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by Peter C. Rathmann on February 22nd, 2017

Price Increase
I pulled into my favorite car wash this week and pushed the button as usual and waited for the robot voice to tell me to swipe my card.

Boom!  What the hay? The price of my usual deluxe wash with the under body flush and towel dry had increased by 20% since my visit last week. Now I had two cars behind me and couldn’t reverse in protest.  Yes, it was now a hostage situation with my only alternatives being to choose a lesser option that would not get me what I expected or grudgingly pay the 20% and feel taken advantage of.

Where was the warning?  Where was the loyalty to the regular longtime customer? What was I actually getting for the 20% increased ransom I just ended up paying?

Sales goals will never go down and part of making your sales goal will include raising prices to your top customers as well as your bottom customers.  However, being proactive, transparent, and honest with communicating the price increase will help your cause of not creating a hostage situation.

Stagnant prices can mean a stagnant business model and stagnation can destroy companies. Sure there is the economic and academic argument that internal efficiencies, purchasing methods and production improvement should allow you to lower the price to the customer, but we are not just talking about widget production.   

Professional services, SaaS solutions, any skilled labor based business, and custom manufacturing are always evolving their offering at a cost that is not always evident to the customer. These evolved offerings and services need to be communicated.  Not only in the initial sale, but in ongoing communications as well.

Here are 8 tips to help your conversations when the time for a price increase is necessary.

1. Understand that your customers increase their prices

Your customers have probably raised prices to their customers and stand to increase more revenues if they mark up your product or services as part of their value chain.
What have they changed or added to their cost centers? Asking some questions and understanding their pricing changes could help open the door for your conversation.
Look at this opportunity as shared growth and more of a partnership in their growth rather than being a vendor with bad news.  

2. Rapport won’t save you, but it helps

Although having rapport helps to soften the conversation about price increases, it is not built overnight, building rapport takes some time.  Trust builds rapport so do what you say, honor your commitments, call when you say you will and always follow through.  

If this a new customer and you don’t have rapport built, then start building it.  It may not be the right time for a price increase this early in the relationship so place yourself in a good position to have the price increase conversation next year.

3. Understand the field of play

What questions have you asked to test the waters about a price increase? Asking some key open ended questions about their business trends, what they see in the market, what they have heard about competition, and where they see prices going can help you set the tone for your conversation.

If you are in a competitive market place, asking some key questions from strategic partners and potential prospects could help frame the potential conversation as well. It’s a good time to use that rapport you have built.

4. Remember why they originally said yes

Most of the time, your customers had a previous vendor in place or other options available before you won their business.  Why did they switch to you?  What are the top three reasons they stay with you? Reinforcing the value they realize should be ongoing and part of the price increase conversation needs to be how raising prices will continue to deliver that value.

5. Don’t flinch

Do you have a quality reputation and record with the customer? Then part of the increase is to ensure it continues.

If not, then you should stress how the price increase will allow you to begin addressing some of the issues in question by allowing you to improve the overall quality of service they have been receiving. Naturally, it is important to make sure all comments are backed with a commitment to follow-through.

Communicating a price increase is all about the delivery. Be transparent, honest, and continue to offer real value to your customers and you will be able to communicate a price increase with very little pain.

This could even make a huge impact on profits since 10% of most troublesome customers cost you money with givebacks and constant concessions. I would plan to talk to those customers first.  The rest should be easy.

6. Believe in the price increase

In order to be paid what you are worth, you must charge what you are worth. In order to charge what you are worth, you must believe that you deliver the value you are worth.
Tell your customers what they receive in exchange for more money.  In an ideal world, you’re asking for money for a better product which benefits your customers.

7. They could pay the same for less

Is there something you did not communicate they were receiving? Something they have been using but was not part of the original contract?  Do you offer an alternative?  Do you offer lesser option at the same price they were paying before?

You may consider having options available or an a la carte menu of alternatives if they really want to keep you as a vendor but can not afford the new price levels.

8. Switching vendors may cost them even more

Nuclear option? New Vendor? The lower price vanishes after the initial order and the new vendor will not have nearly the knowledge or expertise as the original company about how to service the customer, so the switch often winds up costing more money in the long-run. I would not consider this a hostage issue.  It is rather a business point of where their time and energy is best spent in keeping the value chain running.

Turns out, the car wash added a towel person to the end of the line to better dry the car, they included a repellent in the final rinse that would help with the winter salt issues, and they upgraded the scrubbing mechanism to better clean the wheels of brake dust.  If only they had posted a note!

Death, taxes, and sales goals never going down are three constants you can bet your next expense check on so make sure communicating future price increases effectively is part of your sales plan.

Interested in additional sales training for your efforts? Check out our custom sales training options and the sales training calendar for the latest workshops.

by Peter C Rathmann on January 15th, 2017

​It should be no secret that higher quality leads help increase the average value of your sales, the velocity of your sales cycle, and increase your prospect close rate.  So why do we ignore all of the quality sales lead sources out there that could make you more effective as a sales professional?

Here are six sources of quality sales leads that you may want to pay attention to.

