“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 retailing. Show all posts
Showing posts with label retailing. 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 19, 2013
Is Your Shop Customer-Friendly?
When was the last time you looked around your shop to see if there are any customer-aggravating items? How about signs that explain your policies to customers? Do they read like they were written by Joseph Stalin? It’s really not necessary to scold your customers when you tell them where to park, make them stay out of the service area, or keep their hands off your tools, although it may seem like you have to sometimes. “No Customers Allowed” sounds pretty nasty, especially compared to a sign that gets across the same message by reading, “Employees Only, Please.”
You sound a lot more customer friendly (and professional), too, when you explain why you have the rules you have. Add “Insurance Rules” or “OSHA Regulations” to the “Employees Only, Please” sign and you’ve made your policies sound a lot less arbitrary.
When it comes to rules, it’s not a bad idea to review yours every once in a while. Look at things like your hours of operation, availability of merchandise, deposits, and return policies to see if they serve a real purpose beyond irritating your customers. Do you close so early in the day that customers don’t have a chance to pick up something they need after they leave work? If a customer has to take off work, it’s an additional cost to them of doing business with you. The same holds true for when you open—can they drop off an item for repair and still have time to get to their job? Saturday and Sunday hours are customer-friendly, too. And if you want to really do it right, offer to accommodate customers by appointment at other hours when you’re not normally open.
Most customer relationships are built on good communications, of course, which raises a couple of other questions: Do you call the customer when their job is ready or make them call you to find out if it’s finished? If the work’s not going to be done when you promised, do you call to warn them? It takes a little time and effort on your part, but the customer who gets such a call generally recognizes the thoughtfulness. Besides, it demonstrates that you respect the value of their time and, by proxy, appreciate their business.
While I’m ranting, whatever happened to saying “thank you” to customers? From the almost total absence of that phrase in most businesses these days, you might think it had been put on something like the FCC’s list of forbidden words. Another phrase seems to have replaced it, the one you hear when the cashier at the grocery store hands you your change and receipt and says, “here you go.” What the heck is that supposed to mean? Even worse, when the customer takes the change, their inclination is to say “thanks,” which sounds as if they are expressing their gratitude to the store! What’s wrong with this picture?
If you want to make your shop truly customer friendly, make it a practice to thank the customer every chance you get. “Thanks for calling,” “thanks for letting us work on your car,” even “thanks for coming in” are the right words to use when dealing with the person who keeps you in business.
These may seem like little, picayunish details when compared to major factors like how well the product works after the customer gets it home, and they are—individually. But when you add them up, which is what happens when the customer comes into your shop time after time, they grow. Add enough aggravations, and the next thing you know, you’ve built that proverbial mountain out of a molehill
.
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.
You sound a lot more customer friendly (and professional), too, when you explain why you have the rules you have. Add “Insurance Rules” or “OSHA Regulations” to the “Employees Only, Please” sign and you’ve made your policies sound a lot less arbitrary.
When it comes to rules, it’s not a bad idea to review yours every once in a while. Look at things like your hours of operation, availability of merchandise, deposits, and return policies to see if they serve a real purpose beyond irritating your customers. Do you close so early in the day that customers don’t have a chance to pick up something they need after they leave work? If a customer has to take off work, it’s an additional cost to them of doing business with you. The same holds true for when you open—can they drop off an item for repair and still have time to get to their job? Saturday and Sunday hours are customer-friendly, too. And if you want to really do it right, offer to accommodate customers by appointment at other hours when you’re not normally open.
Most customer relationships are built on good communications, of course, which raises a couple of other questions: Do you call the customer when their job is ready or make them call you to find out if it’s finished? If the work’s not going to be done when you promised, do you call to warn them? It takes a little time and effort on your part, but the customer who gets such a call generally recognizes the thoughtfulness. Besides, it demonstrates that you respect the value of their time and, by proxy, appreciate their business.
While I’m ranting, whatever happened to saying “thank you” to customers? From the almost total absence of that phrase in most businesses these days, you might think it had been put on something like the FCC’s list of forbidden words. Another phrase seems to have replaced it, the one you hear when the cashier at the grocery store hands you your change and receipt and says, “here you go.” What the heck is that supposed to mean? Even worse, when the customer takes the change, their inclination is to say “thanks,” which sounds as if they are expressing their gratitude to the store! What’s wrong with this picture?
If you want to make your shop truly customer friendly, make it a practice to thank the customer every chance you get. “Thanks for calling,” “thanks for letting us work on your car,” even “thanks for coming in” are the right words to use when dealing with the person who keeps you in business.
