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Profit Boosting Case Studies – ASP Company
How To Sell High Priced Products And Get Your Prospect Come To You Easily!
This client (SG) is an Application Service Provider (“ASP”). They offer various programs (such as billing, point of purchase, CRM software) to customers over a network (often the Internet). Software offered using an ASP model is also sometimes called On-demand software.
SG was referred to us by one of our friends (most of our new clients are referrals from previous clients). When we met, we found out that SG was having a big challenge in launching and selling their on-demand software.
The Big Plan
They had literally spent months and tons of money to develop a great software for their market—health, wellness and beauty salon operators. The software is an all-in-one management system that can help to simplify all aspects of a salon business.
Their team of software developers had worked tirelessly over the past few months to develop and fine tune the software and iron out all the kinks and made sure that there are no bugs in the system.
This is their first on-demand software and they have been waiting for this moment to launch and take the market by storm.
BUT… Sales Were NOT Coming In!
When they introduced their software to the market there were barely any response. They took out ads, participate in tradeshows and exhibitions and even have a team of salespeople to promote their software to their prospects. They even lowered their prices to really low hoping sales will pick up.
However, sales were just trickling in.
They were way below their sales target. They were very surprised with the development and they knew that something must change radically!
It happened that they had hired one of our friends for some design work. To cut a long story short we were recommended to them. After our initial meeting and finding out some background of the situation and their commitment to get results I agreed to help them out.
The Checklist
Once I accepted a client the first thing I do is to go through a series of questions (checklist) to get a clear and solid idea of the situation. This is the fact-finding part of my process.
Some of the questions include the following:
By asking those questions up front, I was be able to know the profit potential of the product and tailor a profit strategy based on it. (This comprehensive questionnaire is included in the Profit Boosting DVD set I'm launching on 20 November. More info below.)
The Market Potential…
Our research shows that our target market; beauty, health and wellness salons are growing rapidly in the region. Especially with the explosive growth of two of Asia's super economic powers—China and India, growth of such lifestyle industry is also growing rapidly. As people are getting more and more affluent in the region they are also spending much more in pampering and taking care of themselves. This industry is worth billions of dollars.
On top of that, in the past few years, the demand of on-demand software has also gone up significantly in the SME sector. In fact a report showed that in 2003 the industry is already worth over 4 billion dollars. (I cover more on business and market trends in Profit Booster DVD 3: Understanding Business Trends. More info below.)
Obviously those statistics are very enlightening and encouraging as well. Our researched showed that not only is there a huge market for SG's product, but we also know that the demand for the product such as theirs are increasing rapidly.
With such high demand, their product should be flying off the shelves right? That's what they were expecting too. So why are they not selling?
Quickly we discovered it's because they have made…
The Biggest Mistake Most Companies Made!
The moment I got hold of their marketing materials I immediately knew what their problem was. They made the same mistake most other companies did…
They focused too much on themselves & their products!
In their graphically pleasing brochure, they wrote out all the various features and capabilities their software had. However, they were unaware that they created a disconnect with their prospects.
When I asked their salespeople to do a presentation for us, treating us as prospects, I found similar problems. They just kept talking about the features of the product. I also can tell that the salesperson's confidence was low, not expecting the sale to go through. (It's probably understandable since they have conditioned themselves to be rejected most of the time over the past few months.)
All these factors are making it harder for the prospect to be interested. First the prospects don't see why they need the product SG is offering.
Second they are overwhelmed with all the data presented in the brochure.
Third they probably can tell that the salespeople are not confident and subconsciously don't want to do business with them.
It didn't help that their product is a high ticket item costing a few thousand dollars. No wonder their sales had been miserable.
We Totally Overhauled Their Marketing Process!
After understanding the problems they were facing I set out to totally change the way they market their product. I created a profit system for them literally from scratch that is guaranteed to bring in sales, scrapping away their old 'sabotaging' system.