Current Customers

There is a lot of sales potential locked up in the middle 60% of your customer base but most of us do not go back to our clients once we made the initial purchase. They already like you and have their wallet open so what else can you sell them?  Think of "want fries with that" or the Amazon model of "99% of other customers also bought_____________" when you only considered purchasing a single product.

Make a top 10 list of current customers that you could sell an additional item or service to and get them on your calendar.

Referrals

When you do go back to your current clients and ask about additional business, why not ask who else they know that could benefit from your product and services? Most customers know at least one peer that could benefit but you will never find that out unless you ask.

Make a top 10 list of current customers that you could ask for a referral and get them on the calendar.

Ideal Clients

Quit trying to be something to everyone! if you have certain client that are more profitable, easier to close, higher value, longer life time, or clustered around a certain geography or segment you should spend your energy selling to prospects that match those qualities.

Make a top 10 list of ideal prospects that look ideal and start reaching out to them.

Strategic Partners

Especially in the B2B space, sales people like to network with each other but so many us do not use those relationships to their fullest potential.  What other sales people are complimentary to what you do and have access to the ideal prospects you are trying to sell to? Could you meet with them together? Who can you introduce to your clients that would bring additional value and potentially lead to introductions for you?

Make a top 10 list of current and potential strategic partners and get them on the calendar for a meeting.

Past Prospects

Sometimes the "no" answer to your proposals means "not yet" but not all of us consider these past opportunities as future opportunities.

Make a list of your top 10 lost sales to revisit and reach out to learn if there situation has changed.  Might be a good touch point for asking for referrals or introducing a strategic partner as well.

Web and Social (SMERF)

Most sales professionals ignore both digital and analog sources that are right in front of them.

LinkedIn profiles, Twitter # followers or even competitor followers, Facebook groups, Google Alerts, Industry News Feeds, Prospects social media and newsletters, website calls to action, association listings, membership directories, customers in the news, and even Google key word searches.  When what the last time you tuned in to these channels as lead sources? 

In the analog world and hospitality world, this market segment is called SMERF, and acronym that stands for Social, Military, Education, Religious, and Fraternal.  We are all connected to people in our community from our participation in normal life so what is stopping you from leveraging those relationship as referrals and even strategic partnerships?

​Be sure to finish this exercise by making  a top 10 list of the contacts from your digital and social worlds to have start a conversation with.

What would you sales funnel look like if you spent the next 30-60-90 days just focused on these lead sources?

​Want to stay organized and focused on your quality leads?

Drop us a line and we'll send you our "Fuel" sales tool that will help you identify where you need to ask better questions.

You can email us here and please write "fuel" in the subject line.

by Peter C. Rathmann on September 17th, 2016

​Timing. It can be the biggest enemy of every sale and it is the weakest score of the 5 Necessary Sales Ingredients of any sales funnel review I do with sales teams in every industry, of every size.
 
Focusing more on the when before you focus on the who, what, why, and how can be the difference between great and never.
 
Here are six tactics to increase your paycheck and company sales by getting you focused on the when.
           
1.Understand when your product or service is needed
           
What is the trigger that needs to happen for your prospects to potentially buy? Is there a driver that makes them need you? Did they have a break-in, did something break, did they become a parent, buy a house, buy a car, lose a vendor, get a price increase, find a big customer, or just lose a deal themselves?
 
Understanding the trigger will help you focus your messages and time on better qualified prospects that actually have a need.
 
2.  Understand when the budget is available
 
Does your prospect have the budget to make a purchase now, or are they simply shopping? How many proposals have you stayed late to submit only to find out later that it is a budgeting exercise?
 
Just because they are interested doesn’t mean they have the funds or that they are going to make a purchase soon.
 
Understanding if they have the budget helps you focus your energy and time on higher qualified prospects, that are going to buy sooner.
 
3.  Understand when purchases are made
 
We just signed a contract.  We just switched vendors.  We just bought one.  Missing a sale is worse than losing a sale.  At least you’re given a chance when you lose a sale.
 
When is the prospect updating what they offer? When does the prospect review contracts?  When do they review their vendors? When do they need the proposal? What steps do they require to become a supplier, partner, or vendor, and when are the deadlines? When do they make a decision?
 
Understand the buying cycle and buying process to make sure you at least have a chance at the sale.
           
4.  Understand when more purchases will be made
 
Selling more and selling frequently to an existing customer is much easier than selling to a new prospect and is a great way to drive your sales volume.
 
Is this one time or is there an ongoing need? Do you have to adjust inventory to keep them supplied, and is there a price break to be realized by more volume? Can you get commitment for the next order today?
 
Understanding the volume and frequency of the purchase can help you partner with a customer for a lifetime and not just one transaction.
 
5.  Understand when a prospect is available and receptive
 
Prospects tend to be happier, positive, and more receptive to talking and meeting at certain times. When is the best time to call your prospects? When are they more receptive to meeting to talking?
 
Don’t call when it is good for you, call when it is good for them.  Most people prospect or make inopportune calls in their left over time because they use opportune times for non-selling activities. What would your paycheck look like if you flipped that?
 
Understanding availability and receptiveness can help drive better conversations and increase the volume, value, and velocity  of your sales pipeline.
           
