Biz 101

How NOT to Sell On Price

One of the biggest challenges for any business is dealing with customers who are price shoppers. The other big challenge is educating your salespeople on how to respond to requests for lower prices from their customers. Most salespeople who have not received the proper education in dealing with price objections take the path of least resistance and cut the price to get an order. My salespeople are no different. Yes, I have some unbelievable salespeople who know how to fend off requests for lower prices. However, I also have plenty of salespeople who cave in and give a lower price the first time a customer asks for it. Now, if you do not give your salespeople pricing authority they can’t cut the price, but in today’s fast-paced world I’ve found that we get a lot of orders because our salespeople don’t have to request a price variance from one or two levels above them as with our largest competitor. I was on one sales call where the customer told me that we got the order because our salesperson responded to a price request immediately and our competitor took three days to respond after he got pricing approved by both his district manager and his regional manager.

There is no one correct way to handle pricing. You have to decide what works best for your business. However, if you do give pricing authority to your salespeople you need to ensure that they are properly educated and how to respond to requests for a lower price. One of the best books I’ve ever read on dealing with price objections was written in 1992 by Lawrence L. Steinmetz, Ph.D., a former professor of management at the Graduate School of Business at the University of Colorado The title of this book is, How to Make Your Prices Stick. I’ve read many books on selling and, specifically, on handling price objections but Larry’s book, in my opinion, is the best.

Below is a review of Larry’s book that I found on Amazon. I share it with you as I think the unnamed writer of the review really captured the essence and key lessons of this important book.

The title of this book is somewhat misleading because it does not indicate the full scope of what Steinmetz provides…and achieves. True, he suggests all manner of strategies and tactics to overcome sales resistance based almost entirely on price. (He correctly suggests that those who buy ONLY on price be avoided. More about that later.) However, I think this book’s greater value is derived from Steinmetz’s systematic and convincing repudiation of various self-defeating mindsets. For example, those who are so desperate to sell (and earn some money) that they make all manner of unnecessary concessions. In effect, they negotiate against themselves. (Steinmetz: “Business is a game of margins, not volume.”) Here’s another example. Those who fulfill what I call the “Self-Fulfilling Negative Prophecy”:

This is NOT a sales manual. Rather, an extended dialogue between Steinmetz and those readers who are reasonably intelligent, very ambitious, highly energetic, eager to learn what they think they know but don’t, not easily discouraged, and — most important of all — willing to consider vary carefully what Steinmetz suggests. He requires each reader to set aside their (probably cherished) assumptions about “salesmanship,” most of them based on received wisdom that is either obsolete or never true in the first place. Is selling always a “numbers game”? No and Yes. No if the percentage is based on the number of sales made as a result of cold calls to everyone in the telephone directory whose last name begins with “J.” Yes if the percentage is based on the number of sales made to carefully selected, pre-qualified prospects. True, there are differences between walk-in sales (e.g. at vehicle dealerships and department stores) and offsite sales (e.g. at the prospect’s location). Even so, Steinmetz cites five “cases” (price, quality, service, competence of salesperson, and error-free delivery) which apply to both. I agree completely that “business is a game of margins, not volume.” I am also convinced that re-orders (i.e. repeat customers), not merely orders, should be a primary objective. As Steinmetz explains, price may result in one order but quality, service, competence of salesperson, and error-free delivery create and then sustain long-term customer relationships.

