Learning to Look for a Second Dimension

You’ve all seen those 3D posters (you’ll recall the posters that apparently are flat collections of dots. But when you look at them in a different way — we would say with a broader, less-focused way — you see glorious new pictures revealed).

Here we want to bring that concept together in a new way for you — a way that we hope opens up a new dimension for you.
 
To illustrate the point, come with me to a meeting I’m having with an accountant client. He’s showing me a superb (that actually understates it — it was magical) Client/Practice Management system.
 
The system lets you keep data on clients and activities with them in a way that I’d never seen before. It really is a great product.
 
The system is so impressive, that I want to buy it for my business. (The accountant’s intention was simply to show it to me so I could see what they’re doing in their practice.) The accountant picks up on my enthusiasm. And then he has this incredible “ah ha” or “eureka” type of experience.
 
He says excitedly, “A huge number of our clients could — make that should — be using this. We should be selling this to them!”
 
Presto! The second dimension. Here’s a whole business opportunity that was there all the time. Yet it had never occurred to the accountant until then.
 
Another example of how myopic we can be occurred once when an accountant told me that his firm had had someone come in to the practice to conduct what they called a “focus” group.
 
I asked the accountant, “How valuable was it?”
 
“Oh, it was great,” he said. “We got so much from it. It was worth thousands of dollars to us — literally thousands.”
 
So I asked, “So let’s see now. What you’re saying is that when someone comes into your business, it’s tremendously valuable. Is that correct?”
 
“Absolutely,” he says.
 
“So, how valuable would it be if someone went into your clients’ businesses and did the same thing as you just had someone do to your business?”
 
“No doubt at all,” he said. “It would be enormously valuable for them too.”
 
“And who do you know who could do that for them?”
 
“Well …… we could, I suppose.”
 
Presto! Eureka! A second dimension. A new service. (We’ll talk more about that later, too.)
 
Thus far, we’ve pointed out how a second dimension often results in a new product or service being developed. In its simplest form, working in this second dimension (or "back-end", as it’s sometimes called) is learning to leverage second and subsequent sales from the first sale.
 
For example, working in the second dimension might be as simple as writing to your existing customers inviting them back into the store, or advising them of new services.
 
Consider, if you will, standing 80 yards up above a raging river. You’re on a ledge perched out over a bridge. You’re about to do what thousands of people do every day and throw yourself off the ledge. (You are, coincidentally, attached to the ledge by a rope — specifically a Bungy rope.)
 
You’re not sure how the thousands of people who do this each day summon up the courage. So you breathe deeply. You even think about how you already did breathe deeply when you paid the $149 to do it — how crazy is this?
 
And then someone shouts, “One, two, three, B U N G Y !!!!!” And you go.
 
Within a fraction of a second, a camera flash has gone off over on your right. It’s captured the moment you were horizontal casting yourself off into oblivion. Below you, pointing directly at you, there’s a video camera capturing the scene. That’s coupled to another video camera on your left.
 
And of course, you buy the lot! Another $65 on the second dimension. And then you decide to invest a further $15 for a mounted segment of an old bungy rope.
 
What you’re seeing here is a classic example of how the second dimension or back end can be even more lucrative than the front end.
 
One of the most graphic case studies here is one marketing “guru” Jay Abraham related to us. He explained how he helped one of his clients structure an offer to sell a collection of rare coins to his new customers for just $19. In doing so, Jay’s client actually lost a few dollars up-front on every sale.
 
“Up-front” is the key. Of the 50,000 people who bought a coin set at $19, nearly 10,000 came back and bought $1,000 or more on the “back-end”. His client made two million dollars on the back-end! Thank goodness for the second dimension!
 
However, that was just the FIRST step. You see, second-dimension thinking keeps being applied at every turn.
 
In the case Jay was describing, once every three months his client then went back to the original 50,000 people who bought the $19 coin sets and, of them, at least 250 people chose to buy at least $1,000 more in coins.
 
That translates into $50,000 in “back-end” profits every three months, above and beyond the $2,000,000 Jay helped his client generate in INITIAL sales.
 
Again, using what we call that “second dimension” thinking, Jay then taught his client how to go back to those 10,000 people who bought something for $1,000. About 1,500 of them elected to buy more within the first nine months. The average additional order was $5,000, which made his client another $1,500,000.
 
Those 1,500 customers keep ordering an average of one-and-a-half times a year. That means an additional $1,500,000 in business every year comes from the “back-end.”
 
