How (not) to sell in hard times

Do we all love to play the ‘discount game’ in hard times?

When I sell services or consulting I’ll consider offering a complimentary ‘project’ discount or offer some auxiliary free services – but the price never normally goes down from that point unless its a much bigger deal with an end of contract bonus. I would walk away otherwise.

So my approach is to add some perceived value when I present a price discount.

What about other companies?

I’ve had a few companies over and asked for some quotes on improvement work to our hall and landing at home.

One quote is nearly 50% lower than the other for an circa 80% identical product.

The representative who gave the lower price passed it across with no nervousness and just left it with us decide in our time over a week or so, including the current standard discount.

The representative who presented the much higher deal was a bit nervous and agitated (and took a few minutes to present his price on a typed letter head) when it came to presenting the price. I immediately baulked at the price and said it was over my perceived budget.

What’s happened since……

The higher deal was subsequently lowered in writing within a few days after I said it wasn’t within our budget.

I then shared my maximum budget nos with them explaining the 2nd quote was still too high and I asked for options on specification or price.

So today the representative presented a further discount and said the Directors will only give us to the end of the day to agree and pay a 35% deposit. This was still quite a lot over our budget.

So I ‘passed the porcupine’ back across by email and said my wife and I would need to consider in our own time and I asked if the Directors would keep the last price offer open (as who would ever revert to paying a higher price?!).

I find this a fascinating story in sales approach and techniques in austere times when nearly everyone expects a discount to be presented.

Comments welcome!!

Advertisements

Go On; Spoil Your Customers

We are often asked by clients “How can I improve my marketing?” – Often this means – “How can I get new customers?” Indeed, most businesses put most of their marketing effort – and budget – into new lead generation.

However, it’s amazing how few businesses are effectively marketing to their existing customers. Most business owners are sitting on massive untapped potential in terms of their existing client relationships.How do you unleash that potential? Try answering these questions:

  • What cross-sales, up-sales, new products/services could you offer your existing customers?
  • And when did you last let them know? In fact, when was the last time you wrote to your customers or emailed them or phoned them. And what kind of response rate did you get?

If you doubled the number of times you contacted them what would happen? One retail client used a brochure to market to his client base and generated hundreds of thousands of pounds in turnover each year from this method. The brochure was sent out once a year, in springtime. We asked him to try sending it again in autumn. Guess what happened!Play the easy game. Make sure you have a database with all your existing clients listed. And then……speak to them……pamper them……offer them special previews and promotions……ask them to tell their friends.

Remember It costs six times more to get new customers than it does to increase sales to existing customers and 64% of customers don’t purchase from your business a second time because of the perceived indifference with which they are treated.

If you want to reduce your marketing spend, or the cost of customer acquisition, reinvest your pounds into strategies that will retain your customers, so they keep buying from you. Investing in customer relationship strategies – the payback is stunning.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Track, Conversion & Measure

To really know the success of your business you should track its health. To do this you need three sets of information. This could be done for a website or for face to face sales. You will need:

  • Your sales figures
  • Your subscriber and customer statistics (from your website or sales forms)
  • Usage details from your website or records

The most important statistics that you should track and measure are your conversion rates. A conversion rate will measure how successfully you are achieving your goals, such as converting potential customers into buyers or converting first-time buyers into repeat customers. There ill more than likely be several conversion rates that you need to focus on however the below formulas will get you started.

1. How many visitors are you converting into customers? Your potential customer to buyer conversion rate is one of the easiest stats to calculate. This is also one of the most powerful for your business. This formula will give you an indication of how effectively you are winning over your potential customers to buy from you.

Calculation : Divide your total number of sales by the number of visitors to your business or website then multiply by 100. For example, if you have 4,000 visitors a month (to your business or website) and 280 of them purchase from you making them a customer, then your conversion rate is 7%.

2. How Many Visitors Are Signing To Be A Subscriber? This may mean that your potential customer/visitor has signed up to be on your database to receive your monthly newsletter or business promotional offers via your website or direct mail. This is the visitor-to-subscriber conversion rate which will tell you how appealing your subscription offer is. You should keep an eye on this figure as you test and trial different promotions or written copy for your sign-up form or sign-up procedure.

Calculation: Divide the total number of subscribers you have by the total number of visitors to your business or site then multiply by 100. For example, if you get 1,500 new visitors to your site in a week and 700 of them subscribe to your free newsletter, then your conversion rate is 46%.

3. How Many Of Your Subscribers Are Becoming Customers? Your subscriber-to-customer conversion rate is a positive test of how effective your newsletter or other piece of sales material is.

Calculation : Divide the total number of people who purchased something from you by the total number of subscribers to your newsletter then multiply by 100. For example, 105 of your 700 subscribers buy something from you, then your subscriber to customer conversion rate is 15%.

4. How Much Revenue Are You Making From Each Visitor? This statistic will show you how much you are earning from your average visitor to your business or website. This is a valuable statistic as the number will help you to determine how much you can spend to obtain a new visitor or potential customer while still earning a profit. This could be calculated over a month, quarter or a year, depending on how soon you want the figures.

Calculation : Divide the total amount of your sales by the total number of visitors to your business or website. For example, if you sold £12,000 worth of inventory this month and you had 35,000 visitors to your business or website, then your sales per visitor is about £0.34.

