Sales
Are you charging for the confusion?
20/02/10 19:46
I was recently reminded of the importance of properly pricing your product or service. A couple of weeks ago, I went out to my vehicle and took off as usual. As I was driving down the street I noticed that my windshield was cracked...(after a few choice words) I thought that I had better get it taken care of right away so that it would not spread. When I arrived at one of the local glass repair shops, I went inside and gave the make and model of my vehicle to the person working behind the counter. Within a couple of minutes I was happily given a quote for $800 installed. Again, I mumbled a few unrepeatable words to myself as I went back out to my vehicle and drove home.
When I got home, I thought that I would check with a second shop which we had used a number of years ago, and had received good service. I called and after describing the vehicle, I was quoted $300 installed. Wow, I was going to save $500 by going with this second shop....but hold on....this can't be right! I was instantly confused and thought that this had to be a mistake. How can there possibly be $500 difference for the exact same windshield? I began to doubt myself and the person on the other end of the phone at the second shop. So after a few minutes, I picked up the phone and called them again...and sure enough I was again quoted $300. I then had my wife phone and she too was quoted $300.
So, whats the issue? If you take a few minutes to look at this, there are a number of key things in this real world pricing example worth highlighting:
1. The second place is leaving money on the table. When I was in the shop, they told me that they actually order from the exact same distributor as the first shop. However, they were shocked to hear the price their competitor was quoting. Yes, they won the business from me...but even if they were $700 they would have won the business from me as they would have still been cheaper. At $700 it goes without saying that they would have made more profit. Know your competitors pricing!
2. The second shop almost lost the business because their price was too low. Had I not wanted to get to the bottom of this pricing difference, I could have just as easily made the decision that it must have been a mistake and made the decision to go somewhere else. Yes...having your pricing too low can hurt you. If there is such a big difference between your price and the rest of the market, people will begin to wonder "what's the catch?" and may actually decide to deal with someone else. In certain cases with extremely low prices, customers will begin to wonder if you are desperate for business, and will ultimately feel safer going with a solution that is priced more in line with the rest of the market. Again, it pays to know your competitors pricing, and if you are significantly cheaper...make sure you address this price difference early in the sales process. If you leave it to the clients to try and figure out why your price is less, they may attribute it to the wrong reason and end up going to a different supplier.
3. Low prices can cost you more. In this situation, the lady on the other end of the phone at the second shop had to take 3 calls from us before we decided to go with them. So, if you think about it, not only did the second shop make less top line profit than their competitor (had they gotten the business), they actually had a higher cost of sales than the first shop. In fact the second shops cost of sales was actually 3X that of the first shop as they had to take 3 phone calls from us instead of 1. Sure, the second company got the order....but even with such an aggressive price, their cost of sales is actually ended up being higher. So, again make sure your pricing is not too far out of line from your competitors...and if it is make sure you are explaining this up front so your sales team does not have to spend even more time convincing customers that the pricing is accurate.
Sure, this is an example for a consumer focused business. However, the example and the key points are just as applicable and valid for B2B companies and sales organizations. Take a look at your pricing...if you have an aggressive pricing strategy, take the time to make sure that you are not loosing sales due to your low pricing.
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Are you truly listening?
13/07/09 10:40
Are you truly listening?
There was a post on the Forbes.com - Entrepreneurs section titled Learning the Art of Listening. It was written by Dr. Steven Berglas, and it covers the topic of knowing how to truly listen. Where this comes into play is that our business is about not only uncovering the truth of your product or service from your customers and target markets perspective, it is about knowing how to truly listen to them to uncover the opportunities that exist. Until you know how to actively listen, you may be missing out on some great opportunities to grow your business.
There was a post on the Forbes.com - Entrepreneurs section titled Learning the Art of Listening. It was written by Dr. Steven Berglas, and it covers the topic of knowing how to truly listen. Where this comes into play is that our business is about not only uncovering the truth of your product or service from your customers and target markets perspective, it is about knowing how to truly listen to them to uncover the opportunities that exist. Until you know how to actively listen, you may be missing out on some great opportunities to grow your business.
Just get engaged!
08/07/09 09:31
The one thing that we all have to understand is that from the clients perspective, business does not stop. They have some of the same challenges that you do, and have to find ways to not only save some money but ideally find ways to make even more money (sales). So, if you look at it from this perspective, then both you and your clients share the same goals. Take this opportunity of having common challenges and goals to create revenue generating opportunities for you both. The following are just some ideas to help get the creative juices flowing on ways that you may be able to get engaged with clients today in order to ensure you are building a good revenue stream for tomorrow...
