Succeeding In Spite of Yourself

What does it mean to shoot yourself in the foot?  Is it that you're not just aiming too low, you're aiming so dangerously low that your foot is in the sights as you pull the trigger?  Or is it what the military call a 'negligent discharge'?  Have you accidentally pulled the trigger while your gun is still in its holster, muzzle downwards?

Whichever you prefer, the common thread is carelessly, stupidly, naïvely doing something that causes you pain and delay, and does you more harm than good.

I have come across many examples of businesses shooting themselves in the foot, so I thought I'd list some pitfalls for you to recognise and avoid.  You can imagine a (falsely) reasoned argument in favour of each of these.  I believe the counter argument carries far more weight in each case.

1. Selling to the wrong people
   Don't push your business on everyone you meet!  Know how to identify your ideal customer.  It's a waste of time trying to sell to people who simply don't need what you're offering.
   
   
2. Selling the wrong product
   Don't assume all your ideal customers want what you are selling!  Even if you believe they need it, they have to want it before you can sell it to them.  It's a waste of time trying to sell to people who don't even need what you're offering.
   
   
3. Forgetting your Unique Selling Point(s) - USP(s)
   You must offer more than just items of value to the ideal customers.  You must give them good reasons to buy from you rather than your competitors.  You must consistently tell them why you and your products are uniquely placed to help them.
   
   
4. Failing to focus on value creation
   Customers only want to buy from you because the value they get from the purchase far outweighs the value of the money they have to part with to do so.  If you don't create value for them, in their minds, they will see no need to purchase.
   
   
5. Haphazard Marketing
   You need a Marketing strategy that covers all areas of the customers' long-term relationships with your business - From them first finding out you exist, to them telling all their friends how good you are!
   
   
6. Ignoring the only three ways to grow a business
   Getting more people, to spend more, more often - These three 'mores' are the only three ways to grow a business.  You must balance your efforts to increase each factor according to your market and the needs of your business.
   
   
7. Ignoring repeat business
   The third 'more'! - You need to keep your customers aware of your existence, and have the 'more' there for them to buy
   
   
8. Ignoring Up-Selling
   The second 'more'! - You need to offer products or services that are complementary to the things the customers initially wanted to buy
   
   
9. Only advertising when you need Customers
   The first 'more'! - This is the one people usually focus on to the exclusion of the others.  "We need more sales so how can we find more new customers?"  Advertising isn't the only form of promotion, and promotion should be an on-going activity.
   
   
10. Not tracking results
    Not even the 'experts' can accurately predict what will work for you and what won't.  You have to test and measure each Marketing activity.  You have to know what produced what.  Then, if it doesn't work, drop it.  But if it does work, do more of it!
    
    
11. Not following things through
    If you're like most, you'll have many, many things you'd like to try.  Don't waste time and money starting something that you can't follow through.
    
    
12. Running an advert only once
    If you fix your 'haphazard Marketing', you'll be aware that people need to be given several opportunities to fully absorb your messages.  If your promotional activity doesn't produce results first time, it's probably never been given the chance!
    
    
13. Copying the Competition
    Do what you need to do because you know that you need to do it.  Believe me, all your competitors could easily be making the same foolish mistake!  Quite possibly because they all followed blindly!
    
    
14. Trying to save where it counts
    Don't try to save money in places where it shows.  When it comes to what your customers can see, you should spend whatever it takes to get everything looking right.
    
    
15. Spending too much money, unwisely
    Your business should put cash into your pocket, so before you invest money into it, be clear on how you're going to pull that cash back out again
    
    
16. Spending too little money
    Equally, don't be miserly and don't let frugality get in the way of efficiency.  Take advantage of skilled outsiders who can do certain tasks more efficiently than you can.
    
    
17. Going against your intuition
    While you might think that logic is the language of business, that's far from the truth.  If you base all your business deals on hard logic and ignore your intuition, you'll get hurt!
    
    
18. Being too formal
    Business is built on relationships and human beings don't want to build relationships with faceless corporations.  They only want relationships with other human beings, so build rapport and relax formality as appropriate.
    
    
19. Failing to optimize
    You can't simply focus on creating value, and imagine the rest will take care of itself.  As a business owner, you need to find a way to deliver your value in a cost effective way.
    
