Please consider this.
Far too many businesses operate a policy of 'cost-led pricing', whether this is the cost of materials or the notional cost of their time. This is the accountancy view and is held to be mainstream, and it pervades thinking at all levels of most businesses. The alternative, economists' view of 'price-led costing' is thought to be heresy.
Value-based pricing theories are largely ignored by Business Schools and MBA courses! But the only thing any business can charge for is the derived value as perceived by the customer, so why persist with ego-centric pricing policies?
It is perfectly ethical to charge different customers different prices for different value received.
Customers who are charged according to value received are highly delighted customers. Customers who are quoted and charged a fixed price are highly delighted customers. Customers who are charged according to value are high paying customers! Prospects who are quoted according to value are highly likely to become customers.
But you need to address more than just your pricing. You need to conduct a 'value conversation'; you need to ensure your prospects understand fully what purchasing from you involves; you need to make your proposal around value based pricing; and you need to gain the prospect's agreement to your suggestions. In short, you need to address the entire 'sales conversation', but it all starts with establishing the value to the customer of the results of their purchase. It has absolutely nothing whatever to do with your raw material costs, hours 'worked', overheads, lifestyle ambitions or accounting practices!
Win-win means just that! It means that the customer believes they are getting high value for a very reasonable investment, and the supplier believes they are being well rewarded for whatever they are supplying. If either belief is missing, the result is not win-win.
I presume you would like most of your sales conversations to end with "That's a bargain! How soon can you deliver?" whilst at the same time earning a highly profitable price/fee. Value based pricing or pricing by value, call it what you will, is the technique that will enable you to achieve this sort of win-win outcome.
David
Learn more about these techniques and how to apply them in your business by booking your place on my 'Pricing By Value' Workshop which runs in Cambridge on July 7th
Sunday, 28 June 2009
Monday, 22 June 2009
Why Bother Going To Networking Meetings
Register for my 'Pricing By Value' Workshop in Cambridge on July 7th - Backed by my Money-Back guarantee
Why do you bother going to networking meetings? Why do you
1. Meet Strangers
If you meet exactly the same people every time, what are you gaining by going? You could claim that every time you meet, you get to know each other a little better, and I should jolly well hope this is true! But do you need to go to a networking meeting in order to do this? You now know each other and have one another's contact details. Couldn't you arrange to meet for a (several?) more in-depth chats without needing to do so at a networking meeting? If it was the case that strangers were there to be met at the networking event, wouldn't it rob you both of 'stranger-meeting time' if you were to talk to each other?
And one other thought. Any one-to-many networking that you do - such as going round the table, each introducing yourself for 30 or 60 seconds - has only one purpose. To stimulate a request for a one-to-one conversation! It would actually be most unusual for anyone to get business as a result of their elevator pitch without any other contact whatever!
Are all strangers likely to be equally nice to chat to, in need of your contacts, or helpful to you? Of course not! We can all work on our rapport building if we need to, and become nice people to chat to. But who might be most in need of your contacts? And who might be the most helpful type of stranger for you?
The answers to these two questions are really the two sides of the same coin. Both of you want to be meeting people who are naturally 'rubbing shoulders' with your ideal customers. And you need to make sure this happens regularly. But this does not always have to be a one-to-one process. Several people can form such a 'loop' and it will work as long as the loop is closed.
2. Recruit and Train Your Sales Team
How many of you have gone to a networking meeting with this as a specific objective rather than as vague wishful thinking? OK then, how many of you have either been employed in a sales team and never had any team building, product training or motivational meetings, or could imagine such a scenario if you haven't? Of course it sounds ridiculous, so why think you can avoid it when it comes to your network?
There are three crucial ideas you must keep in mind about what is, after all, your 'surrogate' sales team.
Do also bear in mind, you're not requiring them to actually sell your product or service! You can do that yourself when you get face-to-face with the prospect. What you want them to do is to spot and qualify opportunities for you. But you don't just want them to say, "I noticed this .... as I was driving past. Why don't you contact them?"
You want them to have had conversations with people which conclude with something like, "You really need to speak to my friend ..... They should be able to help you. I'll get them to contact you."
To do this your 'salesperson' must know, because you have trained them, how to spot one of your ideal customers and how to identify that they have the sort of problems you can fix. Most importantly they must be able to build up sufficient empathy that the person will agree that they would like to find out more about getting rid of the pain the problem is causing.
To do this you must have trained your team to recognise the symptoms or pains of such problems, and the key to this is giving them a very simple tool that will help in this identification. For example, if your forté is helping companies whose Marketing function is not fully effective, you need to give me a tool for recognising ineffective marketing.
