Monday, October 31, 2011

Perpetual Change Marks Business Strategy

Nothing is so permanent as change. The customer you deal with today will not be the same one you see tomorrow. Your employees will have a different outlook on work when they get up in the morning and your vendors will come through the door with new products, new prices, and oh, by the way, new corporate owners with new credit requirements. More of your tools will have LCD screens and many of them will talk wirelessly to your customer and to each other. You can only hope they keep talking to you. In every type of business—change happens.

Some of us fight change and some of us embrace it, but we all have to deal with it. “You have to respond to the market,” says Michael Young, owner of Street Rods by Michael in Shelbyville, Tennessee. “If you can’t adapt, you’re not going to be here in five years.”

Consider your customers. Most company owners are justifiably very proud of having a base of loyal customers. If they rely exclusively on those loyal customers to support their revenue stream, though, it won’t be long before they see their sales decline. Why? Because customers change. Consider just one simple fact: twenty percent of Americans move every year. While not every one of them moves across the country and therefore out of your market area, many do. And even those that just move across the street put a dent in their disposable income with moving expenses, etc., that cut into their budget for other things—like what you sell. Those lost sales have to be replaced by sales to new customers just to stay even.

Even the customers who do stick around change. Their tastes evolve, they learn new things, they get bored and want to do or own something different. If nothing else, they get older. The baby boomers, the generation that gave us the Rat Fink and American Graffiti, has started cashing Social Security checks. How will that change their propensity to spend money on hot tubs, designer denims, or flat screen TVs? And will the younger customers who hopefully come along to replace them be looking for the same things? Not likely. That’s one reason you see more muscle cars on the street and fewer ‘34 Fords; more Hondas and fewer Chevrolets. It’s not just a change in fashion—it’s a change in the customer.

Don’t fight it

So how do you deal with change? To start with, don’t fight it—you can’t win. Instead, open your eyes to the inevitability of change, make yourself and your company ready for it, and embrace it when it comes. The first step, if you want to keep up with changes in the marketplace, is to make a conscious effort to listen to what the customers are saying to you about themselves and what they want.

“Customers are more knowledgeable,” observes Sales Manager Tom Dickinson of AP Tuning in Lebanon, PA, a company that specializes in high-performance automotive work. Not too many years ago, hot rod magazines and mail-order catalogs defined media for that market. Today, enthusiasts can learn about the sport from an ever-growing number of media outlets—everything from the Internet to entire television networks devoted to it. Enter a term like “torque converter” into Google, and you’ll get 743,000 listings. When Dickinson’s customers see somebody on TV winning races or shows with a car like theirs, they become a more informed—and generally more demanding—customer.

“It used to be that you learned about cars by talking to the guy in the next pit stall at the track,” according to Darrick Klima, also in the automotive performance business as owner of Belleville Motorsports in Belleville, KS, where they build over 100 race cars a year. “One of the bigger things these days are race car workshops and driving schools. People are spending money to become better racers because they’re spending more money on better race cars. It puts a lot of pressure on everybody.” Klima attends schools and seminars himself so he will know what his customers are being told.

Klima also spends a lot of time getting feedback from customers. “We meet change by listening to our customers,” he says. “All I do all day is talk to people who are racing our cars.” He says he and his staff listen to the drivers’ ideas, bounce them around internally, then try them out to see if they work. If they do, the new concepts become incorporated into all their products. “We have to definitely spend more time and money trying to come up with a better mousetrap.”

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Monday, October 24, 2011

More Retail Selling Methods

In retailing, as in all types of selling, a customer with pricing on the mind may insist they can get by with a cheaper product even when you know they are ultimately going to be dissatisfied with it. It’s important to sell this customer the right product the first time if at all possible, because they will probably blame you for their dissatisfaction later—even if you sold the cheap product to them under protest. Even worse, they may spread the bad word to their friends. Selective memory is a powerful force for evil.

One way to up-sell them is to play up the differences between the cheaper and the better products while you stress the very small differential in their prices by breaking it down into smaller amounts. Over the life span of two brands of high performance tires, for example, how many pennies per mile does the twenty-dollar price difference amount to?

Good salespeople always have their eyes and ears open looking for opportunities to up-sell their current customers. Here are some good ways to find more of them:

● Be alert to changes. Has the customer bought a new car? Of course, that’s an obvious opportunity to start selling. But how about if they’ve moved to a new house with a bigger garage? Can’t you envision that rack full of tools they have room for now?

● Disappointment breeds more sales. Let’s be frank: if your customers won every race they entered, they wouldn’t need you, would they? So when you hear one grousing about coming in second all the time, make a few well-chosen suggestions about how they can move up a notch while you’re empathizing with them.