    
20. Not collecting your money on time
    Collecting money from people can be hard, so collect a substantial portion of the money first before you provide anything.  When it comes to debt-collecting, if you act like you don't need the money, you'll never get paid!

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Changes In Buying Attitudes

21st century Sales and Marketing is about solutions, win-win outcomes and lifetime relationships.  It is about rapport, understanding and value.  It is about co-operation, appreciation and service.

We have to be careful that our behaviour and language do not turn the experience into confrontation, win-lose and one hit sales.  And the situation is more or less identical across most sectors.  I even talk to my friends the undertaker and the wedding planner about how to get repeat business!

Much as it was advocated in some quarters in the past, I'm not certain the 'wham, bang, thank you' style was ever hugely productive; and it is almost certainly going to be ineffective with today's more sophisticated buyers.  So what is it that is making buyers more sophisticated?

The answer lies in communication and information - in short, it lies in the internet.  'Googling' what it is they want gives them access to remarkable amounts of information from more suppliers than ever before.  In the past their decision making was far less informed, but now they will know a lot more before you ever get to talk to them.

There is a risk, however, that this increased product knowledge will become merged in the buyer's mind with price!  Buyers may well reject initial quotes out of hand, even from favoured suppliers.  They will try to treat your product or service as a commodity.  Buyers will be thinking that, if they can save a few pennies, they will do so.  If your product or service isn't a commodity, don't let them believe it is!  It has never been more necessary to understand their fundamental problems, the circumstances in which those problems exist, and to propose solutions that reflect why you are uniquely placed to help solve them.

It is also vital to understand the customer's decision making process - one of many 'circumstances' - and this may well have changed recently.  Companies are becoming more risk-averse than ever; decisions are being referred to and made by committees; and no-one wants to take personal responsibility for anything.  People are becoming terrified of being held accountable.  But you can, and should, be offering certainty - but this should also carry a price premium.

Technology is not all bad news though.  It can give access to more information about your competitors' offerings; it can make internal sharing and discussion of information easier; but it can also make it simpler for you to by-pass 'gatekeepers'.

Increased buyer sophistication is also leading to the increasing popularity of referrals.  Networks, customers, unconverted prospects, suppliers, social acquaintances and many other contacts can be approached for referrals, and should be!  It might be as simple as giving you the name of a key decision maker, but it all helps.

Most customers are seen as loyal and most want to be, but as supplier you should never take them for granted.  It is the service with which you deliver your product (or service) that counts.  Keep a customer ecstatic and they won't be tempted away, even by a cheaper rival.  It remains true that people buy from people they know, like and trust.  It is the value that the buyer derives from the purchase that matters.  The more salespeople understand what value means to the buyer in a given situation, the more they can help the buyer.  So make sure the buyers know why you are asking all these probing questions.

But what if yours is a commodity?  How can you compete against, say, cheap imports from the Far East?  The answer is for the sales team to enable their customers, and thus themselves, to fully understand the fundamental problems, the circumstances in which these problems exist, and the way in which the buyer's own performance will be judged.  In this way it becomes apparent what 'total package' is required, and the customer can be helped to see the full value of receiving it.

Key pointers for future behaviour of your sales and marketing team.

• More customer communication and contact
• More 'business knowledge' - Not just product knowledge
• Being more available
• Reducing bureaucracy
• Less 'pitching by quotation'
• More discussion and agreement face-to-face
• Better 'keep in touch' systems
• More and better induction and ongoing training
• Build more rapport and better relationships
• Understand how buyers want to buy
• Understand 'problems and circumstances'
• Don't make sales presentations - Don't dictate
• Be beneficially different
• Give buyers choices

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Determining Value-Based Fees for Software Projects - Part 2

Register now for my 'Pricing By Value' Workshop in Cambridge, England on September 29th.

The mystery correspondent was of course Florida-based Mark Richman of http://www.empiresoftware.net/

Mark went on to ask me:-

"While I understand the concept behind value-based fees, I'm still trying to wrap my head around how to apply them to what I consider highly commoditized services. That is not to say I devalue my own worth, but I do recognize that there is an upper bound to what someone is willing to pay for a service, regardless of ROI - price elasticity of demand.