1. Can your product or service help your client to sell theirs? We have been talking with one client who is offering a solution that brings together teams of people and provides a common set of communication tools for these teams to communicate. Anyway, one of the biggest challenges that they have is that their customers are cautious about spending money on this solution as they do no know if their users will use the new system. Well, one of the biggest issues that causes people to not use a system is that it does not truly meet their needs. So, we have been working with our client to put together a plan where we engage with the end users to truly understand their needs and do an assessment on their requirements for this system. By doing this the users have some input into what they need and as a result of some customization services will get what they need from the system. The users win in this situation, the company purchasing the system wins as they have more captive audience that they can market and easily communicate with. Our client wins as they now can sell their system and also make some additional services revenues. And finally, we win as we are doing the services engagement to help gather and qualify the users needs. You see...in this situation everyone wins by all of us understanding each other challenges and working together to form a solution. Can you find a way to do this with some of your current prospects?
2. If you believe you can do it....can you make a little less today in order to make more tomorrow? For another one of our clients, they have a solution that has a very small footprint within one of their strategic accounts. We have helped them to understand the players within this account and the true stakeholders. As part of the group of stakeholders, there is a very large Systems Integrator. We have approached this Systems Integrator and are now discussing a specific project where we can work together to take an initiative to the organization for approval. Without getting into all the details the point here is that in this example the model is that we work together to build the system based upon taking some of the profits or residuals that the company makes from it. In this situation, the company wins as they get a new system to help generate revenue without a massive outlay of money. The Systems Integrator wins by getting the opportunity to take new a fresh ideas to the client and they get a big portion of the services work that come from this project. Our client wins as they too get services revenues and also their technology is now being used widely throughout the company to help them make money. So, again can you find ways to make a little less money today (NOT FREE), but make even more in the future?
3. Is your price point a barrier to entry? If your focus is on trying to get new customers, and just on trying to sell more to your current customers, then you have most likely run into this challenge. Think about it, in today’s world you too have to be concerned about mitigating risk and want to know that you will see a return from every dollar that you spend. If you feel this way, then chances are your customers are feeling the same way. So, if you were approached by a company who may have a great product or service but to get started required a significant investment, and you were approached by another company with a great product or service which could provide the same benefits, but they had a package that would allow you to get started for less than half of the price of the first company....which one would you choose? My guess is that you would go with the second company as it is a bit less risk for you. Now dont’ get me wrong I am not suggesting that you lower your price, but rather I am suggesting you find ways to package your product or service in order to lower the cost of entry for your clients. A perfect example is can you find ways to provide your product on a subscription basis? If your solution is software, can you find ways to offer it as a hosted Software as a Service solution? Can you put together a packaged service focused on providing an assessment rather than a full engagement? There are many creative ways that you can actually make more money over the long run by packaging it a bit different today....
These are just 3 in depth examples of ways that you have to be in touch and communicating with your clients today. There are many more like this. The bottom line is that if you are not engaged with clients and are “waiting for it to get better” then you do not have the opportunity to truly understand their needs, and ultimately you will not have an opportunity to find creative ways to work together in order to find a win-win solution for you both to make money. So, pick up the phone and find ways to get engaged with your clients today!
Bridging the gap...
17/06/09 20:12
A few hours later I started to think about this statement a bit more. There were a few things that started to jump out at me regarding the statement. In regards to market analysis, there are many organizations and people that can help a company to do this important and necessary exercise. Anyone can easily analyze the market, strategies, pricing models, competitors....anything. On the flip side of this coin, commercialization is just as important to any business as the reality is that you do not have a business until you release your product or service to the market for people to purchase.
Now the interesting part of this is that the “bridging” is the key to success. You can do analysis on many different aspects of your business, but it is not until you cross the bridge to commercialization does any of that matter. Also, you can take any idea to market if you have enough persistence, time, and money, however it is not until you cross the bridge to connecting it with your market analysis (a true understanding of your target market, and their needs) do you truly begin to make profitable, repeatable, and predictable sales results.