● What’s new? New products are coming into the vibrant performance market every day and you owe it to your customers to tell them about them! An email newsletter can do the trick—and so can a simple telephone call.

When you take the sales initiative, opportunity knocks a lot louder.

Seller Reluctance

You and your other salespeople may be reluctant to use these tactics because of expected customer resistance or even resentment. But as long as you watch how they are reacting, listen to what they’re saying to you, and don’t try to cram something down their throat, that problem won’t be nearly as bad as you think. Remember, you’re dealing with somebody who has already decided to spend some money with you, so they must be pretty comfortable with the way you do business.

The biggest obstacle to increasing your sales this way, however, is simple laziness. It’s a lot easier to just give the customer what they ask for, take their money, and say goodbye. When you do that, though, you’re actually doing the customer a disservice because you can’t be sure that what you sold them will really meet their needs. How much do they know about what they are buying? Do they really understand what alternatives they have or what the differences are between various products? Up-selling is a good way to get to know what they truly need, which puts you—the professional—in a position to make sure they buy the right thing.

When you understand it that way, you realize that you are creating value for the customer while you are bringing more dollars into your store. That’s about the best formula for business success I’ve heard since someone advised me to buy low and sell high.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Monday, October 17, 2011

Retail Selling Success Is All About Up-Selling

Back in the good old days, when retail stores had living, breathing employees who helped customers choose their merchandise, it was standard procedure for the salesperson to try to increase the size of each individual sale. They did this very effectively in several ways that can be adopted by today’s retail shop owners who are interested in increasing the top line on their income statements.

One of the first is simple up-selling, where you guide the customer to a selection with a higher price point than the one they came in to buy. In an extreme example, let’s say that the customer came to your hardware store to buy a wrench. An up-seller would make at least an attempt to sell him or her a complete set of wrenches instead. Outlandish? Maybe, but you never know until you try. And, as long as the suggestion is done quickly and without pressure, the customer won’t mind.

A good way to manage this kind of interchange with the customer is to ask them what problems they’re having while you’re getting the item they came in for. That’s also the time to get some basic information like what kind of project they’re working on so you can give them accurate advice. Then, even if they say “no thanks” to the suggestion, you can reply with “Let me at least give you a price so you can think about it.” There’s no pressure on the customer in up-selling this way.


Another sales-building strategy is to suggest add-ons to the original purchase. Back when men wore coats and ties to the office (is anybody besides me old enough to remember that?), you couldn’t buy a jacket in a men’s store without the salesperson offering you a shirt, a couple of ties, and a pocket handkerchief (now I’m really dating myself). The modern shop owner can and should do the same thing. At a garden center, for example, once you’ve sold the customer a rose bush you should suggest new pruning shears and maybe some long gloves.

Add-ons should be, but don’t necessarily have to be, related in some way to the customer’s original purchase. It’s also helpful if they have a lower price point. They are truly impulse purchases for the customer, although the impulse originates with the shop salesperson.

There is no reason these same tactics can’t work for service revenues, too. The garage customer that buys a set of adjustable shocks, for example, might also be interested in a chassis tune. One incentive for the customer to make the additional purchase might be that you can save him or her some money by doing both jobs at the same time. It can also save the customer something else that’s valuable—time.

Up-sell Bargain Hunters, Too

There are some situations where you might think that up-sells and add-ons aren’t possible, like when a bargain-hunting customer comes into the shop and says, “I’m looking for such-and-such, and I only want to spend X dollars.” There are several ways to deal with that kind of low-baller. The first is to call their bluff and see how serious they are about their budget by telling them you don’t have anything in that price range and offering to show them secondhand merchandise or a cheaper job. Note that you’re not refusing to meet their needs, just their price. You’re also sending them a not-so-subtle message that their expectations may be too high without telling them flat out that they’re an idiot.

Another way is to just ignore what they say about their budget and start at the high end of the market and work your way down. One advantage of this approach is that it gives the customer a chance to see options they might not even know exist. What’s more, after they’ve seen that royal banana split, it makes their plain vanilla cone look a whole lot less appealing.

Yet a third approach is to give them alternatives and let them choose. Even if Product A and Product B are both priced higher than they say they are willing to pay, it’s always very possible that their budget will change if you do a good job of selling the higher-priced options. This is also a good way to find out what’s really important to them, both in terms of what they are looking for and how much they are really willing to pay.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Monday, October 10, 2011

Closing The Complex Sale

Selling the way it’s usually described is a pretty simple affair. You find the prospect, research their needs and develop a proposed idea, pitch the decision maker, manage the objections, and close the sale. Straight forward, isn’t it? Nice and linear.

