Number of new “loyal” customers -175 (585x.30%)
- Average ticket - 23.00
- Extra Income generated/month from just 1 extra or repeat visit from these card carrying customers - $4,025.00
So, now you have just shown this merchant how to create:
- $9,750.00 in gift card/pre-paid sales
- $4,025.00 monthly in new revenue from rewarding loyal existing customers.
This is $9,750.00 dollars in cash flow that will be in the business checking account of this merchant until the cards
are redeemed. Consider that breakage is 12-17%, that’s 1,170.00 that may never be redeemed from just one month of gift card sales.
This is now $4,025.00 a MONTH in “NEW” revenue that today, the merchant can not realize because he has no program, cards, terminal and system.
If you could keep up with the math, you have just leveled the playing field between this small business and every other major retailer or restaurant that surrounds them today, competing for their customers’
money!
Now, you have created value and shown this owner how to run his business better today than he did yesterday.
I have not even mentioned the words “credit card processing” or “rate” yet.
So, in closing, the merchant will have the technology and know how to create new revenue and drive their existing customers back in, all the while tracking the demographics of their own business.
Oh, and almost as a by the way, you can now mention, “we also process all forms of non-cash payment through the same terminal. If you have a statement available, I will renew it to ensure we match penny for penny the great deal I am sure you already have negotiated.”
If you ask this merchant if those ‘credit card guys’ are harassing him all the time and bragging about their rate or service, he would say, 99% of the time, “YES I CAN’T STAND THOSE GUYS,”
light years away from walking in cold and saying “what is your rate”
and/or “I am or we are the best credit card company on the planet.”
Stop selling on price alone.
Bravo! Get some backbone and…tell the profit story!
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