Name: BY MARK
Web Site: http://expertaccess.cincom.com
Bio: Mark Hunter, “The Sales Hunter,” is a sales expert who speaks to thousands each year on how to increase their sales profitability. For more information, to receive a free weekly email sales tip, or to read his Sales Motivation Blog, visit www.TheSalesHunter.com.
Posts by :
Want a quick way to destroy sales motivation and profit at the same time? Picture yourself as a sales manager who suddenly receives a phone call from a salesperson who is on the verge of closing a sale. Here’s a sample of that typical conversation:
Salesperson: “We have to cut our price to get the first order. Then, once they see what we can do for them, we will be able to raise our prices. I’m sure once they see how good our service is, I’ll be able to convince them to pay the regular price.”
Hmm. Really? I’ll let you fill in how you feel the sales manager should respond. The sad comment is that too many times the sales manager—after sounding tough on the telephone for 30 seconds—then gives way to the idea of lowering the price by saying something like, “Well, just this time, but we certainly can’t go making this part of our sales tactics with other customers. The only reason I’ll say ‘yes’ this time is because of how much business is at stake.”
I can’t tell you the number of times I have heard this rationalization. Sadly, what blows me away is the number of times I have heard it when somebody is trying to land a new customer—but then I never hear from these same people a year or two later expressing what the long-term results have been. Why do salespeople or sales managers never share with me the long-term outcome of such “price reduction” strategy? Because it never works out the way the salesperson or the sales manager initially believes it will.
Let’s look at this from the customer’s perspective. If you bought something at one price, don’t you think you would be able to buy it again at the same price? Sure you would. So why do you as a salesperson think that increasing the price after the initial sale is going to go smoothly?
Cutting your price to secure the initial deal only does one thing—it takes profit out of your pocket.
Many of you are thinking that this is alright, because all that is being lost is some profit on the initial sale. My experience is you’re giving up profit not only on the initial sale, but also on any future sales to come.
The reason is simple (so simple, in fact, that I can’t believe so many salespeople still think slashing the price on the initial sale is a viable option).
The first price the customer gets is what they believe is the right price with the right value. If the price is higher, they believe it to be unfair.
Sales motivation takes an even greater dive when the customer is ready for the next purchase, and the salesperson begins to wander down a dangerous path. The salesperson justifies in their own mind why increasing the price is just “not the right thing to do” and will “jeopardize the long-term value of the customer.” In the blink of an eye, with that one thought, the salesperson has committed themselves to lower profit on a going-forward basis (maybe even indefinitely … yikes!).
As tempting as it might be to cut your price to gain a new customer, don’t do it!
If you can’t
land the customer at the profit margin your business plan is built upon, then that particular customer is not worth having. Think I’m crazy? Run the numbers over the long term and you will see what I mean.
To avoid being in the situation where you feel desperate to get a sale “at all costs,” here are some strategies to put into place:
First, maintain a strong pipeline of prospective customers. Discounting is far more prevalent when a salesperson believes the sale on which they are currently working is the only sale they are going to get.
Second, never attempt to close a sale until the customer has identified to you the specific objectives and
you’ve had the opportunity to explore the needs they have. When the customer understands the benefits you’re helping them with and the gains they’re going to get from those benefits, then you’re in a much better position to close the sale by not having to discount your price.
Too many times, the salesperson gets taken down the price discount road only because they have not taken the time upfront to get the customer to fully explain the benefits they’re looking for. As tempting as it can be to close a sale quickly, the pressure of the price discount is many times what emerges when you attempt to close too early. Allow the customer to verbally describe the benefits for which they are looking. This gives you time to expand on them and, in turn, help the customer see the full value of what it is you’re offering them.
Protect your profit. Protect your sales motivation. Both are too valuable to toss aside, all in the name of making a sale.
By Mark Hunter
Keeping your pipeline of prospects full is no easy task. I’m not going to suggest it is. I talk to salespeople all the time and most say that prospecting is their number-one source of new business. So if you are like most salespe
ople, one of your hardest tasks is simultaneously one of your most necessary—keeping your pipeline full. There’s no way to slide into loads of profit without some effort—serious effort—on the front end.
To use an analogy, let’s think of athletes. Professional and Olympic athletes train for years for the shot to achieve national and/or international success. For some athletes, their competitions last mere minutes. Even for baseball, football, hockey, soccer and basketball players, their pinnacle moments may take place in games that last only a few hours. What does it take to achieve at such a high level? A tremendous amount of effort on the front end. We don’t see the countless hours spent training, preparing, avoiding injury, healing from injury, finding the right coaches, acquiring the right equipment, managing time schedules and juggling personal lives.
From a prospecting standpoint, consider these questions:
What are the obstacles you’re facing in growing your business?
If you can’t identify specific obstacles, you can’t begin to find ways to overcome those obstacles. Put what is standing between you and more customers down on paper.
What percentage of new business comes to you because of referrals from your customers or your network?
Interestingly, some salespeople wait for their customers to give them referrals. It’s like waiting for your friends to suggest a good restaurant instead of proactively asking your friends for restaurant recommendations. Start today to make it part of your follow-up process with current customers to ask them for the name of at least one contact or company that may appreciate you as a resource.
Referrals happen when you provide a superior customer experience. Networking is all about developing as many relationships as possible. To refine your networking and referral process even more, find ways to develop relationships with people who are in a position of influence.
What would happen to your business if you could expand your pipeline by 50%?
Now is the time to start dreaming big, because the more you visualize what business growth could mean for your company and you personally, the more motivated you will become. Start getting specific. Start listing ways that increased profit will benefit your company and you. Then let this motivation carry you to the next step—expanding your list of potential prospects.
What’s the best new idea you’ve come up with in the past year for your business or sales process?
Write down one idea you developed and the positive impact it had once you implemented it. Then start coming up with more ideas to refine your sales process. You may wonder what this has to do with prospecting. The more you can see that ideas—big and small—significantly improve your sales process, the more momentum you gain in wanting to improve and wanting to prospect.
Creating Confidence in Others
Sales is all about conveying a sense of confidence in others. Prospects become customers when they believe in the product, service and/or salesperson. Without a level of confidence, there is no sale.
Prospecting can be hard, but the payoff is worth it. Grow your pipeline with the same focus as a committed athlete trains. In the end, the “gold” is worth it.
“We’re forced to close because the bank will not loan us the money we need.”
Phrases like this have been heard too many times the last several years, and yes, it’s unfortunate, but here’s my perspective:
“Companies don’t fail due to a lack of financial capital. They fail due to a lack of intellectual capital.”
Let me put it in even simpler terms: Companies fail because people don’t think. It’s always easier to blame someone else for our problems. It’s what most people do, and besides, we all believe we’re brilliant. Any setback could not possibly be associated with us; therefore, it has to be somebody else’s fault, right?
