How many lifetime customers would you be willing to sacrifice so that you could trim your operations and maybe save a few bucks here and there?
If that question makes you sense to you, then you can safely skip the rest of this post…
But if it tickled a little thought in the back of your mind, read on.
Consider this: Since the start of the last worldwide recession many businesses have tightened their credit policies so that only the best-rated customers get payment terms. Everyone else has to pay cash.
Do you do anything like this? Sure, it makes sense to hold down “unnecessary costs” and avoid risky business. But have you bothered to figure out whether net profits are up as a result?
I’m willing to bet that at the end of the day, tight credit policies are costing tons of money in missed sales, and that the “saved” losses are dwarfed by the missed opportunity, the lost life-time value, simply because it’s harder to do business with you than with your competitors.
Losing repeat business… Forever
And that’s just one example of how companies push away perfectly good customers. There are tons of proven ways to lose sales by making it extra hard for customers to buy from you. Mostly these are just bad decisions people make to limit expenses, but they are almost always short sighted. They repel good customers, and not only for the all-important first sale, but for all the otherwise super-profitable recurring sales as well.
Once pushed away, those potential customers are pushed away forever. They never come back for that ever-more-valuable repeat business.
Here are some other ways business owners make it hard for customers to buy.
Limiting forms of payment.
I like to eat at a local place that serves a fabulous “Mediterranean Frittata” with a wild greens salad. But they only take cash. What a pain. It makes me think twice about meeting people there, and I never go with a big group. Who wants to peel off $300 in cash for breakfast? Of course they save anywhere from 1.9% to 3.5 discount on each diner, and that’s not nothing. But what about all the lost business?
The list of widely used payment options is not long. Online you can use credit and debit cards: Visa, Master Card, American Express and Discover, or PayPal, or electronic or e-Checks. Offline, you’ve got the cards, plus checks and cash. That’s pretty much it.
Why on earth would you not accept ALL of them? To save 1% on the transaction free?
Suppose someone doesn’t have a Visa or Master Card because they’ve gone over their limit and their bank has shut them down. But AMEX plays by different rules so they actually have plenty of spending power. But you’re wiling to lose the sale in order to keep 1% of extra margin.
By the way, 1% saved on nothing is nothing.
And 1.9% saved, even 3.5% saved on nothing is still nothing.
Online it’s even worse. At least offline the customer is already in the store, and has maybe consumed the purchase already, so they pay. Online, they just abandon the shopping cart. Many smaller businesses only accept PayPal and don’t take cards at all, which is just nuts. I estimate it cuts into their sales by 30-50%.
Wake up! You’ve spent all this energy getting shoppers to your store. Why not make it easy for them to give you their money?
Shipping and Handling
Another area doing business is made harder than it needs to be is shipping, and the mysterious “handling.” I’m not sure who people think they’re fooling when they add $28.00 to ship something everyone knows costs $4.95 to deliver. If I discover it before clicking the order button, I usually ditch the vendor, just out of spite.
Automated shopping cart systems make it easy to give customers a choice of shipping methods tailored to their needs and their budget.
Easy + Fast + Cheap = Repeat Business.
Or do what Zappos does and ship for free. More and more e-tailers are doing it and those who don’t will get left behind. Make it easy for people to get their stuff and they’ll want to get it from you. One of the reasons cited for Zappos incredible success (and $800 Million sale to Amazon) is free shipping, even on returns. And get this – choose the free shipping option and they still send it overnight. Now that’s easy.
You can’t always find what you want…
Make it easy for customers to find stuff. Online, give them search capability that actually finds things and make the search box PROMINENT on every page. And since shelf space is infinite, feature the same products on every appropriate category page.
Offline, organize your store to match how customers think about products. Use big readable signs, along with on-shelf labeling. Scatter specials around your store. Put them right in the traffic flow. Supermarkets are great sources of merchandizing inspiration, study what they do. And add staff to helpfully direct shoppers. Train them to ask, “How can I help you?” instead of “Can I help you?”
Grease the Wheels
What about handling the transaction itself? Offline this isn’t much of a problem, except in my local Ralphs. They’re great merchandisers but now they’re pushing automated checkout and the scanners don’t work very well. The machines bark rudely at you and the “place the item in the bag” system is clumsy and inefficient. Plus it’s impossible to pay for self-serve items from the “olive bar.”