Following is a simplified formula that I use to create a profit system for our clients:
The Right Market + The Right Message + The Right Media = Big Sales
STEP 1: Choosing The Right Target Market.
Initially, SG was trying to reach and sell to all range of the beauty, health and wellness salons, including the multi-national chains, local big-brand chains, smaller chains, start ups and everything in between.
This is a bad strategy as it is not focused. Trying to be everything for everyone is always a huge mistake. The needs of the different segments of the market are very different and you need to approach and market to them differently.
After a brief discussion I found that SG has been doing better with the upper segment of the target market. This is because whenever a big chain is the prospect, one of SG's founder will be involved and handle the sale.
The lower and middle segments of the market are where SG was having a lot of problems. These segments are also the high growth segments in the industry. So SG asked me to create a system to help them market to these segments. We define our target market as a business with one to eight salon outlets/branches.
Being very clear about the target market is critical because from there I can find out what are the specific problems and challenges these prospects are facing.
STEP 2: Finding Out Their Problems
Based on our research we found that some of the high-priority problems they are facing include:
Knowing this, I can create a message that offers immediate solutions to those nagging problems.
Here's the critical part! I will purposefully and strategically relate those solutions to the features and capabilities of SG's product. I'll cover more on this in step 4 below.
STEP 3: Check Out The Competition
After knowing what the problems the target market is facing and what do they want, it is also important to know who and what the competitors of SG are offering.
This is a critical step to strategically position and brand SG's product. Brands are not created in a vacuum, so understanding the competitors' strengths and weaknesses play a huge part in crafting a strong position for SG's product.
I found that the competitors from the region are all offering terminal-based software. This means that:
1. Their programs can only be used in the computer terminal that they are installed in. 2. Their programs are not part of a real-time network such as the Internet.
These are the two major short comings that we are going to exploit to promote SG's product.
In contrast to the competitors, SG's product is Internet-based. In fact, they are the first Internet-based management system for the beauty, health and wellness industry in Asia. So I positioned their product as:
"Asia's FIRST Real-Time, Multi-Branch, Internet-Based Management System"
Let's break down the positioning to it's elements:
1. "Asia's FIRST": One of the best positioning strategy is to be the leader of the niche market. Once you claim that position, and the marketplace accepts it, it is extremely hard to topple that position.
People tend to remember and choose the leader more. When they are not sure of which brand to purchase, they tend to default to the leader's brand. That's how the saying "Nobody ever gets fired from buying an IBM" comes from.
2. "Real-Time": This is one of the biggest benefits of being an Internet-based system. Anything that is being modified or updated will be reflected in real-time.
This means that salon owners can get real-time information about what is going on in one of their branches. How many customers are in the salon, how many staff are working, what is their inventory like, at that exact moment. This is a very appealing benefit to salon owners as they can have an in-depth view of their salon operation.
This is one of the few benefits we kept drumming to the prospects.
3. "Multi-Branch": This is an extension of being in real-time. Owners can access multiple branches and know exactly what's going on in each outlet.
For example, if one of the outlet is fully booked for a particular time, instead of losing the chance to get a client reservation, they can simply redirect the new appointment to the other nearest outlet they have. They can check availability of the other outlet in real-time because the system uses one major database.
Their competitors' terminal-based software can't do this because they are installed in each terminal and are not able to be accessed remotely, in real-time. This is another major benefit I found for our client's product.
4. Internet-Based": Being Internet-based means that salon owners can access the system from anywhere in the world, at anytime. This is one of the biggest benefits (weapon) SG's product has and I took advantage of it fully.
In the marketing materials I created, I repeated the above unique benefits (that other competitors can't offer) a few times. I also deliberately implanted scenarios such as fully controlling their business operations from overseas by using SG's Internet-based management system. A scenario that was really happening with a few of SG's customers.
That scenario is simply impossible if the prospects are using SG's competitors' terminal-based software.
By creating such a strong positioning for SG's product, it's hard for prospects who are interested to consider using the competitors'.
