Automatic Billing: A Profitable Strategy No One Talks About

“Human nature is above all things — lazy.” – Harriet Beecher Stowe (Household Papers and Stories, 1864)
When we talk about the emotional aspects of selling, we often speak of our customer’s greed and fear — but never of his laziness. But laziness — usually your enemy — can sometimes work in your favor, particularly when it comes to repeat business.

Let’s talk about using inertia to your advantage. (Some of what I’m about to say may raise ethical issues. I leave them to you — for the moment, at least — to ponder.)

Getting a customer requires overcoming his inertia. It requires you to make a promise and stir up a desire that is larger and stronger than his natural laziness.

Once you get a customer, it is often possible to keep him active long after the fire you initially stirred up has turned to embers. You can usually do that through some form of automatic reordering and rebilling process. Get a customer on a fairly priced automatic billing program, and he’ll more than likely continue to buy your product/service simply because the hassle of canceling takes more effort than he is willing to make.

Automatic billing won’t save truly dissatisfied customers (and it shouldn’t), but it will make it easier for those on the edge to stay with you — and the difference may be significant.

For example, about10 years ago, I developed a bill-till-forbid offer for a mail-order jewelry business. When the rest of the business hit a slump, the auto-buyers kept ordering — in dollar amounts large enough to keep the company solvent for almost 18 months (until the market turned). Another example: a jewelry-of-the-month program I set up 15 years ago that paid dividends five years after the company stopped actively promoting new products. A third example: a list-brokerage business that provided me and my partners with about $40,000 a month for many years — with virtually no maintenance — thanks to the introduction of a sort of automatic fulfillment-and-billing program.

A lot of businesses you wouldn’t normally associate with bill-till-forbid offers rely on automatic billing — from national mail-order steak suppliers to toy manufacturers to legal-service companies. And that’s to say nothing of insurance companies, brokerage houses, and karate academies.

Automatic billing — and the inertia it capitalizes on — must be responsible for at least 10% to 20% of the profits generated by American businesses. That’s a lot of money. And yet no one is talking about it.

Why is it such a big secret?

Clearly, automatic billing doesn’t get the credit — or the attention — it deserves. I can’t think of a single article I’ve ever read on the subject — nor a speech made. Maybe it’s because we are all embarrassed by it. No one wants to admit that the most profitable part of his business takes advantage of the apathy of his marginal buyers.

Another reason you don’t much hear about it is that it is not at all easy to put in place and maintain. New customers are justly skeptical of such purchasing arrangements, and so it takes a lot of persuading to gain their trust. Also, such programs require very capable management and sophisticated programming. However, they are well worth the trouble.

Consider your own business or profession. Is there a product/service you provide now (or could provide) that would lend itself to automatic renewals? Something your customers/clients would like to receive on a regular basis?

It may take some thinking, but I’ll bet you can come up with a way to use this strategy. A way to use some sort of bill-till-forbid program to generate regular, dependable, monthly income — enough to pay for your rent and utilities, perhaps. You don’t need to get every customer hooked on a bill-till-forbid offer, but even a small percentage of your sales, coming predictably and reliably, can make a big difference in the long-term health of your business.

In the long run, you want to know that your customers are happily and profitably using your product/service. But now and then, it helps to count on the lazy factor.

[Ed. Note.  Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]