Why avoid those who buy only on price? Steinmetz offers nine reasons:

1. Price-buyers take all of your sales time.

2. They do all the complaining.

3. They “forget” to pay you.

4. They tell your other customers how little they paid you.

5. They drive off your good customers.

6. There’s not going to buy from you again anyhow.

7. They’ll require you to “invest up” to supply their needs — and then they’ll blackmail you for a better price.

8. They’ll destroy the credibility of your price and your product in the eyes of your customers.

9. They will steal any ideas, designs, drawings, information, and knowledge they can get their hands on.

There are dozens of such checklists, step-by-step processes, reminders, dos and don’ts, cautions, and value affirmations throughout the book as well as hundreds of examples of real-world sales situations. Problems and complications are inevitable. Steinmetz identifies the most recurrent ones and explains how to resolve them. Implicit is Steinmetz’s pride in what he views as the profession of sales. He is wholeheartedly committed to quality of product and service. He understands the importance of making prudent promises and then keeping every one of them. He has little (if any) patience with whiners, chiselers, corner cutters, liars, and hypocrites. He views providing service to customers as a privilege, indeed as a moral obligation.

Here in a single volume is a wealth of information and wisdom which Steinmetz has accumulated over a period of many years, presented with a non-nonsense writing style enlivened by his wry sense of humor. All of his advice is eminently practical and easily applicable to most sales situation. However, I presume to offer some advice of my own. Read and then re-read the book, highlighting or underlining whatever seems most relevant to your own situation. Then focus on your most urgent needs. That is to say, do not attempt to apply immediately everything you have learned. Experiment. Take a few prudent chances. Over time, I think you will achieve significant improvement of your skills and a stronger sense of pride in how you earn a living. One final point. Not all prospective customers are worthy of your attention and effort. Concentrate only on the ones who are.

If you are a salesperson, sales manager, or owner and you haven’t read this book I urge you to order it (or the audio version) from Larry’s website (http://www.pricingexpert.com/). I guarantee you won’t regret it.

The Key to Success

There have been hundreds, if not thousands, of books written about success and how to achieve it. I know this because I have read more than 100 myself. In the almost 40 years I have been in the business world full-time since graduating from college I have learned that the key to success is very simple: follow-up.

Over the years I have had hundreds of salespeople try to sell me something for one of my businesses, or personally, only to never hear from that person again. Not even once. That always amazes me. I recently needed a small home improvement job done at our home and called five companies that had half page or larger ads in the Yellow Pages in my hometown. In all five cases I got an answering machine or voicemail. (This is beside the point, but all of the recorded messages were amateurish, at best. Another tip: make sure that your company’s answering machine or voicemail messages are professional.) Of the five messages that I left, exactly one company called me back. Why spend hundreds or even thousands of dollars a month on a Yellow Pages ad and then not return calls left on your answering machine? I can’t fathom why people spend the money on a Yellow Pages ad and don’t track the inquiries left on their answering machine to ensure that they are followed up on and to see their closing percentage.

Even though I have been a CEO for a long time I’m still very involved in selling. In fact, I once read that the job description of a CEO is, “best salesperson in the company”. There are other definitions but I agree that this is the best job description for a CEO. If you can’t sell your company to other people, and you are the CEO, you have a huge problem. But I digress. My point is that I’m involved in major accounts selling, selling banks on loaning us money, selling property owners on giving me a lower price on their property than the asking price, selling people on joining our company, etc. I’m sure you get my point. When I am “selling” I find that the vast majority of the people I’m contacting ignore my first call or email. However, when I follow-up I get to the person I’m trying to reach over 75% of the time. Why is that? My theory is that people are extremely busy these days and simply can’t talk to every person who calls them or respond to every email they receive. However, when they are followed up with they can see that the person trying to reach them is a pro, not an amateur, and they respond. Unless it’s a very large deal I don’t follow up more than three times because then I think you’re just being a pest. When you have contacted someone three times and they still won’t respond to you they actually are responding to you through their silence.

My friend, Dan Adams, says it best: “The key to success is consistent persistence”. If you want to be successful be consistent in your persistence. You will find that the following up will improve your closing rate no matter what you’re trying to sell. Try it and let me know what you find.