(If you're interested to know more about positioning strategies, I cover more subtle and sneaky strategies of positioning in Profit Booster DVD 10: Power Positioning & Creating A Niche. More info below.)
STEP 4: Crafting The Message + The Right Media
This is when I put all the various elements together to create a congruent and highly persuasive marketing message to the prospect.
Crafting the message in the form of a sales letter is a critical part of the profit system. A powerful sales letter that can convert can be worth a fortune for you. This case study is a great example. I'll share with you the exact worth of the sales letter we created for our client in just a bit.
First let's go through some of the elements of a powerful sales letter.
Creating an attention-grabbing headline is crucial as this will determine whether the prospect will read the letter further or not. Research has shown that people read headlines at least nine times more than they read the body text.
Coupled with the fact that an individual is exposed to 30,000 ads/day (reported in Life magazine), people have become indifference to advertising.
BUT, when the headline offers a specific and tangible solution to the nagging, high-priority problems that they are having, they will naturally be attracted to read on. That is why it is so critical to understand the psychology of the prospects and expect what they will be thinking.
While we've created a positioning for SG's product, it is not useful to start the letter with its positioning as the headline. So instead I created a headline that offers the solutions to the problems most of the prospects are facing:
"Discover How You Can Easily Increase Your Sales, Boost Staff Productivity, Simplify Operations And Save Lots Of Money…By Using The Ground Breaking 'All-In-One' Fully Integrated System!"
Then I followed immediately with the following sub-headline:
"Find out why Renowned Brands Like Dr Hauschka, O.P.I And Elements Spa & Slimming Are Rushing To Use Asia’s FIRST Real-Time, Multi-Branch, Internet-Based Spa Management System!
Imagine if you're a spa owner, would this letter catch your attention? Just by the first two sentences of the letter (Headline & sub-headline), any owner of beauty, health and wellness salon would be intrigued and interested to read on.
While the headline offers the ultimate solution to most of their problems, sometimes prospects perceive such sentences as hype and their cynical nature will start to take over. That is why the sub-head works very well hand in hand with the headline here.
I use the sub-head to create credibility by mentioning some of the well-known and authority brands prospects will be familiar with. When they read those famous brands, they will tend to pause their disbelief and want to find out more.
That is exactly the state I want them to be in.
Magnify Their Pains
While they are in that curious state, I start reminding them of the constant and nagging problems that they are experiencing. I wrote out the problems in detail, focusing them unconsciously on these problems. (While this is quite sneaky, it's an extremely effective copywriting technique)
Once they are focused on their ever occurring problems, we then offer the solution...
This is where a lot of marketers and salespeople (even veterans) make their mistake! A lot of people think that once they reach this point, they can forget about their prospects' problems and dive right into the features of their products. That is a huge , huge mistake!
Instead of talking about the products, I will talk about the solutions of the problems, and then link those solutions to my client's product. Here's an example. Instead of saying…
"Our product has a staff performance tracking feature that allows you to keep track of your staff."
I wrote:
"You can Save money and maximise your human resources by using our staff performance tracking feature."
Can you see the difference? Note that I put the benefits (underlined) that are most relevant to the prospects at the front of the sentence so they will be attracted to find out how they can achieve them.
While the difference is subtle, the impact to the receiver is huge. Just imagine you as the prospect who is listening to the salesperson. Will you react differently towards those 2 sentences? Of course you would. (I cover more of this strategy in Profit Booster DVD 12: Finding Buyer's Hot Buttons. More info below.)
Blast Their Doubts Using…
It's natural and part of human nature to doubt things that seems to be too good to be true. And when you offer the perfect solution for your prospects, unconsciously some doubt will creep in their minds.
To blast away those doubts, persuasive testimonials are extremely useful. Testimonial has the power to instantly create credibility for you. What others say about you is going to be perceived as more credible compared to what you say, so let others do the promotion for you.
