Jan 12, 2015 | Marketing
Increasing Profits with Lead Generation
My focus is helping you achieve your business goals; whether that means a certain profit level, a quality of life or the ability to sell the business and retire. For any of these goals, creating a consistent, high level of profits is critical. So for the next several weeks we’ll be reviewing the “5 Steps to Increased Profits” framework – focusing on one of the five steps each post.
As a review, the five key profit-generating metrics are: Lead Generation, Conversion Rate, Average Dollar Sale, Average Number of Transactions, and Profit Margins.
I’ve highlighted the five keys in the following equation:
Lead Generation
x
Conversion Rate
=
# Customers
x
Avg. Dollar Sale
x
Avg. # Transactions
=
Revenues
x
Profit Margins
=
Profits
This week we’re focusing on Lead Generation. Over the past 20 years in which ActionCOACH has been working with business owners, we have collected 21 Truths about Lead Generation. I’d like to share the top seven.
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Separate suspects from prospects:
Too many marketing dollars – and too much time – are spent on people who will never buy. Unless your lead generation marketing weeds these people out, it’s not working effectively. It’s putting a strain on those who process and follow-up on leads. The media you select, the offers you make, your creative strategy, and even your tone all play key roles in drawing out high potential prospects and screening out suspects.
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Sell the next step harder than you sell your product or service:
The whole objective of lead generation programs is to begin the sales process, not to complete it. Your initial direct mail or e-mail should push for action on the next step – sending for more information, a free sample, a free consultation. Once you have qualified prospects, you can concentrate on a full presentation of product benefits, features, and applications.
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Construct meaningful, actionable tests:
You can’t improve any direct response program – whether executed in direct mail, e-mail print, online or broadcast – without valid testing. Make sure you test the most significant factors first – lists/media and offers. Once you have a read of results, react quickly and incorporate them into your program. Your results analysis should not only include number of leads and cost per lead, but cost per appointment and per sale. Making decisions on lead costs alone can be disastrous.
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Once is not enough for lead generation:
Give suspects more than a single time to qualify themselves. No matter how intrusive your direct mail package, email, print ad or online ad, your target may miss it the first time around. Give prospects multiple opportunities to say “Yes” to your offer – whether that means getting additional information, a price quote, or a call/visit from your sales representative. The more narrowly defined your market, the more time you have to spend on each prospect.
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Understand your target’s “hot buttons”:
Executives are much more often concerned about their time than about saving a few dollars. Direct mail/e-mail efforts that demonstrate how the product/service can save the recipient time works very well to management segments. If the savings are enormous, that’s a different story. Middle managers are more concerned about preservation (of their jobs) and about making a safe, unquestionable choice.
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Use testimonials and case histories:
If you say it about you, it’s a lie, if someone else says it about you, its true. Aside from the credibility they imbue, testimonials provide the prospect with applications and usage guidance. Larger corporations should select testimonials or case histories that emphasize the company’s ability to provide fast, personal service. Smaller businesses should use endorsements reflecting on the company’s strength and stability. Include testimonials that underscore how customers gained rewards by finding out more when they were prospects.
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Plan separate, creative strategies and offers for different levels of decision-makers:
Even if you’re prospecting within a specific industry, copy and offer – and sometimes graphics – must change by function and by the objective of your communication. The highly technical approach you make to the head of the IT department will not work in addressing the CEO. And the CEO’s possible interest in your product/service will differ from the CFO’s.
To learn more about how to grow profits, come to an ActionCoach workshop or seminar soon.
Dec 22, 2014 | Self, Time Management
Time to Rest, Time to Play
It’s the holidays, and I thought I would give you a break from my normal ‘how to be a better business owner’ blog, and decided to instead adopt a piece written by John Niland about using your time outside of business.
Time to Play:
The quality of a business owner’s life and the success of the business is heavily dependent on sources of energy and inspiration outside the workplace. These activities and relationships are enjoyable in their own right, and are vital to maintaining physical, mental, spiritual and emotional well-being.
