RAISE YOUR RATES

One of the companies I work with is a specialty retailer. 12 years ago, they created an affinity program to encourage customers to come back time and again and it works beautifully. Customers paid $3.00 to become ‘lifetime members’ of their club which gave them all kinds of discounts, extra value, and special events.

Since then, mailing costs have risen dramatically and they had been absorbing the extra costs which has also reduced their profits. Last year, they reluctantly agreed to change the program to a $5.00 annual fee. Yep, they had to go back to the people they had sold a $3.00 “lifetime membership” and inform them it would now cost $5.00 every year to stay in the club.

Did they meet with resistance? Surprisingly little.

Because they had created such a unique experience, very few members complained. Perhaps one-half of one percent refused to renew, and records revealed every one of those who refused had spent less than $100 total with my client during the last 5 years.

The overall result of the membership increase? Reduced mailing costs by over $10K, increased annual revenue by $20K (so far), net profits improved by at least $30K and counting!

If you have a quality product, world class service, and a unique customer experience, the quickest path to more profit lies in raising your rates.