Make Sure You Get Something in Return

Many sales people are not skilled at negotiating price. Personally, I love to do it. The negotiation is the culmination of the sale. By this point you should have spent a lot of time listening to your prospect, understanding what they value so that you can match the appropriate product or service feature to what they value. In my opinion, this is where the fun begins.

Some prospects will ask you for a discount. If you have listened carefully and built a strong connection throughout the sales process do not be intimidated by this request and definitely don't drop your price without thoughtful negotiation. If you do choose to discount your price, make the prospect commits to a volume level or a length of time. For example, "sure if you order 10,000 and we can be guaranteed a renewal order next year, I can work with you on the rate."

Do not give a price concession, without getting something from the prospect in return. If you give the product or service away, without eliminating features or changing terms, you will diminish the value you've worked so hard to build.

Here's the key - make sure you document the terms. "We agreed to a volume discount for 10,000 units and a two year term." Make sure the prospect commits to this verbally. Reiterate that you both understand and you both agree to the terms.

If at the time of order, your firm receives a 5,000 unit order make sure to revert back to the original pricing agreement. Do not discount if the prospect does not commit to their end of the bargain. You should be building partnerships with your customers. As partners, require that they live up to their end of the deal. They'll respect you for it.

Supporting Charities

A prospect asked me if it was a good idea to give a 5% donation from the purchase price of her product to a charity for each product she sold. My response is "most companies don't have that much margin to give away."

Turns out she doesn't either. Then you are faced with which charitable organizaton to choose. There are so many worthy organizations to choose from and whichever one you do choose will be a refelction on your company and it's values.

I think it's a really noble idea. I do some service work myself and I really enjoy it.

My suggestion was to have the consumer add a dollar to their purchase price and select the organization of their choice. That way she can still facilitate giving and not affect her profit margins.

Close Ratio & Acquisition Costs

I have procured my first renter from my Chicago Reader ad. I received five inquiries from the ad. Two of the five were interested in renting my apartment. I selected one renter. The close ratio of the Chicago Reader ad is 20%.

The acquisition cost of the one renter is $671.00. I ran the Reader ad for 3 weeks at a cost of $57.00 per week. The renters asked for $100 a month off of the rent. It's a competitive market and there are less expensive places out there.

After pointing out all the selling advantages, I offered a one month $500.00 concession. The renters were thrilled and I am thrilled. I did not have to lower my base rental rate. The cost of the ad $171 + the $500 concession = $671.00 per acquisition.

Many sales people and organizations want to take short cuts. They ask "how much will it cost to get a new customer?" I don't know until we go through this process. There's a lot of thoughtful testing that goes on.

Rather than work the process, some like to fill their pipelines with activity. It feels like you're working hard and are productive. I won't argue with the working hard part but it's not productive.

To me, it feels a bit like a panting dog running around chasing it's tail. I prefer a more thoughtful, targeted approach. We now know from this analysis that the Chicago Reader is an effective medium for procuring renters and well worth the investment. Some of the other channels are worth exploring: a realtor, a rental agency and thoughtful use of Craigslist. Hanging flyers was a waste of time. I'd probably still do it in the future but I won't spend a ton of time on it.

I'll continue placing thoughtful ads in the Reader, for sure.

Names

When you are addressing your prospect, make sure to get their name right. If you're speaking the name make sure to pronounce it correctly. If it's an unusual name, ask for clarification. Your prospect will be grateful that you did. They are used to having their unusual name mispronounced and it may be frustrating to them.

If you're composing an email, double check to make sure you got the spelling right. If you mispell their name, it shows you don't pay attention to detail.

When you're on the phone, remember to say their name at least three times. It feels awkward to you but sounds very reassuring to them.

Here's an example:

"So Gregg, I understand you like our system but are currently in a contract. Is that correct?"

"Yes".

"Gregg, this is my core business and I understand it very well. I'm familiar with competitors' contracts and there's always an out clause. I'd be happy to review it for you."

"I'm uncomfortable with that."

"Makes perfect sense, Gregg. I appreciate your loyalty to your vendor. Let me give you some areas to check for . . . "

Get it? Doesn't it sound so much more natural and collaborative?

That was Then, This is Now

It's true. The credit market has dried up. The banks have called in their loans and changed their terms. We all knew they had the power to do so, we just didn't think they'd every really do it. Surprise.

There's another way to bring revenue to your business, by getting new customers.

Quit complaining about the lack of financing. Get out there, create some value, and sell profitable goods and services to your customers.

If you think it can't be done, look to companies that do it successfully as a model, like Abt Appliances. Appliances and electronics are a commodity. Abt has found their competitive advantage, service, delivery, a fun experience when you go to their stores, thoughtful growth.

It can be done. Go do it. You'll create a powerful, profitable company by bringing in one new customer at a time. You won't need the banks. Won't that be fun?

Handling the Price Objection

Inexperienced sales people are easily thrown by the 'price objection'. If a prospect says 'the price is too high' they crumble and offer a cheaper rate, often at the expense of profitability. There's usually no margin to give away.

I'm working with an insurance broker now. The company he signed me up with is giving horrible service. My broker has responded with "I don't think I can get you a cheaper price." He's not listening. I didn't say I was looking for a cheaper price. I'm looking for service. With the horrible service I'm receiving, the rate actually feels quite expensive.

Many sales reps do this. They offer cheap prices, prices they believe are cheap, and never find out what their prospect values.

If you understand what your prospect values and provide service to meet those values, you'll never have to offer the cheapest price and you'll build a profitable company.

VOiP

I made a phone call in response to an SEO lead for our CRM system, SalesInSync.

I was greeted with a groggy, "hullo?"

"I'm calling in response to your inquiry about our web-based CRM", I responded.

"Oh, I'm in Seattle. It's pretty early here. I haven't even had my coffee yet."

Embarrassed I said, "Oh I thought you were in Virginia, I'm pretty conscious of time zones since I do a lot of work by phone. I thought it was 9:00 a.m.".

"Nope, it's 7:00 a.m. Can I call you in a couple of hours?"

This gentleman is travelling with his VOiP phone. His area code and website indicate he's in Virginia although he can pick up his line any where in the country or even the world. I don't know how VOiP phone etiquette will evolve. Unless business people don't mind being called at any time of the day or night. If they do, they'll need to communicate in some way how they'd like to be reached.

Interesting new technology dilemma, huh?