So, take some time to think about this analogy and determine if you have built a good bridge for this gap within your company. If you are not sure if you have a bridge or even if you need to update or fix your bridge, the only true indicator is in your sales results. If sales are on track and you are making money....chances are you have built a good bridge. If however you are not seeing the results that you desire, then the first thing you need to do is see if your product or services (commercialization) is cut off and isolated from your target market, their requirements, and their needs (market analysis). If your not quite sure where to go or how to do this....then give us a call as we have already built a number of these bridges for our clients already.
Going Wide...or Going Deep?
05/05/09 08:59
What is your sales strategy?
Many companies when they begin to build their solution and put together their business case they focus a great deal of attention on things like analysts reports, industry estimates, etc. to try and quantify the opportunity that exists for their solution. However in many ways using this data and approaching things this way leads you into a strategy of going “wide” with your product or service. This is not necessarily a bad thing, however it is important to know the differences between the two different strategies, and to make a conscious decision about which one is truly right for you.
Going “wide” relates to having one product or service to sell, and the strategy is to sell it to as many people as you possibly can. For example there are over 1 Billion people in China....so you may build your business case on “if only 1% of China’s population” bought our solution, then it would mean we would be rich :-). The data required for this type of calculation can be pulled from many different areas, however the foundation is that you are looking to sell your product or service once, and depending upon your solution there may be some reoccurring revenue from things like yearly maintenance, etc.
Now, if your strategy is to go “deep”, then it is not about how many new customers but rather how much can you sell to one customer? For example you may offer a solution that can have an impact on various parts of your customers company or you have a suite of stand alone products that will allow you to up-sell your customers to meet several of their requirements. A simple example of this is the Microsoft office suite. In the beginning you could buy Microsoft Word all by itself. Most people needed a word processor. However, the accounting department, they needed some way to represent their data and they worked with numbers and calculations all day long so they needed Microsoft Excel. The Sales team and the Executive team often did presentations to clients and investors....so they needed PowerPoint as well. I may be really dating myself as today I do not even think you can buy the different Microsoft components separately. The point is that the strategy of Microsoft was to go “deep” with their solutions. By going deep it allowed them to sell to all parts of a company and often to sell more than just one component to the various parts of the their clients organizations.
Again there is no right or wrong strategy here...just different ones. It is important for you to know the differences in the two strategies and to determine what is best for you. With each strategy there are benefits and drawbacks that need to be considered. For example in today’s economy you have a greater chance of success selling more into accounts where you already have some traction and an install base (going deep). However, with a “wide” strategy typically your cost of sales is a bit lower as it is often more of a commodity type of sale, and you may not be as concerned about hiring a sales team to build long term relationships with clients. So, what is your sales strategy? Is it working for you? And finally....is there a way to go “wide” and “deep” with your product or service?
Many companies when they begin to build their solution and put together their business case they focus a great deal of attention on things like analysts reports, industry estimates, etc. to try and quantify the opportunity that exists for their solution. However in many ways using this data and approaching things this way leads you into a strategy of going “wide” with your product or service. This is not necessarily a bad thing, however it is important to know the differences between the two different strategies, and to make a conscious decision about which one is truly right for you.
Going “wide” relates to having one product or service to sell, and the strategy is to sell it to as many people as you possibly can. For example there are over 1 Billion people in China....so you may build your business case on “if only 1% of China’s population” bought our solution, then it would mean we would be rich :-). The data required for this type of calculation can be pulled from many different areas, however the foundation is that you are looking to sell your product or service once, and depending upon your solution there may be some reoccurring revenue from things like yearly maintenance, etc.
Now, if your strategy is to go “deep”, then it is not about how many new customers but rather how much can you sell to one customer? For example you may offer a solution that can have an impact on various parts of your customers company or you have a suite of stand alone products that will allow you to up-sell your customers to meet several of their requirements. A simple example of this is the Microsoft office suite. In the beginning you could buy Microsoft Word all by itself. Most people needed a word processor. However, the accounting department, they needed some way to represent their data and they worked with numbers and calculations all day long so they needed Microsoft Excel. The Sales team and the Executive team often did presentations to clients and investors....so they needed PowerPoint as well. I may be really dating myself as today I do not even think you can buy the different Microsoft components separately. The point is that the strategy of Microsoft was to go “deep” with their solutions. By going deep it allowed them to sell to all parts of a company and often to sell more than just one component to the various parts of the their clients organizations.
