Friday, August 25, 2006

The Power of Retail II

Ok. I feel like I let you down with the Retail blog. I went back and read it and just feel like I didn’t convey what issues were most important. I’m going to go back and retouch a couple of ideas I feel I shorted you.

1) Understand LV and what goes into it.
A) How long does your average client stay with you? 36 months
B) How much do they pay for your service over that time? 36 x 200 = $7200
C) What else do they buy? 12 - $1 H2O’s/month * 36 months = $432
1 – 5 lb MRP/month @ $40 * 36 = $1440
$9072

Very basic example, but I’m sure you understand. By adding 1 water 3x/week, and 1 jug of meal replacement/month, you increased your clients LV by 26% (and helped them with their program). If you don’t appreciate that, imagine increasing your margins 26% on everything you do. Yeah, incredibly rich.

2) I don’t think I relayed the potential options you have to offer retail.
A) EVERYONE can at least offer autoship supplements to their clients. EVERYONE. There is no excuse to not offer supplements. Clients are going to buy them somewhere, why not from you? Is GNC going to cut you a profit sharing check?
B) It is a good idea to have some products on hand, because some people just need to see, touch, smell, and they just don’t want to order online. We don’t want to lose them just because we don’t want to keep any inventory on hand. My concern with inventory is turnover. Don’t let money just sit on your shelves. Be proactive and get it moved. Promotions, specials, sales, etc., just keep it moving, but don’t compromise your Net over it. If you have to ‘slash’ prices to move something, maybe you shouldn’t reorder it.
C) A blend of onsite retail and autoship can be extremely profitable. You may have to experiment with your products and how you market and tie them into your services, (or you could just ask, and we’ll save you the trouble), but that mix has proven work under most any circumstances.

I’ll be getting back on retail very soon. I wasn’t planning on making this 2 entries, but I wasn’t overly happy with my first one.

Nick Berry

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