I pulled into my favorite car wash this week and pushed the button as usual and waited for the robot voice to tell me to swipe my card.
Boom! What the hay? The price of my usual deluxe wash with the under body flush and towel dry had increased by 20% since my visit last week. Now I had two cars behind me and couldn’t reverse in protest. Yes, it was now a hostage situation with my only alternatives being to choose a lesser option that would not get me what I expected or grudgingly pay the 20% and feel taken advantage of.
Where was the warning? Where was the loyalty to the regular longtime customer? What was I actually getting for the 20% increased ransom I just ended up paying?
Sales goals will never go down and part of making your sales goal will include raising prices to your top customers as well as your bottom customers. However, being proactive, transparent, and honest with communicating the price increase will help your cause of not creating a hostage situation.
Stagnant prices can mean a stagnant business model and stagnation can destroy companies. Sure there is the economic and academic argument that internal efficiencies, purchasing methods and production improvement should allow you to lower the price to the customer, but we are not just talking about widget production.
Professional services, SaaS solutions, any skilled labor based business, and custom manufacturing are always evolving their offering at a cost that is not always evident to the customer. These evolved offerings and services need to be communicated. Not only in the initial sale, but in ongoing communications as well.
Here are 8 tips to help your conversations when the time for a price increase is necessary.
1. Understand that your customers increase their prices
Your customers have probably raised prices to their customers and stand to increase more revenues if they mark up your product or services as part of their value chain.
What have they changed or added to their cost centers? Asking some questions and understanding their pricing changes could help open the door for your conversation.
Look at this opportunity as shared growth and more of a partnership in their growth rather than being a vendor with bad news.
2. Rapport won’t save you, but it helps
Although having rapport helps to soften the conversation about price increases, it is not built overnight, building rapport takes some time. Trust builds rapport so do what you say, honor your commitments, call when you say you will and always follow through.
If this a new customer and you don’t have rapport built, then start building it. It may not be the right time for a price increase this early in the relationship so place yourself in a good position to have the price increase conversation next year.
3. Understand the field of play
What questions have you asked to test the waters about a price increase? Asking some key open ended questions about their business trends, what they see in the market, what they have heard about competition, and where they see prices going can help you set the tone for your conversation.
If you are in a competitive market place, asking some key questions from strategic partners and potential prospects could help frame the potential conversation as well. It’s a good time to use that rapport you have built.
4. Remember why they originally said yes
Most of the time, your customers had a previous vendor in place or other options available before you won their business. Why did they switch to you? What are the top three reasons they stay with you? Reinforcing the value they realize should be ongoing and part of the price increase conversation needs to be how raising prices will continue to deliver that value.
5. Don’t flinch
Do you have a quality reputation and record with the customer? Then part of the increase is to ensure it continues.
If not, then you should stress how the price increase will allow you to begin addressing some of the issues in question by allowing you to improve the overall quality of service they have been receiving. Naturally, it is important to make sure all comments are backed with a commitment to follow-through.
Communicating a price increase is all about the delivery. Be transparent, honest, and continue to offer real value to your customers and you will be able to communicate a price increase with very little pain.
This could even make a huge impact on profits since 10% of most troublesome customers cost you money with givebacks and constant concessions. I would plan to talk to those customers first. The rest should be easy.
6. Believe in the price increase
In order to be paid what you are worth, you must charge what you are worth. In order to charge what you are worth, you must believe that you deliver the value you are worth.
Tell your customers what they receive in exchange for more money. In an ideal world, you’re asking for money for a better product which benefits your customers.
7. They could pay the same for less
Is there something you did not communicate they were receiving? Something they have been using but was not part of the original contract? Do you offer an alternative? Do you offer lesser option at the same price they were paying before?
You may consider having options available or an a la carte menu of alternatives if they really want to keep you as a vendor but can not afford the new price levels.