Why Customers Buy From You

When I ask salespeople why their customers buy from them I get a variety of answers. I hear, “Because of my great service”, “I know a lot about the products they buy”, “I have called on them for a long time and they trust me”, “Billy and I played football together in high school”, “We go to church together”, and the like. I have never once heard, “Because my price is lower than the other guy’s”. The truth is there are a lot of reasons why customers buy from you but one of the biggest reasons is that your customers (assuming that you sell a fair amount) like you more than they like someone else. Why they like you is normally a combination of the above.

What can you do to get more customers to like you more than the other guy? Here are a few things that have worked for me over the years:

Don’t lie. This may seem simplistic, but I have seen many salespeople ruin their career by lying to their customers. Don’t lie about what your products do, don’t lie about when you can deliver… don’t lie about anything. If a customer catches you in a lie you may as well move on to another customer.
Have your customer’s best interests at heart. Many times in your career you will be confronted with a situation where a customer wants to give you an order for something you know isn’t the best solution to their problem. Amateurs take the order. Pros turn it down and steer the customer to the company that has what they need. Passing on orders that aren’t the best solution for your customers is one of the best ways to get a customer to like you more than the other guy.
Get your customers to trust you. How do you get customers to trust you? That’s simple; don’t make claims about your product that aren’t 100% true. If your customer sees over time that you’re 100% accurate with what you say about your products it will take a lot for a competitor to take this customer away.
Get them to respect you. Respect is similar to trust but different. Respect is pretty much the sum total of the above. Customers also respect winners. Don’t ever beg for an order or ever do anything that could be in any way construed unethical. Once your customers respect you they will have little interest in talking to the competition.
You offer the best “value”. Amateurs try to get business by having a low price. Pros get business by having the best total value. Total value doesn’t necessarily mean best price. It means that all things considered (price, service, quality, delivery time, credit terms, etc.) you offer a better value than the competition. Your having the best total value isn’t always apparent to the customer. That’s where salesmanship comes in. It’s incumbent upon you to sell your total value, not just your price.

What else has gotten your customers to like you more than the competition? My readers and I would like to know.

How to Overcome a Customer’s Prior Bad Experience with Your Company

One of the most daunting tasks for any salesperson is trying to repair a relationship with a customer when one of your predecessors did something that totally turned the customer off on your company. Anyone who has ever been in sales has heard a customer say something like, “You have some nerve coming in my office after what your company did to me back in 1999”. During my career I never cease to be amazed about how long some customers hold a grudge over something (real or imagined) done to them by someone else from your company, sometimes many, many years ago. Overcoming a grudge that has been held for a long time is extremely challenging, but not impossible. I have been able to overcome most, but not all, past grudges by doing some or all of the below things:

Referral. If you have a happy customer that knows the grudge holder very well ask that customer to call on your behalf and vouch for you. If you can get a customer that is a friend of the person you are trying to sell after a past mishap, a referral, or better yet several, can get you back in the door.
A credit good on the first order. I have given a former customer a $500 credit good on their first order as an apology for past missteps and as a peace offering. This has worked for me more often than not. One time a former customer used the credit on a $5500 order, the first sale we made to him in over 20 years. That was the best $500 I ever spent. I got a nice order, and better yet, resumed selling a customer others in our company had given up on. That customer ended up buying over $80,000 from us over the next twelve months.
A sincere apology. If you are able to get in front of the aggrieved party a sincere apology can also work. I have said things like, “Mr. Jones, I understand that my predecessor made some serious mistakes in handling your account and beyond apologizing on behalf of my company, all I can say is that if you give me a chance you will see that I am different.” I then make a point of handing the customer my business card and I point out that my office, home, and mobile numbers are all on the card and that he or she can call me 24/7 with any problems in the future. It’s amazing how far a sincere, heartfelt apology will get you.
Ask for a small order to prove your worth. I have asked customers that haven’t bought from us in years to give me even a small order just to test me as to how I service my accounts. I had one customer give me a $150 order after months of begging for an order. I ensured that he received his shipment without any hitches, and exactly when I said he would. He was so impressed with the amount of care I exhibited on a small order that his next order was $7000. We are still selling that customer six years later.
Persistence. When all else fails, be persistent. Persistence doesn’t work with all types of customers but I have found that, generally speaking, the type of customer that I want to sell is a fair person and is impressed with persistence. If you refuse to take no for an answer (without being a pest) you can wear down even the most bitter former customer.