"At what point am I delivering a valuable service, expertise, information, guidance, and coaching, and at what point am I simply laboring to produce a relatively undifferentiated good (i.e. a presentation website)? I tend to think I do much more of the latter, unfortunately. Certainly, I can rattle off a unique value proposition to a prospect, but many will have shopped around before they talk to me and already have an expectation of what they will pay.

"This brings me to my next hurdle. Assuming I have somehow navigated past the prospect's early push to hear a price quoted, I find that I get nervous asking for more money than I think is "fair" (whatever that means). Is it a lack of self esteem, or a sense of ethics run amok?"

I cover all of the dozen or so points he raised in my Workshop (and more!), so again, I replied to him in detail, tackling his points one at a time.

"what I consider highly commoditized services"

"It really doesn't matter what you consider! The client's perception is the only thing that counts!

"You are unique and provide a unique service, so it is only by your own lack of 'Sales Conversation' skill that a client could be allowed to retain that impression of "highly commoditized". If they do retain it, this just means you haven't done your selling job well enough!"

"not to say I devalue my own worth"

"It's not yours to devalue (although you could blow it completely!), and it's not your worth that matters! It's the client's perception of the worth of having their problem fixed that matters, coupled with your personal value to the client. This is where the 'Value Conversation' needs to be heading. As I said previously this can take quite a large chunk of your sales conversation, and mustn't be truncated."

"there is an upper bound to what someone is willing to pay for a service, regardless of ROI"

"There is an upper bound, but based almost exclusively on ROI! Having enabled the client to articulate for themselves the true value of having their problem fixed, your fee will be seen as an investment on which they expect that return.

"A ROI of 20 to 1 sounds mightily attractive! 10 to 1 is still pretty good. Many consultants say they'll make a client at least three times their fee, but I think this is not desperately attractive. Less than 3 to 1 is certainly not a brilliant investment, even though it does make money. We are trying here to get a reaction of "That's a bargain!", so go for a high ROI."

"price elasticity of demand"

"Re-read Alan Weiss's Value-Based Fees - particularly the 'Supply-and-demand illogic' section of chapter 2 (in my edition) on ''The lunacy of time-and-materials models'. Alan explains brilliantly why the economists' theories that apply to commodity markets don't apply to non-commodity markets such as you providing your services. "

"At what point am I delivering a valuable service etc"

"Easy! When the client believes you are!"

or "laboring to produce a relatively undifferentiated good"

"Easy again. Only when you allow them to think this way!"

"I tend to think I do much more of the latter"

"At the risk of sounding repetitive, it's not about what you think! It's about what the client perceives and believes."

"I can rattle off a unique value proposition to a prospect"

"Do I sound like Elvis Presley continually saying "one more time" to the band? The client is the one who determines value! You have to allow the client sufficient time to reach this conclusion (generally with your guidance via your questions, but certainly not putting words into their mouth) for themselves, so 'rattling off' is almost by definition not going to work. And your proposition comes almost at the end of the sales conversation - it's where that entire conversation has been heading all along - it's not even at the end of the value conversation. Re-read the rest of 'Value-Based Fees'!"

"already have an expectation of what they will pay"

"This is natural, but will be based on their perceived remedy to their perceived pain, turned into a commodity, and put out for the world to bid the lowest price for! If you hear "that's too expensive" this really translates as "I haven't understood enough of the value of having my problem fixed in this way to see this as a bargain investment in order to achieve that return."

"You need to get them to understand for themselves what is their fundamental problem; their 'underlying disease' that is causing the 'symptoms' or pains that they are experiencing. Once they understand, they can articulate it to themselves, and then to you, and then you can understand also!
A useful question is "What keeps you awake at nights?" I doubt the answer is lack of a website! Lack of profitable sales, maybe! You have to ask other value seeking questions first though."

"somehow navigated past the prospect's early push to hear a price quoted"

"Well done for identifying this one. Client questions about your daily rate are designed (even if subconsciously on the client's behalf) to identify you as a supplier of commodities, and thus be suitable material for forcing into a price war.

"There is only one way to get rid of the daily rate question and that is to say "I don't have one!" And mean it! If you're not charging for your time, why do you even need one in your head?