- Do 20 minutes of physical exercise (swimming, cycling working-out, walking, running etc.) immediately after work. In a few weeks you will enjoy it, and it serves as a ‘switch-off’ from the working day and generates more energy.
- Consider ending any relationship that is consistently keeping you awake, dragging you down or draining you. Seek professional help and advice earlier rather than later. Whatever you do, deal with it.
- Always speak the truth as you see it. It never pays to lie or exaggerate.
- Block out holidays and planning time in your calendar for the following year. We will only plan if we have planned the time to plan.
- Unless repairing appliances is a fun hobby for you, do not waste weekends fixing things. Either replace appliances that do not work, or employ somebody to get them repaired.
- Unless you love gardening, consider employing a gardener.
- Rise at the same time every day – even during weekends. Eventually you will not need a wake-up call; and the extra time you have at weekends can be used for relaxation and play.
- Eliminate from your circle of friends people who criticize, judge or try to change you. Trying to please others is a huge waste of time.
- Avoid excessive indulgence in food or drink; this leaves you lethargic and hung-over, with less energy.
- Spend some time every year writing / reviewing a mission-statement or life purpose. You will have more fun, make better decisions, and make much better use of time when you are clear about your personal and professional direction. When you love what you do, you will never have to work again.
- Avoid idly surfing the internet. If you have to use it, consider keeping to a set of sites you want to visit, and then limit your time online. Many clients have saved an hour per day on this alone that’s five hours per week, over 200 working hours per year.
- Get a swim-buddy or workout-partner so that your commitment to them will over-ride the temptation to stay on in bed or in the office.
Time to Rest:
- Relaxation after a busy day is a real challenge for many business owners. Tiredness causes mistakes, inattention, frustration and disorganization; in turn prompting more long hours that exacerbate the problem. Business owners who are well-rested are not just more productive, they inspire better relationships with clients and colleagues.
- Avoid invalidating a day off by opening a briefcase, checking business email, sitting down a computer, visiting the office or reading your calendar. The objective of a day off is to get totally away from the business.
- Employ a cleaner so that your home is clean and tidy. Do not waste time off by doing chores. Similarly, can you delegate laundry, ironing and shopping?
- When you want to switch-off, put the phone on voice mail and silence the ringer.
- Go to bed earlier (or later) so that the timing of your sleep is ideal for you. Rather than compromise with other family members, ask for their support if necessary.
- Prioritize the elimination of all debt, except that secured on property. Cut expenses if necessary to ensure that you live within your income. Financial worry is a frequent cause of sleepless nights.
- Have regular checkups with your doctor, optician, audiologist and dentist.
- Review the newspapers and magazines that you read. Are these really inspiring or relaxing, or are you bingeing on a diet of depressing material?
- Avoid watching television, unless you have a specific program you want to watch. Random TV is ‘chewing gum for the eyes’, and contributes little to quality of life.
- Clear the clutter from your life. Whether its old files or old clothes, it takes up space both in our heads and our lives. If you are in any doubt about this, just choose one room, clear it, and watch what happens!
- It may be difficult to adjust to a vacation if they are too infrequent. Plan at least 4 weeks of holiday every year.
- Make amends to anyone you have hurt, damaged or offended. This will allow you to reclaim the hours wasted on feeling guilty.
- Spend at least 20 minutes every day in deep relaxation, meditation, or other peaceful or spiritual activities. These give perspective, and make all other activities more enjoyable.
- Before settling down to relax or play, remove all traces of work from your lounge, bedroom, or other immediate environment.
This time of year is a great time to focus on relaxing and recharging and creating the energy to start the new year fresh and ready to make a difference.
Dec 15, 2014 | Finance, Sales
Discounts vs Profits – How discounting affects your bottom line.
Do you have (or have you ever experienced) one of those salespeople who thinks that giving a discount is the easiest, quickest way to make a sale? Of course, they may be right, but what about the profit (your profit) they’re giving away?