Now I’m not going to say 100% of all failures are due to a lack of intellectual capital, but I will say the number is probably close to 97%. Let me explain why. Any business is in business to satisfy customer needs. If things work out correctly, they can fill those needs at a value for which customers are willing to pay and at an amount that is more than the company has to spend to prepare the item for sale. It’s that simple – nothing complex, nothing behind the magic curtain. Just sell something for more than it costs to make it and you’re fine. Well, not quite.
We all know there are numerous other factors that can and do come into play with regard to how a business operates, and it’s all of these other circumstances that require the proper use of intellectual capital. The level of intellectual capital in any business is going to vary dramatically. More importantly, how the intellectual capital is ultimately used is going to determine the success or failure of a business.
In my role as a sales consultant, I’ve watched a great number of people with incredible sums of intellectual capital not being challenged at all to contribute. At the same time, I’ve watched people who are, for lack of a better phrase, “a few dollars short upstairs,” making all of the decisions without any input.
Whenever I work with salespeople or any other business professionals, including CEOs, I love to challenge them with a few simple questions. Here goes:
What did you learn yesterday?
How did you apply today what you learned yesterday?
What do you expect to learn today?
What will you need to change next year to stay ahead?
You get the idea. I love to challenge conventional thinking. Some people say that’s not my place as a sales consultant, but I say that is my place. In sales, it’s all about fulfilling the needs people or entities may have, but many times these people or entities don’t know what their needs are. Worse yet, they don’t understand what needs they may have tomorrow. This is my role as a salesperson – to not only help them today, but also to prepare them for tomorrow.
You might be asking how this ties back into the original idea of businesses failing due to a lack of intellectual capital rather than lack of financial capital. It is intricately related because no matter what our role is, it is our job to help those with whom we come in contact to fully use their intellectual capital. This means we need to be fully using our own intellectual capital. And that means we have to ask ourselves the very same questions I listed above.
In my own company, we ask ourselves these questions on a regular basis. We also challenge ourselves to go outside of our comfort zone to seek diverse opinions and ideas.
The opportunities before us have never been greater. I firmly believe due to advances in communication and the global business community, there are more opportunities for businesses (large and small) to grow and thrive. I also believe the financial capital requirements are actually decreasing due to the advances in communication and the ability to grow a business. These changes, however, mean the average business faces far more competition than ever before, and the natural lifecycle of any business is getting shorter. Intellectual capital is even more important today than it was yesterday.
One final thought: Who around you has intellectual capital from which you can learn? What can you do each day to be growing your own intellectual capital? And finally, what is the one breakthrough idea that truly defies gravity that you can work toward implementing in the next six months?
Nobody can tell for sure what social media will look like five years from now, but what everyone can agree upon is that the concept of using the internet to socially communicate is not going away.
For salespeople, an important question is,
“Can social media help in negotiating?”
My answer is, “Yes, it can.” I’m not saying you should directly negotiate with another person by way of a social media (although I suppose there might be exceptions where this is possible). What I am saying is that social media is a perfect tool that someone can use to help frame a situation or build their on-line reputation before the negotiations even begin.
Negotiations are won or lost in two critical areas. The first is the period of time leading up to the start of the negotiations, when both parties are preparing to negotiate. The second is at the end, when the two parties are working out the details of the negotiation.
With regard to social media, I am not an advocate of conducting business negotiations in public. The reason I feel this way is because it is important throughout the negotiation process to maintain respect and integrity for everyone involved. This can be very hard to ensure if stuff is being thrown around for others to read and see. This is the reason I say the best use of social media in negotiations is before the negotiations even begin.
Using social media before negotiations begin allows you to establish the context of who you are and what your expected outcome might be. Best example of this is Donald Trump. He uses social media tools and the media in general to let everyone know who and what he is.
Trump’s goal is to make his brand known, and his brand really is himself. He wants his brand to appear favorable. He does this by coming across as a shrewd businessperson, and he uses social media to further this persona. On the one hand, this gives him an upper hand in any negotiations. On the other hand it also alerts everyone who might be planning to do business with him that he most likely is going to be very tough.
Conversely, a person who has used social media to cast a tough but fair image is billionaire investor Warren Buffett. The image he has crafted in social media and the media in general is one of a very smart long-term investor known for making quick deals based on how he sees a situation. The result of this image is many people might be far more willing to enter into negotiations with Warren Buffett under the belief they would be treated more fairly than if they were negotiating with Donald Trump.
The examples I use are extremes, but you see the picture. This is why I am a very strong believer that anyone who is planning to do any amount of negotiating with others needs to make sure their internet image is the one they want.
Use social media sites to position you and your company in the manner you want to be seen by others. Be active in how you do this. If you’re not active yourself, other people may craft an image of you that is not accurate.
If you are about to enter into negotiations with another party over a business contract or anything else for that matter, the other party likely will “Google” your name or company to see what they can learn about you. (This is a very common practice).
The other party is going to read all they can about you, and what they read may impact how they choose to negotiate with you.
Some people may like to believe that social media does not have a place in the professional business world. Sorry, but that is old-school thinking (or maybe I should say, “That is so 2009 thinking!”) Today, search engines capture everything, and people expect to find out everything. When someone can’t find something on the web, they become that much more suspicious.
Finally, don’t think for a moment the web is going to become any less powerful in the years to come. Just the opposite is true. It’s going to become more powerful. The sooner you accept the reality that you need a solid social media strategy, the better. The strategy of what you post, how you position yourself and so forth is up to you. Choose wisely and be consistent.
Always remember that the respect you show to others and the integrity you live by are priceless. If you build your social media strategy around respect and integrity, you’ll be well on your way to positioning yourself properly for today and tomorrow.
You’ve had a great sales call. You’ve done everything correct, and you are certain the customer will soon say “yes” to your offer.
Just as quickly as you think the customer will buy, they say something along the lines of, “I like what you’re offering, but your price is way too much.” Without missing a beat, you begin to shudder at the thought of losing the sale.
Let’s look at why your customer doesn’t like your price.
It comes down to one reason. The one and only reason your customer doesn’t like your price is because they have failed to see enough value in what you are offering to warrant paying the price.
Don’t believe for a moment it’s because a competitor might be offering a lower price. Certainly don’t allow yourself to believe the customer would be better off waiting for a better deal. Finally, don’t even entertain the thought that your price might really be too high.
The correct answer is the customer simply has not seen enough value in what you’re offering.
The easiest way to correct this problem is to get the customer’s input. Don’t wait to do this after they’ve rejected your offer, but rather do it at the beginning. At the start of the sales call is when the customer’s input is the most valuable. The reason I say this is because the first half of the sales call is when the customer is going to be the most forthcoming with information.
