Find More Depth In The Second Dimension


Identifying prospects and converting them into customers can be a costly process.

Just think of it for a moment. There is the advertising, introducing yourself to new customers, dealing with the tyre-kickers, repeating again and again to each new person who contacts you why they should buy from you, etc.

Yet ironically, most businesses rarely try to resell to the current or previous customers. Instead they try to put all of their marketing efforts into the single dimension of generating more new customers. In fact you would think it was the only way of increasing sales.

Once a customer has made a purchase from you (that they are happy with), they are the most likely people to buy from you again. This is the second dimension (or back end as it is sometimes called).

You will generate more profits when a major part of your selling effort concentrates on up-selling, reselling and cross selling to existing customers. As Frederick Reichheld points out in his book The Loyalty Effect: "companies not capitalising on loyal customers face a dismal future of low growth, weak profits and shortened life expectancy. At 5% increase in customer retention can produce a 125% increase in profitability."

And that is what working in the second dimension is all about.

It can be as simple as sending an invitation to your existing customers to stop in and see your new product or service. Another classic example can be taken from the bungee jumping craze...

So you are perched on a ledge 100 metres above a raging river, summoning up the courage to throw yourself off. You're saying to yourself "I actually paid $150 to do this crazy stunt. What was I thinking?" And then someone yells, "One, two, three bungee!" and off you go. Within a fraction of the second flash cameras go off on your right and left capturing your vertical flight, and below you a video camera catches the whole fall for posterity. And of course you buy the whole package-including a further investment for a mounted segment of an old bungee cord. Chalk up another $150 to up selling in the second dimension.

Sometimes it's easy to see where second dimension opportunities lie. If you sell carpets, second dimension or back end products could include vacuums or carpet cleaning services. If you sell computers there are opportunities such as computer classes, custom software and peripherals. An industrial equipment business could use maintenance contracts, supplies or troubleshooting. For motels its a decent breakfast menu (rather than the 30 year old menu of baked beans on toast).

Others may find it more difficult or uncomfortable to identify potential second dimension opportunities. A helpful exercise can be to ask yourself, "what business are we really in?". And then shift your thinking a bit to expand the opportunities. For example, if you're in the trucking business do you simply move things with trucks? Or are you really in the business of solving transportation issues? With this simple paradigm shift, you can then start to see the second dimension opportunities: logistics management and alliances with other transportation carriers.

So you can see the potential for generating many times more profit than just the original sale. If your product or service is good, then you are denying your customers the benefit of any new improvements, selections or related services by not letting them know about them. And that's not good customer service.

Next time, "Is it all worth it?"

Until then,
Mike Reddy