“I’m sorry” may be the two most powerful words in customer relations. They’re certainly applicable if you or your company messed up an order or have something else for which to apologize, but they also show empathy for the customer’s feelings regardless of who is to blame. Those two simple words go a long way toward removing the “me against you” attitude that pours gasoline on a smoldering customer’s fire.
If you really want to “wow” the customer, accept responsibility for the solution, even if you don’t deserve it for the problem. Fear that their problem is going to get short-shrift causes more customer stress than any other single factor. It’s no wonder, when we live in a society where way too many “customer hotlines” are answered by call-center operators on the other side of the world whose standard answer to a complaint is to file it. Anticipation that this is going to happen turns slightly unhappy customers into absolutely furious customers, so one of the most effective ways you can defuse an explosive situation is to immediately promise your personal attention to working something out. When the customer finds a real, live human being who says they will personally take care of the problem, they’ll feel a tremendous sense of relief. And, when you actually do solve the problem, they’ll become customers for life.
Speaking of stress, it helps to relieve yours if you remember that not every single difficult customer can be satisfied. Sometimes their frustration stems from circumstances beyond your control, the solution is something you can’t deliver, and they just can’t or won’t accept those facts. Or maybe he or she really is that one-in-a-thousand customer whose goal in life is to get the better of you in every deal. If that’s the case, just tell them “sorry” and let them go. You’ll probably lose a customer but you’ll gain a little peace and quiet.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Showing posts with label creative selling. Show all posts
Showing posts with label creative selling. Show all posts
Friday, May 31, 2013
Friday, May 24, 2013
Practical Methods For Difficult Customers
Here are some ways to improve communication with difficult customers:
Listening is the most important skill a sales person can possess in every situation, from trying to get an appointment with a new prospect to making a presentation to your biggest client. It’s essential when dealing with a difficult customer, so remember the first rule of listening: you can’t listen if you’re talking! Let the customer talk. Don’t pounce on the things they are saying by trying to give them an answer before they’re finished saying them. In fact, watch out that you don’t just pretend to listen when you’re actually phrasing your answer while they’re talking. A remarkable number of difficult customers just want someone to listen to their problems, so learn to offer that small service automatically.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
- Be receptive. Tell the customer you want to hear what they have to say, then give them a chance to say it.
- Put on their shoes and walk around in them for awhile. If you were faced with their frustration, how would you feel? And, just as importantly, what would you expect to be done to correct it?
- Use descriptive, non-judgmental words. Instead of saying “that’s wrong” try “that’s one way to look at it.”
- Set limits on the problem by excluding things that happened in the past or aren’t relevant to the current situation.
- Break the problem up into smaller pieces and try to reach an agreement on each one.
- Emphasize the things you have in common. “We both want the recipient of your gift to be happy,” for example.
Listening is the most important skill a sales person can possess in every situation, from trying to get an appointment with a new prospect to making a presentation to your biggest client. It’s essential when dealing with a difficult customer, so remember the first rule of listening: you can’t listen if you’re talking! Let the customer talk. Don’t pounce on the things they are saying by trying to give them an answer before they’re finished saying them. In fact, watch out that you don’t just pretend to listen when you’re actually phrasing your answer while they’re talking. A remarkable number of difficult customers just want someone to listen to their problems, so learn to offer that small service automatically.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, May 17, 2013
Dealing With Difficult Customers
We’ve all had them: the customer who refuses to be satisfied. Sometimes they whine like nine-year-olds; other times they rant and rave about our merchandise, our service, or even our parentage. One way to deal with them involves a baseball bat but, attractive as that solution may be, it’s not really viable. Your goal when dealing with a difficult customer is to solve today’s problem in a way that lays the ground work for tomorrow’s order. Smacking them in the head interferes with that process. The better way is to apply some of the simpler principles of sales psychology and see if you can’t turn that steaming monster into a happy, satisfied repeat customer.
The root of most customer problems is stress, usually stemming from what they perceive as an obstacle you’ve placed in their way. They may feel you’re not giving them what they thought they were supposed to get from you, or that what you are providing doesn’t satisfy their needs. Regardless, the first step in reducing the stress level is to find out what’s really bothering them.
That’s much easier said than done. All too often, our first reaction to a complaint is to get defensive. The customer makes a less-than-pleasant comment about the design of a product we’ve slaved over for hours and it’s like somebody peeked into the bassinet and told us our first child was an ugly baby. How dare they!? We have to keep our primary goal in mind: to make more sales. It’s very satisfying to create beautiful designs, but the only award that counts is the one that ends up in your bank account and that prize comes from a very opinionated judge, your customer. So, if the customer likes it, it’s good. If they don’t, change it! And do it cheerfully, because if you’re snarling under your breath, you’re telling that customer that you think they’re wrong. No one likes to be treated with condescension.
Sometimes, we immediately jump to the conclusion that they’re trying to get something for nothing or to bad-mouth us into cutting our price. There are people like that out there, but there are a lot fewer of them than we think. If we start from a defensive posture, we’re bound to make the problem worse instead of better. Orlando-based organizational management consultant Dr. Arnie Witchel advocates what he calls “negotiation jujitsu” when faced with a difficult customer. “In jujitsu,” he says, “you go with the force to disarm your opponent, not against it. If a difficult customer is pushing hard on you, do not push back!
Reframe any attacks on you or your company with questions that seek to clarify the situation and concerns. Don’t resort to hostility!” He points out that you have to separate the person from the problem and focus on their interests and goals, not on the problem itself. If you do that, if you approach the situation with an eye on removing obstacles that block what the customer wants to achieve, you’re more likely to arrive at a collaborative, mutually-satisfactory conclusion.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
The root of most customer problems is stress, usually stemming from what they perceive as an obstacle you’ve placed in their way. They may feel you’re not giving them what they thought they were supposed to get from you, or that what you are providing doesn’t satisfy their needs. Regardless, the first step in reducing the stress level is to find out what’s really bothering them.
That’s much easier said than done. All too often, our first reaction to a complaint is to get defensive. The customer makes a less-than-pleasant comment about the design of a product we’ve slaved over for hours and it’s like somebody peeked into the bassinet and told us our first child was an ugly baby. How dare they!? We have to keep our primary goal in mind: to make more sales. It’s very satisfying to create beautiful designs, but the only award that counts is the one that ends up in your bank account and that prize comes from a very opinionated judge, your customer. So, if the customer likes it, it’s good. If they don’t, change it! And do it cheerfully, because if you’re snarling under your breath, you’re telling that customer that you think they’re wrong. No one likes to be treated with condescension.
Sometimes, we immediately jump to the conclusion that they’re trying to get something for nothing or to bad-mouth us into cutting our price. There are people like that out there, but there are a lot fewer of them than we think. If we start from a defensive posture, we’re bound to make the problem worse instead of better. Orlando-based organizational management consultant Dr. Arnie Witchel advocates what he calls “negotiation jujitsu” when faced with a difficult customer. “In jujitsu,” he says, “you go with the force to disarm your opponent, not against it. If a difficult customer is pushing hard on you, do not push back!
Reframe any attacks on you or your company with questions that seek to clarify the situation and concerns. Don’t resort to hostility!” He points out that you have to separate the person from the problem and focus on their interests and goals, not on the problem itself. If you do that, if you approach the situation with an eye on removing obstacles that block what the customer wants to achieve, you’re more likely to arrive at a collaborative, mutually-satisfactory conclusion.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, May 10, 2013
How To Lose A Customer - Method #3
You can’t please everybody. Some days, in fact, it seems like you can’t please anybody. The paint color is a shade lighter than the customer thought it was going to be. There is a squiggle in the upholstery seam that only the customer can feel. The shelf is higher on one side than it is on the other—you can’t see it, but the customer can. How do you handle impossible, irrational complaints? (No, a slap upside the head is not a viable solution.)
The first step in handling a complaint—rational or otherwise—is to hear the customer out. Listening is the most important skill in customer relations, so remember the first rule: you can’t listen if you are talking! Let the customer talk first. Don’t pounce on what they say by trying to give them an answer before they’re finished. A remarkable number of complaining customers just want someone to listen to their problems, so learn to offer that particular small service automatically.
Is the customer always right? No, but they should never be told flat out that they’re wrong, either. Soften it a little by using phrases like
Then make an adjustment if you can, or explain—politely and respectfully—why you can’t. It’s tough to generalize because complaints can vary from the frivolous to the catastrophic, but the key factor in the customer relationship is the way you communicate with them about it.
