« Postcard Marketing…wonderful ads for your business! | Home | How To Survive This Recession! »
How To Create A Mafia Offer
By Ken Varga | July 17, 2008
If you are a business owner or manager, then you are always looking for ways to make more profit doing what you do best. If I told you that one of the most radical methods for insuring your success in business was not a matter of beating your competitions prices or service, you would probably be intrigued as to how this was possible. What could this method possibly be?
What if I told you that instead of focusing on offering a cheaper service or product to your customers or clients, that what I want you to do is increase the value of your service or product in their eyes to such a level that they can hardly refuse your offer?
Now, you have heard me talk many times about creating value. But today I have a new twist for you…no matter what you sell, one of the most scientifically effective ways to maximize your profits would be to create what is known amongst the business savvy as a “mafia offer.”
If you think this is some clip out of an old mobster comic, you should think again. A mafia offer is an offer that you can craft for almost any business which will allow you to close maybe more than 80% of prospective buyers. Imagine closing on 80% of the clients who review your products or services. Sounds too good to be true, but with a mafia offer it isn’t; and, 80% is only the beginning.
Since mafia offers rely on offering a proposal to each and every customer that they literally "cannot" refuse, you insure your business’ profits and future. I am sure you are intrigued, so read on to understand how a mafia offer works and how a cutting-edge theoretical construct known as the Theory of Constraints, or TOC is the backbone of the mafia offer’s almost surreal effectiveness.
Basic business theory tells you that supply and demand is behind every instance of buying and selling in the business sector. This means that even if it costs you near nothing to acquire a particular item, it will demand a significant market price if it is in high demand. Market value is a function of supply and demand.
Now, imagine you could instantly increase the demand for your particular item significantly above the rest of the competition. This means you could sell your item at a higher price than the competition and still make more sales than the competition, simply because your item is in higher demand. Sound impossible? It is not, and this is the basis of the mafia offer.
A mafia offer is essentially an offer that is so good to any purchaser who is in the market for your product or service that they would have to be absolutely illogical to buy that good or service from anyone but you.
Now, in order to craft your own mafia offer, you need to understand a principle which was pioneered by Eliyahu Goldratt back in the 1990’s. This theory is known as the Theory of Constraints.
The Theory of Constraints essentially states that in any business, there is always an internal or marketing constraint that limits the system’s performance relative to its goal. In other words, there is always a particular issue in any business’ structure that limits how much profit can be generated for a given amount of overhead. The mafia offer is essentially building a business proposal for clients that seeks to remove constraints on their perception of the value of your product or service.
As an example, say you are in an industry where the standard delivery time for your type of product is 2 weeks, but your customers and potential purchasers would love to have the product sooner. However, the constraints of equipment performance, design, material acquistion for producing the product, etc., make it difficult for any business in your industry to improve on that time.
Let’s say you get your production team together and you break down the whole production process into its miniscule parts. Then you challenge all the assumptions to that process. As you do so, you discover that if you stockpiled enough material on hand you could deliver the product in one week or less. However, you would need to be able to finance the stocpile of materials.
In studying your competiton, you discover that none of them finance or stockpile materials. Everything is ordered on an as needed basis. You also discover that none of them have the assets or collateral to get the financing required to stockpile materials. The interest on such financing would eat away substantially at their profits.
So you decided to proceed to get the financing, stockpile the materials, and offer your customers and potential customers delivery in one week instead of two.
Now this is a mafia offer. Why? Because, since delivery is important to your customers, they would be crazy to turn down your offer to get them the product in one week, whereas if they went with your competition they would have to wait an additional week.
The second reason it’s a mafia offer is becuase your competition can’t, or is unwilling, to match your offer, at least in the near future.
So creating a mafia offer requires you to examine the constraints on your company’s processes and removing the constraints that will allow you to give your customers what they want, while at the same time creating a condition that your competition is unable or unwilling to duplicate.
You should read Eliyahu Goldratt’s works before you begin crafting a mafia offer. Start with these three books: "The Goal", "It’s Not Luck", and "The Theory Of Constraints".
Topics: Attract More Clients, Grow Sales, Growing your business | 5 Comments »
July 18th, 2008 at 7:04 am
Dear Ken,
Thanks for the Mafia Offer concept.
I read THE GOAL in 10 minutes. Didn’t make me a dime. Because it only dealt with large corporate assembly-line type “Constraints.”
I interview self made millionaires and small business owners from all over the world.
Do you have specific book suggestions or Case Studies that deal with One Person Constraints?
A – I have a realtor client whose constraints are local signage laws. So he only does open houses on the weekends. Takes his Giant signs down Sunday nite.
B – A Home SEcurity Alarm salesman knocks on 40 doors to find 16 people home to make one 800.00 profit sale.
His “Constraint” is time. So we’re switching him to a BY REFERRAL ONLY strategy. Should easily 5 TIMES his income.
C – A Toastmasters Club Pres – is 1/2 million in debt. His wife won’t talk to him. He’s now using my SUPER SPINACH Natural Energy Referral program to bring people into his program.
Those are the kinds of “Restraint anecdotes” I’d like to hear more about.
Thanks,
Glenn
P.S. – Thanks to your advice a few years back – I started my F-r-e-e *Big Red Nose NLP Testing Ezine*
We FLIRT Test ideas we see George Lucas, Steve Jobs, McDonalds and others using.
[Reply]
July 21st, 2008 at 3:33 pm
Hi Glenn,
Thanks for your comments. You have some good, workable solutions for your clients.
Regarding the referral strategies you mention, they would fall in the realm of marketing methods, rather than offers to the customer. The distinction is that the mafia offer is an offer, rather than a marketing method. The mafia offer is also not a great headline, marketing piece, or positioning statement; it is actually based on doing something that your competition can’t or won’t do. It cannot be arrived at in an afternoon, since it requires deep soul searching and a clear understanding of one’s industry and competition.
When I collect examples of crafting successful mafia offers from our subscribers, I will publish them for you and others to read, provided I get their permission to do so.
Glad I could help with advice a few years back.
Ken
[Reply]
November 3rd, 2008 at 8:50 am
Thank you for this entry Ken. I’d also recommend THE CHOICE the new book by Dr. Goldratt as a great way to explain uses of TOC across multiple business categories.
[Reply]
November 3rd, 2008 at 8:56 am
All due respect to Glenn, THE GOAL takes more than 10 minutes to read, it’s important to give it the attention it deserves. If time is a problem, there’s an audio book version, though I also strongly recommend the audio CD seminar BEYOND THE GOAL by Dr. Goldratt. It has a great overview of his concepts, it’s fun to listen to, and it has easy to follow power point presentation material, all for less than $30.
[Reply]
December 23rd, 2008 at 4:39 am
For more information on Mafia Offers, see http://www.MafiaOffers.com and the Mafia Offer Boot Camp. There are a couple videos there. and the best books for learning more are It’s Not Luck by Goldratt, Viable Vision by Kendall, and my Achieving a Viable Vision workbook and audio CD.
[Reply]