But I was in the new Fresh and Easy the other day, and they’ve rethought the whole process. Every bad aspect in the Ralph’s system works beautifully here. Now I know it’s possible to get it right.
Online, checkout can be hard if you can’t find the checkout button or the “show my cart” button. Or what about losing your order information when you accidently hit the back button. And why can’t your shopping cart handle dashes in my phone number. What’s wrong with dashes? And why wouldn’t your system save things in my cart for a day, or even two? Get interrupted and have to start over again? How frustrating. How inconvenient. Amazon saves things in my cart… forever.
Did you know that 70% of all orders started in a shopping cart don’t complete? Put some thought into improving your process, and it could pay hugely.
Faxing in the Age of the Internet
This one is my absolute favorite. I tried to purchase an exotic version of anti-oxidant Glutathione from a company in New York. The only way is to print out their order form, write my order by
Sources of Friction
Here are a few other sources of friction you may wish to consider.
- Are you store open hours long enough, or early enough, or late enough?
- Do you have enough staff for the volume of shoppers?
- Is your customer service line responsive?
- Are your on-hold times out of whack?
- What about your toll-free phone numbers? Easy to find, prominently posted?
- Is your phone tree a button-pushing nightmare? “Please listen carefully because our menu has recently changed…” Don’t waste my time, just tell me what I need to know, and ALWAYS give me the option of talking to an operator. Outsource this if you don’t have your own.
- If you have online chat, make sure it’s available most of the time. People aren’t idiots, and when your chat is always closed, they know you’re scamming them with some “conversion tactic” you read in a blog post.
Think about your customer’s buying process. What steps do they have to go through to make a purchase. Where do they get hung up? Where is it harder than it needs to be. Find the sources of friction and reduce or remove them.
By the way the people running Amazon are the kings of this. They continually refine their ecommerce system to reduce friction and make the buying process easier and easier.
One-Click is perhaps the most friction-free method of buying anything anywhere, and it gets smarter and smarter over time.
What is you version of “one-click?” Figure that out and your sales could jump quite a bit.
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Thanks, William. I agree – it’s a short program that have you making profitable changes to your business this week. (Especially if you’ve got a services-oriented business.) BUT don’t forget those “long $2k courses” like Blueprints to Profits. They can be life changing!
John Furst says
And add to the list things like *having to sign-up for an account before you even can add something to a cart.*
But I think the worst of all types of sites are B2B sites. They tend to give the least amount of detail about services and products, ask for too many details in contact forms and often the only way to get the info you need is to call their sales force.
John – thanks. I should have put that one on the list. Very smart… B2B isn’t a different animal, at least it shouldn’t be.
I am in process of building a website for an information product. Plans are that between the sales letter and the Clickbank purchase page, a surprise page giving the option of ebook, audio version, or combo of the two should be purchased. Any thoughts on how this may affect “grease the wheels”? I know, testing.
Sorry, Stephen, to tell you what you already know but… On the other hand, my “opinion,” for what it’s worth, is that you’d be better selling them your ebook, then upselling to the audio or combo.
Excellent post, very basic stuff even the MOST seasoned Gurus do Not follow and that is Leaving xtra cash on the table, I’m glad this got brought up, i have tried to buy several (well made) products
and was told ONLY credit card, when trying to offer 200%<<<yes two-hundred percent MORE than what was being charged i was still shot down???? Can People only imagine if these so called gurus..(really) had Great products where they would actually Want to selll lots of them with more hot products and excepted Cash or even other forms of alt payment!?! the only answer i was told why Gurus DO Not except cash is the under staffed?<thats it? And i Bet this awsome blog post will go ignored. I do not know much of paul lemberg besides a teleseminar w/ j.w he being a travler and a skier that forgot to shift weight in frount of the ski's NOT the back anyhoo,.in an econ like this why not look at whats going on and make it easier for prospects to get whats hot?!
I’m a little unclear as to your point, but I’ll tell that while not advertised, we accept cash, eCheck, check, wire transfer, Amex, Visa, MasterCard, Discover, and even some weird forms of barter. Not sure about the skiing thing, though.