You may have to shave your profit on a job to make the customer happy, but it doesn’t really happen all that often. There are people who try to get something for nothing, but if we start by assuming that the customer is trying to take advantage of us, we’re never going to resolve the problem to either their satisfaction or ours. In fact, the damage to our relationships with good customers far exceeds any loss we’ll experience by giving in to the unfair demands of the single crooked complainer.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
The first step in handling a complaint—rational or otherwise—is to hear the customer out. Listening is the most important skill in customer relations, so remember the first rule: you can’t listen if you are talking! Let the customer talk first. Don’t pounce on what they say by trying to give them an answer before they’re finished. A remarkable number of complaining customers just want someone to listen to their problems, so learn to offer that particular small service automatically.
Is the customer always right? No, but they should never be told flat out that they’re wrong, either. Soften it a little by using phrases like
- “I can see why you feel that way…”
- “Let me look at that again…”
- “I understand what you’re saying…”
Then make an adjustment if you can, or explain—politely and respectfully—why you can’t. It’s tough to generalize because complaints can vary from the frivolous to the catastrophic, but the key factor in the customer relationship is the way you communicate with them about it.
You may have to shave your profit on a job to make the customer happy, but it doesn’t really happen all that often. There are people who try to get something for nothing, but if we start by assuming that the customer is trying to take advantage of us, we’re never going to resolve the problem to either their satisfaction or ours. In fact, the damage to our relationships with good customers far exceeds any loss we’ll experience by giving in to the unfair demands of the single crooked complainer.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, May 3, 2013
How To Lose A Customer - Method #2
When you are in a service business, not every job goes as planned. That’s why, depending on the kind of work you do, you give your customers an “estimate” instead of a firm price before you begin. If you’re smart, that estimate is in writing, and if you’re even smarter, you ask the customer to sign it before you touch their job. Even then, though, misunderstandings occur and customer relationships can become strained. No one likes to get a bill for more than he expected.
It happens all the time: a manufacturer raises the price of a key component after you’ve figured the old price into the job; you remove a panel only to discover a crack in the supports underneath, one thing leads to another and before the job is done the man-hours you originally estimated turn into man-years. You can’t just absorb these unexpected costs, nor should you. But you can’t just pass them on to the customer either, at least not without his prior approval.
Your future relationship with your customer depends in part on the way you tell him his bill is going to be higher than he thought. Your goal should be to convince the customer that you’re not trying to pull a fast one. Express regret that you have to deliver some bad news, then give them the details—and the more details you include in your explanation, the higher your credibility will be. You don’t have to be defensive or apologetic, but let him know you share his pain. If you’re open, honest, and above all timely, you’ll keep that customer.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
It happens all the time: a manufacturer raises the price of a key component after you’ve figured the old price into the job; you remove a panel only to discover a crack in the supports underneath, one thing leads to another and before the job is done the man-hours you originally estimated turn into man-years. You can’t just absorb these unexpected costs, nor should you. But you can’t just pass them on to the customer either, at least not without his prior approval.
Your future relationship with your customer depends in part on the way you tell him his bill is going to be higher than he thought. Your goal should be to convince the customer that you’re not trying to pull a fast one. Express regret that you have to deliver some bad news, then give them the details—and the more details you include in your explanation, the higher your credibility will be. You don’t have to be defensive or apologetic, but let him know you share his pain. If you’re open, honest, and above all timely, you’ll keep that customer.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, April 26, 2013
How To Lose A Customer - Method #1
One of the easiest things to accomplish in any business is to lose a customer. Good ones are hard to find, but they’re easy to lose. A certain amount of customer turnover is to be expected; people move out of town, suffer pocketbook problems, even experience lifestyle-altering events like getting married and having kids that change their buying habits. On top of that natural attrition, though, is the kind we create ourselves. It’s the result of the things we say, do, think, and ignore that drive our customers away.
Losing customers is never intentional, but you wouldn’t know that from the way some business owners and their employees treat the people who pay the bills. They inadvertently insult them, frustrate them, embarrass them, and confuse them in numerous ways that make the customer hesitate before coming back to the shop for more. Some of the problems come from poor attitudes, others from simple misguidance. Often, we think we’re doing the right thing when it’s actually the worst possible thing we can do from a customer relations standpoint.
Here is one of the most common ways we treat our customers that are almost guaranteed to drive them away:
You’re the expert. Let’s say you are in the automotive restyling business. You’ve spent years learning the tricks of your trade, the special skills that let you tweak a convertible top until it’s watertight or lay down a pinstripe with the precision of a NASA engineering draftsman. That’s probably why your customer brought his ride to you in the first place; if he could do it himself, he wouldn’t need you. But that doesn’t mean you have to rub his face in it.
Let’s face it, tricked-out wheels are all about ego. My car is cool and it makes me cool. It’s a reflection of my self-image, my style, my place in the world. If I ask a question, please don’t make me feel stupid when you answer it. You may be able to prove you’re smarter than me, but it won’t improve our relationship. If I have an idea or suggestion on what I want done to my car, please don’t ridicule it. Even if what I want you to do violates all the laws of physics, you don’t need to belittle me when you tell me it can’t be done.
It’s all about respect for the customer, an attitude that’s reflected in the words you choose and even the body language you use when dealing with them. Here are some phrases that you might use to raise the customer’s self-esteem:
Above all, no matter how hard it is, resist laughing, snorting, or shaking your head in disbelief when the customer asks a question or makes a suggestion.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Losing customers is never intentional, but you wouldn’t know that from the way some business owners and their employees treat the people who pay the bills. They inadvertently insult them, frustrate them, embarrass them, and confuse them in numerous ways that make the customer hesitate before coming back to the shop for more. Some of the problems come from poor attitudes, others from simple misguidance. Often, we think we’re doing the right thing when it’s actually the worst possible thing we can do from a customer relations standpoint.
Here is one of the most common ways we treat our customers that are almost guaranteed to drive them away:
You’re the expert. Let’s say you are in the automotive restyling business. You’ve spent years learning the tricks of your trade, the special skills that let you tweak a convertible top until it’s watertight or lay down a pinstripe with the precision of a NASA engineering draftsman. That’s probably why your customer brought his ride to you in the first place; if he could do it himself, he wouldn’t need you. But that doesn’t mean you have to rub his face in it.
Let’s face it, tricked-out wheels are all about ego. My car is cool and it makes me cool. It’s a reflection of my self-image, my style, my place in the world. If I ask a question, please don’t make me feel stupid when you answer it. You may be able to prove you’re smarter than me, but it won’t improve our relationship. If I have an idea or suggestion on what I want done to my car, please don’t ridicule it. Even if what I want you to do violates all the laws of physics, you don’t need to belittle me when you tell me it can’t be done.
It’s all about respect for the customer, an attitude that’s reflected in the words you choose and even the body language you use when dealing with them. Here are some phrases that you might use to raise the customer’s self-esteem:
- “I can see how you might think that…”
- “Good question!”
- “That’s an interesting idea, but…”
Above all, no matter how hard it is, resist laughing, snorting, or shaking your head in disbelief when the customer asks a question or makes a suggestion.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, April 5, 2013
Using Idea Power To Build Repeat Sales
Creative selling isn't just for new accounts. A good creative seller will base the renewal proposal on a fresh idea for the long-term customer as well. Since you know their business intimately now, your ideas for them should be real barn-burners.
Idea power works on renewals the same way it works on new prospects. It more firmly establishes you as a resourceful ally of the customer. It separates you from the competition. It moves you and your proposal farther up the decision-making chain. And there’s that key advantage of idea selling, which is its focus on value rather than price.
A typical contract renewal usually starts with you and/or your sales manager deciding how much more to ask the account to spend. That amount generally is determined by the budgeted revenue increase your company has imposed on your sales manager and has nothing to do with the customers or their needs.
So the two of you look at what the customer spent last year, what prices they paid for what inventory or services, and you put together a proposal for the same thing with an additional item or two plus some unit price increases. Sound familiar?
When you pitch this insightful piece of work to the customer, Mr. Big’s going to consider it with two things in mind:
1. “Since this is the same thing I bought last year, am I satisfied enough with it to buy it again?
