MBA1524 Add-Ons In Your Business The Right Way

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Hey O welcome to the Hundred Dollar RBA show, the business podcast that helps you build the business that you want every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's lesson you will learn add ons in your business. Done the right way Add ons are more than just a way for you to increase your revenue. It's a way to potentially increase the value you offer your customers. If you produce something that your customers want, they're going to want more things to help their business, to help their life. And this is where add ons come in. Add ons are more than just upsells. They're not one time, they're ongoing. And they can apply to many types of businesses, not just software businesses. You could be selling a course or training and I will give plenty of examples in today's episode. How do you create add ons that make sense for your customer? How do you price them? And how do you know if an add on should be a core feature? Or you guessed it, an add on. That's what we get into in today's episode. So let's get into it. Let's get down to business. Let's begin by defining an add on. An add on is a reoccurring piece of value that you would charge for reoccurringly to your customers. This could take on many different forms. It could be premium support if you're doing some sort of course, it could be a private Slack group. If you're a coach, it could be access to directly via Viber with voice messages. Add ons are things that people can choose to opt in for that are in addition to your core feature, your core offer. So let's get into that first. So we're defining the core offer. That means that anything outside the core offer can be an add on. Your core offer is what you promise. Whatever your product or service is, you need to make sure you fulfill that promise. If I'm selling a course on how to snowboard, then the course material, if it fulfills that promise, if I follow that course, will I learn how to snowboard? Then yes. That's the core function, the core feature of my product. Now will I learn faster, more efficiently? Will it be easier? Will it be more supportive? If I had a private Slack group or I had direct access to the instructor via email, yes. And these are considered add ons. I can still fulfill the promise with my core product, but the add ons make it easier. It takes things to the next level. It allows me to be more of an advanced student in this case, or user. If you're selling a product. Now, many businesses like the concept of add ons over tiers in pricing, saying that you'll have three tiers of pricing and each tier will have a bundle of features. And as the price goes up, so do the features. Some people do away with that and just have add ons. Some other companies have both. They have tiers and add ons. But the key to make sure your add ons are successful so people actually buy them and want them is that it fits in the progression of the user's journey. I'm gonna give you a perfect example of an add on I just recently purchased. A few months ago, this add on was purchased with a software called Intercom. Now Intercom is sort of a messaging and help desk software, a way for me to communicate with our customers and allow our team to be able to answer support tickets. As your company grows, you will start to meet new challenges. And if the company that I'm with in this case, Intercom, can solve some of these challenges for me, I'll be willing to pay. I don't recognize these Challenges until I grow. And this is the brilliance of an add on. An add on is like, hey, you may not need this now, but at some point you might need this. And when you do need it, you're gonna be willing to pay for it because it's gonna solve a lot of problems. The add on that we bought at Intercom was something called a resolution bot. Now, our customer service agents will speak to our customers directly via or email, but there are a lot of common questions that customers ask that we can answer for them with a resolution bot. Resolution bot basically is a bot, a computer program that will answer many of the frequently asked questions that you provide to it with answers that you've provided in the past from your past conversations with customers, questions like password resets and pricing questions and how do I get started and all that kind of stuff. We realized about 20 to 30% of of our support tickets can be answered by this resolution bot, saving us hours of time and freeing up our customer service agents to answer our customers a lot more quickly because, hey, they don't have to deal with these very common questions. Now, this resolution bot would kick in and provide these answers to the customers. And if it couldn't answer a question, it would say, no problem. It'll say, hey, an agent will be with you momentarily. But I was willing to pay lots of money, hundreds of dollars a month for this because it's going to save me time and headaches and get to my customers faster. I didn't perceive this problem when I first started with Intercom maybe three or four years ago because I didn't have it. But Intercom had the foresight to understand that as people progress, they're going to have new challenges. If we could solve those challenges, they'll be willing to pay for it. That's a typical way to use add ons as your customer progresses in their journey. What are some of the challenges they're going to have? What are some of the questions they're going to have? What are some of the things that they're going to be willing to pay for? Now, add ons don't work. If people have to pay for something that they think that should be included in your core product. They feel like, hey, I can't really get the value of what I originally paid for without buying the add on, then people feel like they're being cheated. They feel like they're not getting what they paid for and you're just basically trying to steal money from them. That's never a good feeling from a company when you're dealing with a company where you feel like, hey, they're nickeling and diming me and I'm not getting really what I wanted. Add ons work great when people say, wow, that's a great solution to something I have right now. It's a feature that I would love to do. I didn't even know this thing did this. I didn't even know that you offered this service. Whatever it is, I'm willing to pay for it. One of the most popular add ons of all time is Amazon Prime. Now it seems as a standalone product or service, but really it's an add on to the experience of Amazon. You can order things on Amazon and pay the shipping and wait X amount of days, or you can pay for Amazon prime, get shipping in two days, it's included for free for most items and you get a whole bunch of other benefits like prime video and music and all the other stuff that's included in Prime. The point here is, is that people will see the value in this if they're advanced shoppers on Amazon. If you buy something from Amazon once a year, you're not really gonna see the benefit of this add on. But if you buy something once every month or even once every two months, it's going to be worth it for you to pay that prime membership because you're going to save the money in shipping alone and you're going to get the convenience. So as long as a customer sees value in it, they're going to go for the add on. Now the question is, how do you price your add ons and when do you present this as an offer? Do you do it right on your pricing page during the checkout process later? Well, let's talk about pricing first. Add ons are a great way to add extra revenue into your business. And of course we want to price it appropriately to make sure you cover your costs. But of course you need to make a profit. This is why I believe that add ons are a great place to experiment with price. One of the biggest mistakes people make with add ons is they go too cheap. Remember, add ons are for people that are using your product. They're getting a lot of benefit from your product. They love what you do, your service, whatever it is, and they want more. That kind of customer is not price sensitive. If you're going to solve their problem, they'll be willing to pay for it. They see the value already they're sold. So you can both bump up the price and offer a fair price. That's equal to the value of the actual offer. The actual add on what I like to say Start with a number that makes you feel slightly uncomfortable. Like an add on that's worth $50 extra a month means you feel a little bit uncomfortable. But hey, I think it's worth it. I think it's going to save them time, money and people will be willing to buy from there. Move up and experiment with that price. Now there are many schools of thought about when to put in add ons. Some people think it's great to display them right on the pricing page. So some people think it's great in the flow of the checkout. Some people think it's not a good idea to do that anytime during the purchase time. It's best to do that after. In my experience. I feel like add ons work best when people are aware of them but don't need to worry about them too much at the start. When you're onboarding a new customer and you're trying to get someone to check out and buy your product or service, you just need them to become a customer first. Let them be sold on what your core product is and your core offer. So it's good to mention you have these add ons on your pricing page at some point. A little small brief, you know, description and you could just say add ons available in your account. They can buy this once they become a customer. You don't have to confuse them and have it tacked onto their shopping cart and all that kind of stuff at the beginning. This is especially important if you have more than two or three add ons. Get them into your core product or service. Once they're there you can present this inside their account or via an email or via email, you know, an internal message or chat message. Add ons are something that your customer will seek. Customers that are advanced are looking for solutions and as long as you make it easy for them to find it, whether it's side their account in their account area when they upgrade, or via an email or via presentation once a month. If you do like a members webinar, this is definitely something that works. Now there are companies that do the add on process during the checkout process. I personally think it's a bit cumbersome. You'll have a lot of car abandonment because you're making the process a little bit more confusing, a little bit more long winded. It takes more time to check out. I want my customer to be in and out and paying me quickly and be part of my customer group as quickly as possible. I want them to get a win out of my service, my product as soon as possible so they can trust me and be open to an add on. Hey Fidelity, how can I remember to invest every month?

