Residual Income. Hummmm… What’s that? Ok. Here’s a few technical definitions:
1. Earnings that are accrued on a frequent basis - usually monthly. Repeat Business: The situation when a customer returns to purchase a product or service. This is seen as a key endorsement of a business.
2. The amount of money left over after you have paid all of your ordinary and necessary debts including the mortgage.
3. The amount of profit that a segment has made after charging a notional amount of interest based on the business’s investment in that segment.
4. The excess of controllable operating income over a "minimum" amount of desired controllable operating income.
I like number one! Especially the monthly part!
How do businesses like Wal-Mart, Sears, JC Penny, etc. stay in business? They don’t count on every customer in the world stopping by once to make a single purchase. They count on a small number of customers coming in to buy products that are competitively priced, and then later returning to buy something else they might have seen on a previous visit.
I can remember when Wal-Mart opened a Super Center in Neosho, MO. This was big stuff for the small town of 10, 700 people! On our first trip down from the big city to visit with my folks, they wanted to take us down to see the new Super Center. We got the grand tour. Even though they had been there several times you could still see the excitement in their eyes. The place was packed the entire time we were there. While we were there my folks picked up a few things. People who were in checkout lines had kids who were asking for the candy that was neatly displayed in convenient reach of the children. Special sale items were conveniently placed throughout the store to catch the eye of the shopper who didn’t even know they needed one until they saw it at Wal-Mart!
That’s the concept of Residual Business. Someone comes by to shop and you offer something else that they might be interested in. And while you have their attention, you look for opportunities to sell them something in the future. Sounds simple. The concept is, but it’s a little harder to implement. Let’s think at a high level about how the eBay auction system works:
| 1st – | You List Your Item for Sale |
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| 2nd – | People bid on your item and someone wins the bid. | |
| 3rd – | You contact the seller providing them with payment and shipping information. | |
| 4th – | They pay you, you ship the item, positive feedback is left for everyone. The world smiles. |
Now, let’s see how we modify the above scenario to insert opportunities for residual income.
| 1st – | You List Your Item for Sale |
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| 2nd – | People bid on your item. | |
| 3rd – | You send an email to the individuals bidding on your item thanking them for their bid and encourage them to let you know if they have any questions. You email has links to your eBay About Me page and your website. There might be a short blurb about signing up for a no-cost newsletter covering a topic based around the item you are auctioning. | |
| 4th – | Someone wins the bid. | |
| 5th – | You send an email to the non-winning bidders on your item thanking them for their bids. You email has links to your eBay About Me page and your website. You include a short blurb about signing up for a no-cost newsletter covering a topic based around the item you are auctioning. They signup for the newsletter. | |
| 6th – | You contact the seller providing them with payment and shipping information. Your email thanks them for their bid and provides them with details about how you plan to complete the transaction. You email has links to your eBay About Me page and your website. You have an offer in the email that indicates your eBay store or website has a related item they might also be interested in. You also include a short blurb about signing up for a no-cost newsletter covering a topic based around the item you auctioned. | |
| 7th – | They pay you. You ship the item. Immediately following shipment of the item, you send them an email containing information about how their item was shipped, tracking number (if applicable), when they might expect to see the item arrive. You ask them to contact you if they haven’t received the item within a reasonable amount of time. You have an offer in the email that indicates your eBay store or website has a related item they might also be interested in. Your email contains links to your eBay store and website, and an offer to sign up for a no-cost newsletter covering a topic based around the item you auctioned. | |
| 8th – | The person receives the item, emails you that they have received it. Positive feedback is left for everyone. | |
| 9th – | The person is pleased with the transaction and your attention to service. They signup for the newsletter, and order the related item they have now seen an offer for in your 3 previous emails. | |
| 10th – | Several of your bidders receive your weekly or monthly newsletter. The newsletter contains information they are interested in. It also contains offers for other related items. | |
| 11th – | Some will buy items advertised in your weekly or monthly newsletter, or from your eBay store or Website. You Smile! This is residual Income! |
With every email, you have the buyer’s attention. They came to you with their interest in your auction. Their initial interest in you auction has provided you with valuable one-on-one time to sell your ideas or products. I would hate to be a cold call salesman (one who just goes from business try to sell their wares without the benefit of knowing if the potential buyer will be interested or not). There’s noting cold call about this process. Simple concept, but it takes initial effort on your part during the sale, and then follow-up with simple weekly or monthly effort to produce a newsletter with additional offers.
Let’s take a moment to consider how we might come up with items your bidders might be interested in. Three areas that are very popular and successful provide you with avenues for Residual Income:
We’ll talk more about affiliate programs later in Step 3, but all of the above create methods whereby you can offer an additional product or service to someone who is already interested in what you have to offer. Here’s where people usually hit a dead end. They’re not sure what they are selling at this point in the program, however, for sake of illustration let’s look at a method that will aid you later when you are ready to begin formulation of your business.
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