2. And if I buy it again, can I get a lower price?”
Then he’ll pull out the proposal which your competition has given him and compare the prices. Since they’ve had a year to study what Mr. Big bought from you, they’ve undoubtedly offered their version of it at a lower price. Even if they haven’t, Mr. Big is going to tell you that they have.
Being the saint that he is, Mr. Big will also inform you that he wasn’t entirely happy with what you sold him last year and has to have a better price this year to justify buying the same thing again. And since you can’t prove either point otherwise, you have to negotiate the renewal on price.
But what if you had followed the Creative Selling System to set up your renewal pitch? You’d be presenting a new idea to Mr. Big rather than the same old thing. And since your idea is based on the intimate understanding of his needs you have gathered during the last year of servicing the account, it should be right on Mr. Big’s target. Can he compare your new proposal with the competition’s? They’ve come in with last year’s model while you’ve presented a completely redesigned, up-to-date, forward-looking alternative. Which looks better?
How about comparing the new proposal with the old contract? If he says he wasn’t satisfied with the old deal, he’s playing right into your hands. Once again, what you are offering isn’t the old deal—it’s something new. He can’t compare prices—it’s apples to kumquats.
Idea power is awesome.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Idea power works on renewals the same way it works on new prospects. It more firmly establishes you as a resourceful ally of the customer. It separates you from the competition. It moves you and your proposal farther up the decision-making chain. And there’s that key advantage of idea selling, which is its focus on value rather than price.
A typical contract renewal usually starts with you and/or your sales manager deciding how much more to ask the account to spend. That amount generally is determined by the budgeted revenue increase your company has imposed on your sales manager and has nothing to do with the customers or their needs.
So the two of you look at what the customer spent last year, what prices they paid for what inventory or services, and you put together a proposal for the same thing with an additional item or two plus some unit price increases. Sound familiar?
When you pitch this insightful piece of work to the customer, Mr. Big’s going to consider it with two things in mind:
1. “Since this is the same thing I bought last year, am I satisfied enough with it to buy it again?
2. And if I buy it again, can I get a lower price?”
Then he’ll pull out the proposal which your competition has given him and compare the prices. Since they’ve had a year to study what Mr. Big bought from you, they’ve undoubtedly offered their version of it at a lower price. Even if they haven’t, Mr. Big is going to tell you that they have.
Being the saint that he is, Mr. Big will also inform you that he wasn’t entirely happy with what you sold him last year and has to have a better price this year to justify buying the same thing again. And since you can’t prove either point otherwise, you have to negotiate the renewal on price.
But what if you had followed the Creative Selling System to set up your renewal pitch? You’d be presenting a new idea to Mr. Big rather than the same old thing. And since your idea is based on the intimate understanding of his needs you have gathered during the last year of servicing the account, it should be right on Mr. Big’s target. Can he compare your new proposal with the competition’s? They’ve come in with last year’s model while you’ve presented a completely redesigned, up-to-date, forward-looking alternative. Which looks better?
How about comparing the new proposal with the old contract? If he says he wasn’t satisfied with the old deal, he’s playing right into your hands. Once again, what you are offering isn’t the old deal—it’s something new. He can’t compare prices—it’s apples to kumquats.
Idea power is awesome.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, March 29, 2013
Successful Contract Renewal Strategies
If you’ve been selling for any period of time, you’ve learned that contract renewals, even with your very best customers, are far from automatic. That’s why you should develop a renewal strategy that’s as complete as your plan for selling a new major account.
First, when you start working on that renewal, try to move the decision date earlier every time. There’s a real pragmatic defensive reason for this. Just as you monitor your competition, they’re constantly monitoring your accounts, too. And they’re probably just waiting for the opportunity to get in there with your biggest account at renewal time. Can’t you just see them lurking in the shadows?
The best way to foil their attack is to preclude it by locking up the renewal early. If you wait for the prospect to tell you it’s time for renewal, it’s too late. You should be the proactive party in the transaction.
Do your estimate (or re-estimate) of their spending potential, study their needs as you now know them, and put that proposal for the renewal on the table as early as you can. You’ll stand a good chance of getting an early renewal at the best and will have set the standards for the competition at the worst. It’s generally better to be defending your position than assaulting someone else’s.
And when renewal time rolls around, make sure you set your sights high enough. Don’t let your expectations be limited by the size of the last contract. Human beings have a bad tendency to categorize each other. In sales, you tend to sort your current customers into boxes—and the size of the box is not based on their total potential as a revenue source but on what they spent with you the first time you sold them.
This system of classification is even worse when you take over an account that had been handled by someone else, like your predecessor in the territory. There’s a particular danger of improper classification, by the way, with some computerized sales automation systems since they can’t take into account what should be, only what has been. And many time management systems encourage you to rank your prospects by dollar volume and allocate your time accordingly, so the error can be compounded.
If you sort your customers into boxes based on their previous spending with your company, you’re putting yourself into a box, too. And that box limits the potential for growth in your commission check. You should have no more pre-conceived ideas about your current customers than you do about new prospects. You must not let past spending be the sole determinant of the size of future proposals.
Remember, too, that the stereotyping process works both ways. Just as you’ve classified the account based on its past spending, the buyer has probably classified you based on the size of the proposals you have offered. If you’ve been selling them small deals, you’re grouped (mentally at least) as an unimportant vendor. If the amount they spend with you “moves the needle” on their income statement, you’ll be in a much larger box.
I recommend periodic reviews of current account potential along the lines of the initial research on prospective new accounts described in The Dynamic Manager’s Guide To Sales Techniques. There’s no law that says you can’t do that same kind of research into your current accounts. In fact, you would be doing the customer a real service if you took the time to analyze them that way.
Start with a fresh needs analysis as if you were getting ready to pitch a new account—then add the knowledge you’ve gained during the term of the current contract. Has the competitive scene changed? Has the customer made any changes in their business? The list of questions is endless but they should all give you a clearer map of the route to a sizable renewal.
Then look outside the box and estimate their revenue potential. If there’s a discrepancy between the estimate and their actual spending, you may have identified an opportunity.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
First, when you start working on that renewal, try to move the decision date earlier every time. There’s a real pragmatic defensive reason for this. Just as you monitor your competition, they’re constantly monitoring your accounts, too. And they’re probably just waiting for the opportunity to get in there with your biggest account at renewal time. Can’t you just see them lurking in the shadows?
The best way to foil their attack is to preclude it by locking up the renewal early. If you wait for the prospect to tell you it’s time for renewal, it’s too late. You should be the proactive party in the transaction.
Do your estimate (or re-estimate) of their spending potential, study their needs as you now know them, and put that proposal for the renewal on the table as early as you can. You’ll stand a good chance of getting an early renewal at the best and will have set the standards for the competition at the worst. It’s generally better to be defending your position than assaulting someone else’s.
And when renewal time rolls around, make sure you set your sights high enough. Don’t let your expectations be limited by the size of the last contract. Human beings have a bad tendency to categorize each other. In sales, you tend to sort your current customers into boxes—and the size of the box is not based on their total potential as a revenue source but on what they spent with you the first time you sold them.
This system of classification is even worse when you take over an account that had been handled by someone else, like your predecessor in the territory. There’s a particular danger of improper classification, by the way, with some computerized sales automation systems since they can’t take into account what should be, only what has been. And many time management systems encourage you to rank your prospects by dollar volume and allocate your time accordingly, so the error can be compounded.
If you sort your customers into boxes based on their previous spending with your company, you’re putting yourself into a box, too. And that box limits the potential for growth in your commission check. You should have no more pre-conceived ideas about your current customers than you do about new prospects. You must not let past spending be the sole determinant of the size of future proposals.
Remember, too, that the stereotyping process works both ways. Just as you’ve classified the account based on its past spending, the buyer has probably classified you based on the size of the proposals you have offered. If you’ve been selling them small deals, you’re grouped (mentally at least) as an unimportant vendor. If the amount they spend with you “moves the needle” on their income statement, you’ll be in a much larger box.
I recommend periodic reviews of current account potential along the lines of the initial research on prospective new accounts described in The Dynamic Manager’s Guide To Sales Techniques. There’s no law that says you can’t do that same kind of research into your current accounts. In fact, you would be doing the customer a real service if you took the time to analyze them that way.
Start with a fresh needs analysis as if you were getting ready to pitch a new account—then add the knowledge you’ve gained during the term of the current contract. Has the competitive scene changed? Has the customer made any changes in their business? The list of questions is endless but they should all give you a clearer map of the route to a sizable renewal.
