Incremental Revenue

In a previous post, I mentioned incremental revenue opportunities. http://power2negotiate.blogspot.com/2011/04/business-plan-versus-mantra.html.

What IS an incremental revenue opportunity. If I can use a ubiquitous example, "Do you want fries with that?" is the definition of an incremental revenue opportunity.

It is simply doing a side sell, or an upsell to an existing customer. They are already purchasing, and, at the point of purchase, you persuade them to add an additional product or service to the purchase, increasing profit.

What are your costs for doing this?

Absolutely zero? You have already PAID the advertising costs to get the client into your store/site/office. You have already PAID all of your rent/fixed costs/overhead to run your business. You have already completed the hardest part, getting them to purchase the first item. Now, all you have to do it have them increase the sale.

The added revenue is "free money" with only your cost of goods assigned to it. It has NO overhead costs, advertising costs, or commission costs, because it is an incremental sale.

My family had an RV park. During the winter, we would have more guests than sites. So, we would park the additional campers around our house, hook them up to our electric and water, and let them stay there for a few months.

I HATED it. I couldn't open my window for fear of seeing a retiree looking back at me. I complained to my Aunt Betty.

She explained, "Reed, we don't have any additional costs for those campers. That is VACATION money." When she explained it that way, it made sense.

You want to encourage your employees to always ask, "Do you want fries with that?" with EVERY purchase, because the profit percentage on incremental revenue is tremendous. If your employees are not asking for the additional sale, you are losing money. You are losing VACATION money.