This also covers point 3. and I'm sure you don't need my help with number 4.!
Why do you bother going to networking meetings? Why do you
- Get up before dawn?
- Have a shower before the central heating's come on?
- Drive several miles in the cold, dark and rain?
- Consume rather more caffeine and cholesterol than you ought to?
- To meet strangers
- To recruit and train my surrogate sales team
- To be recruited and trained by other people into their surrogate sales teams
- To enjoy myself, and help others do the same
1. Meet Strangers
If you meet exactly the same people every time, what are you gaining by going? You could claim that every time you meet, you get to know each other a little better, and I should jolly well hope this is true! But do you need to go to a networking meeting in order to do this? You now know each other and have one another's contact details. Couldn't you arrange to meet for a (several?) more in-depth chats without needing to do so at a networking meeting? If it was the case that strangers were there to be met at the networking event, wouldn't it rob you both of 'stranger-meeting time' if you were to talk to each other?
And one other thought. Any one-to-many networking that you do - such as going round the table, each introducing yourself for 30 or 60 seconds - has only one purpose. To stimulate a request for a one-to-one conversation! It would actually be most unusual for anyone to get business as a result of their elevator pitch without any other contact whatever!
Are all strangers likely to be equally nice to chat to, in need of your contacts, or helpful to you? Of course not! We can all work on our rapport building if we need to, and become nice people to chat to. But who might be most in need of your contacts? And who might be the most helpful type of stranger for you?
The answers to these two questions are really the two sides of the same coin. Both of you want to be meeting people who are naturally 'rubbing shoulders' with your ideal customers. And you need to make sure this happens regularly. But this does not always have to be a one-to-one process. Several people can form such a 'loop' and it will work as long as the loop is closed.
2. Recruit and Train Your Sales Team
How many of you have gone to a networking meeting with this as a specific objective rather than as vague wishful thinking? OK then, how many of you have either been employed in a sales team and never had any team building, product training or motivational meetings, or could imagine such a scenario if you haven't? Of course it sounds ridiculous, so why think you can avoid it when it comes to your network?
There are three crucial ideas you must keep in mind about what is, after all, your 'surrogate' sales team.
- You don't employ them so they don't have to do as you ask
- You don't employ them so there's no financial incentive to do as you ask
- You don't employ them so they don't have a job to lose if they don't
Do also bear in mind, you're not requiring them to actually sell your product or service! You can do that yourself when you get face-to-face with the prospect. What you want them to do is to spot and qualify opportunities for you. But you don't just want them to say, "I noticed this .... as I was driving past. Why don't you contact them?"
You want them to have had conversations with people which conclude with something like, "You really need to speak to my friend ..... They should be able to help you. I'll get them to contact you."
To do this your 'salesperson' must know, because you have trained them, how to spot one of your ideal customers and how to identify that they have the sort of problems you can fix. Most importantly they must be able to build up sufficient empathy that the person will agree that they would like to find out more about getting rid of the pain the problem is causing.
To do this you must have trained your team to recognise the symptoms or pains of such problems, and the key to this is giving them a very simple tool that will help in this identification. For example, if your forté is helping companies whose Marketing function is not fully effective, you need to give me a tool for recognising ineffective marketing.
This also covers point 3. and I'm sure you don't need my help with number 4.!
Tuesday, 16 June 2009
Succeeding In Spite of Yourself
Register for my 'Pricing By Value' Workshop in Cambridge on July 7th - Backed by my Money-Back guarantee
What do I mean by 'succeeding in spite of yourself'? Well, many businesses will say they are getting what they believe to be acceptable results. Of course they would like to do even better but either they are not really sure how to achieve this, or they are unaware that improvement is possible for them, and anyway, we've just said the results are acceptable!
Many businesses I meet are suffering from one or more of these faults:
Firstly, list all your current methods of promotion
Then list all the messages about you, your products and services, your customers, the problems you help solve, the joy this brings to your customers, the ways in which they can let you know they're interested, the incentives and risk reducing things you offer, which you are communicating in all your current promotional activities.
Whilst on the subject of what the customers expect to be able to take for granted, there is a simple test for whether your message is a UPH (Uniquely Placed to Help) or a TFG (Take For Granted). Just turn your message on its head and ask yourself if any of your competitors are likely to compete on this opposite message. If you think your superb service is a UPH, then how many competitors are advertising in the trade press that theirs is appalling?
These few questions on their own are generally enough to tell whether any business owner whom you know could benefit from my help. But for your own organisation, let's go just a little further.