It’s not unusual during a sales call for the customer to begin sensing the salesperson may try to ask for the order. If the customer begins to believe this and they are the least bit hesitant, they may very well start throwing out false information. The customer may start talking about objections that are really irrelevant to their real need. They will do this purely to disarm the salesperson.
This is the reason why it is so important to engage the customer early in the sales call and to get them to begin sharing with you their wants and needs. The earlier they share with you this type of information, the better job you can do later in the call in following up on this information. You can then drill down deeper to get even more specific information. Your objective is to get the customer to really see that the issues they’re facing are significant – and the only solution available is the one you are offering.
Some of you might think this is manipulative selling or arm-twisting, but it’s not that at all. If you, the salesperson, are merely asking questions and getting the customer to do the majority of the talking, then how could it be called arm-twisting?
Your objective as the salesperson is to get the customer to share with you at least three reasons they need what you’re offering. One of the three should be time sensitive. The customer’s time-sensitive need will allow you to close the sale now. It’s the other two that will allow the customer to see why they need to buy.
I use three benefits as the minimum, but the more the customer shares with you, the higher the probability you will be able to close the sale. I use the number three because more often than not, if you try to close before the customer has shared three of their wants or needs, you won’t be as successful. Of course, this excludes the overwhelming benefit or need they share with you that is so big and time-sensitive that it invites an immediate close.
When the customer shares with you a time-sensitive need, this is a perfect opportunity to first validate the time need. You validate it by asking them a question to get them to share more about why time is an issue. By getting the customer to explain this further, you will discover that the customer usually becomes even more conscientious about why they need to buy from you right now.
When you feel as if a customer doesn’t like your price, you simply need to remember they only fail to see the value of what you are offering. As long as you remember it is your job to help them see the value, you will increase your odds of success dramatically. I’m not going to say you’ll be 100% successful with this approach, but I know the more you use it, the less often you will hear the “price” excuse when a customer doesn’t buy.
Go ahead and blame marketing, your boss, operations, or even the customer. The sale you just lost was certainly not lost because of you. Certainly your sales motivation is sinking because of someone else. It’s someone else’s fault!
So you now own an iPad or other type of tablet and you’re wondering if you should use it on a sales call.
Here are six quick rules to consider: Read the rest of this entry “
Before you get too excited thinking I’m going to say it’s okay to fire any customer – regardless of the reason – guess again.
What I am talking about are customers we don’t like because after we do everything we do for them, we simply are not making any money from them. Not making any money off of a customer goes beyond your commission or bonus. It’s the bottom-line profit your company is not making because of the customer. No salesperson is going to intentionally go out and find unprofitable customers, but too often we do end up with a few of these.
We wind up with unprofitable customers not because of the price we’re charging them, but because of the intensity of their demands and requests. You know what I’m talking about. It’s the customer who seems to always want one more thing. No matter how good of service you think you’re providing them, they keep asking for something more.
The problem we get into is the more we serve the customer, the more they expect from us. Each time we help them, they come away thinking of something else they want from us. These ongoing demands on your time (and the time of other people in your company) are what quickly erode profit – turning a once profitable customer into one that is completely not profitable.
What is even more disturbing is that often this dynamic happens so slowly that we don’t even realize how unprofitable they have become. This “slow drain” means that it usually gets way out of control before anyone realizes how bad the situation is.
To be able to determine which customers need to be “fired,” you must become more discerning of customers who place too many demands on you and/or other people in your company. It is absolutely essential you get control, because if a customer becomes high maintenance, there is a great likelihood they will remain high maintenance.
As the salesperson servicing the account, you are often the one in the best position to realize how high maintenance the customer has become. More than likely, most of the customer’s requests are flowing through you. You then dole these requests out to the respective departments, but collectively all the departments do not see the big picture of everything the customer is demanding.
Once you spot a trend with a customer making multiple service requests, you must begin detailing the cost involved. A detailed account of what has transpired will help when you and management need to decide how to deal with the customer.
Once you have identified an unprofitable customer, you and your company must decide what is going to be done about the customer.
Too many times, companies roll over and play dead and allow the customer to continue to be high-maintenance. In the end, the only thing that happens is profit is lost and sales motivation is depleted. You and other people in the company become disenchanted with the amount of support devoted to a customer who never seems to be happy.
If, on the other hand, smarter heads prevail, then you and management will realize something needs to be done to rectify the situation.
There are two options:
- Confront the customer. Your objective is to decrease their requests.
- Increase their prices. This will offset the additional costs you incur serving the customer.
Personally, I prefer option #2. The reason is simple. Increasing their price either restores your bottom-line profit or they reject your price increase and leave. Essentially what this option does is allow you to make the profit you need – or it releases you from a customer who is draining your profit. Either way, you and your company are winners.
This is a much better option than the first choice of confronting the customer. I’ve found that confronting the customer tends to create a level of tension that winds up as long-term friction. Ultimately, no one is happy.
If you raise your prices for those difficult customers, you will gain the profit you need or the customer will walk away. The beautiful part of using this approach to “fire” your customer is that they leave without you ever having to tell them you are firing them.
Profit is good. Don’t sacrifice it in the name of “good customer service.” Wisdom tells you that the best service is that which satisfies your customer and allows you to make a profit. Your time is best spent on profitable activities. For more information on implementing a price increase, consider this article section of my website (http://thesaleshunter.com/resources/articles/selling-a-price-increase/).
My mom always used to tell me how we learn more in life from our failures than we do from our successes, yet for too many of us in sales this concept doesn’t seem to sink in.
I’ve lost plenty of sales in my life. If I wanted to get really down on myself, all I’d have to do is take a piece of paper and start writing down as many as I could remember. If I wanted to go into a complete state of despair, all I’d have to do is to write down next to each sale I lost the amount of commission I failed to receive because of the lost sale.
For this simple reason too many of us in sales choose not to dwell on what didn’t happen. Instead, we merely move on.
It’s much easier to move on than dwell on the past, and I’m a firm believer that dwelling on the past doesn’t do anyone any good. If you want to damage your sales motivation, go right ahead and dwell all you want.
As much as we can’t dwell on the past, we do need to spend a few minutes doing an autopsy on the lost sale and learning from it. If we don’t learn from each sale we fail to close, then we’re committing ourselves to a pattern of losing more sales.
The key I’ve found to the process is to do the autopsy on the failed sales call right away. The sooner you can do it, the sooner you can apply what you’ve learned to the next sales call.
The only downside to doing it quickly is you have to make sure you’re in a stable frame of mind. I’m not meaning to be rude with this comment, but you can’t think clearly if you’re so hot emotionally over losing the sale. If you are worked up over the lost sale – wait till you calm down. Then do your autopsy.
