A disclaimer of sorts: This method of boosting revenue is intended for entrepreneurs who own businesses that are already making a little money. This strategy can help you look down the road if you’re just getting your business up and running, but the method I describe in this article is intended for established businesses, rather than those just starting out.
More money. It’s an appealing prospect, but it’s not always easy to achieve. One of the most versatile solutions I’ve ever found is the tier method, and it’s successful because it’s such an elegant and simple strategy.
Here’s how it works:
Your business is established, and you have a good product, but you’re looking to increase sales. The answer is simply to create additional, higher quality (and higher priced) offerings.
Let’s look at some examples:
- You own a restaurant, and you’ve found success with your weekday, prix-fixe menu. Folks love coming in and selecting three courses for a set price. How do you step it up? Add on the option for wine pairings for each course (with an additional fee, of course.) You’re adding an additional tier of services that will entice your existing customers.
- If you own a cleaning service and have regular customers, but need a way to get more from them, create tiers of service. Your existing contracts – let’s call that your Silver Service – is offered at the current price. You add Gold Service with additional services – periodic window cleaning or carpet shampooing, as well as Platinum Service – where you clean everything that doesn’t move. You’ll inevitably find some clients who want to step up to a better plan, and your new clients are likely to settle for the option in the middle, so you’ll be starting them at the Gold Service – it’s your new default setting, complete with higher price tag.
- You sell original artwork, either online or in a brick and mortar store. Your customers love your work, and you decide to offer additional options. Your first tier is the watercolor painting – the work your clients know and love. You offer one option of adding a frame, and a second option of high quality mats and a custom frame. You’re adding tiers of service that save your clients the time they’d have to invest in selecting the perfect frame that shows off your valuable artwork.
Why is the tier method so successful? You’re starting with an established brand – a product or a service that your customers already trust and enjoy – and you’re offering a better version of that product. We all want the best, and we’re conditioned to think of selecting the least expensive option as settling for less than the best. Airlines make bank on pricier seats in first class. People pay extra to buy iPhones with more memory than they’ll ever use. If you offer your customers pricier options, it is inevitable that some of them will take you up on it.
The key here is to offer authentically better options. We’re not talking about smoke and mirrors — playing games with your clients is a tactic that can alienate loyal customers. Rather, you want to develop tiers that are meaningful and offer additional value that’s appealing to your customers. You’re finding a way to enhance your existing high quality offerings by creating options with added benefits to your clients and added revenue for your business.Tags: Branding, Finance, Growth, Marketing, Mondays with Mike, Money Management, Sales