14 Feb How Do I Know If I Have Bad Profits?
This is a term coined by the author of The Ultimate Question. Bad profits come from all of those shady deals, extra fees, hidden costs, and those confusing price structures. Airlines do this all the time, with the upcharges for seat selection, baggage fees, cost of foods, etc. These are considered bad profits because they turn customers off from wanting to do business with you in the future.
Think about your add-ons or those charges that you spring on customers at the end of the process. Sure they give you amazing profit margins, but is it really worth risking your customers’ satisfaction?
So, you are making money from these, but they are not necessarily helping you build customer value and loyalty in the long run.
I challenge you this week to go through your sales process and look for any “tricky” fees that customers often complain about or get confused with? You want to be 100% transparent and you want to make sure that the costs you are passing on to customers are fees that you need to pass on. If it isn’t costing you anything to provide a service, then why charge for it? What you gain in customer satisfaction is often more valuable than what you gain in profits.
You want to provide maximum value to your customers – all the time. Nickel and diming them to pad your profits is certainly not adding value to their experience. If you need to charge for a service, be sure that this is explained to your customers early on. Springing new fees on them when it is time to pay is not the best way to run your business.