Ask yourself the following questions:
- Was I able to get the customer to state their key needs and desired benefits?
- Why specifically did the customer choose not to buy from me? How do I know that?
- What were two things I know the customer appreciated about me?
- What did the customer ask and how did I answer? What can I learn from the questions?
- What were all of the customer’s objections and how did I respond to them?
- Did the customer clearly understand my value proposition? How do I know that?
- What closing technique did I try? How specifically did the customer respond to it?
- What did the customer agree with me on? How can I leverage this for future sales?
- What is my next step with this prospect / customer?
Take the time to answer these questions.
Doing so will provide you with key information you need. Also, never hesitate to go back to the customer after they’ve turned you down and ask them why they didn’t select you. Be sincere in how you speak to the customer and be appreciative for what they tell you.
This is not the time to be defensive or attempt to convince the customer they’ve made a dumb decision by selecting someone else. Your ability to be professional and appreciative in listening to what the customer shares with you will do more than anything else to help ensure you have a good relationship going forward with that person.
It’s been my experience both personally and professionally that by doing this process right, you can position yourself to become the salesperson these individuals turn to in the future.
The beautiful thing about this entire process is you come away with two major outcomes.
First, you find out things you can do differently to help you with other customers.
Second, you deepen your relationship with the customer you weren’t able to close, setting yourself up to potentially close with them next time around.
Every customer has a price range where they are willing to make a decision without any further thinking. I refer to this as the Price Tolerance Ratio – also known as the PTR.
Knowing your customer’s PTR is critical. I believe it is one of the major obstacles salespeople fail to comprehend. As a salesperson, when you don’t understand a customer’s PTR, at least one of the following results is inevitable:
• You offer a price that does not maximize the profit potential.
• You get the order but encounter resistance from the customer that hinders the relationship.
• You encounter resistance that leads to spending too much time on the selling process and ultimately no order.
Let’s look at each of these individually, starting with the first one where the price offering does not maximize the profit potential.
I start with this one because it is the most common. The salesperson rarely finds out the price is lower than necessary until long after the sales is completed – or worse yet, they never find out.
The only way around this is by asking the customer early in the relationship, before they’ve expressed any intention to buy, how they determine value and what their critical needs are. Many times, trying to ask these questions during the sales transaction itself is too late, unless the customer is experiencing a significant issue as to why the order must occur.
The reason I say this is because once the customer has determined they need to buy, they many times become focused on seeing what it will take to get a lower price. If you, the salesperson, ask them a question about value at this point in the sales process, the customer may very well use the question against you.
Take the time to ask the customer why the order is important and what risks they feel they would encounter should they not receive it on time. Ask them how their order fits into the overall scheme of what they do and what their customers do (if you’re in a B2B environment).
As a salesperson, if you can identify value or risk in other parts of the supply-chain, you can leverage this information during the sales process and increase the amount the customer is willing to pay (essentially widening their PTR).
The key is to find out as much information about the customer as you possibly can early in the sales process. Also, you need to understand how critical time is to their process. Obviously, the more critical time is to the customer, the wider the customer’s PTR will be. The impact of time could be reflected in how quickly they want to order.
By thoroughly understanding the customer’s PTR, you will be able to effectively price your product and/or service. Pricing too low means you leave profit on the table; pricing too high means you don’t get the order. There is no magic formula. It comes down to your level of knowledge and your confidence.
The second scenario a salesperson may encounter with regard to PTR is that they get the order, but with resistance that ultimately hinders the relationship. Resistance is not always a bad thing. I believe strongly that if you don’t encounter some customer resistance from time to time, then you have not truly pushed the process to the point of being able to maximize profit.
When you encounter resistance, you first have to determine if the resistance is real or superficial. Many times the customer is merely venting as a way to assert their control.
The best way to measure if the resistance is real or superficial is to see if they continue to express their concerns about price on multiple occasions. If price comes up only once or twice, then you can reasonably assume it is merely the customer venting. You can overlook it and continue with your sales process, knowing your level of service and support is going to overcome any pricing perception.
If the customer does carry on regarding pricing, then the resistance is real and it will slow the sales process. You then can adjust accordingly.
The final reason knowing the PTR is essential is it prevents you from spending too much time with someone who is nothing more than a customer from whom you can’t make any money.
Early in the prospecting and sales process, you must begin determining the customer’s PTR. The easiest way is by simply asking them what they’ve been paying for services in the past and what their expectations have been for the companies they’ve been using. If you are not direct with questions like these, you will waste time chasing customers you ultimately do not want.
Price Tolerance Ratio (PTR) is a new concept. I am pleased to be one of the first to educate people on this. Since explaining this concept, we’ve seen salespeople and companies significantly improve their profitability.
If you want to improve your bottom line, begin now to identify the Price Tolerance Ratio (PTR) for each of your customers. Waiting until you close the sale is too late.
Recently I spoke at a large conference on the subject of how to maintain your price and avoid discounting. After the presentation, a businessperson approached me and asked what my strategy would be if his company needed to discount price to create cash flow. This is not an easy question to answer.
Sure, I could easily throw out a response that implies that the reason a company has to discount is because it hasn’t done a good enough job of building its pipeline or hasn’t invested enough in the right type of marketing. I know, though, that this isn’t the answer a person needs when faced with the issue of cash flow.
Cash flow is a huge issue to a lot of companies, large and small. I would be lying if I didn’t admit that even in my own company we’ve experienced periods of tight cash flow.
The question we’re answering is if cutting a price to get a deal is a smart way to create cash flow.
Here is my answer:
Before making any decision about cutting a price to create cash flow, think about how you can maintain the price point and offer the customer more value. Cash is king. I first heard Donald Trump speak that phrase and I’ve never forgotten those three words.
Offer your customer more of something. Anytime you can close the sale at the original price, you’re going to be better off. Just be careful in what your additional offering is.
The last thing you want to do is offer the customer something more that ultimately winds up costing you more in cash long-term. Notice I said cash. I’ll give up some percent margin before I’ll give up cash.
Before you look at offering the customer more, you have to ask yourself if you’ve truly done a thorough job of actually selling. Many times I’ve found salespeople will cut their price only out of a false belief that that is what is needed to close the sale. You might say the salesperson or business owner is panicking over what they believe, not what the customer believes.
Before you consider discounting your price, make sure that the customer fully understands the value proposition you offer and that you fully understand the customer’s needs and wants. Too many times salespeople will flinch and offer a reduced price too early in the selling process.
A thorough selling process means you need to ask enough questions and follow-up questions – and listen – until you are certain you understand what the customer wants. The more you focus on the fact that what you have to offer is of value to your customer, the less appealing discounting becomes as the only way to close a sale.