Now, do you know:
If the truth is that, above all other reasons, they buy from you because you're always cheerful and wear red trousers, then for goodness sake why aren't you promoting yourself as the cheerful, red trousers company?
I hope I have given you some food for thought. You absolutely must have solid foundations for your marketing. It might be more exciting to lay bricks, erect timbers and tile the roof, but until a trench has been dug and filled with concrete that has now set hard, there's no point!
Can you clearly articulate who your ideal customers are? Do you know what good they believe they get out of buying your products or services and from having you as their supplier? Can you say why you are a better bet, less of a risk, and more trustworthy than your competitors? And are you letting your market know all of this?
What do I mean by 'succeeding in spite of yourself'? Well, many businesses will say they are getting what they believe to be acceptable results. Of course they would like to do even better but either they are not really sure how to achieve this, or they are unaware that improvement is possible for them, and anyway, we've just said the results are acceptable!
Many businesses I meet are suffering from one or more of these faults:
- They don't focus on any particular type of customer
- They don't know what is likely to be appealing to their customers
- They don't know why their customers buy from them
- Waste money
- Underperform
- Squander their potential
Firstly, list all your current methods of promotion
Then list all the messages about you, your products and services, your customers, the problems you help solve, the joy this brings to your customers, the ways in which they can let you know they're interested, the incentives and risk reducing things you offer, which you are communicating in all your current promotional activities.
- Are these messages consistent across all the material?
- Do they make you stand out from your competitors?
- Or are they things your customers expect to be able to take for granted?
- Do they pass the "So, what" test?
Whilst on the subject of what the customers expect to be able to take for granted, there is a simple test for whether your message is a UPH (Uniquely Placed to Help) or a TFG (Take For Granted). Just turn your message on its head and ask yourself if any of your competitors are likely to compete on this opposite message. If you think your superb service is a UPH, then how many competitors are advertising in the trade press that theirs is appalling?
These few questions on their own are generally enough to tell whether any business owner whom you know could benefit from my help. But for your own organisation, let's go just a little further.
Now, do you know:
- Are you successfully communicating these messages?
- How do you know whether you are or not?
- Why do your customers choose to buy from you?
If the truth is that, above all other reasons, they buy from you because you're always cheerful and wear red trousers, then for goodness sake why aren't you promoting yourself as the cheerful, red trousers company?
I hope I have given you some food for thought. You absolutely must have solid foundations for your marketing. It might be more exciting to lay bricks, erect timbers and tile the roof, but until a trench has been dug and filled with concrete that has now set hard, there's no point!
Can you clearly articulate who your ideal customers are? Do you know what good they believe they get out of buying your products or services and from having you as their supplier? Can you say why you are a better bet, less of a risk, and more trustworthy than your competitors? And are you letting your market know all of this?
Tuesday, 9 June 2009
Start-Ups and Other Companies
Register for my 'Pricing By Value' Workshop in Cambridge on July 7th
Wealth creation, derived from the huge knowledge and science base in this country, is critical for the UK's continued prosperity. But turning ideas into saleable, profitable products is not the same as merely turning ideas into products! It is crucially important to create value from any technology, for all stakeholders. If you want to make a quick buck, technology exploitation may not be for you.
In all businesses, but especially start-ups, you need to have experienced Sales and Marketing people. If not, you stand a good chance of failing, unless those involved in the organisation accept this premise and invest in becoming experienced, extremely rapidly.
Every business can be likened to a three-legged bar stool.
Whether you sell products or services, whether you sell to other businesses or to consumers, whether you are large or small, the same model still applies.
One leg of the stool represents your Operations, your 'doing what you do'. Most businesses were started because someone was particularly skilled at doing something and decided to start a business doing it. When asked to rate their Operations function out of ten, most business owners would give a score of 8 to 10 - and quite rightly too! Started with a high level of skill and a huge dose of passion, the business is their baby. If there are any operational problems, this person is onto them in a flash and fixes them almost as quickly.
The second leg of the stool is Financial Management, the 'looking after the money'. Many business owners would rather not do this bit themselves, but they know that they cannot neglect this area so they get their Accountant to help them. They may employ the services of a bookkeeper, they may purchase commercial accounts software, but they never lose sight of the fact that managing the finances is an important function. At least what they believe to be adequate financial management, even if in reality their practices leave a lot to be desired.
The third leg of the stool is Sales and Marketing. Nothing anywhere else in the business is of any use unless the world knows you have something available for sale and unless enough of them end up buying it from you, a process that generally requires someone to sell it to them. Many businesses believe that this is a function that can be left until later, or which can be done on the cheap, or which has one universal answer which is suitable for every business, so all they have to do is 'turn the handle'.