But selling in the real world isn’t quite that simple. The “normal” sale is about as linear as a basket of eels. You may be able to find something that looks like a beginning, but which of the squirming bodies leads you to the other end? We all operate in the world of the complex sale.

The complex sale is easy to identify but hard to complete. You know you are in the middle of one when Mr. Big says, “I really like this idea, but I have to run it by my boss.” And then his boss, Mr. Bigger, says, “Good idea. What does production have to say about it?” And then production says, “Interesting. Can we change these widgets into woudgets—if the new assembly line we’re installing next year calls for it? Better check with the vendor.” So the vendor of the new assembly line says, “We’ll set it up any way they want. Besides, what’s a widget?” Get the picture?

There is a decision maker, but there are also multiple decision influencers. There is ultimately a “yes” or “no” decision, but there are also multiple interim decisions to be made before that point is reached. Multiple decision influencers making multiple decisions. It’s a recipe for mass confusion.

The dollar size of the buying decision doesn’t necessarily dictate the number of decision influencers involved. One of the more interesting sales I ever made was a multi-million dollar communications tower to a company in Saudi Arabia. The situation had all the hallmarks of a complex sale. The purchasing company was a joint venture operated by two other companies, one French and one Saudi, and the item I was selling was a very high priced component in a much larger complete system to be operated by a ministry of the Saudi government. The construction manager was an Egyptian subcontractor to the Saudi/French joint venture.

Even the payment wasn’t linear. The customer’s funds were coming from an insurance settlement that was still in dispute. The payment to us was to be made in the form of an Irrevocable Letter of Credit, which had to be approved by the Saudi bank, our bank, and a transmitting bank in Switzerland. There was an endless chain of meetings, referrals, studies, and opinions offered, countered, and negotiated by phone, fax, and snail mail that went on for six months and involved engineers, bankers, and various functionaries on three continents. Finally, the sale was closed after a single 90-minute meeting I held with the president of the joint venture and his construction manager. That meeting was basically a formality, however, since all the details had been ironed out in the months before.

On the other hand, I once sold a small-market television advertising package worth $300 that required four weeks of study and deliberation by an advertising agency’s media planner, buyer, and account supervisor, their client’s store manager, regional manager, and advertising director, and the co-operative advertising manager of one of the store’s vendors. The Federal Express and long-distance telephone bills were greater than our profit on that sale!

Watch out, a complex sale could be lurking anywhere out there.

Successfully completing a complex sale requires tremendous patience and perseverance, two qualities often in short supply among salespeople, who often chose sales as a career in the first place because they like the instant gratification of closing a deal. If the reason you get up and go to work each morning is to see how many sales you can make that day, I suggest you find something simple to sell—like Girl Scout cookies—and a simple market to sell it in—like sole proprietorships with fewer than two employees. Selling just about anything else to larger organizations requires the ability to navigate through a complex sale.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.

Monday, October 3, 2011

How To Make Interviews Meaningful

From the hirer’s standpoint, the purpose of the job interview is to learn things that will hopefully predict the potential employee’s future success (or failure). Some things I learned while hiring hundreds of salespeople over the years:

• The applicant should do most of the talking. If you spend more time speaking than listening, you’re not learning as much about them as they are about you.

• What they say may not be as important as how they say it. Do they speak clearly and convey a positive outlook? Do they get defensive?

• Communication goes both ways, so do they listen well? How much attention they pay to your questions may reveal how much attention they’ll pay to those of your customers.

• Appearance isn’t everything, but who wants to work with a slob? To find out how neat an applicant really is, go outside and look in their car. If the back seat is full of junk, they may not be as well-kept as they appear.

• Follow-up counts, especially in personal sales. Give the applicant your phone or fax number or your email address, then a day or two to see if they send you a thank-you after the interview. If they do, it will not only show that they’re polite, but that they care enough about the job to go the extra step.

Starter Questions

The goal of an interview is to listen to the candidate talk so you can learn about them. Here are few open-ended questions to start the process:
• Tell me about your work history. Which job did you like best? Why?

• Did you enjoy school? What was your favorite subject? Why?

• Is there anything I should know about your career that doesn’t show up on your resume?

• What part of your current (or last) job do you like best? Least?

• Do you like your boss? Why? Why not?

• Describe for me the most difficult problem you’ve ever faced and tell me how you solved it.

• What do you do best?

• What do you want your employer to do for you?

• Who is the person you most admire? Why?

• Tell me what you do to improve yourself.

Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.