Profits: How to Save on Sales Opportunity Costs

 

If your sales efforts aren’t leading to your desired results, here are a couple of questions: How many times have you been burdened by so-called prospective customers who waste your time without buying? How many times has a business or government agency asked for information on projects but used your ideas without paying you?

Ouch. That’s a waste of time and other resources.

Candidly, there are four plausible reasons why people don’t buy from you:

• You haven’t done a good enough job selling your company.
• You’re dealing with habitual tire-kickers.
• You’re trying to sell to customers who are too price-conscious and are not value-minded.
• Not to be gauche, but you’re dealing with parasites or thieves who will try to replicate your ideas without paying you.

Regarding the latter, remember these two adages: 1. “What goes around comes around.” 2. Sooner or later, they’ll get theirs.”

Don’t get mad. Get even. Getting angry only hurts you. It’s usually a waste of time and energy, and often creates negative PR images.

When you point your finger at someone, there are usually reasons why you have three fingers pointed back at yourself. So before you start pointing fingers, remember to assess your role and processes, and make the necessary improvements.

There are five basic dos and don’ts for productive selling:

1. Review your branding and marketing. A strong marketing program will prevent such problems by pre-selling your products and services, and will minimize the footwork required to close sales.
2. Distribute informative sales collateral and upgrade your Web site – without divulging too much information.
3.  Improve your customer service and sales processes. Make sure that you and members of your team are using the techniques. Basically, this means remembering when and how to use the Golden Rule – empathy; incisively qualifying and researching your prospects; asking the right questions; listening; providing strong value propositions; showing an attitude of enthusiasm coupled with gratitude; preventing buyers’ remorse; and providing added value whenever possible.
4.  Become a better student of human nature. Remember the basic law in economics 101 – know when to cut your losses. On the other hand, understand when it’s important to persevere and not give up prematurely.
5.  Maintain your mental acuity and balance when dealing with prospects. Don’t be desperate to make a sale to a prestigious-looking customer or company. Don’t allow them to use you or your intellectual property. As a prospect deliberates, keep moving and prospecting. Don’t spend your profits before the customer buys, and remember the adage: “A sale ain’t a sale until the money is in the cash register.”
6. Be loyal to customers who are good to you. This will make you feel better and you’ll enhance your odds for repeat business, which will also cut your sales opportunity costs.

Remember the essence of productive selling and you’ll save on sales opportunity costs. It’s all about wisdom in creating a happy buying environment and developing relationships.

From the Coach’s Corner, for more on profitable sales techniques, see: The Seven Steps to Higher Sales.

Strategies for Maximum Customer Loyalty, Profits

 

If you’re finding it a challenge to create profits, you might appreciate knowing that you’re not alone. Profits in this Great Recession are elusive  for other businesspeople, too.

A case in point: 50 percent of the members in a Seattle-area business-networking group admit to selling products at below cost to remain in float. That’s according to a survey by Washington State University and the Seattle Executives Association (Feb., 2010).

The leads group, with about 100 member businesses, is comprised of one business per category throughout the greater Seattle area.

They described their employment, financing, inventory and sales situations as “stagnant to declining.” However, they were optimistic about their prospects.

Obviously, it’s important to do a profit analysis to determine your strengths, weaknesses, opportunities and threats. Then develop a strategic action plan and implement it.

Another factor affecting profits is customer retention. American businesspeople and consumers have become cost-conscious and look for opportunities to save money.

Many companies are slashing prices and making the mistake of focusing on price in their sales messages. That means your customers are constantly hit with discount offers. And they are tempted to change to your competitors because of price, quality and service.

But it isn’t a permanent switch. Such customers will gravitate to the next low-ball offer. So advertising to attract such customers is simply not cost-effective.

It’s true that many customers base their decisions on price, only. That’s 18 percent of buyers. So, it’s key to target the other 82 percent who can be persuaded to buy based on their five perceptions about value.