These are some of things that have worked for me over the years. If something else has worked for you, I would love to hear about it.

The Secret of Sales Success

Most sales trainers overly complicate the sales process. They teach techniques such as probing questions, trial closes, assumptive closes, and many, many other ways to make a sale. While these techniques have their place in selling, the true secret of sales success is building relationships with your customers. All things being even near equal, customers buy from people they like better than other people calling on them. Even if your initial quote is high, if the customer likes you and wants to do business with you, you will get “last look”. Many times your customer will even show or e-mail you your competitors quote because they want to buy from you. In over 35 years of selling when I have been given last look I can count the number of orders I have lost on one hand…with fingers left over.

How do you get customers to like you more than the competition? Here are some techniques I have seen work over the years:

Eat breakfast and lunch with a customer daily. One of our top sales people eats both breakfast and lunch with customers every day. Sometimes he even eats breakfast twice, with two different customers. “Why does he do that”, you may ask? Well, sometimes he calls or e-mails a customer and asks him to meet him for breakfast the following day but doesn’t hear back from him for several hours so he asks someone else and they accept. Then, the customer he asked first finally calls back and says that he can meet for breakfast. So, our salesperson has one breakfast at 7 AM and a second one at a different restaurant at 8 AM. This isn’t quite as tricky as dating two girls at once but you still don’t want to get caught at it so you should eat at different restaurants.
Entertain. Find out what your key customers like to do at night and on weekends and then do it with them. It’s just that simple. If you have a customer that likes to fish, take him fishing. If you like a customer who loves country music you and your wife should take him and his wife to dinner and a show. If you have a customer that likes to hunt, take that customer hunting. It really is that simple. Even if you don’t have an expense account you should still entertain to the extent that you can afford to. I think golf is the best way to entertain. With warming up, golf, and lunch or drinks afterward you will spend five or six hours with your customer and really get to know him or her.
Send cards and presents. You should send your key customers birthday cards, baby presents, graduation presents for their children, and the like. They don’t have to be expensive, and it’s actually better if they aren’t because then they look like bribes. A simple, thoughtful gift or card goes a long way in building relationships.
Get involved with their causes. If you have a customer who is deeply involved with the Wounded Warrior Project, the Red Cross, United Way, or another worthwhile cause you should get involved with these groups as well. Not only will you spend more time with your key customers but they will appreciate that both of you have a shared cause.
The Mackay 66. Harvey Mackay wrote a classic book of business advice in 1988 called Swim with the Sharks without Being Eaten Alive. In the book he touts the Mackay 66. This is a list of 66 questions (http://www.harveymackay.com/pdfs/mackay66.pdf) for you to get the answers to regarding each of your key accounts. You obviously can’t get the answer to all 66 questions on one sales call or it will look like an interrogation. Keep the list with you and answer a few questions on each call. Over time you will know more about your key accounts than anyone else calling on them and that will result in a deeper relationship and more sales.

As I said at the outset of this post, most sales trainers overly complicate the sales process. If you aren’t already doing some or all of the above try doing it and I guarantee you will see your sales zoom.

Ten Things Top Salespeople Do

Most people think top salespeople are born, not made. I am proof that’s not the case. When I started high school I was tall, skinny, and shy. I’m still tall but that’s where the comparison ends. I learned to be a top salesperson in every company I have been with by consistently doing the following ten things.