"It would be wrong to leave your answer there however. You need to continue along the lines of "I'm quite prepared to quote my fee, at the appropriate time, later, but at the moment I don't know enough about your issues to do so. Please can we start/return to talking about the problems that are bugging you right now?"

"I get nervous asking for more money than I think is "fair" (whatever that means)"

"Firstly you have to accept that backing winners at odds of 10 to 1, even 20 to 1, is more than 'fair'! Secondly, everyone gets nervous when they see how they've been undercharging in the past. [They've also been under-delighting, which is why they've been under-charging!]

"I know I was no exception, particularly in moving from "I'll invoice you at the end of the project" to "My standard terms are 50% before I start and 50% after four weeks". Stating that my fee was five or ten thousand pounds instead of the two thousand I would have asked previously was less of an issue for me, but all of us have different types of nervousness."

"Is it a lack of self esteem, or a sense of ethics run amok"

"Almost certainly it's a lack of self confidence! The good news is there are simple techniques for gaining confidence at this.

"As we've implied already, the toughest sell is to yourself. One technique that works for many people is to think of the highest fee you've ever been able to charge, multiply it by five, and then look in the mirror and tell the face you see there "My fee is x thousand dollars". Keep doing this until you can do it with a perfectly straight face and no hint of embarrassment.

"Confidence comes from practise, not further contemplation. If you can say it to yourself, you'll be fine in front of clients. And it gets easier every time.

"Do the value-based thing properly and effectively you're telling the client 'I know a horse that is absolutely guaranteed to win, but you can still place your bet at odds of 20 to 1.'"

I concluded by asking Mark, what is there to be embarrassed about in that?

More to come soon ...

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:

• 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

As a consequence they continue to:

• Waste money
• Underperform
• Squander their potential

You can do the same as I do every time I meet a potential new client. There are a very small number of very simple questions you can ask yourself to establish whether your business could be easily and rapidly improved by making some elementary changes to your Sales and Marketing function.

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?

If there are too many 'NO's in there, then there are some easy fixes I can suggest.

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?

Again, easy fixes are available if your answers start to trouble you. I have one more question for you.

• Why do your customers choose to buy from you?

Do you know? Have you ever asked them? Presuming that you have, and you have made a list of the reasons, let me finally ask you, "Why is this list different from the list of messages?" I just kind of thought it would be!

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's In It For Them? - Value Outcomes

I hope it goes without saying that what matters most about your business offering is the value that your customers get from buying it from you. This is the “What’s In It For Me?” that is the only thing the customers are really interested in.

I have been working on Value Outcomes recently and I have been studying the promotional material put out by some of the Marketing experts whose ideas I trust and believe in. In promoting their own services there are some very apparent and totally common threads. I don’t think it would be a bad idea if the rest of us copied them, especially those of us who sell our skill, experience, expertise and time.

I also looked at the promotional material of other service providers and found some mis-matches - OK I’ll admit some of my own stuff falls into this category, but that’s why I’m working on it! - which helped reinforce for me the good sense of following the experts.

The first thing to notice is that the experts’ material is much more densely packed with Value Outcomes than that of other service providers. The experts don’t stop when they’ve found one, they want loads. It would be a fair bet to say they’re always looking for more.

After separating the Value Outcomes from the ‘chaff’ in the other providers’ stuff, they could be categorised into five groups:
– True value
– Learning
– So what?
– I expected to be able to take that for granted
– Bu..s..it!

The fraction that were ‘true value’ was not huge either! However, in the case of the experts there was nothing representing the last three items, and true value and learning were in the ratio 5:1 to 10:1.

I rest my case!

The six common threads in what the experts are saying are:
– Numbers - of good things you’ll receive
– Time - either time saved, or how quickly you can put the advice
into action
– FREE - “stuff” whose value is established by including some of the
other points
– Regular - they’ll deliver value to you at a pace at which you can
easily absorb it - more Readers Digest than War and Peace
– Exclusive - not just that they’ve written it, but that the information
it contains is either unavailable through any other source, or that
it has been distilled from the very best practitioners in
whatever the art
– Growth - of your business, which is taken as read but is also
stated quite often

I hope this enables you to start adding more Value Outcomes to your promotions - don't forget to ask the customers for their opinions of what is or would be most valuable - and to cull the ‘chaff’ and unproductive outcomes to make room for it.

David