Again there is no right or wrong strategy here...just different ones. It is important for you to know the differences in the two strategies and to determine what is best for you. With each strategy there are benefits and drawbacks that need to be considered. For example in today’s economy you have a greater chance of success selling more into accounts where you already have some traction and an install base (going deep). However, with a “wide” strategy typically your cost of sales is a bit lower as it is often more of a commodity type of sale, and you may not be as concerned about hiring a sales team to build long term relationships with clients. So, what is your sales strategy? Is it working for you? And finally....is there a way to go “wide” and “deep” with your product or service?
Postmortem deal review...
16/04/09 22:13
When is the last time you have done a postmortem on deals that you have won?
Many sales teams and organizations know the importance of doing this type of review on lost deals, but for some reason not many understand and fully appreciate the value in doing the same type of analysis on deals that they have won. If you are not taking advantage of this opportunity, then you are missing out on building longer lasting relationships with clients and truly understanding the value your solution is providing.
Although you may like to think that the customer bought from you because your product or service is “the best”, but the reality is that this is very rarely the reason why they purchased. Think about it for a moment...with today’s economy, people do not buy a solution unless they can clearly understand and articulate the value of that solution to their particular situation. With purchasing approvals having to go even higher within an organization even for the smallest of deals means that somewhere along the line someone has had to build a business case to justify this purchase. If you do not understand this business case, or were not involved in helping the client to build it, then you have just lucked out on getting this business.
The bottom line is that it is impossible to make something that you do not truly understand repeatable. This is especially true when it comes to sales.
So, take the last 5 deals that you have won and do a postmortem review. Go back to these client and ask them to help you understand the value that they are receiving from your product or service. Find out what you did right....and find out what could have been improved. Find out what was important to them in their decision and business case justification that motivated them to move forward with the purchase of your solution. Once you have gathered this information, pick up the phone and talk with the top 5 deals you have listed on your current forecast. Talk with these prospects to see if they share the same issues, and are looking to realize the same type of value from your solution that the 5 current customers are now already enjoying.
Many sales teams and organizations know the importance of doing this type of review on lost deals, but for some reason not many understand and fully appreciate the value in doing the same type of analysis on deals that they have won. If you are not taking advantage of this opportunity, then you are missing out on building longer lasting relationships with clients and truly understanding the value your solution is providing.
Although you may like to think that the customer bought from you because your product or service is “the best”, but the reality is that this is very rarely the reason why they purchased. Think about it for a moment...with today’s economy, people do not buy a solution unless they can clearly understand and articulate the value of that solution to their particular situation. With purchasing approvals having to go even higher within an organization even for the smallest of deals means that somewhere along the line someone has had to build a business case to justify this purchase. If you do not understand this business case, or were not involved in helping the client to build it, then you have just lucked out on getting this business.
The bottom line is that it is impossible to make something that you do not truly understand repeatable. This is especially true when it comes to sales.
So, take the last 5 deals that you have won and do a postmortem review. Go back to these client and ask them to help you understand the value that they are receiving from your product or service. Find out what you did right....and find out what could have been improved. Find out what was important to them in their decision and business case justification that motivated them to move forward with the purchase of your solution. Once you have gathered this information, pick up the phone and talk with the top 5 deals you have listed on your current forecast. Talk with these prospects to see if they share the same issues, and are looking to realize the same type of value from your solution that the 5 current customers are now already enjoying.
A fair exchange...
08/04/09 16:47
One of the sayings that I have picked up over the years and continue to tell people is that sales is all about a fair exchange of value for money.
It has been my experience that many early stage companies truly struggle with finding the right pricing strategy for their solution. They often go through the standard process of calculating how much it takes to manufacture their product including materials, time, etc. They then add a certain percentage of profit that they would like to receive from each sale....and they settle on the price. However, many of these early stage executives then have a tendency to come back and revisit this topic a number of times, either because they are not seeing sales traction, or because they feel that they may be “leaving money on the table”.
In our program, Building Sales Momentum Through Client Driven Development, I have set out a process for allowing you to set your pricing strategy and to be comfortable in the fact that it is the right strategy. If you go back to the statement that I used when starting this post is was that it should be a fair exchange of money for value. If you agree with this then, the variable that you need to figure out before you can calculate money is to understand and calculate the value your offering provides to your customer.