6.  Understand when to close
 
How many proposals or price quotes have you sent without a clear next step of commitment or having asked for the sale?  What if you could gain commitment earlier and skip the entire selling process to begin with?
 
Understanding your prospect’s buying signals or asking for the order early can help you focus on the prospects that are ready to buy.

Focusing on your prospect’s timing will help you spend your time on higher qualified opportunities with less effort and will drive your sales faster.

To integrate these tactics and others, check out our sales workshops to help drive your sales faster.


by Peter C. Rathmann on September 7th, 2016

​"The Soup Nazi" was the 116th episode of the NBC sitcom Seinfeld on November 2, 1995 and the classic spoken words became part of pop-culture instantly.  A little known fact is that actor Larry Thomas perfected his portrayal of the Soup Nazi by studying Omar Sharif's accent in Lawrence of Arabia.


Question: How does this translate to sales?
Answer: It is a great example of not understanding the buying/selling process.  Making assumptions, asking the wrong questions, not knowing the roles and needs of the players, and not having the relationship you need.  All of these combined will earn a "No Sale For You!" from your prospect and be reiterated from your Sales Manager when you have to explain what happened.

How would you like to have a sales funnel full of higher value opportunities that have a shorter sales cycle?

​This post has to do with the 5 ingredients of a sale that determines the probability of you closing the deal.  Most sales people do not ask the right questions and do not understand all of the moving parts that have to align for a sale to happen. They rely too much on their "gut" feeling and it is usually wrong.

Question: How many opportunities in the funnel get lost at the negotiation phase with a 90% probability rating?
Answer: Too many!

The first part of the problem exists inherently in CRM systems and their sales funnel stages.  Most CRM systems automatically assign a probability based on the assigned sales stage.  This is a terrible link and it should be removed if you can edit the system you are using.  Probability should have it's own stand alone data field that you can manually enter.

Question: How do you take the "gut feeling" out of the probability figure?
Answer: The probability to close should be based on an objective score that everyone uses the same way.

The second part of the problem exists from sales people using different criteria about how their sale is progressing compared to the what is really happening.  As sales people, we believe we can land all of the opportunities. The fact is that we will only close 10% of the sales and waste valuable time on the other 90%.  That time could be used to pursue higher rated business that had a greater probability to close had you only understood what the actual probability was.

Question: What are the five sales ingredients that we need to use for probability?
Answer: Budget, Authority, Need, Timing, and Trust.  Each one of these ingredients has a 1-20 point potential with 20 being the highest.  If each ingredient is identified and exists, then you should have 100 points or a 100% chance to close the deal. This process is known as "BANTT"  

​Let's look at these five sales ingredients individually.  In the next blog, we will give you the questions you need to ask that will help you assign them a score.

Budget: How many times have you presented a proposal only to have the prospect choke or have a small seizure? How much time did you spend developing that proposal?

Does the prospect have the money to purchase what you are offering? Are they actually looking for a solution or just window shopping? Are they going to make you their vendor or just hold their current one accountable with the price you provide? Have you made a legitimate case that would help them justify the spend on your product or service?

If they don't know their budget or what they spend now on a similar solution, it scores a zero. If they know the cost and understand the price of not integrating your solution, then it is a 20.

Authority: How many times have you presented a proposal only to hear "I'll give this to my boss to look at"?

Are you speaking with the decision maker? Are you talking to the person that can give you money or is the person you are talking to just a messenger?  Do they have any stake in the process at all besides making you go through the motions?

If you are dealing the person that can hand you a sack of cash, it scores a 20.

Need: We hate saying "no" as sales people but at the end of the day, you need to be able to identify if this future client is a the right fit for your business.

Is this client in your "wheelhouse"? Can you deliver the solution they need without any customization that drives the operations team nuts and hurts the profit margin? Can you deliver what you are promising without making excuses later?

If this is an ideal client that will have a long lifetime value, it scores a 20.

Timing: What is your targeted sales cycle.  If it is 3 months, then you need to focus on those prospects who have a 3 months buying window.  If your prospect is not looking to buy for 24 months but you "think" they will close because you like the same sports team, guess what, the line for the crazy train just got one person longer.

Is this prospect looking to make a purchase in the next 90 days or are they trying to plan for 24 months out to prepare the CFO for the check he might have to write? Will this opportunity make an impact on your bonus this year or is it a something that might never happen.  Don't make any major purchases yet.

If they are going to make a decision in your targeted sales cycle, it scores a 20.​ If they are just shopping, it is a one.

Trust: What have you done to make yourself the obvious choice? Do you have a seat at the table or is your competition in the seat?  I guarantee you are not the only option the prospect has.  If you were, you would not be reading this and I would be reading your book that you wrote on the island you own. 

By identifying these five sales ingredients earlier in the sales process, your sales funnel will be filled with higher value opportunities that have a shorter sales cycle.  How can that not be good for your wallet and the company profit and loss statement?
Want to improve your probability?

Drop us a line and we'll send you our "Torque" sales tool that will help you identify where you need to ask better questions.

You can email us here and please write "torque" in the subject line.