8. Switching vendors may cost them even more
Nuclear option? New Vendor? The lower price vanishes after the initial order and the new vendor will not have nearly the knowledge or expertise as the original company about how to service the customer, so the switch often winds up costing more money in the long-run. I would not consider this a hostage issue. It is rather a business point of where their time and energy is best spent in keeping the value chain running.
Turns out, the car wash added a towel person to the end of the line to better dry the car, they included a repellent in the final rinse that would help with the winter salt issues, and they upgraded the scrubbing mechanism to better clean the wheels of brake dust. If only they had posted a note!
Death, taxes, and sales goals never going down are three constants you can bet your next expense check on so make sure communicating future price increases effectively is part of your sales plan.
It should be no secret that higher quality leads help increase the average value of your sales, the velocity of your sales cycle, and increase your prospect close rate. So why do we ignore all of the quality sales lead sources out there that could make you more effective as a sales professional?
Here are six sources of quality sales leads that you may want to pay attention to.
There is a lot of sales potential locked up in the middle 60% of your customer base but most of us do not go back to our clients once we made the initial purchase. They already like you and have their wallet open so what else can you sell them? Think of “want fries with that” or the Amazon model of “99% of other customers also bought_____________” when you only considered purchasing a single product.
Make a top 10 list of current customers that you could sell an additional item or service to and get them on your calendar.
When you do go back to your current clients and ask about additional business, why not ask who else they know that could benefit from your product and services? Most customers know at least one peer that could benefit but you will never find that out unless you ask.
Make a top 10 list of current customers that you could ask for a referral and get them on the calendar.
Quit trying to be something to everyone! if you have certain client that are more profitable, easier to close, higher value, longer life time, or clustered around a certain geography or segment you should spend your energy selling to prospects that match those qualities.
Make a top 10 list of ideal prospects that look ideal and start reaching out to them.
Especially in the B2B space, sales people like to network with each other but so many us do not use those relationships to their fullest potential. What other sales people are complimentary to what you do and have access to the ideal prospects you are trying to sell to? Could you meet with them together? Who can you introduce to your clients that would bring additional value and potentially lead to introductions for you?
Make a top 10 list of current and potential strategic partners and get them on the calendar for a meeting.
Sometimes the “no” answer to your proposals means “not yet” but not all of us consider these past opportunities as future opportunities.
Make a list of your top 10 lost sales to revisit and reach out to learn if there situation has changed. Might be a good touch point for asking for referrals or introducing a strategic partner as well.
Web and Social (SMERF)
Most sales professionals ignore both digital and analog sources that are right in front of them.
LinkedIn profiles, Twitter # followers or even competitor followers, Facebook groups, Google Alerts, Industry News Feeds, Prospects social media and newsletters, website calls to action, association listings, membership directories, customers in the news, and even Google key word searches. When what the last time you tuned in to these channels as lead sources?
In the analog world and hospitality world, this market segment is called SMERF, and acronym that stands for Social, Military, Education, Religious, and Fraternal. We are all connected to people in our community from our participation in normal life so what is stopping you from leveraging those relationship as referrals and even strategic partnerships?
Be sure to finish this exercise by making a top 10 list of the contacts from your digital and social worlds to have start a conversation with.
What would you sales funnel look like if you spent the next 30-60-90 days just focused on these lead sources?
Interested in stay focused? You can request a copy of the “Fuel” sales tool from the MKE Sales Accelerator here.
Timing. It can be the biggest enemy of every sale and it is the weakest score of the 5 Necessary Sales Ingredients of any sales funnel review I do with sales teams in every industry, of every size.
Focusing more on the when before you focus on the who, what, why, and how can be the difference between great and never.
Here are six tactics to increase your paycheck and company sales by getting you focused on the when.
- Understand when your product or service is needed
What is the trigger that needs to happen for your prospects to potentially buy? Is there a driver that makes them need you? Did they have a break-in, did something break, did they become a parent, buy a house, buy a car, lose a vendor, get a price increase, find a big customer, or just lose a deal themselves?
Understanding the trigger will help you focus your messages and time on better qualified prospects that actually have a need.
