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Monday, August 21, 2006

What One Thing Ensures You Stay In Business?

It's what Ted Nicholas terms the GF.

This strategy is vital to any business. Without it you're going to go plunging down the tubes straight to the Dead Business Graveyard.

...Probably within 18 months to 2 years.

Ted Nicholas writes about the GF in his excellent book "Magic Words That Bring You Riches" .

He tells the story of his Uncle Frank who was his first business hero.

Uncle Frank was the successful creator of 4 famous restaurants and on Ted's 17th Birthday gave him a Gillette razor.

Uncle Ted reckoned that Gillette was the most profitable company he knew and he had a large shareholding in it because he was so impressed.

In answer to Ted's question as to why Gillette was so special Uncle Frank said , "When you buy their razor, you'll undoubtedly love it. But to continue to enjoy it, you must buy their blades (no others fit) forever!"

When Ted started his own business (Ice-cream and candy) he built in what he calls the "Gillette Factor" (GF).

The Gillette Factor strategy Ted uses is that of repeat or back-end sales. Without it you can only do so many one-off sales until your market has enough of what you're selling - then what?

Beware --- Back-End Sales Are Not Enough

And it's not enough to have repeat sales because me-too imitators come in and attempt to take your market with cheaper products or improved products or slightly different products.

So you also need to do what Gillette does with it's own products: continuous innovation.

Go to any Gillette stockist and you'll see the wide variety of products they've produced. One blade, two blade, three blade, two blade with lubrication strip, battery powered...

The list goes on.

So like Gillette you need to constantly update and
improve your product at least once a year.

Otherwise your competitors will simply snatch your customers away from you.

Innovation applies to many parts of your business, not just the product itself. You need to look at all of the following, although you don't need to change it all the time.

  • Product packaging
  • Sales approaches
  • Marketing tactics, including:
    • Sales letters
    • Emails
    • Brochures
    • Catalogues
    • Using the Internet
    • PR
  • Handling complaints and rework
  • Other customer relationship handling processes

You should keep testing changes to individual elements, keep the ones that raise sales and ditch the ones that don't.

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