Then look outside the box and estimate their revenue potential. If there’s a discrepancy between the estimate and their actual spending, you may have identified an opportunity.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, March 22, 2013
Continual Selling Cements Customer Relationships
The best way to make sure the long term customer knows you’re not taking them for granted is to make it a practice to continually sell them. Advertising works best when it’s presented constantly over time. The message and the medium are important, but the repetition of the message—the frequency with which a customer sees the ad—is paramount. Good customer relations are built the same way: continual selling.
As you practice continual selling, watch out for a few pitfalls. In most businesses, long-term orders are encouraged. A contract to deliver the product or service in increments over a period of several months is generally considered more valuable than a series of contracts to deliver the same volume written one month at a time. The security of the long-term contract is often so important that the vendor will grant a discount or other special terms to the customer who signs one. Salespeople recognize the value, too, because they know that it’s much more efficient to sell one contract than twelve.
But there’s a downside risk in long-term contracts, too. The salesperson often believes, either consciously or subconsciously, that they’ve secured all the business they’re going to get from that customer, so they stop selling them until contract renewal time comes around. In some cases (which are all too frequent), the customer won’t even hear from the salesperson again until it’s time to renew. This attitude not only impairs the relationship with that customer, but it blinds the salesperson to many good opportunities in the interim.
I’m sure that your company has a continuous stream of new products, repackaged lines, sales promotions, and maybe even a price change or two. The first place you should prospect to sell these is among your current customers. They’ve already shown their willingness to buy from you, so keep the boiler stoked by continually feeding it new fuel.
Your customer’s needs may have changed or new ones arisen since they signed that long- term contract. The contract itself may have left some money on the table or there may well be a “contingency fund” in the customer’s budget held back just for last-minute opportunities. You’ll never know unless you constantly offer them additions to their contract.
Another advantage of continual selling is that you are trying out new ideas on the customer all the time. That gives you frequent feedback on what the customer likes and doesn’t like, needs and doesn’t need. Whether you sell any add-ons or not, this is very useful information when it comes to renewal time.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
As you practice continual selling, watch out for a few pitfalls. In most businesses, long-term orders are encouraged. A contract to deliver the product or service in increments over a period of several months is generally considered more valuable than a series of contracts to deliver the same volume written one month at a time. The security of the long-term contract is often so important that the vendor will grant a discount or other special terms to the customer who signs one. Salespeople recognize the value, too, because they know that it’s much more efficient to sell one contract than twelve.
But there’s a downside risk in long-term contracts, too. The salesperson often believes, either consciously or subconsciously, that they’ve secured all the business they’re going to get from that customer, so they stop selling them until contract renewal time comes around. In some cases (which are all too frequent), the customer won’t even hear from the salesperson again until it’s time to renew. This attitude not only impairs the relationship with that customer, but it blinds the salesperson to many good opportunities in the interim.
I’m sure that your company has a continuous stream of new products, repackaged lines, sales promotions, and maybe even a price change or two. The first place you should prospect to sell these is among your current customers. They’ve already shown their willingness to buy from you, so keep the boiler stoked by continually feeding it new fuel.
Your customer’s needs may have changed or new ones arisen since they signed that long- term contract. The contract itself may have left some money on the table or there may well be a “contingency fund” in the customer’s budget held back just for last-minute opportunities. You’ll never know unless you constantly offer them additions to their contract.
Another advantage of continual selling is that you are trying out new ideas on the customer all the time. That gives you frequent feedback on what the customer likes and doesn’t like, needs and doesn’t need. Whether you sell any add-ons or not, this is very useful information when it comes to renewal time.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, March 15, 2013
Customer For Life? Maybe!
Your goal for every customer should be to turn them into a customer for life, a popular concept that’s made the rounds in the last few years. Bowl them over with your service. Become such an integral part of their company that you have your own desk in their office. Know their needs so intimately that you develop solutions before the customers even discover the needs themselves.
Out of all your customers, you won’t have very many with that kind of relationship, but when you do, you’ll profit from it. I’ve been fortunate enough to have a handful of such customers with whom I’ve done business both when I worked for other companies and after I started my own. A few of them have represented millions of dollars in income over the years. You can enjoy the same kind of long-term relationship with your best customers if you practice just one thing: never stop selling them.
They may become your friends; in fact, I hope they do. They may come to rely on your service or products to the exclusion of all others. They may tell you that they’ll always be your customers and sign long-term contracts to prove it. But if you take them and their business for granted, you’ll regret it someday.
You’ll also be sorry if you rely on them as your sole or main source of income. Having one dominant customer is a dangerous situation because there are too many variables outside your control—and theirs. “For life” is a long, long, time.
Situations and people change. What was the foundation for a wonderful relationship two years ago may not mean anything today. Your relationship with your customer for life has to develop and change the same way your relationship with your spouse or significant other evolves over time. That’s the only way the relationship will stay vibrant, alive, and satisfying to both of you.
So never stop selling them. Every time your company comes out with a new product or service, pitch it to your current customers first. If it’s really a “new and improved” model, don’t you owe it to them? If there’s a limited supply, shouldn’t your best customers get first shot at it? That should be one of their rewards for being a loyal customer.
And always look for ways to add value to their current purchases from you. If your company sees fit to offer an inducement to new customers, shouldn’t your best current customers get the same deal? It’s a real slap in the face if they don’t. And if the new business incentive is a small price to pay for a new account, it’s an even smaller price to pay to keep a current one. That’s one of the management dilemmas behind sales promotions.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Out of all your customers, you won’t have very many with that kind of relationship, but when you do, you’ll profit from it. I’ve been fortunate enough to have a handful of such customers with whom I’ve done business both when I worked for other companies and after I started my own. A few of them have represented millions of dollars in income over the years. You can enjoy the same kind of long-term relationship with your best customers if you practice just one thing: never stop selling them.
They may become your friends; in fact, I hope they do. They may come to rely on your service or products to the exclusion of all others. They may tell you that they’ll always be your customers and sign long-term contracts to prove it. But if you take them and their business for granted, you’ll regret it someday.
You’ll also be sorry if you rely on them as your sole or main source of income. Having one dominant customer is a dangerous situation because there are too many variables outside your control—and theirs. “For life” is a long, long, time.
Situations and people change. What was the foundation for a wonderful relationship two years ago may not mean anything today. Your relationship with your customer for life has to develop and change the same way your relationship with your spouse or significant other evolves over time. That’s the only way the relationship will stay vibrant, alive, and satisfying to both of you.
So never stop selling them. Every time your company comes out with a new product or service, pitch it to your current customers first. If it’s really a “new and improved” model, don’t you owe it to them? If there’s a limited supply, shouldn’t your best customers get first shot at it? That should be one of their rewards for being a loyal customer.
And always look for ways to add value to their current purchases from you. If your company sees fit to offer an inducement to new customers, shouldn’t your best current customers get the same deal? It’s a real slap in the face if they don’t. And if the new business incentive is a small price to pay for a new account, it’s an even smaller price to pay to keep a current one. That’s one of the management dilemmas behind sales promotions.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, March 8, 2013
Existing Customers vs New Prospects
Your current customers are your best single source of new business. They know you, they know your product, they have demonstrated their willingness to purchase. What’s more, you know them, you’ve learned about their needs, and you’ve invested a significant amount of your time in the success of their business. You should work to protect that investment and encourage it to grow the same way you manage your investment portfolio, making adjustments periodically to maximize the return on your investment.
Your current customers are also your company’s most profitable customers. The heavy start-up costs have been absorbed and written off already. The current customers have passed the credit checks, had their account data fed into your computer, been educated about your billing practices, learned how to use your customer support and service staffs, and otherwise incurred the typical back-office expense necessary to start doing business with a new account.
They’ve probably also passed the most expensive stage of incurring initial selling costs. You’ve used the get-acquainted offer, the short-term trial contract, and the sales promotion expense to bring them into the company. You’ve done your basic research, invested your time in preparing the initial proposals, tracked down the decision-makers, and made all the follow-up presentations to make the first sale. Once you’ve done these things, you generally don’t have to do them again. You can skip or abbreviate at least some of these time-expensive tasks.