If your product has a profit margin of 30% and your salespeople give a 10% discount to make the sale, you’re losing a massive, one-third (33%) of the available profit!
During a seminar for the buyers of a large retail group with branches all over the country, an attendee shared the following tactic: “My job is easy. I just let the salesperson make a full sales presentation. I ask questions and listen to their explanations. When they’re finished, I simply say, ‘I’d like to place an order with you, but your prices are too high…’ and I then simply sit there and enjoy myself, because the once-confident salesperson suddenly doesn’t know what to do or say next. With much less conviction and enthusiasm, they may repeat the benefits and features of their products, but most of them get in to see me by giving me a lower price in the first place. Whatever new price they offer, I usually respond by saying, ‘You’ll have to do better than that!’ And more often than not, they do…in fact, do better than that! I get lower prices by just sitting there, enjoying the game!”
If you are selling, or have others selling for you, you must protect your price and your margins. Teach your sales people to talk about the unique benefits of buying from you, and not to hesitate or stutter when a buyer insists on a lower price. Start negotiating! Start using tactics to hold firm on your prices. Sell value…perceived and real
Here’s Why:
Do you think it’s possible to work 50% less and earn the same income from selling? You bet it is! Here’s how:
Suppose your company sells pumps, with selling price of $10,000 per unit. Assume that your net cost per pump is $7,000. That means that the net profit on each pump would be $3,000. If you sell ten pumps at the full price, the net profit for your company will be $30,000.
Compare this with selling ten pumps, but this time at a discount of ten percent. The total selling price for ten pumps is then $90,000. The net cost for ten pumps remains at $70,000. The net profit has decreased to only $20,000 compared to the original transaction $30,000 where no discount was given. With only a 10% discount you’ve just lost one-third of your profit.
If your company continued to sell at ten percent discount, then you’d have to sell 15 pumps to achieve a net profit of $30,000. Here’s how it looks:
Sales Discount Gross Sales Net cost Profit
10 0% $100,000 $70,000 $30,000
10 10% $90,000 $70,000 $20,000
15 10% $135,000 $105,000 $30,000
What lessons can you learn from this example?
A ten percent discount means your company must sell 50% more units (15 instead of 10) to earn the same profit dollars.
A ten percent discount means someone has to work 50% harder to earn the company the same dollars.
By not giving discounts, in essence the company can “work” 50% less and earn the same income.
In spite of this, you might still think, “But, if I don’t give discounts, I’ll lose sales! It’s an industry norm to give them…everyone does. If I don’t give discounts, they’ll go to the competition!”
And you may, of course, be right. You may lose a few deals if you don’t give discounts… but the good news is you can afford to…and still make the same or more profit. OR, you can work on your Unique Selling Proposition so that your customers see the value you uniquely offer, and are willing to pay for it.
Dec 8, 2014 | Sales
How to become a Sales Master …
Being a business owner requires many different skills but one of the most important is the ability to sell. However, the majority of people in business do not consider themselves to be ‘natural’ salespeople. Even those that come from a sales background may not consider themselves great sales people and even those that do, will eventually have to build a sales team of people.
For those of us who want to become better at sales, or teach our team to do so, there is one tool that can not only help us become more confident with selling but allow us to consistently replicate what we do. So as we grow we have more and more people getting the same great results as we have. That tool is creating a successful sales process.
If you’ve ever watched the US Masters Golf Tournament, you’ve seen a successful, repeatable process. Although these golfers obviously have a lot of talent, they also have a process that they follow to ensure they are successful and they practice over and over to ensure they can perform consistently well. You wouldn’t expect Phil Mickelson to be able to come out and perform at his peak if he hadn’t swung a club for months. As Arnold Palmer once said “the more I practice the luckier I get”. So do professional golfers practice a different thing every time they go out? Of course not; they find what works for them and refine it until it is in their subconscious and seems effortless. Sometimes we forget about the time, effort and dedication professional sports people put in to become as good as they are.
