... COVER CONTINUED Good news for Musk; he was right, and 8 percent of the people who paid a deposit upgraded to a higher-end Tesla. With a minimum cost per new Model S or X of $75,000, Musk was able to generate another $3.3 billion in sales. Not too shabby. Of course, it isn’t all good news; some people got tired of waiting for their cars and asked for their money back. But according to Musk, that only amounts to 12 percent of customers in the last 28 months. That’s a great attrition rate and a loss of only $66,000,000 — a virtual drop in the bucket compared to the $3.85 billion that has come in from sales and deposits. Of course, now that Model 3s are rolling off the factory line, there are 455,000 people who were willing to pay $39,000 more for a car at some point. Assuming 80 percent of them actually pull the trigger, that would be another 14.2 billion dollars in sales over time. Not too shabby. Now, you and I may not be creating products as high-end as a Tesla and making billions of dollars, but we can use some of the same money math to grow our companies.
to be a part of at TheNewsletterPro.com/tesla. Here’s some background info on the program and the economics behind it. “Of course, it seems SCARY TO GIVE AWAY A CAR and have a $50,000 liability in cash prizes, but when you think about it, this is some of the SAFEST MARKETING EVER.” The program overview: We’re giving away a Tesla Model S or X to someone who sends us a referral who signs up for any of our custom newsletter packages. We’re also giving away $500 cash money to each person who refers or $50,000 once we reach 100 new referrals.
Of course, it seems scary to give away a car and have a $50,000 liability in cash prizes, but when you think about it, this is some of the safest marketing ever. You see, like Musk, we have to invest a little money up front to promote our referral program, and we needed to already have media in place (like this newsletter), but we don’t accrue much expense at all for each new customer until after the new customer gives us money. At that point, we owe $500 to the person who referred the new customer to us. Ultimately, we will have to buy a car, but that is only after we’ve gotten 100 referrals, which we estimate will take around 12 months. We will have had new customers paying us for a year before we have to purchase the vehicle, which allows us to offer a killer prize with minimum risk. We’re doing the same thing Musk is doing, just with referrals instead of product deposits. If we had to buy the car first, the risk would be so high that we’d never take the chance. (The reality is that not all marketing campaigns work, even for me.) But if we don’t have to shell out most of the money until after we already have the customer, it is virtually risk-free for us. If your wheels are spinning on how you can also use these strategies to give away a car or some other killer prize, that’s great. If you want it to be successful, there are two things you must do ASAP: You need to make sure you have media that you own and control (like a newsletter, hint hint), and you need to make sure you’re using that media to build a relationship with your customers and prospects. Ideally, you wouldn’t launch both the referral program and the media/relationship platform at the same time, because you really need the relationship first.
The simplest case study to look at is our Tesla referral program, which you should totally register
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