You can concentrate on keeping the current customer happy and increase your business with them while you go about developing other new accounts. As you’ve probably guessed by now, you have to do both tasks to build a successful account list or territory. There is no rest in sales unless you decide you’re not going to grow your business both ways. And if that’s your decision, you’ll have plenty of time to rest—in the line at the unemployment office.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Your current customers are also your company’s most profitable customers. The heavy start-up costs have been absorbed and written off already. The current customers have passed the credit checks, had their account data fed into your computer, been educated about your billing practices, learned how to use your customer support and service staffs, and otherwise incurred the typical back-office expense necessary to start doing business with a new account.
They’ve probably also passed the most expensive stage of incurring initial selling costs. You’ve used the get-acquainted offer, the short-term trial contract, and the sales promotion expense to bring them into the company. You’ve done your basic research, invested your time in preparing the initial proposals, tracked down the decision-makers, and made all the follow-up presentations to make the first sale. Once you’ve done these things, you generally don’t have to do them again. You can skip or abbreviate at least some of these time-expensive tasks.
You can concentrate on keeping the current customer happy and increase your business with them while you go about developing other new accounts. As you’ve probably guessed by now, you have to do both tasks to build a successful account list or territory. There is no rest in sales unless you decide you’re not going to grow your business both ways. And if that’s your decision, you’ll have plenty of time to rest—in the line at the unemployment office.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Monday, March 4, 2013
Free Sales Training
Learn the secrets of making a sale on the first call....absolutely FREE!
One of the great myths of selling is that you must make a series of calls on a prospect to determine their needs before you can make a proposal. This is generally time-wasting nonsense based on a misunderstanding of consultive selling. Why wait? You’ll speed up the prospect’s decision-making process if you present an actionable proposal on the very first call. Here's how to do it.
For a limited time, this ebook in the Dynamic Manager Handbook series is available at no cost to Kindle owners or anyone with a device that can use the Kindle app. It's my way of saying thanks to all the readers of the Dynamic Manager series and an introduction to aggressive, progressive sales people who haven't tried it yet.
Dave Donelson distill the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Friday, March 1, 2013
Getting Past The Flak Catcher To The Decision Maker
One of the most frustrating situations in sales is getting your proposal to a decision maker who is protected by an army of underlings or flak catchers who can't place an order but can shortstop your pitch. You can overcome this problem, if you approach it carefully but aggressively, following the steps I recommend in their exact order. If you try to jump ahead, you’ll suffer the consequences.
Step One: First, establish contact with Mr. Big, the real decision maker. Contact doesn’t have to mean a face-to-face meeting. In fact, in this stage you don’t really want a face-to-face. Put Mr. Big on your company’s direct mail list. Make sure he gets your newsletter, press releases, and new product announcements addressed to him personally and with a brief “FYI” note signed by you.
Step Two: When you present a proposal to the flak catcher or buying agency, follow it up with a “thank you” letter and carbon Mr. Big. Make sure the letter praises the flak catcher for their perception and professionalism during your meeting. Do the same if they somehow give you a little order. Lay it on real thick. It’ll make them look good to Mr. Big—and how can they object to that? That letter, of course, will also put your name in front of Mr. Big, establishing a human contact in your company he can call if he wants to. It’s also a good idea to send an actual, physical snail mail letter; they’re not only classier than email, but much less likely to get lost in Mr. Big’s spam folder.
These steps can’t be rushed. Together, they’ll probably take at least four to six weeks. You have to judge the time you need according to each situation, of course, but remember that the relationship has to evolve over a little time—weeks, not days—and work like water dripping steadily on rock. After enough drops have struck the surface, a hole will appear in the rock. It takes a lot of drops for that to happen.
Step Three: After you’ve laid the foundation, start to build the relationship. This step will probably require at least another four weeks. Now is the time to get some face-to-face contact with Mr. Big. Invite him (and the flak catcher) to any of your company functions where customers are welcome. If you don’t have any, think about staging one. Maybe you can throw a cocktail party to announce a new product or a buffet lunch in appreciation of past business.
If your company gives away any goodies—coffee mugs, T-shirts, caps with your logo—be sure to give one to the flak catcher and one to Mr. Big. Hand-deliver them if at all possible. Your goal is to put your face with that name Mr. Big has been seeing on correspondence for the last eight weeks. If you have to leave Mr. Big’s gift at the front desk, put a hand-written note with it.
Get your management involved, too. If your boss invites Mr. Big to dinner, the flak catcher can’t take it out on you, especially if the dinner is a purely social affair, which it should be at this point. Most top management recognizes the importance of these occasions and considers it part of their job.
Step Four: After you’ve established a pattern of contact with Mr. Big, he’s seen your name and face a few times and has been exposed to your company and its products, it’s time for the next step, which is to pitch an idea to him. Send a letter to Mr. Big much like your cold call telephone appointment pitch—promise him an idea and ask for 15 minutes of his time. Send a copy of the letter to the flak catcher. Then call the flak catcher and ask him if he’s available for that meeting assuming it happens. Don’t ask his permission—assume the close and invite him to the meeting. Then call Mr. Big to set the date and time.
The worst thing that can happen is that the flak catcher gets irritated by your end run. But what’s he going to do? Tell Mr. Big that he shouldn’t meet with that nice person who gave him all those gifts, invited him to dinner, and sent him that wonderful letter praising the flak catcher’s performance? It’s pretty hard for him to do that without sounding petty and defensive.
Is he going to tell you not to call Mr. Big? He can try, but if you remind him that you’re not going behind his back, in fact you’re inviting him to the meeting because you know how much Mr. Big values his opinion, he’ll have a tough time justifying his demand.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Step One: First, establish contact with Mr. Big, the real decision maker. Contact doesn’t have to mean a face-to-face meeting. In fact, in this stage you don’t really want a face-to-face. Put Mr. Big on your company’s direct mail list. Make sure he gets your newsletter, press releases, and new product announcements addressed to him personally and with a brief “FYI” note signed by you.
Step Two: When you present a proposal to the flak catcher or buying agency, follow it up with a “thank you” letter and carbon Mr. Big. Make sure the letter praises the flak catcher for their perception and professionalism during your meeting. Do the same if they somehow give you a little order. Lay it on real thick. It’ll make them look good to Mr. Big—and how can they object to that? That letter, of course, will also put your name in front of Mr. Big, establishing a human contact in your company he can call if he wants to. It’s also a good idea to send an actual, physical snail mail letter; they’re not only classier than email, but much less likely to get lost in Mr. Big’s spam folder.
These steps can’t be rushed. Together, they’ll probably take at least four to six weeks. You have to judge the time you need according to each situation, of course, but remember that the relationship has to evolve over a little time—weeks, not days—and work like water dripping steadily on rock. After enough drops have struck the surface, a hole will appear in the rock. It takes a lot of drops for that to happen.
Step Three: After you’ve laid the foundation, start to build the relationship. This step will probably require at least another four weeks. Now is the time to get some face-to-face contact with Mr. Big. Invite him (and the flak catcher) to any of your company functions where customers are welcome. If you don’t have any, think about staging one. Maybe you can throw a cocktail party to announce a new product or a buffet lunch in appreciation of past business.
If your company gives away any goodies—coffee mugs, T-shirts, caps with your logo—be sure to give one to the flak catcher and one to Mr. Big. Hand-deliver them if at all possible. Your goal is to put your face with that name Mr. Big has been seeing on correspondence for the last eight weeks. If you have to leave Mr. Big’s gift at the front desk, put a hand-written note with it.
Get your management involved, too. If your boss invites Mr. Big to dinner, the flak catcher can’t take it out on you, especially if the dinner is a purely social affair, which it should be at this point. Most top management recognizes the importance of these occasions and considers it part of their job.
Step Four: After you’ve established a pattern of contact with Mr. Big, he’s seen your name and face a few times and has been exposed to your company and its products, it’s time for the next step, which is to pitch an idea to him. Send a letter to Mr. Big much like your cold call telephone appointment pitch—promise him an idea and ask for 15 minutes of his time. Send a copy of the letter to the flak catcher. Then call the flak catcher and ask him if he’s available for that meeting assuming it happens. Don’t ask his permission—assume the close and invite him to the meeting. Then call Mr. Big to set the date and time.
The worst thing that can happen is that the flak catcher gets irritated by your end run. But what’s he going to do? Tell Mr. Big that he shouldn’t meet with that nice person who gave him all those gifts, invited him to dinner, and sent him that wonderful letter praising the flak catcher’s performance? It’s pretty hard for him to do that without sounding petty and defensive.