Well, the same is true for mastering sales. Yes, there is an element of skill to becoming a great salesperson, but like all skills you can learn them, it just means that some people learn faster than others, but if you have the determination and discipline, these will more than compensate for any lack of skill. We break becoming a master of sales down into four simple stages:
The first stage is to understand what selling is about. Many people have the belief that sales is a bad thing because they hate being sold to and have probably had a bad experience of a bad salesperson in the past. Jeffery Gittomer says “People like to buy but they do not like to be sold too”, so if you change your sales belief to one of “professionally helping people to buy” then suddenly sales can take on a whole new meaning.
The second stage is to improve your skill at sales, and like all skills there are two ways to do this and the best way is to use both. Education, via reading; courses; DVD’s and CD’s and real life practice. “Just Do It” as NIKE says.
The third stage is to build your sales process and the best framework I have found for my clients created by one of the best sales trainers in the world, Tom Hopkins, and comes from his book “How to Master the Art of Selling”.
The sales process involves 4 steps, Build Trust, Find the Need, Show How You can Help and Hurry to a Close ,and has to be carried out in that order.
If you have not built Trust with your prospect then you will never sell to them, and this is the feeling you get when you are being sold to. How to build trust is a topic I will be covering in a future article.
Need has to come before Help, because if we do not truly understand what the prospects needs and wants are then how can we be sure what we are offering to help with is actually the right thing. The only way to really know the need is to ask questions and listen. Have you ever met a sales person who rabbits on how wonderful their product is before they have asked you a single question?
The penultimate step is to successfully educate and communicate how your product/service can help them meet their need. It might be fantastic but if they do not understand then they will not buy.
Only when you have completed all three of the previous steps can you attempt to close the sale, but close it you must. If you work hard on steps 1-3, helping them buy will be easy and natural, but if you forget then all that work is wasted, you rarely get a second chance.
The fourth stage to becoming a master is constant and never ending improvement or Kaizen as the Japanese call it. In your sales process, your main feedback source will be your Key Performance Indicators, such as conversion rate, number of transactions, average per sale. So you need to constantly analyze these figures and then set new goals and plans to improve them. Sometimes you’ll need help to see what is going right and what is wrong and this is why more and more business people are following the lead of sports stars and getting themselves a coach who can provide independent and professional feedback. As the old saying goes “you cannot see your own bald spot”.
So if you want to build a great business you have to build a great sales process, the question is when are you going to take action and become a Sales Master!
Dec 1, 2014 | Customers, Marketing
Converting leads into customers – One of the biggest tragedies I see in business is watching a business owner spend significant time and effort generating leads for their business, but then not acting on them in a logical, methodical, repeatable way to convert those leads into paying customers.
You haven’t done that in your business have you? But I’ll bet you know someone (better to keep them nameless) who has a stack of business cards on their desk that they have collected through their networking activities but they have not been added to their customer database, no follow-up has taken place, and they are essentially growing colder by the day. If that is you, no need to raise your hand. But it is time to get out of the trap and start turning those leads into paying customers, wouldn’t you agree?
To make improvements in this area, you simply have to start doing one thing – MEASURE your current conversion success rate! Most business owners have no clue what their conversion rate is. By simply measuring where you are, you will improve. It happens every time. Once you start measuring, you realize what you should be doing that you are not, and your results begin to improve.
Add to that a specific, focused approach to handling your leads and your conversion rate will go through the roof! And, the best part is, you can grow your business without spending one more dollar! You’ve already invested marketing dollars to generate the leads. Now, make the most of that investment by defining your specific, repeatable sales steps that will convert your leads into customers.
To get started, take a few minutes and write down the specific steps that you take each and every lead through to get them familiar with you and your business. Each business has a different set of steps in their selling process. Some have just a few steps, most often where the average ticket price for a transaction is relatively small. Others have many steps, most often where the average ticket price is relatively large. You must decide how familiar a new prospect needs to be with you and your business in order to pull out their wallet and make a purchase. If it is a complicated product or service, you will likely need more steps in your selling process.