This second dimension is absolutely vital to any business. Yet most businesses never see it. One of the reasons why we believe so passionately in accountants being the natural (and best) business advisers is this — developing the second dimension requires an good understanding of the numbers and the ability to focus your attention on them. Accountants can do that better than anyone else.
 
You need to see that this “second dimension” thinking applies in lots of areas. It gives a new perspective on businesses.
 
For example, suppose you spend $10,000 a month in newspaper advertisements, and they produce $9,000 in retail sales. It looks like you’re losing $1,000 or more (not including the cost of the product sold or services delivered). But, is that, in fact, necessarily the case?
 
Consider that you (through developing the appropriate systems) have systems which have those new customers buying similar products or services and within 45 days, you have doubled the value of the customer. 
 
If you can then develop systems to make sure the customer comes back once every three months and repeats the average transaction, you’ve set up a tremendous income stream. But note it’s all coming from an original $1,000 loss which you bank rolled. (Clearly, you need not just systems but accurate measurements and accurate cash flow models here! Again, the need for understanding numbers).
 
The same dynamics apply right across the spectrum of every business.
 
Ironically, most businesses rarely try to resell to their current or previous customers. However, you should do it constantly.
Let’s face it — identifying prospects and converting them to customers can be a costly process. Yet, what do most businesses do when they’ve got a new customer? They ignore him or her entirely and put all their marketing efforts into gaining more new customers.
 
As you will hear us say time and time again, that really IS a crazy approach.
 
Once a person has bought from you (assuming, of course, your product delivers what is promised), they are THE most likely person to buy again. In fact, that one-time customer has a propensity to buy perhaps TEN TIMES more than someone "off the street.” 
 
Most marketing efforts we see concentrate only on the single dimension of generating new clients or customers. Second-dimension thinking says “let’s look in here again with a new focus.”
 
You will generate vastly more business and profits when a major part of the marketing efforts concentrate on up-selling, re-selling, and cross-selling to existing customers. THAT is “working in the second dimension.”
 
Sometimes it’s easy to see where the opportunities lie. For example, if you sell carpets, second dimension or back-end products could include not just MORE carpet, but carpet sweepers, vacuum cleaners, protective sprays, and carpet cleaning services.
 
If you sell computers, then clearly there’s a myriad of second-dimension opportunities in things like computer courses, custom software, and computer supplies.
 
If you sell industrial equipment, the second-dimension services or products can be maintenance contracts, supplies, and troubleshooting services.
 
The profits generated from the second dimension can bring many times the profit made from the initial sale.
 
 
This concept is a powerful extension of second-dimension thinking. The logic is this: you should be willing to break-even on an initial promotion — or even lose a little — if you know you will make money on the back-end.
 
To put that another way — make the first offer so attractive that you lock clients in for on-going services. It’s in these “on going” or second generation services that the real profits are generated.
 
A classic example is, of course, what’s been happening lately with mobile or cellular phones. Companies are practically giving the phones away in order to get the revenue that flows from their use.
 
Another classic example is a newsletter.
 
Clearly, subscribers to the newsletter have "profiled" themselves in a certain way. Once they’ve developed trust, they will not only respond to further offers, they WELCOME having people on team select and offer ancillary products and services. 
 
 
We touched briefly on this concept a moment ago with the cellular phone example. It does, however, have far-reaching implications for you.
 
This concept is extraordinarily simple, yet it results in nothing less than a guaranteed future cash flow. It can be applied to any business that offers a continuing service (maintenance, cleaning, etc.), or a continuity-type product such as a newsletter.
 
The way it works is this: you get the customer started by offering the first installment free, or at very low cost, with the understanding in advance that if they like the product or service, the customer will continue at an agreed-upon price for a year or, even better, forever!
 
Say you have a carpet-cleaning business. You could offer new customers a free cleaning of one room, provided the customer agrees in advance that should they be happy with the work, they will sign up for regular cleanings four times a year and will be automatically billed to their credit card. This is what’s called “TFN” — ‘til further notice. You simply keep on billing until the customer cancels.
 
Do you see what this accomplishes? Instead of waiting for customers to call when they need carpet cleaning, you are now guaranteed that the customer will pay for a cleaning four times a year. All you have to do is call the customer each season to schedule the cleaning and then just write up the charge slip.
 
Naturally, you will lose money giving out free cleanings on the initial sale. However, the loss will be more than compensated by the back-end profit made from the four-times-a-year cleanings — especially since the marketing cost for the future cleanings are zero.
 
Second-dimension thinking leads to much more profitable businesses. It gets even more exciting when it’s combined with the third dimension – so read on to future articles!