Is Discounting Ever Needed?
If what you’re selling is bought solely in an auction type of environment and cutting your price is the only way you know you can get the deal, then yes, it does become an option you can use.
Regardless of the circumstances that are compelling you to discount, you still must be very wise in your approach. You have to remember that if you cut your price for one customer, you will potentially send signals to other customers and prospects.
If all of your current and potential customers are going to find out, then all you’ve done is move yourself into a permanent state of always having an issue with cash flow. The reason is simple — you’ll now be selling everything at a lower price.
What Will Your Discount do to Your Competitors?
Just as you need to be conscientious of what messages you are sending to customers and future customers, you also must be aware of what your discount says to your competitors. How will they respond? If they respond by cutting their prices to match yours, then congratulations – you’ve now entered what I call “pricing death spiral.”
Pricing death spiral is when one company cuts their price and everyone follows. I have one response – stupid! “Pricing death spiral” is often broken only when one company ultimately goes out of business or leaves the marketplace to focus on something else.
If you do need to cut your price to gain a sale to create cash flow, then it’s imperative you do it in a way that will not send signals to other customers or competitors. Make sure the customer is isolated enough and the customer is not going to become a long-term customer.
One last point I would make about discounting is that you may have to clarify to your customer that the discount is a “one time” discount. The last thing you want to do is discount a price for a customer on one sale to create cash flow, only to have them expect the same reduced price for years to come.
To further protect yourself from being in the position of having to discount, be sure to build a marketing strategy that allows you to sell to different markets or industries. This way, even if you have to discount, you can do so with one set of customers as opposed to all your customers across the board.
Only you can decide if discounting your price is a good way or bad way to create cash flow. No matter what, make sure you think it through.
When is the best time to sell a price increase?
I get asked this question a lot and my response is “right now.” After I say this and see the expression on the person’s face, I then have to back up my response with my rationale.
Taking a price increase is not something to be taken lightly. It has to be done with confidence, and too often, salespeople will put off taking a price increase under some false belief that if they only wait a couple of weeks, some how things will be better.
Sure, waiting is an option, but often the only thing you’ll experience is more of a belief as to why you can’t take the increase, as well loss of the added revenue during that time frame.
My perspective is you can take a price increase anytime any of the following conditions occur:
1. A competitor has gone up in price.
2. You’ve incurred an increase in your costs.
3. Your customers have just taken their prices up.
4. Other key players in the industry are increasing their prices.
These four reasons are all what I refer to as “market factors,” and any one of them is certainly reason enough to advance.
Keep in mind, though, that just because one of the above is true does not mean you should increase your price. It merely means the marketplace is giving you permission to do so.
Listed below are what I call “value factors.” These are the real reasons why you would want to take a price increase.
1. Has your customer realized added value during the past year from using your products and/or services?
2. Is your customer going to be realizing added value from what you provide them in the year to come?
3. Are there improvements in service or performance you can document that your customer would see value in?
4. Will you be able to increase your strategic importance to your customer in the year to come?
5. Can you show your customer how what you provide them will give them a competitive advantage or minimize their risk in the year to come?
These are the real reasons why you can take a price increase. The reason I say you can take an increase is because your customer is seeing increased value in what it is you provide.
When the customer can see increased value, you have every right to increase your price. Yes, there could very well be other strategic or even tactical reasons why you would still not want to take a price increase. Those questions are going to be answered only when assessing your overall business plan.
Again, my perspective is you should take advantage of increasing your price whenever possible. Being proactive protects your bottom-line and provides you some protection against price increases with which you will have to deal on the production or operation side of what you make.
The more confident and comfortable you become in your pricing – including your price increases – the less likely you will be to devote precious effort and energy to worrying about your pricing. That effort and energy is better spent on showing your customer how the value of your product or service meets their needs and the benefits they desire.
There’s no better way to improve the quality of information you receive from a potential customer than by asking short questions. We all can recall far too many times when we’ve sat across the table from a customer we’re trying to help – and we know we can help, if they would just provide us information about their needs and goals.
The problem is that no matter what question we ask, we get the same response: a big fat “I don’t know” (or something along that line). Then, almost without thinking, we put on our super salesperson cape and start telling the person everything they need. Unfortunately, when it comes to agreeing to the sale, the person turns cold.
Our problem in dealing with this type of customer is we need to find a better way to engage them and to get them to think about what they want and need – and then share that information with us.
The answer to this dilemma?
I believe that short questions get you long answers (while long questions get you short answers). What too often happens is we are talking to a customer and asking them what we believe are simple questions, but in reality, those questions are simple only to us. To someone unfamiliar with our product and services, the questions are complex.
For example, we ask a question that has a couple of facts wrapped up in it. As a result, it winds up being more of a statement for which we are simply looking for feedback or agreement. No wonder customers can give us the cold shoulder and the blank stare.
What we want to do is ask short questions. In their simplest form, they are questions like “why” and “how.” Or possibly they look like this: Could you give me an example? Could you explain that again to me?
The shorter the question, the more likely we are to get a long answer. The next step is to ask them another short question, following up on what they just said. The beauty about this is it allows the customer to do all the talking. By doing the talking, they’ll tell you their needs and desired benefits. They’ll tell you their goals and will reveal a level of information you need to determine how to best serve them.
When using the short question approach, there are only two things you need to remember. First, ask the customer a soft easy question to which you know they’ll respond. Then after they have given you a response, continue with the short questioning approach by asking, “Could you give me another example?” You then pause and allow the client to give you more information, upon which you follow up again with another short question such as, “How?” or “Why?” Basically, you want to do whatever you can to get them talking more.
The second rule to remember is to not keep asking the same short questions. If you do, you’ll come across as an inquisitive 3-year-old rather than the professional salesperson you know you are. You can avoid this best by picking up on a single item they shared with you and drilling down on just that one item.
When you drill down on a single item, you demonstrate your listening skills and your ability to truly discern information. The beauty of this approach is when it works, the customer will many times share with you exactly what they want and will begin asking you questions about features and benefits.
Short questions get you long answers.
Long questions get you short answers.
It is up to you as to the approach you want to take, but if you want to actually learn something about the customer’s needs, you will get there quicker by asking short questions.
Mark Hunter, “The Sales Hunter,” www.TheSalesHunter.com, © 2011
Have you ever really considered how price affects your customer with regard to their perceived benefit? Too often, we use a simplistic approach to determining a price – figure the cost to produce a product or service, tack on some arbitrary percentage, and call it good, right?