Is he going to tell you not to call Mr. Big? He can try, but if you remind him that you’re not going behind his back, in fact you’re inviting him to the meeting because you know how much Mr. Big values his opinion, he’ll have a tough time justifying his demand.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for business owners and managers in the Dynamic Manager's Guides and Handbooks, a series of how-to books about marketing and advertising, sales techniques, and management strategy.
Monday, October 29, 2012
B 2 B Direct Mail Marketing Followup
Once you’ve done a few mailings, go visit the prospects on your list. Before you go, though, think through what you want to say to them. A short (three-minute) description of what you do and how you can help the prospect’s company make money will get you started. Once you’ve delivered it, ask them what you need to do to get their business, then shut up and listen. Nine times out of ten, they’ll tell you what you need to know as long as you use a professional approach and demonstrate a willingness to pay attention. Don’t be offended if you get a brush-off or two and don’t give up if they say they already have a preferred source for what you’re trying to sell. If that happens, thank them for their time and move on. Keep them on your mailing list, though, and visit them again next month—things change!
You should also have a leave-behind of some sort for every sales call. This can be a version of your latest direct mail piece, a fancier brochure, or even a coffee mug with your logo. And don’t forget to give them your business card. In fact, one of the best tactics you can adopt is to always hand out two cards at a time and ask the recipient to pass one along to anyone else they know who might be interested in your services.
Once you’ve established a relationship, build on it. There are all kinds of creative things you can do to keep your company at the top of the prospect’s list of preferred subs and vendors. Offer to sponsor a sales contest for the prospect for example, awarding a prize to the dealer’s salesperson who sells the most pieces in your line during a given period of time. Watch for the prospect’s own sales event, then have a pile of pizzas or a few boxes of donuts delivered with your compliments on their busiest day. If the prospect belongs to a civic group or supports a local charity, become involved with it yourself. The goal is to keep your name in front of the prospect all the time.
Your own vendors may help you with business-to-business marketing, too. Many manufacturers and distributors have co-operative advertising programs that pay part of the cost of your printing and mailing if you feature their products. Even if they don’t have a formal program, it doesn’t hurt to ask the next time you place an order. Others may have regional sales reps who would be available to go with you to make face-to-face calls. You should also ask if your suppliers do any lead generating of their own—trade shows, magazine advertising, etc.—that they can share with you.
Even with help from your vendors, marketing isn’t free, of course. A hundred first-class letters will cost you at least $100 for postage, envelopes, and computer printer ink. Imprinted coffee mugs aren’t cheap and even a supply of business cards will set you back a few bucks.
The biggest expense, though, is your time. Someone has to compile the prospect list, write the sales letters, and make the sales calls. In most small businesses, that someone is you. To control that particular expense (and to make sure the marketing gets done), dedicate a set number of hours every week to it, budgeting your time the same way you do your money.
Marketing is an investment from which you should expect a return. Fortunately, results from business-to-business marketing are usually easy to track. There is a finite prospect list, you know exactly how you’re marketing to each one, and you can easily identify the orders that you get from them. Make the investment in business-to-business marketing for a few months, then review the response. You might be surprised how much your company’s business has grown.
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.
You should also have a leave-behind of some sort for every sales call. This can be a version of your latest direct mail piece, a fancier brochure, or even a coffee mug with your logo. And don’t forget to give them your business card. In fact, one of the best tactics you can adopt is to always hand out two cards at a time and ask the recipient to pass one along to anyone else they know who might be interested in your services.
Once you’ve established a relationship, build on it. There are all kinds of creative things you can do to keep your company at the top of the prospect’s list of preferred subs and vendors. Offer to sponsor a sales contest for the prospect for example, awarding a prize to the dealer’s salesperson who sells the most pieces in your line during a given period of time. Watch for the prospect’s own sales event, then have a pile of pizzas or a few boxes of donuts delivered with your compliments on their busiest day. If the prospect belongs to a civic group or supports a local charity, become involved with it yourself. The goal is to keep your name in front of the prospect all the time.
Your own vendors may help you with business-to-business marketing, too. Many manufacturers and distributors have co-operative advertising programs that pay part of the cost of your printing and mailing if you feature their products. Even if they don’t have a formal program, it doesn’t hurt to ask the next time you place an order. Others may have regional sales reps who would be available to go with you to make face-to-face calls. You should also ask if your suppliers do any lead generating of their own—trade shows, magazine advertising, etc.—that they can share with you.
Even with help from your vendors, marketing isn’t free, of course. A hundred first-class letters will cost you at least $100 for postage, envelopes, and computer printer ink. Imprinted coffee mugs aren’t cheap and even a supply of business cards will set you back a few bucks.
The biggest expense, though, is your time. Someone has to compile the prospect list, write the sales letters, and make the sales calls. In most small businesses, that someone is you. To control that particular expense (and to make sure the marketing gets done), dedicate a set number of hours every week to it, budgeting your time the same way you do your money.
Marketing is an investment from which you should expect a return. Fortunately, results from business-to-business marketing are usually easy to track. There is a finite prospect list, you know exactly how you’re marketing to each one, and you can easily identify the orders that you get from them. Make the investment in business-to-business marketing for a few months, then review the response. You might be surprised how much your company’s business has grown.
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 22, 2012
How To Succeed At B 2 B Direct Marketing
Advertising to other companies doesn’t mean running TV spots in the Super Bowl. It’s much more targeted than that, which means it’s much more economical. Direct mail is probably the single most effective medium to use; it’s intrusive and there’s very little waste circulation. There are three keys to successful direct mail: a good prospect list, a compelling message, and repetition. You can make up a short prospect list yourself if you spend a little time with the Yellow Pages. Just look up the dealers and other prospects in your market area, call them to get the names of the general managers, service writers, sales managers and buyers, and you’ll have a solid prospect list to work with. Keep it handy, by the way, because you’ll use it later when you start making sales calls.
The direct mail piece itself doesn’t have to be a four-color glossy catalogue. In fact, a one-page personal letter introducing you and describing how you can make money for the other company (in one form or another, that should always be your pitch) will be a good place to start. Every three or four weeks, send another one saying the same thing in different ways. You can announce new equipment or product lines you’ve added, quote a recently satisfied customer, or brag about any awards you’ve received. Address it to each individual on your list, keep it to one page, include a picture or two, and make sure you send something at least once a month.
A web site is a useful business-to-business marketing tool, too. If it has plenty of pictures of your work or products, testimonials from satisfied customers, and some information about your background and your company’s capabilities, it will give the prospect even more reasons to send business your way. Also make sure there is a working email link, phone and fax numbers, and keep it all up to date. You don’t need to hire a high-priced web designer, by the way; most hosting services offer perfectly good bare-bones templates. The site itself can cost less than $10 a month.
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.
The direct mail piece itself doesn’t have to be a four-color glossy catalogue. In fact, a one-page personal letter introducing you and describing how you can make money for the other company (in one form or another, that should always be your pitch) will be a good place to start. Every three or four weeks, send another one saying the same thing in different ways. You can announce new equipment or product lines you’ve added, quote a recently satisfied customer, or brag about any awards you’ve received. Address it to each individual on your list, keep it to one page, include a picture or two, and make sure you send something at least once a month.
A web site is a useful business-to-business marketing tool, too. If it has plenty of pictures of your work or products, testimonials from satisfied customers, and some information about your background and your company’s capabilities, it will give the prospect even more reasons to send business your way. Also make sure there is a working email link, phone and fax numbers, and keep it all up to date. You don’t need to hire a high-priced web designer, by the way; most hosting services offer perfectly good bare-bones templates. The site itself can cost less than $10 a month.
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 8, 2012
Pricing For Profit - Step Two
Once you know how much the merchandise or job costs, you mark it up to provide a profit. One way is to use what’s known as “keystone” pricing, which simply means doubling the cost to arrive at the selling price. This provides a 50% gross profit margin. That’s why retailers can put goods on sale for 40% off and still make a profit. It works fine, but it isn’t always the best choice.
You can also use manufacturers’ suggested retail pricing, which even further simplifies the calculations. Nationally uniform prices, of course don’t reflect local market conditions, much less the individual business owner’s costs of doing business. Remember, too, that they’re designed to help the manufacturer move more merchandise, not necessarily help you make more money.
Using a standard markup sounds simple, but that’s really only the beginning of sound pricing strategy. You also have to be sure that the gross profit is large enough to cover your overhead, or the indirect costs of operating your business, and still leave a net profit. Whether you’re marking up merchandise or deciding on a labor rate, you’ve got to build in something to cover the rent—and all those other bills you pay every month.
