As I pulled around the corner, I saw one of our neighborhood’s most successful entrepreneurs, our local 8-year old lemonade vendor, using an incredible method of increasing sales. Her sign read, “A Full Summer of Lemonade: $1.00.” For a dollar, you got a punch card that entitled you to 6 lemonades instead of the regular price of $.25. Just like a magazine or symphony subscription, she gave the customer a great deal on every lemonade in exchange for a long-term up-front commitment. She increased the ticket, kept them coming back, and had many opportunities to “up-sell” them on popcorn, candy and baseball cards when they returned. And, she had the use of the money before the purchase was made. Something tells me that a lot of people never saw the entire package used up. She’s well on her way to a successful career leveraging customers.
Services can be similarly packaged as retainers, where your client pays a monthly or quarterly fee for access to you at a reduced price per consult. In these cases, even though the entire amount is not paid “up front,” the retainer achieves a longer-term commitment, and is a way for the customer to amortize a large financial commitment over a longer period.
If you have a line of products or services with a good deal of variety, a continuity or is another approach to encourage customers to increase their commitment. Notable examples are product-of-the-month programs such as wine, pasta, books, CD’s and fruit. Like subscriptions, continuity programs provide regular delivery of a product or service on an ongoing basis, but differ from subscriptions in that the products are not the same.
Continuity programs have tremendous benefit to both the buyer and seller. For the buyer, they provide convenience, an element of surprise, or in the case of a gift, the potential to extend the “giving period” for a year or more. For the seller, you’re able to substantially increase the wallet share, gain predictability and excellent cash flow in that the full amount of the purchase is received “up front.” In addition, you have the added advantage in the gift segment, to create a satisfied “user” (the recipient) who can later become a customer.