These may seem like little, picayunish details when compared to major factors like how well the product works after the customer gets it home, and they are—individually. But when you add them up, which is what happens when the customer comes into your shop time after time, they grow. Add enough aggravations, and the next thing you know, you’ve built that proverbial mountain out of a molehill
.
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 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 24, 2012
How To Turn A Newbie Into A Customer For Life
New customers are the lifeblood of any business, but only if they stick around long enough to become old customers. A one-time buyer is welcome, but the ones who put money in the bank are those who come back again and again.
One breed of new customer that’s tricky to develop is the neophyte, the guy or gal who is new to the world your business inhabits. Maybe they are a first-time home buyer or a young couple setting up a college fund for their newborn. The way you and your staff respond to that newbie can make or break your relationship with them. Treat them like an idiot the first time and you’ll never see them again. Treat them right, and you’ll create a customer for life.
It’s tough, though. A newbie doesn’t know what questions to ask. He doesn’t know what’s do-able and what violates the laws of physics and/or the local building code. She may have seen a TV show where some lucky stiff’s family room went from wreck to magazine-spread-worthy in thirty minutes and expect you to do the same. What’s worse, she’s going to take up way more of your valuable time than this measly little job is worth.
The next time a newbie walks through your door, put yourself in their shoes for a minute. Remember what it was like when you went onto the field for your very first Little League tryout? If you were like most of us, the experience was a little intimidating. Everyone else seemed to know exactly what they were doing, but you weren’t sure. You wanted to make the team, but the single most important goal was to avoid making a fool of yourself.
That’s what the newbie is feeling when he comes into your business for the first time. He or she may not admit it—and may try to bluff their way through—but they are nervous about sounding dumb when they talk to the experts in the field.
Your first job, then, is to make the customer comfortable. Don’t draw attention to his ignorance by telling him it’s all right to be stupid. Instead, listen to his ideas in a non-judgmental way and ask him questions about what he needs at a level he can understand. Try to avoid using terms the customer may not have heard before, or, if you have to, explain them without being condescending.
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.
One breed of new customer that’s tricky to develop is the neophyte, the guy or gal who is new to the world your business inhabits. Maybe they are a first-time home buyer or a young couple setting up a college fund for their newborn. The way you and your staff respond to that newbie can make or break your relationship with them. Treat them like an idiot the first time and you’ll never see them again. Treat them right, and you’ll create a customer for life.
It’s tough, though. A newbie doesn’t know what questions to ask. He doesn’t know what’s do-able and what violates the laws of physics and/or the local building code. She may have seen a TV show where some lucky stiff’s family room went from wreck to magazine-spread-worthy in thirty minutes and expect you to do the same. What’s worse, she’s going to take up way more of your valuable time than this measly little job is worth.
The next time a newbie walks through your door, put yourself in their shoes for a minute. Remember what it was like when you went onto the field for your very first Little League tryout? If you were like most of us, the experience was a little intimidating. Everyone else seemed to know exactly what they were doing, but you weren’t sure. You wanted to make the team, but the single most important goal was to avoid making a fool of yourself.
That’s what the newbie is feeling when he comes into your business for the first time. He or she may not admit it—and may try to bluff their way through—but they are nervous about sounding dumb when they talk to the experts in the field.
Your first job, then, is to make the customer comfortable. Don’t draw attention to his ignorance by telling him it’s all right to be stupid. Instead, listen to his ideas in a non-judgmental way and ask him questions about what he needs at a level he can understand. Try to avoid using terms the customer may not have heard before, or, if you have to, explain them without being condescending.
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, April 2, 2012
Retail Sales Negotiation
Helpful negotiation tactics for retail salespeople:
In today’s economy, you can expect more and more retail customers to test the firmness of your prices. If you keep your wits about you and exclude emotions from the process, though, you can use that trend to build your sales.
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.
● Stay cool. If a customer asks for a lower price, remember that it’s just a business transaction, not a judgmental comment on your artwork, your gallery, or you.
● Know your limits, but don’t go there right away. If the customer can talk you into two small concessions rather than one big one, they’re more likely to be satisfied with the deal.
● Ask for something in return. A customer may be willing to use cash rather than a credit card, put their name on your mailing list, or give you something else of value in return for a lower price.
● Use negotiation to close the sale. “If I give you this price, will you buy it now?” is a great way to separate buyers from lookers.
In today’s economy, you can expect more and more retail customers to test the firmness of your prices. If you keep your wits about you and exclude emotions from the process, though, you can use that trend to build your sales.