Like any other three-legged stool, take one of these legs away and the whole thing falls over.
It can be interesting to ask the owner to rate their business out of ten for both of these other functions too. Surprisingly often you will find that the Finance score is the average of the Operations score and the Sales and Marketing score! If indeed this were a law of the Universe, what would it imply?
We can assume a score of ten out of ten for Operations. If Sales and Marketing was totally neglected, the Financial Management could never exceed five out of ten, no matter how much effort was put into it! But if Sales and Marketing were driven to a score also of ten, then Finance will be at ten out of ten before any effort is put into it! I am not suggesting you totally neglect your finances. But I am suggesting there's a huge amount to be gained from getting Sales and Marketing as good as they can be.
If a business owner does not already have Sales and Marketing skills, they must acquire them. The owner doesn't have to be directly involved in the Sales and Marketing functions of the company, but they must know enough to be directing the activities of the individual or department to whom they've delegated the task in reasonable and meaningful ways. In the UK we seem to be happy to allow those with technical skills to graduate without insisting they all also have some level of commercial, particularly Sales and Marketing, skills too. If someone leaves school, college or university without the knowledge of how to exploit a good idea should they have one, then we are letting them, ourselves and the whole country down.
And the seat of the bar stool? That's the processes and procedures that hold the 'legs' of the company together!
Visit my website http://www.davidwinch.co.uk for loads of Marketing and Sales advice
Wealth creation, derived from the huge knowledge and science base in this country, is critical for the UK's continued prosperity. But turning ideas into saleable, profitable products is not the same as merely turning ideas into products! It is crucially important to create value from any technology, for all stakeholders. If you want to make a quick buck, technology exploitation may not be for you.
In all businesses, but especially start-ups, you need to have experienced Sales and Marketing people. If not, you stand a good chance of failing, unless those involved in the organisation accept this premise and invest in becoming experienced, extremely rapidly.
Every business can be likened to a three-legged bar stool.
Whether you sell products or services, whether you sell to other businesses or to consumers, whether you are large or small, the same model still applies.
One leg of the stool represents your Operations, your 'doing what you do'. Most businesses were started because someone was particularly skilled at doing something and decided to start a business doing it. When asked to rate their Operations function out of ten, most business owners would give a score of 8 to 10 - and quite rightly too! Started with a high level of skill and a huge dose of passion, the business is their baby. If there are any operational problems, this person is onto them in a flash and fixes them almost as quickly.
The second leg of the stool is Financial Management, the 'looking after the money'. Many business owners would rather not do this bit themselves, but they know that they cannot neglect this area so they get their Accountant to help them. They may employ the services of a bookkeeper, they may purchase commercial accounts software, but they never lose sight of the fact that managing the finances is an important function. At least what they believe to be adequate financial management, even if in reality their practices leave a lot to be desired.
The third leg of the stool is Sales and Marketing. Nothing anywhere else in the business is of any use unless the world knows you have something available for sale and unless enough of them end up buying it from you, a process that generally requires someone to sell it to them. Many businesses believe that this is a function that can be left until later, or which can be done on the cheap, or which has one universal answer which is suitable for every business, so all they have to do is 'turn the handle'.
Like any other three-legged stool, take one of these legs away and the whole thing falls over.
It can be interesting to ask the owner to rate their business out of ten for both of these other functions too. Surprisingly often you will find that the Finance score is the average of the Operations score and the Sales and Marketing score! If indeed this were a law of the Universe, what would it imply?
We can assume a score of ten out of ten for Operations. If Sales and Marketing was totally neglected, the Financial Management could never exceed five out of ten, no matter how much effort was put into it! But if Sales and Marketing were driven to a score also of ten, then Finance will be at ten out of ten before any effort is put into it! I am not suggesting you totally neglect your finances. But I am suggesting there's a huge amount to be gained from getting Sales and Marketing as good as they can be.
If a business owner does not already have Sales and Marketing skills, they must acquire them. The owner doesn't have to be directly involved in the Sales and Marketing functions of the company, but they must know enough to be directing the activities of the individual or department to whom they've delegated the task in reasonable and meaningful ways. In the UK we seem to be happy to allow those with technical skills to graduate without insisting they all also have some level of commercial, particularly Sales and Marketing, skills too. If someone leaves school, college or university without the knowledge of how to exploit a good idea should they have one, then we are letting them, ourselves and the whole country down.
And the seat of the bar stool? That's the processes and procedures that hold the 'legs' of the company together!
Visit my website http://www.davidwinch.co.uk for loads of Marketing and Sales advice
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