Price, though, is consequential in ways we may not initially consider. The price a person pays for something goes a long way in determining the perceived benefit they expect to get from it. The perceived benefit cuts two ways. First, the expectation of service goes up the more a person pays for something. Second, the perception of what they’re gaining also goes up with the amount they pay. The two are not opposites; they work in tandem, and in nearly all businesses, this tandem relationship can and does work to your advantage.
Many companies, hopefully including yours, are known for delivering incredible service. This quality service may be what your customers comment upon and why they are willing to refer you to other customers. This level of service comes at a price. One of the things you always should be doing is explaining to and showing your customers how your level of service helps them.
The more you share this type of information with your customers, the more comfortable you become in seeing the value of what you offer. Having confidence in your service allows you to increase your “Price Investment Ratio” (PIR). This all has to do with what you expect customers to pay.
For the customer, the PIR is revealed when you help frame their expectations. To help explain this best, let me refer to what I call the “IBM paradox.” This is the belief people have that although you will pay more for anything you buy from IBM, you will never be fired for using IBM. What this means is there are plenty of companies that sell the exact same items and services as IBM, but at a less expensive price. Although other vendors will be less money, there is a level of safety and confidence in using IBM – so much so that it translates to a premium price that customers will pay.
The “Price Investment Ratio” (PIR) is the amount over the minimum amount a person would have to pay for something. They are willing to pay it to feel confident in what they are buying. You might say the PIR should really be the CP – the “Confidence Premium.”
There are no two ways about it – when you have great service but do not reflect it in your PIR, then you are underselling. If you are underselling, you are not making the profits you could be making.
I can hear some of you at this point thinking, “What if we don’t have a solid sense of how good our customer service really is?” In other words, maybe your company receives very few complaints, but at the same time, you are not sure if your service is at a higher caliber than what your competitors bring to the table.
In order to find out your “Price Investment Ratio” (PIR), you must do a deep dive with your existing customers to get them to tell you what your service means to them. Once you do this, you can then match up what existing customers are telling you with what prospective customers are asking you to do. When you grasp this, you begin to understand what the PIR really should be. How much “investment” is the customer willing to make in going with you instead of your competitor?
As I have often said, in the B2B arena, companies don’t buy anything, they only invest. If your customer can’t see the return on investment, they won’t invest – they won’t pay the price you want to get. When they do see the value, though, then you can feel very confident in charging a price above what your competitors charge. Don’t settle for a lower price when doing so is detrimental to your bottom line.
One of the complaints salespeople share the most is that buyers never seem to make up their mind. Just about the time it looks like they’re going to make a buying decision, they suddenly hold off.
Yes, there are times when a buyer legitimately can’t make a decision. Many times, though, the delay is nothing more than a tactic on the part of the buyer to get a better deal. This is especially true of professional buyers, who see numerous salespeople on a regular basis. Why should anyone make a decision quickly if they don’t have to? More often than not, the buyers believe that by waiting, they will get a better deal. The salesperson will get scared and will think the only way to secure the sale is to offer a discount. Buyers believe this because experience has shown them that it works!
Salespeople by nature are scared.
Don’t take offense to my observation, because I include myself in this profession as well. We, unfortunately, can view things too quickly in a negative manner. For most salespeople, the way out of a situation like this is to immediately offer the buyer a price reduction. This is exactly what the buyer wants! They are looking for the salesperson to show some fear and some sense that the sale may not happen at all. Once the buyer smells fear, they know a better deal is about to appear.
This is also a key reason why many professional buyers love to ignore phone calls, emails and all other forms of communication from salespeople. Nothing can make a salesperson more scared than a buyer who doesn’t communicate with them. If you’re a buyer, it’s hard to find any activities that can result in a higher return on investment than ignoring a salesperson or holding off on making a decision. These tactics usually result in saving money.
Now let’s look at this challenge from a salesperson’s perspective.
Salespeople love to close sales and they also love to close sales quickly, preferably with as little effort as possible. But effort – particularly mental effort – can make the difference. This is the ability to understand and rationalize objectively what is happening and what is not happening. This means understanding why the buyer does need to buy from you and how what you’re selling will allow them to achieve their needs and objectives. The more you can build this kind of objective thinking into your attitude, the better equipped you are to keep negativity at bay.
Negative thinking is the culprit that takes the biggest toll on a salesperson’s level of success.
As soon as the salesperson begins viewing the situation negatively and how the sale may not occur, it’s only natural for them to think the solution is to lower the price or offer something extra in the form of service. When the salesperson does this, two things happen. First, it confirms in the buyer’s mind why the smart thing to do is to slow down the decision-making process. Second, it destroys profit margin for the salesperson.
While there are several techniques to counter these outcomes, there really is only one that is foundationally most important – the confidence of the salesperson. If the salesperson is not confident, then every other tactic or strategy is useless and will have little effect.
Everything starts with the salesperson.
Confidence begins with the total belief in your own skill set as a salesperson and total belief in your ability to help the buyer fill the needs they have. If you don’t believe in both of these, then there is nothing else you can do to prevent the buyer from taking advantage of you by delaying their decision. Buyers, especially professional buyers, can discern very quickly how confident a salesperson is. If they sense the salesperson is not confident, then they’ll delay their decision. They have nothing to lose and everything to gain by doing so.
On the other hand, if you as the salesperson are determined to regularly and intentionally strengthen your own resolve and your own confidence, your natural reaction to stalling buyers will not be to cave under the pressure. Your reflex will be to wholeheartedly believe in your product, your price and your potential to help the customer achieve their goals.
Are you going to let fear or confidence determine your future?
The choice is yours, so choose wisely. And profitably.
I’ll never forget the first time it happened to me.
The presentation with the customer was going well. I had prepared extensively. In fact, I had not just spent more time than normal, I had stayed up nearly all night to make sure I had every element covered perfectly in my presentation. For me, this sales call was going to be a huge success. My boss had told me this was going to be a difficult quarter, and that’s all I needed to hear to motivate me to close this particular sale.
The customer I was meeting with was tough.
In fact, using the word “customer” was simply too nice. This customer was the ultimate professional buyer who would routinely drive salespeople crazy with questions, bold accusations and flat out rejection.
For this sales call, I was prepared. The program I was presenting to him that day included a new item that I knew in the back of my mind he didn’t need and would most likely flat out reject with some very colorful language. Shortly into my presentation, I noticed him giving me a high level of attention and agreeing with what I was saying. Before I was even half way through my presentation, he said he wanted what I was selling.
To say I was shocked would be an understatement. I couldn’t believe it! I began to wonder if he knew what he had just agreed to. Yes, he did know and yes he said again he would take it. At this point, we all know as a salesperson that it is wise to take the sale and leave. Yet, I was a bit hurt. Remember, I had spent nearly the entire night preparing an incredible presentation, and suddenly more than half of it was never going to see the light of day. My ego took control and I felt that if I had spent hours preparing it, he was going to hear it, so I continued on.
