Let’s say I own a really successful fast food company that dominates in my industry, as a business person I’m always looking for ways to improve my profit. One day I sit down and think about all the ways I can make more money. The first thing I do is explore different marketing campaigns that could convert competitor customers into my customers. I work out the cost of the marketing campaign and estimate the number of new customers I may get, from there I can work out the return on my marketing investment and forecast my increased revenue based on increased customer numbers. For example it might cost me $200 to market to one customer who might potentially spend $500 with me over the next year. After costs profit might be only around $100 in the first year, but if they stick with me for the long term it will be a good investment.
I keep exploring other ways to increase my profit. This gets me thinking about the customers I already have. I know from my previous sales numbers how often the average customer comes in and what their average spend is. As I think about this and my goal of increasing profit I realise an easier way to increase my profit is to try and get my existing customers to spend more during the visits they already make. Now all I need to do is convince people to buy more food every time they come in.
Ok, you may be wondering where I’m going with this. I was watching TV the other night and saw an advertisement for one of the top fast food chains. They were offering a deal where you could get some tasty morsels for around $2, half the normal price. Their campaign was trying to sell this small added extra (which your wallet will hardly notice) to your usual meal. They are trying to instill a habit where you buy a little “add on” with each meal and once the deal is finished the habit stays and their profits increase.
A fast food company’s job is to sell you calories. They aren’t concerned about the effect of those calories on your health. So when they try to sell you temptation in the hope that they will create an unhealthy habit look a little closer and see what they are really selling you and try to make the decision that is healthy for you.
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