Now...notice in my initial statements that I used the term sales which is not to be confused with the act of selling. The art of selling is to uncover and understand your clients needs and to understand what they define as value. It is about demonstrating how the value of your solution far outweighs the price that is being charged. Through the Ideas2Revenue program, you will be walked through the process of identifying, engaging, and incorporating clients into your process early so that you may accomplish this. Although our program is not just about a “selling” or any new magical techniques to help you “sell” we do however offer you a number of ways that you can begin to question and truly understand the value of your solution and the impact on either the personal lives of your clients or the impact on their organization as a whole.
So, if you have struggled or if you continue to struggle with the pricing question....then understand that you are not the only one however know that there is an easier way. Yes, it is possible to have confidence in your pricing strategy, and to ensure that you are offering your clients a fair exchange of value for their money.
How we communicate has changed...
06/04/09 20:53
I am sure that I am not the only one that has said this over the last few years. In fact, I am sure that you have heard it from a number of people even over the last few months.
I was at a house party with some friends who my wife works with in the local education system. Somehow the topic of email and the lack of live conversations came up. We had a great conversation with the hostess of the party and she was telling us about how even in the office where she works, they use email as their main form of communication. She went on to tell how several of the people she worked with operate so much through email that even if she did have a conversation with this person, they would ask her to send an email with any types of commitments or activities that need to be completed. She communicates more by email, than she does with a live conversation with her coworkers a few cubicles away! My wife and her then spent a few minutes talking about how many of the children in the schools rely more upon social networking, instant messaging, and texting in order to communicate with their peers. In many ways they have a hard time communicating with each other on the phone or in person and often opt just to send a quick text message or tweet.
So, what is the big deal? Well, it really began to sink in on how the world has truly changed as it relates to how all of us, including our children communicate. Although I am of an age that is more comfortable in picking up the phone and calling someone, there are more and more people that the only way you can communicate with them is through some sort of electronic medium. I looked at my own children and the amount of texting, and instant messaging that goes on with them and their friends. In their world the phone is an antique.
Even though this topic is one that has many different views and this one topic can fill a whole blog by itself, my point was to simply bring it up so that you can think about it in your own terms. The one thing you always have to remember is that people buy from people. Relationships and a feeling of trust and sincerity go a long way when dealing with current as well as potential customers. If you are communicating with them through an electronic medium like email, then you may very well be loosing out on the opportunity to build trust and demonstrate your sincerity with your clients. It is next to impossible for you to read body language or to even show true sincerity in your voice when it has to be communicated via a keyboard. So, pick up the phone and call someone. Spend a day calling your current customers or even your potential ones. Although you may not be able to change the world back to the time when the phone and live meetings were how business was done, but who knows maybe by simply making a phone call you can set yourself apart from your competition.
I was at a house party with some friends who my wife works with in the local education system. Somehow the topic of email and the lack of live conversations came up. We had a great conversation with the hostess of the party and she was telling us about how even in the office where she works, they use email as their main form of communication. She went on to tell how several of the people she worked with operate so much through email that even if she did have a conversation with this person, they would ask her to send an email with any types of commitments or activities that need to be completed. She communicates more by email, than she does with a live conversation with her coworkers a few cubicles away! My wife and her then spent a few minutes talking about how many of the children in the schools rely more upon social networking, instant messaging, and texting in order to communicate with their peers. In many ways they have a hard time communicating with each other on the phone or in person and often opt just to send a quick text message or tweet.
So, what is the big deal? Well, it really began to sink in on how the world has truly changed as it relates to how all of us, including our children communicate. Although I am of an age that is more comfortable in picking up the phone and calling someone, there are more and more people that the only way you can communicate with them is through some sort of electronic medium. I looked at my own children and the amount of texting, and instant messaging that goes on with them and their friends. In their world the phone is an antique.
Even though this topic is one that has many different views and this one topic can fill a whole blog by itself, my point was to simply bring it up so that you can think about it in your own terms. The one thing you always have to remember is that people buy from people. Relationships and a feeling of trust and sincerity go a long way when dealing with current as well as potential customers. If you are communicating with them through an electronic medium like email, then you may very well be loosing out on the opportunity to build trust and demonstrate your sincerity with your clients. It is next to impossible for you to read body language or to even show true sincerity in your voice when it has to be communicated via a keyboard. So, pick up the phone and call someone. Spend a day calling your current customers or even your potential ones. Although you may not be able to change the world back to the time when the phone and live meetings were how business was done, but who knows maybe by simply making a phone call you can set yourself apart from your competition.