Go ahead and say it – BIG mistake! You’re right – it was a big mistake. The more I continued on with the presentation, the more the buyer was becoming upset; however, he was not upset enough to throw me out without the order. He listened, and honestly, I’m still not sure why. That’s when I made the final mistake. I shared with him some information that I never should have had in my presentation, and suddenly he began asking me questions. It’s not hard to imagine what happened next, as he decided not only to NOT buy what I was selling, he also went into a tirade about how I and the company I worked for didn’t know what we were doing.
My mistake was very basic. I kept talking after the buying signal was given and in so doing, I lost the order and I lost credibility. The reason I’m sharing this is not to say this has happened to me only once in my more than 25 years of selling. I’m sharing it because it’s one of many situations where I’ve unsold something. It’s just that on this particular occasion I saw it coming like a slow-moving train and still didn’t do anything to get out of the way.
When the buyer gives a buying signal, close the sale and leave. It’s simple, yet we as salespeople allow our egos and our pride to get in the way. Let me share two rules I have regarding sales presentations. They’re not complicated rules, but many times are overlooked.
Rule 1: Close the sale as early in the call as you possibly can.
The only exception is if the price or quantity the customer wants is not within the range of your objectives. If the buyer’s requests are in your range of expectations, then get the order.
Rule 2: Close the sale before you run out of presentation.
I tell salespeople with whom I am working that the measure of success is to not have to go through your entire presentation to close a sale. This rule is extremely important. You always want to have information and questions you can share with the customer. I like to view it as always having a “back pocket” presentation – information I can share with a customer, but only if it is necessary. This gives me more flexibility and helps me close the sale earlier. My ego is saved and the buyer is not subjected to information they don’t necessarily want to hear. Final benefit of keeping some of your presentation in your back pocket is it subconsciously gives you confidence and determination. You will have confidence in knowing you have more information if you need it, and you will have determination to close the sale with the initial round of information and questions.
It seems crazy that a salesperson could unsell what they have already sold, but it can happen. Do whatever you can to make sure it doesn’t happen to you.
If you’re wondering what happened to me and my relationship with the customer, here’s the epilogue: He never did take the new item, and although he did continue to work with me on other activities, I never did get our relationship back to the level it was before my mistake.
How the Latest Trends Will Hurt You
Now more than ever, you need to stay tightly focused on your goal if you expect to keep your level of sales motivation up. It becomes far too tempting to start chasing after the latest trend when things are not happening at the rate you expect them.
We’ve all done this at one time or another. Sales slow down and suddenly, a new customer appears, a new product comes out or a new sales technique emerges, and you start to think it is the “cure all” for ALL your sales struggles. You begin chasing after the new trend instead of sticking to tried-and-true sales techniques. Ultimately, the only thing that happens when you chase the trend is you waste time and effort on something that ends up de-motivating you.
Our problem begins when we start doubting our current sales strategy, our prospects or some other element in our approach. This opens the door to us becoming distracted. It also makes us more susceptible to being swayed by the new trend or new customer we believe will turn our sales slump into a huge new level. We begin grasping, desperately bouncing around for the “magic” solution that will “fix” our dilemma.
Don’t get me wrong – it is good to be open to new ideas and new customers. Obviously, that’s part of the sales industry. You have to have discernment though. You have to be able to quickly assess what are valid opportunities worth pursuing and valid techniques worth incorporating.
I have always believed it is far better to slightly alter the course than it is to dramatically change the course altogether. Sales are driven by momentum and awareness from both the salesperson and the customer. When you change course dramatically, you no longer have the ability to leverage the momentum and awareness that you have built with current customers and prospects. Sure, you may see a burst of momentum from the thrill of running in a new direction, but this momentum will be lost quickly if sales don’t materialize immediately.
So what does it look like to slightly alter your course? You start to incorporate slight modifications to your selling process. This may include developing new questions to ask prospects, creating a new customer referral program, and/or increasing the number of sales calls you make. All of these changes enhance and build upon what you’ve already done. In other words, you work with the momentum and awareness you have already created.
There is just no substitute for tweaking well-established sales techniques, rather than scrapping them altogether. And this is true no matter what industry you work in. For example, a real momentum killer is when a salesperson will fail to close a sale because they fail to make that one last follow-up call or visit to the client. To use a football analogy, this is like a team’s inability to score from the “red zone” – the last 20 yards on the field just before the end zone.
If a team drives the ball consistently down to the red zone but then fails to score, there has been so much wasted effort. It’s no different in sales. Instead of abandoning the sales strategies that get you “down the field” (so that you can jump on some bandwagon of a slick trend), you would be wiser to simply alter your approach slightly so that you will actually score more. If your current sales techniques are getting you down the field, then maybe all you need to do is add a few more follow-up calls and visits in order to incrementally close more sales.
The best recommendation I can make to any salesperson is to stay focused on the opportunities you have at hand and work to enhance your current processes to ultimately close more sales. The more you stay focused on the prospects you have, the less you’ll be distracted by the latest trend. Let your competitor fall for the new trend. Let your competitor chase after the fleeting opportunity. When they do this, they leave you with more opportunities to actually make more sales.
Too many salespeople view their buyers as anything but smart, especially those salespeople who deal with purchasing departments. In far too many sales communities, there exists an attitude that buyers and purchasing departments are nothing more than barriers that need to be broken down.
Well, yes there are barriers.
Ironically, though, they are barriers that more often than not are there due to the very actions of the sales community. One simple thing salespeople need to keep in mind is the fact the professional buyer sees far more salespeople in the course of a week or month than most salespeople realize. Buyers have every reason to put up barriers, because the sales community in general can crank out some pretty pathetic salespeople.
How do I know this?
Simple – buyers have told me (not just once, but often twice. And not just in one industry, but in several industries). As a consultant, I often have access to buyers in a way that most salespeople don’t. More importantly, the people I meet share with me insights they would never share with the sales community. The buying community is really quite smart. They do their job well. Stop and think for a moment about this question: If they didn’t do their job well, wouldn’t their company let them go, especially in today’s economy?
Buyers are smart .
You should also know that they’ve seen every trick and every sales pitch known to mankind. I never cease to be amazed at how well many buyers can play back to me specific examples of sales techniques used by salespeople. What’s even better is that not only have they shared with me examples of what they’ve seen, but they also have shared how they have responded to these sales techniques.
I know it may be painful to hear, but you are not as smart as you think you are, and the new trendy sales approach you have learned probably isn’t as revolutionary as you believe it is. It more than likely isn’t going to equip you to blast through barriers the purchasing department has in place.