John Wale says
Thanks for another interesting and informative article.
There’s just one aspect that I’m not sure I agree with, with is the statment that ‘Many smaller businesses only accept PayPal and don’t take cards at all, which is just nuts’. It might well be true that many small businesses don’t have a merchant account for card payments. However, PayPal does, as far as I know, allow customers to pay using their normal credit card even if they don’t have a PayPal account and acts, effectively, as a card payment gateway. This is how I use it for my on-line business, but your article does make me wonder if accepting card details directly through my website would improve sales conversions.
John, what you say is mostly true, but not always. Business owners have to agree to accept payment via credit cards. Not all PayPal account holders accept payment forms other than bank transfer, and some only accept Visa/MC and not Amex or Discover. And there isn’t any way to know until you try to make the payment.
“By the way, 1% saved on nothing is nothing.
And 1.9% saved, even 3.5% saved on nothing is still nothing.”
Simple, yet profound. Great post. Thanks for sharing.
Addison, I wanted to double check. Did you get the math?
Gary Tootle says
Paul: Good advice! Your writing style is eminently readable. Will be looking for more and am always keen to support those who dispense sound counsel.
We have a long way to go on our site but with suggestions & recommendations like this we can’t be too far away from something that we’re happy with…at least for the moment.
Gary – just keep it up. I’d set a goal to have what my friend Chris Collins calls a “no excuses” website.
It is always worth my while to sit through your information piece.
It aligns my thinking.
Very good with true facts article.
Were its on or offline business it is still human error.
Most of the time people simply do not qualify for they
It is always been like that and always will be.
People don’t have money for education and companies
don’t think or simply to stingy to send staff for training.
Management always think they are underpaid and simply
don’t do they job. Loyal and committed professionals are
very scares all the time.
I always say, you want to do it good, hire specialist,
you want to do it best, do it yourself.
Anatoli, what you said may be true. It’s often hard to find people who operate up to our own personal standards. However following that approach makes it difficult, if not impossible to scale your business. Also it means you end up doing all the work. Personally I don’t like that situation and will find ways to systemize so that others can get the work done. (See my Turnkey Your Business program)
Yes, you are right Paul.
It is better to have a support.
I took my business from the ground and grow a biggest business in aria.
I had no specialists, so I train them.
To grow bigger, I went from repairs to a big retail store, to a manufacturer and eventually to a wholesaler.
Then I return to ground zero.
People left for more money, shopping center was converted in to Casino, where costumers take all the money to lose.
After loosing 20K with a fraud check, I stop taking them, to reduce cost I canceled credit card machine which cost me 5K a month.
But because of my reputation I still have all my costumers and new come all the time. There is one problem, I can not do all the work alone but again, there is no
qualified specialists around.
I lost over 200K trying to train new people but new generation are hopeless.
This is when I learn about internet marketing which make me so happy.
Now I do all the work by myself and even if I need somebody to help, I have a worldwide on my desk where I can pick and choose.
I can train people and doesn’t cost me anything.
Internet is the best invention that was ever made in all times.
John Chancellor says
This post reinforces a principle which I am finding more value in each day. That of noticing what goes on in the business and testing alternatives. You cannot make the best decision in a vacuum. You need some way to evaluate what is working and what is not. So take any of the things you suggest and test. The online test will be different than offline. Online it is easy to split test. Offline it is more difficult. But as an example, you could begin taking AMEX and TRACK the difference.
I have been observing that success comes more from consistent incremental improvements than brilliant flashes. Most business people are too lazy (or too busy doing the wrong things) to keep testing, tracking and making improvements – and unfortunately it shows in the results.
John – I like to think of it this way. Look for continuous improvements to provide consistent, foolproof growth year in and year out. Look for breakthroughs that when they happen (or when you allow them to happen) to make you wealthy.
Adam Gordon says
As always, great points. The first resonates particularly with me. We moved to a small coastal village a coupe of years ago. I’ve been amazed at the number of local retailers, not just in our village but also surrounding towns, who will only take cash or cheque. They perfectly illustrate your point, more worried about the fee than the gross profit they lose from the sale. One, incredibly, was the local computer shop. Finally they have changed and their tech tells me they are already noticing the increase in sales.
Wow, Adam. What a surprise!!!