1. Plan every sales call. I have a written plan for each sales call I make. I review my CRM system, note what was discussed the last time we met, review any personal topics that came up, and list my objectives for this call. It never ceases to amaze me that most salespeople have only a vague idea of a plan for their sales calls, if any. Most are what I call “industrial tourists”;i.e., a company pays them to drive (or worse, fly) around “visiting” customers, and the occasional prospect, buying lunches, playing golf, or similar things. Most salespeople don’t have a written “game plan” for every call. They just wing it and hope for the best.

2. Have a written plan to grow your top ten accounts. When I was in sales I always had a plan to add to my sales to my top accounts. Marketing 101 teaches you it’s easier to sell more to your top accounts who already know and like you than to prospect for new accounts, so you should always have a plan to sell more to your top customers. No one gets 100% of the business from any account so always be planning how to grow sales to your best customers.

3. Review your “value add” frequently with customers. I am always looking for “value adds” I can use to get more business from my customers. A value add could be providing labor along with your products to take this headache away from your customer, selling products pre-assembled, customizing products, providing financing, etc. Without a “value add” you are often times reduced to selling on price.

4. Prospect for new business even though you are doing well. Most salespeople don’t prospect until their business falls off dramatically. Not prospecting for business when you’re doing well is like not buying life insurance until after you’ve had a heart attack. Top salespeople are always prospecting and preparing for a rainy day.

5. Begin your day with a list of things that you need to do that are both urgent and important. Most people either fritter their day away doing “fun” tasks or they take care of the urgent at the expense of the important. Make a list of things that you need to do that are both urgent and important and stick to that list, at least for the morning. I move on to other things on my “to do” list in the afternoon but I reserve the morning for tasks that are both urgent and important.

6. Become a serious student of the selling profession. When I do seminars on selling I always begin by asking who has ever been to a seminar on selling before. Almost always only a smattering of hands go up. Next I ask how many have ever had a golf lesson, shooting lesson, swimming lesson, or any other type of lesson related to a leisure pursuit. You guessed it! Almost every hand in the room goes up. If you sell for a living and don’t regularly go to seminars, read books, and listen to recorded programs on the art of selling you aren’t serious about selling as a career.

7. Build strong personal and professional relationships with customers. The best way to keep your competition from taking your best customers away from you isn’t by constantly lowering your price. It is by taking the time to build strong personal and professional relationships with your customers. By this I mean socializing with key customers and joining professional groups to which they belong and then being active in those groups. If you do those two things you make it infinitely harder for your competitor to take your key customers away from you.

8. Don’t waste your time on customers who pay slow, constantly complain, and who buy little of what you sell. As a professional salesperson, time is money and you need to spend your precious time in pursuit of big volume, good pay, and professional accounts that can buy millions of dollars from you over the years.

9. Develop your personal brand. By this I mean what are you known for in your market? How have you “branded” yourself? What do you do to set yourself apart from your competition? I used to do my own newsletter back in the days when I had to type it myself, take it to a copy shop, and mail it out. It wasn’t great but no one else I competed with did a newsletter so I won by default. In today’s world with e-mail and other technology tools, doing your own newsletter is much easier. This is just one idea. What else can you do to set yourself apart from the competition?

10. Outwork the competition. When I was in sales I started earlier and quit later than anyone else I knew of with whom I competed. When I couldn’t get an appointment with a workaholic who was always “too busy” to see me I would get his attention by asking for an appointment at 6 AM or on a Saturday. Workaholics were always impressed when I would propose appointments at such odd times. Back before cell phones I gave my customers my home phone number and encourage them to call me 24/7 whenever they needed anything. I’m always amazed when a salesperson who calls on me doesn’t return a call from me on Friday afternoon until Monday morning and then gives me the excuse that they turn their cell phone off over the weekend. You can be sure I never bother them again… with an order, or anything else.

In summary, selling isn’t hard, but properly done, it is hard work. Always keep in mind the old adage, “There is never a traffic jam on the extra mile”. The type of customers you want to sell will recognize that you are doing some or all of the above and, if you do it consistently, it will pay off. Take it from this tall, formerly skinny and shy guy.