With the Fidelity app you can choose a schedule and set up recurring investments in stocks and ETFs.

Huh, that sounds easier than I thought.

You got this?

Yeah, I do. Now where did I put my keys?

You will find them where you left them.

Investing involves risk, including risk of loss. Fidelity Brokerage Services LLC Member NYSE SIPC ADP knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll, ADP helps businesses take on the next anything ADP always designing for people.

To wrap up today's lesson, add ons are a great way to add more value to your customers experience. If you could solve their problem, they'll be willing to pay you money for it. That's the main reason why you should have add ons. And then of course it's going to allow you to add more average revenue, more revenue per customer. Your ARPU is going to go up and you're going to be serving the people that love what you do. Your customers that love your product. These are gold. You can get them to continue to buy from you rather than trying to get new customers that are not the perfect fit. People that love what you do, love what you offer and are looking for more. These are amazing customers. If you could solve one problem from the core problem that you solve with your product, you could solve other auxiliary problems for them with add ons. Thank you so much for listening. If you love it here, leave us an itunes rating and review by leaving us an iTunes rating and review Enter our weekly random draw we call Free Ride Friday where we win a free ride to one of our programs. It's our way to say thanks for showing us love on itunes. Before I go, I want to leave you with this. Many people are a little bit tentative about add ons. They feel like I rather just sell packages or just sell my product with no levels or tiers or add ons. One of the things I learned in business is if you try to give everybody everything they need now until the end of time in one sales page, you overwhelm them. People just need the next step and really the first step is your core product. This gets them going and tiers and add ons and things like that allow them to understand what the next step would be and what are the some of the things that they can do or use from your services. This is a more pleasant experience for your customers. It's not overwhelming and they only pay for the things they actually need. And that's really important here because every time you try to offer something that's a cost on your end. And why are you going to charge them that cost when they don't need it just yet, just a different way to look at it. Hopefully that helps and I hope to see you in tomorrow's episode. I'll see you then. Take care.

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ADP knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll, ADP helps businesses take on the next anything. ADP always designing for people.