Posted on: Monday, July 23, 2001

60 Seconds on Business
Customers often like to spend more

By Dr. Drake Beil
President, Solutions Inc.

Wouldn't you like to make more money without spending more?

Every business has revenue streams. You can turn them into mighty rivers if you understand the processes embedded in managing and improving yield.

Start with understanding customer value.

Every customer has a value. The secret of good yield management is increasing your average customer's value. Or, simply, getting more dollars to flow from each customer, whenever possible.

You can appear greedy or annoying if you push too hard or too much. ("Want fries with that?") But often, asking customers if they want to buy more than they had planned is quite appropriate.

Think about your own likes and dislikes. I can be persuaded to get the Caesar's salad with blackened salmon because it sounds so 'ono, rather than the club sandwich I usually eat. I might take a luxury car for a little more than a compact, or a hotel suite with an ocean view instead of the standard room over the parking lot.

Such incentives could increase what a customer spends without meaning more expense for you. Over the next few columns, I'll provide additional examples of how yield programs work. If you have developed similar programs, please share them.

Dr. Drake Beil can be reached at drake@60secondsonbusiness.