Once you have your current process steps written down, ask yourself, is everyone in my business doing it the same way? If not, why not? How can you have a “best in class” approach if you allow each individual to “roll their own”? How can you test and measure new approaches if you don’t first start with a standard? How can you improve and predict your outcome if there are multiple approaches? The answer to all of these questions is you cannot!
I often hear business owners say they would lose their best sales person if they made them follow a standard sales process. Let me ask you – whose business it? Is it yours’ or your sales person’s? Who has all the risk in the deal? Who is setting the expectations and limitations? My hope is that it is you – the business owner. Don’t let the personal preferences of others dictate how you will run your business – unless you like working for them!
Establish your specific selling process steps, train your team to follow the selling process, support it with the necessary materials, and measure the results of each specific step. Make changes to your sales process based on the results of your measurements. Test and Measure. Test and Measure. Again and again. Make incremental improvements and hold yourself and your team accountable for the results. This is the recipe for success.
One last thought. As you build your step by step sales process, be mindful of the thought that in every sales process there is a point where your prospect will do some specific physical something to indicate they are ready to buy. If you can identify that “physical something” for your business, then point all of your efforts to make that happen, your conversion rate will improve. I call this the “get on the boat” moment. One of our clients has a 100 person catamaran on a local lake and does corporate events, private parties, wedding, etc. His specific physical something for his prospects is to get them to step foot on his boat. Once they do that, they are so impressed that they are very likely to sign a contract. What is your “get on the boat” moment?
Stay focused. Stay determined. Be determined. Build a repeatable process for converting leads into customers. Your business success will become a certainty.
Nov 24, 2014 | Customers
Are they your best customer or worst customer?
You know who I’m talking about. That one customer who is seen as the most important and precious to the company, who everyone treats with kid’s gloves. Yet this customer seemingly pays later than all the others, demands special terms, takes up a great deal of the manager and staff’s time and never seems satisfied?
When I ask business owners about why it is that one customer can seem to dominate their company, the reply is often along the lines of, “they’re our longest-serving customer” or, “they’re our biggest customer” or even “they’re a personal friend of the owner”.
In this situation, it’s useful to ask: is this customer adding to the long-term growth and well-being of the firm or, actually detracting from it? This situation is particularly acute when that one customer’s business represents greater than 40% of the overall revenue. This benchmark indicates that the customer has too much influence, and in effect, it runs the business, not the owner.
For a small to medium enterprise, accepting those large orders seem critical to growth, but at the same time betting the business growth on the back of one customer places the businesses into a very dangerous position. I’ve both been in a business where this has been the case and worked with clients in this position. The key point to watch out for is that if this large customer starts to dictate how your business operates, what markets it is in, what products it offers and then, on top of that, chronically pays late, then the business owner can get into real trouble.
How to get out of this? In the short-term, work on educating the customer about the terms of business you want to have with them. Easier said than done you may say, yet when explaining what you want, what your business needs in order to continue being a stable supplier for them, and why the modifications to your existing arrangements are necessary for the relationship to remain valuable for both of you, often will produce the change you’re looking for.
In the long-term, work towards expanding your customer base and even, towards firing that one customer if desired or necessary for you to meet your long-term goals for the business. Again if a customer doesn’t pay on time, or exerts too much control over your business, no matter what their size, are they really a customer you want? And how much time could be freed up to handle those that do pay with better margins? Remembering to work this plan in alternative customer sources and cutting of ties when the time is right for you.
In ActionCOACH we call this getting rid of ‘D’ Class customers (we grade all customers A to D). Get rid of your “D”s, so that you have more time to cultivate your “A”s. Go over your whole customer list. Does your ‘best’ customer upon inspection really live up to this premise – or if you had a choice, you’d rather not to have taken the order and would prefer to have other customers?