- Understand when the budget is available
Does your prospect have the budget to make a purchase now, or are they simply shopping? How many proposals have you stayed late to submit only to find out later that it is a budgeting exercise?
Just because they are interested doesn’t mean they have the funds or that they are going to make a purchase soon.
Understanding if they have the budget helps you focus your energy and time on higher qualified prospects, that are going to buy sooner.
- Understand when purchases are made
We just signed a contract. We just switched vendors. We just bought one. Missing a sale is worse than losing a sale. At least you’re given a chance when you lose a sale.
When is the prospect updating what they offer? When does the prospect review contracts? When do they review their vendors? When do they need the proposal? What steps do they require to become a supplier, partner, or vendor, and when are the deadlines? When do they make a decision?
Understand the buying cycle and buying process to make sure you at least have a chance at the sale.
- Understand when more purchases will be made
Selling more and selling frequently to an existing customer is much easier than selling to a new prospect and is a great way to drive your sales volume.
Is this one time or is there an ongoing need? Do you have to adjust inventory to keep them supplied, and is there a price break to be realized by more volume? Can you get commitment for the next order today?
Understanding the volume and frequency of the purchase can help you partner with a customer for a lifetime and not just one transaction.
- Understand when a prospect is available and receptive
Prospects tend to be happier, positive, and more receptive to talking and meeting at certain times. When is the best time to call your prospects? When are they more receptive to meeting to talking?
Don’t call when it is good for you, call when it is good for them. Most people prospect or make inopportune calls in their left over time because they use opportune times for non-selling activities. What would your paycheck look like if you flipped that?
Understanding availability and receptiveness can help drive better conversations and increase the volume, value, and velocity of your sales pipeline.
- Understand when to close
How many proposals or price quotes have you sent without a clear next step of commitment or having asked for the sale? What if you could gain commitment earlier and skip the entire selling process to begin with?
Understanding your prospect’s buying signals or asking for the order early can help you focus on the prospects that are ready to buy.
Focusing on your prospect’s timing will help you spend your time on higher qualified opportunities with less effort and will drive your sales faster.
If you are in the Milwaukee area and need help integrating these tactics or others into your efforts, check out my workshops through the MKE Sales Accelerator.
Getting results out of your sales team is still the goal but the days of beating the Viking drum are over except for those lucky few that still work in a pirate culture where beatings will continue until moral improves. These are the companies and bosses that only care about how many calls you made, how many leads you found, and how late you are working this Saturday when you come in. Most socks in your dresser drawer have a longer life than the sales team members and sales managers in these types of cultures.
Today’s sales leaders don’t yell down from upstairs, ask questions that are meant to make you look foolish in front of your peers, threaten to take accounts away if you don’t make your numbers, or force their teams to sit through sales training from the bosses networking friend that only addresses perceived organizational problems.
Today’s sales leaders are characterized by the following:
- They work with and support their teams in the field
- They work hard to make sure their teams have the resources and training they need
- They make sure post-sales support is in place
- They make sure that marketing is aligned with target markets and generating leads
- They make sure that goals have been developed together, plans are in place, and that activities are aligned with meeting the goals.
They also keep their teams focused by asking these 6 simple questions of their sales team members on a weekly basis:
- What went great this week?
- What got in the way?
- What is your plan for next week?
- What does success look like next week?
- What changes do you need to make for that success to happen?
- How can I help you?
Today’s sales leaders get their team members to become autonomous and self-directed like independent business units that independently have a unique set of skills. These questions are asked in a one-on-one setting where individual hurdles and constraints can be solved like using a personal trainer versus the traditional drill instructor that we see in movies.
Results still matter at the end of the day but so does how you get them. Provide your sales team members with the resources and training they need and make sure they have a personal trainer to help them.
We’ll end with a quick quiz.
Q: What do typewriters, asparagus tongs, horse plows, beta cassettes, Polaroids, and 1950 sales management tactics have in common?
Feel free to contact us if you need help with the answer.