5. How many people are responding to what you want them to? This statistic is the response percentage of people who read your newsletter or direct mail piece either posted or on the website and go straight to the order form. In web terms this is the click through rate from your email newsletter to your order form. Same principle applies for posting of direct mail.

Calculation: Postage/Direct Mail Divide the total number of people who respond to Newsletter A by the total number of visitors to your business then multiply by 100. For example you have 4,000 potential customers and 420 respond to your mail via the order form, then your Newsletter has a response rate of 10.5%. Internet Divide the total number of clicks on link X by the total number of visitors to the page with link X then multiply by 100. For example, if you have 4,000 visitors to your emailed newsletter and 420 click on the link to your order form, then your newsletter has a click-through rate of 10.5%. All of these calculations are important for you to understand how your potential and existing customers are reacting to your business and sales promotions.

Get in touch and ask us to conduct a FREE Business Evaluation Meeting and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Are You Ready To Sell More?

Often at our seminars and events we survey business owners to discover the challenges they face within their own businesses and one topic often comes through loud and clear; ‘I need to sell more’. But whilst I agree that growing sales is an essential component of business growth it is often not the real solution to their problems.

Before you embark on a sales campaign first examine the following questions:

  • How do you intend to cope with increase in demand?
  • What will be the impact of a successful campaign on cash flow?
  • Can the business sustain any growth long term?
  • How does this campaign fit with the long terms goals of the business owner?
  • Are the sales processes effective?
  • Are the staff sufficiently trained?
  • Is the marketing plan robust and will it generate the levels of inquiries necessary?
  • What are your motivations for growth?

Let’s start with the last point first; why do you want to sell more? Far too often the motivation in the first place is wrong, and many owners see selling more as the solution to long hours, poor cash flow and low staff morale and productivity, often with disastrous results.

Recently I worked with a business owner who had spent the last 4 years chasing bigger sales with good success. Sadly as the business grew so did his headaches; cash flow just got tighter, already creaking systems began to implode, the demands on his time became greater whilst profits remained static. The harder he seemed to work, the harder it all seemed to get; worse, his home life was rapidly heading for trouble, his relationships with loved ones being eroded by his long hours and short temper. His dream of owning a £1,000,000 + business was rapidly becoming a nightmare.

I can’t begin to imagine how he felt, he was successful! He had set a goal for growth, gathered his team around him and cajoled, motivated and trained them to the best of his ability and it had worked! He had hit every sales target he had set and yet somehow his only reward was a bigger overdraft (and pressure from the bank) and a larger mountain of work, hassle and issues to deal with. It must have been a devastating moment when he realised he was the author of his own undoing. Sadly this is an all too common tale.

So where did he go wrong? The truth is that it costs money to grow and businesses are limited by the rate at which they can grow safely and securely. Furthermore if the motivation for selling more is to relieve a cash flow problem or to create enough space to employ more staff to reduce hours (meaning you are already over capacity) then more than likely you are setting yourself, and your business up for a very bad fall. Our poor business owner had simply magnified the problem by not dealing with the core issues which created the lack of cash and profit (not to mention time) In the first place.

When we work with business owners we check a number of key factors within the business before we will allow them to go out selling and I suggest you do the same.

  • Firstly and most importantly, look at the end game; where do you want to be in 2, 3 and five years time? Selling more just to solve a problem is not healthy as we have already discussed.
  • Secondly check and get control of the finances of the business; how much stock do you hold, how long do clients take to pay, how quickly do suppliers expect payment, are you pricing correctly and can overheads be reduced? These parts are crucial as they have a major impact on profitability and cash flow and EVERY business owner should know these metrics for their business off by heart.
  • Next take a look at the people who will help you achieve your goals, these can be split into three major groups:
  1. Customers: Do you truly understand your target market, do they want what you have to sell and why do they buy from you?
  2. Staff: Do they work late without asking for extra pay? Are they part of the team and working with you to achieve the businesses goals or are they leaving you alone at the end of the day to finish off? If the team is not motivated and behind you, growth will be a very rocky journey!
  3. Suppliers: As you grow so will the amount of trade you do with suppliers. Are they willing to give you the credit you need and can they meet the increase in demand? What impact will this have on their selling price to you?
  • Now take a look at your systems and processes. Do you have a manpower plan for when the business grows, and how will staff be recruited and integrated quickly into the team. How will you cope with expected demand?
  • Lastly Conduct a SWOT of your business (Strengths, Weaknesses, Opportunities and Threats) to determine if you have covered everything and put a plan in place to address these issues before you go on a selling spree.

Now I know this seems a lot to do and it is and maybe this is the reason so many businesses don’t do it. Indeed I have heard all sorts of excuses in my time from “it is unnecessary“(a foolish notion) to “I’ll do it after this next big sale which is going to make everything all right” (It won’t).The truth is often they don’t know how to do it or they are trying to take a short cut, sadly you can’t, and in general those businesses that try, fail.

It’s an old and tried mantra but businesses that fail to plan are planning to fail, and it’s truth is something that irks us business advisers no end! We watch time and time again as people struggle without asking for help. I have never tried to build my own house, make my own car or grow my own food; I am simply not qualified. Yet the average business owner tries to grow his or her own business on the same basis, and wonders why he/she fails losing their dreams, homes, self respect and relationships along the way.

So go on, get your business ready to sell more; give us a call and ask for a health check and I promise to leave the tools in the garage……

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.