My research also shows that you have to reach a prospect with five positive messages before the decision is made to buy your product or service.

Why companies lose customers

When devoutly loyal customers shop elsewhere, 70 percent of the time they feel taken for granted.

Customers will leave you for a myriad of reasons, including failure to properly answer questions, treating them abruptly, making the buying process inconvenient, failure to solve problems quickly and subsequently failing to provide added value to assuage an unhappy customer.

Losing customers also means blown opportunities for word-of-mouth advertising and customer referrals. Plus, social networking and blogs – positive and negative – have changed the marketplace even more.

That’s why listening to customers is so vital – to gather information, to analyze it, and to develop answers.

In large cities, the advertising opportunity costs are high – usually $300 to $400 or more per customer.

If you lose a customer, it will cost you more to attract a replacement. Then, you have to factor in the sales curve – how long it takes for a new customer to become profitable.

So profits suffer in a down economy if you lose customers and can’t easily replace them. That means layoffs, which will hurt you even more.

Fifty-two percent of a customer’s value-perceptions motivating them to buy from you hinges directly on what they think about your people – spokespersons, sales reps and other personnel. (For more on value perceptions, see “The Seven Steps to Higher Sales.”)

So it helps to have ongoing discussions with your staff on these topics: Why customers buy from you, perceptions about poor customer service, and the factors about your service and products they like the best.

Meantime, be proactive in other ways.

Continually query your customers in formal surveys and in casual conversations using open-ended questions to get solid answers, not “yes” or “no” answers.

Take action steps and make improvements when feasible.

After you get great feedback and measure the results of improvements, tell your customers and express your appreciation.

When customers make purchases, don’t forget to thank them and prevent buyer’s remorse by tactfully reminding them of the value of their purchases.  

And explain to your employees why it’s important to stop using the most-trite phrase on the planet: “Have a nice day.” Instead, your employees need to focus on providing an attitude of service and gratitude.

You’ll be creating a happy buying environment for repeat business and customer loyalty.

From the Coach’s Corner, how would you like some social-networking tips from an outstanding salesperson?

Meet Sean Heiner, he’s director of the membership department at one of the nation’s premier business organizations, the Association of Washington Business (AWB). AWB is Washington state’s chamber of commerce.

From personal experience, I can tell you he’s pleasantly persistent and personable, but I’ve also noticed he keeps up with the times and social-networking trends.

He graciously provides five social-networking tips:

1. Don’t stop networking outside the social media world, and think that LinkedIn, Facebook or Twitter are replacements for actual human interaction, they aren’t. If you use all of the tools listed above, you will progress much faster with higher quality contacts who actually want to hear from you.
2. This one is basic but crucial – use the same picture on your Twitter/LinkedIn accounts, and Facebook, as well, if you use it at all for business purposes.
3. Post! Don’t simply regurgitate information you read somewhere else. Sure, this will allow people to know what you’re interested in, but it will not enhance your personal brand within the business world, online or otherwise. Plus, once people catch on they may begin to tune you out, and that is social networking death. 
4. Verbiage and diction – don’t use shorthand text style messaging ever in a professional setting, and spell check anything you put on the web. You would be appalled at how many people don’t.
5. Jump in feet first. So many tell me they are not “techy” enough to use social networking sites, and I’m sure they are also still enjoying their gramophones, but just go for it!  All of the social networks I use, and there’s about five total, take up less than 20 minutes a day, unless of course you count reeling in all of the new business I’ve been able to generate through that activity.

Checklist to Build Your Brand on a Budget

 

Branding is very important. Nebulous branding is a leading cause of business failure.

Besides ill-defined branding, when a business fails there are several likely reasons. They include poor planning, insufficient passion, ineffective management, weak finances, undesirable location, and ineffective use of technology.

A solid brand will help you land customers and insure customer loyalty. For sustainability and strong customer relationships, remember your customers want consistency and a positive tone.