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, March 26, 2012
Sell More Services With Better Communication
Above all, selling services requires strong communication between you and the customer. It’s essential that you explain exactly what you’re going to do, why it needs to be done, and how much it’s going to cost. It’s even more important that you listen carefully to the customer to make sure that you’re both on the same page. Does he understand what you’re proposing? Is it what he wants? Does he have any unasked questions?
Establishing and maintaining open communication is especially important for a service job because you often encounter unexpected problems as the work proceeds, which can undermine the trust you’ve built up with the customer unless the news is delivered properly. No one wants to leave their car in your shop for a dash panel upgrade only to come back and learn that a major instrumentation repair has been added to their bill as well. The time to talk to the customer about unanticipated repairs is before they’re done, not afterwards.
Another source of customer dissatisfaction that can be eliminated with better communication is pricing. Some routine, straightforward jobs can be sold at a published flat price. Most of the work you do is probably not simple and routine, however, and you don’t really know how much time it’s going to take until you do it. Pricing tools like automotive flat rate manuals can help, but they’re far from the total solution, especially for complicated work that comes with high expectations.
Again, the solution is openly communicating with the customer at the beginning of the transaction.
Emphasize that the amount of labor, parts, and material required for the job is an estimate. It’s based on your experience with similar jobs so it should be pretty accurate, but it’s still just an estimate, not a guarantee. Explain that you’ll do everything you can to keep the amount of hours under the estimate and assure them that you’ll let them know as soon as possible if it looks like there’s going to be an overrun or if there are additional parts required due to an unforeseen complication.
Then do it! Make sure you have telephone numbers where the customer can be reached during the day while the work is being done and call whenever there’s the least question about any item beyond the estimate. It’s a great temptation to skip the call in the interest of time, but it’s a false economy if the customer blows up when he finds out about the work later. Even if the work is absolutely necessary, it’s going to leave a bad taste in the customer’s mouth and make them hesitant about trusting you in the future. And those kinds of grudges not only last a long time in the customer’s mind, they linger on the word-of-mouth grapevine forever.
Service is the heart of every business. With the growth of online retailers who can sell merchandise below the brick and mortar shop’s costs, selling those services is more important than ever. Following these simple guidelines can make the experience less painful for the customer and more profitable for the shop owner.
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.
Establishing and maintaining open communication is especially important for a service job because you often encounter unexpected problems as the work proceeds, which can undermine the trust you’ve built up with the customer unless the news is delivered properly. No one wants to leave their car in your shop for a dash panel upgrade only to come back and learn that a major instrumentation repair has been added to their bill as well. The time to talk to the customer about unanticipated repairs is before they’re done, not afterwards.
Another source of customer dissatisfaction that can be eliminated with better communication is pricing. Some routine, straightforward jobs can be sold at a published flat price. Most of the work you do is probably not simple and routine, however, and you don’t really know how much time it’s going to take until you do it. Pricing tools like automotive flat rate manuals can help, but they’re far from the total solution, especially for complicated work that comes with high expectations.
Again, the solution is openly communicating with the customer at the beginning of the transaction.
Emphasize that the amount of labor, parts, and material required for the job is an estimate. It’s based on your experience with similar jobs so it should be pretty accurate, but it’s still just an estimate, not a guarantee. Explain that you’ll do everything you can to keep the amount of hours under the estimate and assure them that you’ll let them know as soon as possible if it looks like there’s going to be an overrun or if there are additional parts required due to an unforeseen complication.
Then do it! Make sure you have telephone numbers where the customer can be reached during the day while the work is being done and call whenever there’s the least question about any item beyond the estimate. It’s a great temptation to skip the call in the interest of time, but it’s a false economy if the customer blows up when he finds out about the work later. Even if the work is absolutely necessary, it’s going to leave a bad taste in the customer’s mouth and make them hesitant about trusting you in the future. And those kinds of grudges not only last a long time in the customer’s mind, they linger on the word-of-mouth grapevine forever.
Service is the heart of every business. With the growth of online retailers who can sell merchandise below the brick and mortar shop’s costs, selling those services is more important than ever. Following these simple guidelines can make the experience less painful for the customer and more profitable for the shop owner.
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, March 19, 2012
Powerful Retail Selling Environments
Having shelves full of merchandise is fine, but it’s almost impossible to up-sell a customer if you just rely on the quantity of SKUs you offer. Even worse, impulse purchases might seem to be more likely, but they are just about non-existent in a cluttered, claustrophobic environment. The most successful retail operations have showrooms that make both of these profitable events happen more often. Here are some tips for making the most of your selling space:
Finally, keep in mind that every interaction with a customer is a transaction whether they buy something or not. Both you and the customer get something from every conversation; you get a chance to qualify them for future business by finding out what kind of lifestyle they have, the size of their family, and other important details that affect their purchasing intentions. They learn (hopefully) that your staff is knowledgeable and eager to assist and that you carry the kind of products that can help them achieve their goals—information that will bring them back again. So, even if they don’t make a purchase, be sure to thank them for coming in and invite them to come back soon.