In our previous posting, we identified that most companies forget to build any “execution” into their business plans, financial plans, marketing plans, and sales plans. Most sales and marketing professionals are very good at telling others what they want to do and hope to do, but terrible at telling others what they are going to do and when it is going to be completed. So, let’s develop your execution plan to merge with your other plans for next year.
Including Others: Nobody likes having a list of things handed to them to do and being given goals that seem unachievable. You need to include the people that will be completing the necessary activities in this planning process. It will help you understand what their capabilities are, identify the potential skills gaps are for you to invest in training or hiring another person, and it will help everyone understand what you are trying to accomplish and what their roles will be.
Setting Goals: We will start with the end in mind by first setting a goal of what exactly needs to be accomplished. What does success look like when we look back at the end of the year? Do you have a financial goal or a non-financial goal for next year? Are you targeting a specific sales goal (as an organization or individually) or do you want to launch a new product/service, hire a key employee, buy a new piece of equipment, build an inbound marketing function, enter a new market, on board a number of new customers, or break ground on your new building? It does not matter what the goal is, but you need one, upon which, to align all of your resources and activities.
Reverse Engineer Success: Picture the instructions you laid out in front of you this past weekend to assemble that new TV stand, mount the stand alone wine rack, or install that kitchen sink faucet. What are the key things that have to happen in order for you to get this done? What are the milestones that have to be met and what are the deadlines? What tools do you need? What needs to happen step by step to get the job done?
Example 1: Let’s use an example of gaining 10 new clients next year: If your close ratio is 10%, you will have to pitch to 100 targeted prospects. If only 50% of your prospects let you pitch to them, then you will need 200 targets to meet with. If only 50% of targets meet with you, then you will need 400 targets. If only 50% of prospect turn into targets, then you will need 800 prospects……See where this is going? You will need to look deeper then at how many leads you need, where those leads are going to come from, and how you are going to reach them. You also may want to look at the quality of leads you are chasing to be more efficient.
Example 2: How about hiring that new key employee as an example. We will assume that you are not going to hire someone first and then start to find business to keep them busy and pay for them. Define how much additional business you need for that position to add value to your efforts and then plan the steps that it will take in reverse order to get there.
Assign Duties/Accountability: Go back to our goal of gaining 10 new clients. We now understand how many leads we need and maybe where they are going to come from. But however, we have not created the plan to contact them and convert them into clients. What are those key activities that need to be completed? How are we going to market to these leads? Who is going to contact these leads? How are we going to contact them? When are we going to contact them? What happens if we don’t contact them? What is going to prevent us from contacting them? Having your sales team develop their own plans will help keep them focused on what they need to do and help identify what support will be needed to keep them doing the right activities.
Develop Leading Indicator Metrics: Most sales management efforts are still like using a rear view mirror to drive forward. Just tracking the activity from last week is not going to help you but looking at the results from last week will….and make them public for all to see! Again, go back to our goal of gaining 10 new clients. Everything sales people do should be focused on growing their sales funnels and moving opportunities through their sales funnels…..that’s it! Anything else needs to take a back seat, be automated, or be delegated to a support role. With this in mind, how many meetings does the sales person need to have with “new” prospects per week? How many new opportunities do we need to identify per week? How many pitches do we need to make per month? Focus on the metrics that will guarantee success based on your numbers. If they are not met, then you can start asking questions about what is not happening based on best practices/training and what needs to be changed (coaching 101).
Release the Hounds: No time like the present. One useful line I remember from one of my coaches was “Every day that passes is an opportunity lost”. So there is no time like the present to start focusing on what you need to do today to ensure your success in the future. If you have a 6 month sales cycle and you do nothing today to grow or move opportunities in your funnel, guess what you can guarantee six months from now?
Execution will be the key to achieving your goals next year and following years. If you need help developing an execution plan or if you would like a copy of our Integrated Sales and Marketing Calendar to help keep everyone on task and on time, please contact us and we’ll get a copy of it to you.