Every business has indirect expenses (not related to the cost of a piece of merchandise or a particular employee’s labor on a job) that have to be paid. The obvious ones include your building and what it costs to operate it (utilities, maintenance, taxes, insurance), your fixtures, tools, office equipment, vehicles and other fixed assets (their cost on an annual basis is your depreciation expense), your salary and benefits (especially health insurance), not to mention the office manager and other general employees. Don’t forget to add in your property and casualty and liability insurance premiums, accountant’s fees, advertising and marketing expenses, office supplies, telephone, and so on and so on. While you’re at it, make sure you include an annual contribution to your own retirement plan, be it a 401-K, SEP-IRA, or whatever.
Finally, add something for net profit. That’s the whole point of running the business, right? The net profit, by the way, is not the same as your salary as the manager or owner. Your salary is payment for your labor managing the business. If you’re the owner, the net profit is the return on your investment and the compensation your receive for the risks you take. There’s a big difference.
The total dollar amount of your shop’s gross profit, the figure that has to be larger than your overhead expense, is also dependant on how much merchandise you sell or how many jobs you complete. These are determined, at least in part, by the prices you charge. If your prices are too high, customers will run away, so it can be a vicious circle. Cost-based pricing is all well and good, but ultimately, the prices you charge are determined by what your customers are willing to pay. That’s where a whole raft of other factors comes into play.
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.
You can also use manufacturers’ suggested retail pricing, which even further simplifies the calculations. Nationally uniform prices, of course don’t reflect local market conditions, much less the individual business owner’s costs of doing business. Remember, too, that they’re designed to help the manufacturer move more merchandise, not necessarily help you make more money.
Using a standard markup sounds simple, but that’s really only the beginning of sound pricing strategy. You also have to be sure that the gross profit is large enough to cover your overhead, or the indirect costs of operating your business, and still leave a net profit. Whether you’re marking up merchandise or deciding on a labor rate, you’ve got to build in something to cover the rent—and all those other bills you pay every month.
Every business has indirect expenses (not related to the cost of a piece of merchandise or a particular employee’s labor on a job) that have to be paid. The obvious ones include your building and what it costs to operate it (utilities, maintenance, taxes, insurance), your fixtures, tools, office equipment, vehicles and other fixed assets (their cost on an annual basis is your depreciation expense), your salary and benefits (especially health insurance), not to mention the office manager and other general employees. Don’t forget to add in your property and casualty and liability insurance premiums, accountant’s fees, advertising and marketing expenses, office supplies, telephone, and so on and so on. While you’re at it, make sure you include an annual contribution to your own retirement plan, be it a 401-K, SEP-IRA, or whatever.
Finally, add something for net profit. That’s the whole point of running the business, right? The net profit, by the way, is not the same as your salary as the manager or owner. Your salary is payment for your labor managing the business. If you’re the owner, the net profit is the return on your investment and the compensation your receive for the risks you take. There’s a big difference.
The total dollar amount of your shop’s gross profit, the figure that has to be larger than your overhead expense, is also dependant on how much merchandise you sell or how many jobs you complete. These are determined, at least in part, by the prices you charge. If your prices are too high, customers will run away, so it can be a vicious circle. Cost-based pricing is all well and good, but ultimately, the prices you charge are determined by what your customers are willing to pay. That’s where a whole raft of other factors comes into play.
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 1, 2012
Pricing For Profit - Step One
When it comes to prices in your business, how much is enough and how much is too much? How do you set your prices? Buy low and sell high is the obvious answer, but for many companies, especially those with a mixture of retail merchandise and services, bricks-and-mortar and online competition, and customers driven one day by a penny-pinching budget and the next by the lust called gotta-have-whatever-at-any-price, there aren’t any easy answers.
Setting prices requires that even the most experienced manager or owner take a few moments every once in a while to dust off the calculator, get the accountant on the phone, and do some serious figuring. It’s tempting to just mark all merchandise up by a fixed percentage and figure labor at a flat rate comparable to what your competitors charge, but that’s not managing for profit, it’s hoping for one. There are several factors that you should consider.
Start with the cost of goods sold. That’s the amount you pay the manufacturer, wholesaler, or whomever for the merchandise you sell, whether at retail or as part of a service job. But it also includes the cost of acquiring those goods (shipping and handling), carrying them in inventory (interest expense), and allowances for returns and defective merchandise. If you pay any salespeople a commission or spiff, that needs to be taken into account, too.
For service work, you have to cover your direct labor costs on each job. These include not only an appropriate portion of your technicians’ annual salaries, but also their benefits, payroll taxes, unemployment insurance, worker’s compensation insurance, etc
What about the cost of your time? Whether you are a one-person business or simply provide indirect supervision of your staff, your time is a cost that has to be covered. One way to approach this is to divide what you expect to personally earn on an annual basis (including those items above but not your profit from the business—I’ll talk about that later) by 2,000, which is roughly the number of working hours during the year. Let’s say your “salary” plus benefits is $100,000. Your hourly labor cost is $50. Multiply that number by the hours you estimate you’ll personally spend on the job, add in the other worker’s costs, and you have your direct labor costs.
These aren't the only factors, so check next week for more guidelines on pricing for profit.
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.
Setting prices requires that even the most experienced manager or owner take a few moments every once in a while to dust off the calculator, get the accountant on the phone, and do some serious figuring. It’s tempting to just mark all merchandise up by a fixed percentage and figure labor at a flat rate comparable to what your competitors charge, but that’s not managing for profit, it’s hoping for one. There are several factors that you should consider.
Start with the cost of goods sold. That’s the amount you pay the manufacturer, wholesaler, or whomever for the merchandise you sell, whether at retail or as part of a service job. But it also includes the cost of acquiring those goods (shipping and handling), carrying them in inventory (interest expense), and allowances for returns and defective merchandise. If you pay any salespeople a commission or spiff, that needs to be taken into account, too.
For service work, you have to cover your direct labor costs on each job. These include not only an appropriate portion of your technicians’ annual salaries, but also their benefits, payroll taxes, unemployment insurance, worker’s compensation insurance, etc
What about the cost of your time? Whether you are a one-person business or simply provide indirect supervision of your staff, your time is a cost that has to be covered. One way to approach this is to divide what you expect to personally earn on an annual basis (including those items above but not your profit from the business—I’ll talk about that later) by 2,000, which is roughly the number of working hours during the year. Let’s say your “salary” plus benefits is $100,000. Your hourly labor cost is $50. Multiply that number by the hours you estimate you’ll personally spend on the job, add in the other worker’s costs, and you have your direct labor costs.
These aren't the only factors, so check next week for more guidelines on pricing for profit.
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, September 17, 2012
Highs And Lows Of Negotiation Strategy
I used to be a strong advocate of aiming high—making an outrageous offer so that I’d have plenty of room to come down when the buyer made a counter offer. Besides, I believed, low offers signal weakness.
I eventually learned that if the first offer was too high—outside the realm of what’s reasonable to the buyer—then the buyer just might not make any counter offer at all. Then where was I? If I lowered my offer to try to re-start the negotiation, I was really signaling my desperation and letting the buyer know that concessions could be won.
The first step in the Creative Selling System is gathering information about your prospect. And one of the key pieces of information is an estimate of the prospect’s spending potential. This not only gives you a goal to shoot for and an idea of how to structure your proposal, it gives you a good guideline for where to start your negotiations. As long as you begin with a proposal in the ballpark your prospect is used to playing in, you’re not likely to scare them off.
Take the time to do your homework and use one or more of the estimating methods I covered in The Dynamic Manager’s Guide To Sales Techniques. Even if you didn’t use those figures to structure your proposal in the first place, they will give you a sense of what’s possible for your negotiation.
Judge the reasonableness of your opening offer carefully. My rule now is that my opening offer is one at the high end of what the prospect could accept with no further changes if they were so inclined—and one I could defend without stretching my credibility.
It’s also good to practice a little mental discipline. Right at the beginning of the negotiation, establish in your own mind the lowest acceptable offer you’ll take. That way, you have a sense of how far you can go before you start cutting into profit margins, production capacity or whatever benchmark your company uses. As the negotiations proceed, you know where you are at all times. That sense of security gives you greater confidence during the process.
