Why grow and how to grow
- As a company, you have to grow or die. You can't stand still if every around you is growing;
- So what does it take to grow?
- Get more customers;
- Increase their average purchase value;
- Get them to buy more times.
- Terms to calculate growth:
- Gross profit: revenue made from an additional customer minus direct costs of fulfillment;
- Net profit: what's left over after all expenses are paid;
- Lifetime value: gross profit accrued over the entire lifetime of a customer.
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Psychological solutions are your opportunities
- Most people naturally try and solve problems using logical solutions, which usually have been tried;
- If you try to solve a problem with logic, what comes out of it usually is a undifferentiated solution;
- If you want to charge for a premium, you need to come up with psychological solutions;
- Some examples:
- Commuter complain about trains being too slow:
- Logical solution: make trains faster to increase satisfaction;
- Psychological solution: decrease the pain of waiting by adding a dotted map;
- Psychological solution: pay models to be the hostesses on the trip (people would wish it took longer to get to their destination!)
- Elevator is too slow:
- Logical solution: make elevator faster;
- Psychological solution: add floor to ceiling mirrors so people are distracted staring at themselves and forget how long they were on the elevator.
- How do we increase sales?
- Logical solution: make it cheaper.
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