11 May 2012

Now that you’ve built your network up, you’re probably ready to start to monetize it. We’ve already talked about how to measure your ROI (several times); but what do you do to extract maximum value?

Here’s a twist: ‘free’ might just be the best way to turn your social networks into money.  

The real revolution that came from internet marketing and sales was in retail margins. Savvy shoppers combine with great search to make margins paper-thin online. There is always someone who is willing to undercut your price by just a little in order to win away your customers.

Let’s take a real world example. Imagine I’m looking for microdermabrasion in Phoenix. Google shows me that I have almost a half million results to choose from.  That’s far too much choice for me, so I’ll hop over to Yelp and see what I can find. Just 80 results. That’s more manageable. If I sort by “highest rated”, I can see at least 10 options that are simply excellent as far as actual customers are concerned. A little smart shopping shows I can buy a package of 3 microdermabrasions for just $129 (just $43 each!). How do you compete with an incredibly inexpensive package by a top-rated vendor?

If you’re competing on price, you simply can’t win.  It’s a lose/lose proposition. You’ll wind up cutting your margins to the bone. Ironically, your biggest fear is success. If you earn too many customers who are accustomed to your bargain-rate pricing, you may wind up working around the clock and still not having enough profit to pay the rent. We’ll make it up on volume is a quick recipe for a tiny profit margin and lots of headaches.

Why is this? It’s because it’s very difficult to raise prices on customers. Once you condition them to pay a certain amount, you risk damaging a relationship by increasing that amount. If you’ve captured a customer because they see you as a low-cost provider, then raising the perception of your value (and the price you can command) is very difficult.

Rather than work twice as hard to capture borderline profitable customers, why not work less and earn more? 

Don’t cast a wide net and catch small, unprofitable fish. Instead, put a little bait on the hook and catch the whale you actually want. Try manually going through your network and select a few people who you think might be influential. If you can’t find any, consider your local community and select some people with a loud voice. 

Not sure how to figure out if someone is influential?  Find out the size of a customer’s network (you may try Klout, or Yelp).  Look at her social networking activity. You can quickly determine which of your customers has influence within her networks.

Take those influential people, and offer them something really special – something really compelling. Some examples include:

  1. Free procedure for a friend if you bring her to your appointment
  2. A free tour of the facility, followed by a special treatment
  3. Free wine/lunch/dinner if you schedule an appointment

Here’s the good news: you’ll have an easy time selling “free”.  All of these people can’t be wrong; free really brings people in in droves. 

You’re not done yet; “free” can’t do all of the work for you. Make sure you check off these three criteria for these visits:

  • You must do a great job. 
  • You have to have a plan to convert a nonpaying customer into a paying customer. Be honest but discreet about your methods; tell your customer that you believe she’s an influencer (flattery always works) and that you’re trying to build your reputation.  Encourage her to share an honest review of her experience with her network.
  • When you’re done, ask that customer for a follow-on appointment.

If you deliver excellent customer service, you may just have captured that customer for life. Furthermore, with a couple of good references, you may get a few of that customer’s friends as well. The value of an influential new customer (or several) is much, much more than zero.

Want to learn more about how to make money for nothing? Contact us about how we can help you manage your own social marketing campaign.

Make sure the customer understands 

TSS

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