It’s for this very simple reason why I tell salespeople the number one thing you can do when dealing with professional buyers and purchasing departments is to be yourself and be positive. Your buyer will see right through you if you’re not being yourself. They’ll also see right through you if you’re putting on a front and not genuinely showing interest in their business and the concerns and needs they have.
If you’re not genuine, it will show. Sure, you might be able to pull off your trick for a one sales call or maybe even a couple, but your trick will be exposed. When it is, the consequences you’ll face will be severe. This is something to always keep in mind. Many times when a professional buyer decides to cut you off, they may not tell you right away – they may leave you hanging in the wind for days, weeks or even months. One reason they may choose to do this is to simply see how you’re going to respond or, more likely, to continue to gain information from you that they can then use to negotiate a better package with your competitor.
When a professional buyer does this, they’re doing their job. You may naively think they’re being stupid, because they’re not being more forthcoming with you. This is where the real stupidity starts to come out with the salesperson. Because the salesperson believes the buyer is not smart, they start to play bullying games back with the buyer. Such examples include trying to go around them or opening up other doors. The only thing this does if further alienate the salesperson from doing any business with the purchasing department, because the buyer with whom you first began working alerts the rest of the buying department about you and what you may potentially try to do.
All of this comes back to my original point: Buyers are smart and purchasing departments have a job to do and they do it well. They’ve seen the games that can be played and they know how to leverage such games to their advantage.
As a salesperson, you can thrive with buyers and purchasing departments if you follow these simple approaches: Be yourself, be professional, and be engaged in genuinely wanting to help the buyer and their company. If you can’t do these things, then you shouldn’t be selling. If you are not sure if you’re already doing these things, then I hate to tell you this, but you’re probably not.
Don’t walk around telling people you care about them and that you are so concerned about helping them. The salespeople who truly do care and are concerned let it come out in their actions day in and day out. Other people see it and do not need the salesperson to offer a verbal alert to it.
Do you think I’m way off base in these observations about the buying community? Don’t take my word for it. Ask your buyer. They will give you a straight answer – but only if you are being yourself, demonstrating trust, and genuinely caring for them and their business.
The salesperson tries to convince the sales manager that it makes so much sense to offer the prospect a discount to get them to finally become a customer. Of course, the salesperson has the expectation that this new customer will quickly become a high-profit customer.
The sales manager has heard the same plea hundreds of times before, and yet for some reason, the salesperson and the lack of current sales suddenly make offering a discount very attractive. It’s as if we’re watching the unveiling of a very slow accident that is completely avoidable and yet happens anyway.
The salesperson gets it into his or her head that the only way to close the deal is by discounting the price. They just need to convince their sales manager to go along with it. When this occurs, a major shift happens with how the salesperson does their job. No longer are they selling to the customer; now they’re selling to the sales manager.
The problem with this is simple – a salesperson gets paid for selling to customers. That’s how both the top-line and the bottom-line are made. If you’re reading this and you’re a salesperson, here is some very simple advice.
Contrary to what you believe will happen, you will never make up in long-term profit what you’re about to give up with your immediate discount. Sure, there are always exceptions to this, but such exceptions are similar to me winning the lottery. Is it doable? Yes. Is it probable? NO!
When you discount the price, the new price is now the price of value the customer is willing to pay. When they’re offered the price once, they will expect it again and again. When you attempt to move the price to the “normal or regular” price, they see it as a price increase.
Even if you do get the price up to the “normal or regular” price, you’re still behind the profit curve because of all the product you sold to the customer at the lower “discounted” price.
I hear this argument a lot: “You don’t understand. If I didn’t offer the discount, I would never have had the opportunity to move the price up, because they would never have become a customer.” My response is always the same: “So what! It doesn’t matter.” In your quest to get the customer, you cut your price. But you did so much more than that. What you did was cut your profit dollar for dollar. That is a very simple fact of what happens when you cut your price.
It’s highly unlikely you cut the cost of your goods or services, because your goal is to get the customer to experience what you can do. That means the only place to cut is your profit.
HERE’S THE DEAL
Your ability as a salesperson is not in how much you sell, but in how much you earn for your company. It’s the bottom-line profit that counts, and anytime you reduce your price, you’re slashing your profit. There is not a sales manager out there of any quality who will allow any salesperson to spend their valuable time trying to sell internally. The focus must be on external selling.
Focus first on creating value by determining the needs of the customer.
Then position your product or service as the solution, and do so at full price.
This is the only strategy that ensures you are not only protecting profit, but also ultimately in a place to increase it!
People continue to say how cold-calling is dead and how in today’s environment, it no longer can be cost justified. Right? The answer in my book is both “yes” and “no.” Let me deal with the “no” first.
In the past few months, I’ve watched numerous salespeople shift all of their prospecting efforts to developing social media with such vehicles as Linkedin, Twitter and Facebook. The problem with this is it becomes a giant time sucker. The payout of social media in terms of developing sales short-term is very poor.
To develop a social media strategy requires time, and I’m a firm believer it must be incremental time. You can’t allow it to take away from your current sales development strategy. Now, I’m astute enough to know that this may change, but we’re not there yet. Salespeople who spend their time dealing in the social media world at the expense of time spent on normal sales development do so at great expense.
Now let me give you a “yes” response to the use of social media and cold-calling.
First, keep in mind that cold-calling is rarely as cold as the term implies. Unless you’re still living in the world of selling via a phone bank sweatshop, then you understand that cold-calling is really more about warm-calling. More often than not, you are contacting people who already have some sort of knowledge of you or relationship with you. In this context, social media is a great supplemental vehicle – one that must be handled in the context of a marketing strategy. To spend time tweeting away hour after hour or visiting everyone’s Facebook page is not going to get you anywhere but broke.
The solution exists in having a sound sales development strategy that is focused on your core prospects. As an incremental process (on your own time), develop a social media awareness with Linkedin, Facebook and Twitter.
A key part of your sales development strategy needs to include keeping your web presence tight and focused. Don’t be easily swayed into believing that your best approach is to be part of every social media website available. If you can’t be a strong presence, don’t go there. What I mean by a “strong presence” is that you are an active player who can contribute or monitor the site at least four times per week. For me, this means the only social media sites I use are Twitter, Linkedin, and Facebook.
One very strict rule to keep in mind is that social media should occupy no more than 15 minutes per day. Only in rare exceptions should you ever access Facebook or Linkedin during your normal workday. Twitter is an exception, but only to the degree that you can have a timely review and distribution of messages. Fortunately, there are plenty of apps you can use to automatically send out pre-loaded tweets during the workday.
Social media has a role in your sales strategy, but not to the abandonment of time-tested elements such as cold-calling and meeting face-to-face with customers. Begin today to grasp this so that you do not jeopardize your sales success.