“Execution”. Short posting right?
We have reached that time of the year again where sales teams are trying desperately to meet their goals and put together last minute sales plans, where CFO’s are developing the financial plan and top line revenue budgets to be met in 2015, and where leaders are revising business plans and looking to make changes based on the lack of meeting goals this year or the hopes of making goals next year.
It is also that time of the year where you (the sales and marketing experts) start down the annual marketing plan path looking to do market research, re-define your target markets, plan the content for your new products and services to launch, make SEO changes to your website, update social media profiles, revisit your SWOT and competitive analysis, communicate your mission statement, develop your marketing communications tactics and activities, schedule tradeshows, look at the 4 P’s, begin the begging process for a budget from your CFO, establish goals, define what metrics your are going to use to measure success, hopefully use some sort of system to track the results of your efforts, and put all of this nicely into a report that makes you look really busy to the powers that be.
Sound familiar? This scenario is being played out in companies all over the globe. You have all the latest articles that tell you what the trends are for next year, you have the latest templates downloaded from the various marketing associations for planning, you have your three focus words for the year, You even have a useful spreadsheet that a consultant left behind which performs brilliantly as a tool for organizing it all. But there is still something missing when all of the planning is complete and the appropriate approved forms are filled out and submitted to the leadership team for their 2015 files.
Where is the execution in all of this? Someone will eventually have to do the activities that are necessary to make all of these plans work. I guarantee that most of you will overlook the following questions and just submit plans on what you “want” to do and not what you are “going” to do. You will need an execution plan and it will need to answer the following questions:
- What exactly has to be completed?
- When does it have to be completed by? What is the timeline?
- Who is going to complete the activities?
- Who is capable of completing the activities or do we have to invest in training?
- What additional training and skills do we need to invest in?
- What tools and resources have we given that person to make sure they are successful?
- What benchmarks do we have to measure improvement?
- What happens if that activity is not completed? What are we at risk of losing if we don’t get that activity completed?
- What changes are we prepared to make if we can’t get the activity completed?
At the end of the day, the word “execution” and the execution plan are the only things that should matter to you for achieving your goals in 2015 and future years. Without execution, your plans mean nothing and you can guarantee that you will fall short. Look for our next article on how to develop an execution plan.
Do you know where to focus your sales activities to get to the next level?
Most companies were successful in the beginning because of one or two main clients that represented 80% of their sales. Their second stage growth then came from employers from those first two clients that moved to other companies and pulled that company with as a supplier. But what happens when that organic growth stops and your company has to go find new customers to achieve that third stage of success? Would you be able to develop a plan, create new habits, and commit to the right sales activities that drive your sales funnel growth and sales funnel movement?
For every sales effort, there is an identifiable key sales activity that drives the growth and movement of the sales funnel. It is that one activity that if you repeat it over and over, success will follow. Example of 1% sales activities would include:
- Presenting to ideal prospects and key strategic partners about value you can add to their business
- Having lunch with key centers of influence to understand how they integrate with clients
- Speaking at a business networking event full of people representing businesses that are in your wheelhouse
- Meeting with a new ideal prospect to learn about their business and understand where you might be able to help them add value to their clients
- Making introductions for others to help grow their business
- Writing blogs to share your experience with the world
I refer to these activities as the “1%” since when they are completed, the other 99% of activity follows automatically. My personal 1% is having 3 meetings per week; One meeting with a business owner to learn about their business, one meeting with a center of influence or a service partner in the market to learn about what their challenges are, and one meeting where I am introducing two people that I know should be working together. If I have those three meetings per week, I know that my sales funnel will stay full through referrals, and that I will be scheduling meetings with potential clients to learn where I can help their business.
When was the last time you reverse engineered where your sales success comes from? Do you know what your 1% activity is? Do you know who you need to perform that 1% activity with? What do you need to clear from your schedule to make sure that 1% happens every week? Please feel free to contact me if you need help identifying what your 1% is and creating the right habits to make sure it happens.