Successful companies also work on continual improvement. They gain market share by becoming more competitive. That includes effective pricing as part of their branding process.

For success in brand-building, remember it’s a process to manage the feelings and thoughts of your customers by creating a happy buying environment.

How?

Address the five critical value-buying perceptions that motivate customers to buy from you. While pricing is important, target only customers who want value, not necessarily those who want the cheapest price. My research shows 18 percent of the population will only buy the cheapest product or service.

Target the other 82 percent who are concerned about price but they have other concerns about value.

No company has ever succeeded by only focusing on selling at the lowest price. Even Walmart’s branding slogan is “Save Money. Live Better.” And they always position a greeter at the store’s entrance. Costco creates a community atmosphere with lots of added value.

Much like buying a house, you need to build brand equity. That means first tapping into the value-emotions of your customers.

The value perceptions and their percentages of importance include:

• What customers perceive about you, your employees and spokespersons – 52 percent.
• Image of your company – 15 percent.
• Quality of product or service utility – 13 percent.
• Convenience –12 percent.
• Price – 8 percent.

So, for a quick primer on affordably building brand equity, here is a checklist of 29 tips:

1. Test your ideas. Rely on the opinions of successful people and get a mentor. Use them as a focus group. But in the end make sure you have a strong aptitude for decision-making and follow your instincts.
2. Develop a mission statement. What is your reason for launching a business and values?
3. Create a logo and insert it in every one of your collateral messages, such as advertising, letterhead, signage, business cards and Web site.
4. Create a Web site. Only 52 percent of businesses have a Web site, which might give you a competitive edge over others who don’t have one. Keep it current and update it every two years. Insert your logo as a favicon, which is short for favorites icon; also known as a website icon or a shortcut icon. In this way, it will show up in the search line on users’ computers. It will add sophistication to your online image much like bigger companies.
5. If you have a small company, own your keyword names – both your name and that of your company’s. If your company is named after you, that’s even better. How many quality references does the Web have about you?
6. Market yourself personally as well as your business.
7. Stay current on social media; at least LinkedIn, Twitter and Facebook.
8. Become known as the leader in your industry. Choose the right colors for your business. For example, research shows certain cars with certain colors do not sell well, such as purple or yellow.
9. Tell a great story.
10. Be consistent.
11. Personality and character is important to show value, stability, security and fun.
12. Partner with other successful people and businesses.
13. Create a leave-behind sales flyer. Differentiate yourself from competitors. Limit it to one page with short paragraphs, your contact information and logo.
14. Volunteer your time and expertise.
15. Get face time with customers.
16. Speak, write and teach. Customers love buying from experts.
17. Develop and maintain a prospect list with deadlines for action and follow-up.
18. Offer your expertise to reporters who cover your industry and don’t forget trade magazines. Don’t be discouraged if a reporter doesn’t call you. Be patient. I once offered the expertise of a law firm client as an authoritative information-source to the media and five years later he was quoted in a major newspaper.
19. Create press releases for the media and post them on your Web site on a “Press” or “Media” page.
20. Personally contact the media with your ideas.
21. Use cause-related marketing, especially in this economy.
22. Be present at as many relevant events in your community as possible.
23. Post your appearances in a calendar on your Web site.
24. Budget permitting, join your chamber of commerce and industry associations.
25. Study SEO techniques so customers can easily find you and discover information about your abilities and expertise.
26. Develop and implement policies for excellent customer service and retention.
27. Practice an attitude of gratitude.
28. Always demonstrate that you want to make sales, but you don’t need them.
29. Keep on trying whenever you fail. Every experience is a learning experience.

From the Coach’s Corner, you might want to check the other marketing/sales pages for more branding tips.

For outstanding strategies in finance and technology, I wholeheartedly suggest reading the insights of strategic technology consultant Joey Tamer (www.joeytamer.com):

What No One Tells You about Raising Investment Capital