Establishing the lowest acceptable alternative in advance does something else. It keeps you in a win/win frame of mind because you don’t have to worry about losing! As long as you know the point at which you will walk away (and stick to it) you can’t lose anything.
As you may have noticed, we’ve now set an upper and a lower limit to pricing. This range makes it much easier to build a few small concessions into your proposal, or plan some value items you can add as the negotiations proceed. This helps you avoid making that big concession all at once, leaving you with no place to go if the buyer rejects it.
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.
I eventually learned that if the first offer was too high—outside the realm of what’s reasonable to the buyer—then the buyer just might not make any counter offer at all. Then where was I? If I lowered my offer to try to re-start the negotiation, I was really signaling my desperation and letting the buyer know that concessions could be won.
The first step in the Creative Selling System is gathering information about your prospect. And one of the key pieces of information is an estimate of the prospect’s spending potential. This not only gives you a goal to shoot for and an idea of how to structure your proposal, it gives you a good guideline for where to start your negotiations. As long as you begin with a proposal in the ballpark your prospect is used to playing in, you’re not likely to scare them off.
Take the time to do your homework and use one or more of the estimating methods I covered in The Dynamic Manager’s Guide To Sales Techniques. Even if you didn’t use those figures to structure your proposal in the first place, they will give you a sense of what’s possible for your negotiation.
Judge the reasonableness of your opening offer carefully. My rule now is that my opening offer is one at the high end of what the prospect could accept with no further changes if they were so inclined—and one I could defend without stretching my credibility.
It’s also good to practice a little mental discipline. Right at the beginning of the negotiation, establish in your own mind the lowest acceptable offer you’ll take. That way, you have a sense of how far you can go before you start cutting into profit margins, production capacity or whatever benchmark your company uses. As the negotiations proceed, you know where you are at all times. That sense of security gives you greater confidence during the process.
Establishing the lowest acceptable alternative in advance does something else. It keeps you in a win/win frame of mind because you don’t have to worry about losing! As long as you know the point at which you will walk away (and stick to it) you can’t lose anything.
As you may have noticed, we’ve now set an upper and a lower limit to pricing. This range makes it much easier to build a few small concessions into your proposal, or plan some value items you can add as the negotiations proceed. This helps you avoid making that big concession all at once, leaving you with no place to go if the buyer rejects it.
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, September 10, 2012
Use The Time Factor In Negotiation
One of the factors never to be overlooked in any negotiation is time. Time pressure works for and against both parties, often in interesting ways. Anyone who has been involved in union negotiations, for example, knows that the largest concessions always come just before the strike deadline. In fact, sometimes that’s the first time any concessions occur! Knowledge of the deadlines faced by the other party can be a powerful tool.
The pressure to come to an agreement is generally greatest on the party with the nearest deadline. Magazines are much more inclined to negotiate liberal terms for ad space the day before the issue closes than they are the week before. The prospect whose insurance policy is about to lapse is more eager to renew the policy than one with a 90 day grace period remaining. Know your prospect and know their deadlines.
One way to use time to your advantage is by making small concessions one at a time, drawing out the negotiating process if that is to your advantage. On the other hand, you may need to bring the deal to a close, in which case you may want to make a BFO, or best and final offer.
As a seller, though, don’t be surprised if the buyer calls your bluff. They have nothing to lose and plenty to gain by telling you your BFO isn’t good enough. If you back down and make a further concession, all you’ve done is prove to the buyer that you’re a bluffer—and that your word isn’t any good.
The time to make a BFO is when you discover you’re negotiating with yourself. You can tell that’s the situation because the other party isn’t offering any concessions—you’re the only one making any movement. It’s one of the most frustrating situations you can face. You make all the moves, getting nothing more than a “that’s not good enough” response from the prospect. The time to take a chance and make your BFO is when you have nothing to lose.
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.
The pressure to come to an agreement is generally greatest on the party with the nearest deadline. Magazines are much more inclined to negotiate liberal terms for ad space the day before the issue closes than they are the week before. The prospect whose insurance policy is about to lapse is more eager to renew the policy than one with a 90 day grace period remaining. Know your prospect and know their deadlines.
One way to use time to your advantage is by making small concessions one at a time, drawing out the negotiating process if that is to your advantage. On the other hand, you may need to bring the deal to a close, in which case you may want to make a BFO, or best and final offer.
As a seller, though, don’t be surprised if the buyer calls your bluff. They have nothing to lose and plenty to gain by telling you your BFO isn’t good enough. If you back down and make a further concession, all you’ve done is prove to the buyer that you’re a bluffer—and that your word isn’t any good.
The time to make a BFO is when you discover you’re negotiating with yourself. You can tell that’s the situation because the other party isn’t offering any concessions—you’re the only one making any movement. It’s one of the most frustrating situations you can face. You make all the moves, getting nothing more than a “that’s not good enough” response from the prospect. The time to take a chance and make your BFO is when you have nothing to lose.
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, September 3, 2012
Adverse To Negotiation? Get Over It!
Some people are leery of negotiating a sale. They feel that the process is somehow dishonest or demeans them, their product, or even their prospect in some way. In fact, I often encounter sales managers who proudly point out that their prices are firm. They insist that every customer pays the same price and that’s the one set by the sales manager. They would rather forego a sale than violate their holy pricing policies. These sales managers need a strong dose of reality—and they often get it in the form of declining market share.
There is nothing holy about a given price, nor is there any moral law that says that every customer is entitled to the same terms. In fact, certain religions make a pretty strong moral case for customizing prices and other terms according to each customer’s individual needs. Don’t get me wrong. There’s nothing wrong with having a firm pricing policy. But let’s not hide the reasons for it in some kind of moral cloud. Firm pricing is a matter of what management feels is best for the selling company. Ideally (from their standpoint), it controls demand to produce the maximum profit from the available supply. And having firm prices makes the administration of the revenue stream easier, which makes the sales manager’s job easier. There’s nothing wrong with that.
But there is nothing wrong with negotiating every sale, either. Humans have been doing it for thousands of years in one way or another. In fact, the most successful economic system yet invented, the free market economy, is predicated on the freedom of sellers to offer different value for various prices and for buyers to accept or reject them.
Isn’t that what happens when your favorite department store puts an item on sale? Apparently, the store’s customers made the choice to not buy that item at the previous price, and the store made the choice to offer it at a lower price as a result. Isn’t that a form of negotiation?
Western retail negotiation just doesn’t happen face-to-face (usually) like the haggling that occurs in a Middle Eastern souk. It’s the same process, but the department store is haggling through the medium of its displays and signs rather than having hawkers standing in the aisles soliciting offers for the merchandise on the tables.
In business-to-business sales, nearly every sale is openly negotiated. There may be published price lists and standard terms, but very few buyers would keep their jobs if they didn’t at least try to do better. And few sellers would keep the revenue flowing if they didn’t make pricing adjustments to stay competitive.
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.
There is nothing holy about a given price, nor is there any moral law that says that every customer is entitled to the same terms. In fact, certain religions make a pretty strong moral case for customizing prices and other terms according to each customer’s individual needs. Don’t get me wrong. There’s nothing wrong with having a firm pricing policy. But let’s not hide the reasons for it in some kind of moral cloud. Firm pricing is a matter of what management feels is best for the selling company. Ideally (from their standpoint), it controls demand to produce the maximum profit from the available supply. And having firm prices makes the administration of the revenue stream easier, which makes the sales manager’s job easier. There’s nothing wrong with that.
But there is nothing wrong with negotiating every sale, either. Humans have been doing it for thousands of years in one way or another. In fact, the most successful economic system yet invented, the free market economy, is predicated on the freedom of sellers to offer different value for various prices and for buyers to accept or reject them.
Isn’t that what happens when your favorite department store puts an item on sale? Apparently, the store’s customers made the choice to not buy that item at the previous price, and the store made the choice to offer it at a lower price as a result. Isn’t that a form of negotiation?
Western retail negotiation just doesn’t happen face-to-face (usually) like the haggling that occurs in a Middle Eastern souk. It’s the same process, but the department store is haggling through the medium of its displays and signs rather than having hawkers standing in the aisles soliciting offers for the merchandise on the tables.
In business-to-business sales, nearly every sale is openly negotiated. There may be published price lists and standard terms, but very few buyers would keep their jobs if they didn’t at least try to do better. And few sellers would keep the revenue flowing if they didn’t make pricing adjustments to stay competitive.
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.
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