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.
● Your front window is the first impression many customers get, so make sure it’s an appealing one. It should be clean (including the glass), well-lit, and arranged in an uncluttered, entertaining way. Choose the merchandise you’re displaying carefully and remember that it will fade in the sun. Most pros suggest cleaning the space and re-doing the arrangement about once every six weeks.
● Keep the entrance area free of clutter. Customers—especially new ones—generally stop when they come through the door to look around and get their bearings, so give them a little room—and the sight lines—to do that. Avoid big displays just inside the door that might block their view of whatever it is they’re really shopping for.
● Keep your space brightly lit, not just because it makes the merchandise look more appealing, but because it gives a sense of energy and motion to the shopping experience.
● Silence is deadly, so crank up your CD player or radio. Almost any kind of music is good, just as long as it’s not so loud that the customers and your sales staff can’t hear each other.
● Take a tip from the supermarket industry and arrange your merchandise on shelves or racks in ways that encourage impulse buying. Put related items like winter hats and gloves near each other and remember that the items that sell the best tend to be displayed just below eye-level. Generally, goods located above the customer’s head might as well be hidden in the back room for all the attention they’re going to get.
Finally, keep in mind that every interaction with a customer is a transaction whether they buy something or not. Both you and the customer get something from every conversation; you get a chance to qualify them for future business by finding out what kind of lifestyle they have, the size of their family, and other important details that affect their purchasing intentions. They learn (hopefully) that your staff is knowledgeable and eager to assist and that you carry the kind of products that can help them achieve their goals—information that will bring them back again. So, even if they don’t make a purchase, be sure to thank them for coming in and invite them to come back soon.
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, March 12, 2012
Retail Customer Service
We sometimes fool ourselves into thinking that people are so used to shopping unaided in the aisles of mass-market retailers that they don’t want to be bothered by pesky sales people, but nothing could be further from the truth. What customers don’t like is a clerk hanging around putting silent pressure on them to make a decision. While there may be a few independent souls who want to browse unaided through a plan-o-gram full of merchandise, most people appreciate the expert advice and guidance of a knowledgeable retail sales person, especially when they’re shopping for something more complicated than a bottle of shampoo.
A good retail salesperson does their best work when they help a customer figure out what they need in order to accomplish their goal or fix their problem. Which means, of course, that your staff has to know what they’re talking about. They need to know the lines you carry and what the products do—and don’t do. They need to be able to answer the prospect’s questions and even to suggest questions that the prospect should be asking. If they don’t know the answers, they should know where and how to get them—and make it clear to the customer that they’re willing to do the extra work cheerfully.
Helpful service like this means the sales person needs another set of tools, too: good communication skills. Sometimes, it’s not enough to just ask the customer what he wants. The sales person may need to do a little probing about the customer’s needs or desires before he or she can suggest a good solution. They need to know what kinds of questions to ask and—even more importantly—they need to listen to the answers. Some customers will be able to tell you exactly what they’re looking for, what size they want, and even where it’s located in your inventory. A far greater majority of them, though, are like patients in the doctor’s office; they need somebody to listen to their symptoms, to tell them why it hurts, and to prescribe something they can do about 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.
A good retail salesperson does their best work when they help a customer figure out what they need in order to accomplish their goal or fix their problem. Which means, of course, that your staff has to know what they’re talking about. They need to know the lines you carry and what the products do—and don’t do. They need to be able to answer the prospect’s questions and even to suggest questions that the prospect should be asking. If they don’t know the answers, they should know where and how to get them—and make it clear to the customer that they’re willing to do the extra work cheerfully.
Helpful service like this means the sales person needs another set of tools, too: good communication skills. Sometimes, it’s not enough to just ask the customer what he wants. The sales person may need to do a little probing about the customer’s needs or desires before he or she can suggest a good solution. They need to know what kinds of questions to ask and—even more importantly—they need to listen to the answers. Some customers will be able to tell you exactly what they’re looking for, what size they want, and even where it’s located in your inventory. A far greater majority of them, though, are like patients in the doctor’s office; they need somebody to listen to their symptoms, to tell them why it hurts, and to prescribe something they can do about 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.
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