However, lame and boring testimonials just won't do. They might even hurt your credibility instead. Good testimonials will cover the 'before' and 'after' process. It will be specific. And it will talk about the problems being solved easily. (In Profit Booster DVD 6 I share the step-by-step method to get a great testimonial from your clients)
There are many critical elements of writing a great sales letter. But covering all will take longer than this case study alone, so let's jump right to the end of the sales letter.
The Closing
Obviously, the final part of any sales materials is closing. Most of marketing materials such as flyers, brochures, mass faxes, etc are just too wimpy because they neglect the closing. Without the closing, the whole materials are just a waste of paper.
This is because without any specific instruction to act (call to action/closing), prospect won't be motivated to take any kind of action.
You probably have heard of Newton's Law of Motion:
"An object at rest will stay at rest… unless a resultant force acts on it."
Similarly, unless you ask for specific action, the prospect will most probably forget about your letter quickly.
In SG's sales letter I asked prospects to call and schedule for an appointment with a consultant (instead of a salesperson) for a FREE consultation on how they can improve their business using SG's product.
Can you see how the salespeople are now positioned as an expert consultant? This tip alone is extremely valuable.
No one wants to be sold by pesky salespeople, especially when they are approach by cold call. But if they are looking for solutions and seek out the consultants that can offer them advice, they will be in a much better state to buy.
In fact my client's salespeople were amazed at how ready to buy the people who responded were.
By positioning the salespeople as consultants who the prospects have to make appointments to meet, they are transformed from a nuisance pest into an esteemed guest.
At The Last Minute They Decided To Drop The Bomb!
Just when I finished creating the sales letter and other supporting materials, before I start implementing my profit system on their business, my client decided to raise their product prices by over 100%. That is more than double their original prices!
I think their confidence were boosted after I went through with them the strategies that I was going to implement for them. And maybe they were upping the ante to test whether my system will really work for them ;)
One of my profit explosion formula is to:
Increase price + Increase Clients = Profit Explosion!
Since my client has done their part in raising their prices, it's time for me to show my stuff...
The Bottom Line Result!
The marketing package contains:
A 13-page sales letter + their company & directors' profiles (16 pages of letter)
It costs 80 cents to mail out.
From initial mailings they received over 3.7% response rate. While this is way above the average 1% response rate for direct marketing sales letters, this is still rather low compared to my normal 5 – 7% response rate.
However, the premium prices might have affected the response rate as well. We will monitor and fine tune this along the way.
But let's break it down and make the numbers more useful.
If SG mailed out to 1,000 prospects. It'll cost them $800.
Their response rate is over 3.7%. So 1,000 x 3.7% = 37 responses.
They reported that every response they got brought in a minimum of $8,000 to $12,000 worth of sales. For easy calculation and to be conservative let's take the lower number of $8,000 as the worth of every response.
So every 1,000 letters will bring in a revenue of 37 x $8,000 = $296,000. After deducting the postage costs $296,000 - $800 = $295,200 profit. $295,200 ÷ 1,000 letters = $295.20 /letter.
In essence every time our client mail out a sales letter I created they will receive $295.20. They just need to mail out to 4,000 prospects (they can get this easily from list brokers) to rake in over a million dollar profit!
By the way, all these happened within just a couple of weeks after mailing out the sales letter. Previously it took them a few weeks to months to close a deal, now they are closing deal within 2 meetings!
Now, if you know that every time you mail out a letter you will get back $295.20 in profit, do you think that letter is worth a fortune? It's like having a goose that lays the golden eggs.
This is not taking into account 3 follow letters that I've created for them as well. Follow up letters tend to bring in more sales. And this will make the profit margin bigger.
Hope you have benefited from this case study. If you've learnt something from it, don't stop here. Apply what you've learnt and take some actions NOW!
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>> http://www.maneuvermarketing.com/blog/case-studies/
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To your profits,
Sant Qiu - The Profit Strategist
PS. You can get more in-depth profit strategies from the "Profit Booster DVD Set" that I'll be releasing on 20 November, Tuesday. Only 70 sets are available. For more info on this subscribe using the above form.
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