Why businesses succeed (part 2): They understand how to sell

Almost nobody really likes to sell. But small businesses that don’t understand the selling process can end up with stress-inducing revenue and cash flow problems.

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Avoid the revenue roller coaster. What’s that? First the owner or team spends a lot of their time closing sales. While they’re closing sales, they’re not spending time delivering the product or service that customers will pay for. Revenue falls. Once the sales are made, the owner or team spends most of their time delivering the product or service, but not closing more sales. Money is coming in, but there aren’t many customers in the sales funnel. So the owner or team spends a lot of their time closing sales. It’s feast or famine.

Create a balanced sales process. Sales success depends on networking and prospecting, plus using your web site and internet tools to help potential customers find your business.

Most prospects start the sales process by doing an online search. When prospects start looking for more information about what you do and how you can help them, they identify themselves as potential customers. That way you can consistently spend part of your time interacting with prospects who have reached out to you. The feast or famine cycle is reduced.

Customer referrals are a great source of leads. Here your existing customers are doing some of the prospecting work for you. Referrals from strategic partners are also valuable. Outbound lead generation tools include networking, prospecting, email newsletters, presentations to outside groups, customer events, and advertising. Your web site, blog, social media sites, webinars and podcasts are inbound lead generation tools that let you leave a trail of content from the prospect to you. Find out which of these works best for you.

Start with a clear understanding of your target customer. If you don’t know who your target customers are or what their pain or opportunity is, how do you know what to say to them? How do prospects come to see you as the best vendor to help them? How do you screen out prospects you can’t help?

Respect your time and theirs. You have limited time every day or every week to spend with prospects. You have to spend that time with the best opportunities. Every sale starts with a prospect that has a need. Your sales process should help you understand which prospects have a need and intent to satisfy the need, and focus on them.

As you narrow the list of prospects, start checking social media to see what questions they are asking or what comments they are making that create a ‘buying signal’ for you. Do a Google search. See if they have a LinkedIn profile. Have they connected to or followed or liked any of your competitors? That’s a bad sign.

After you have researched the prospect, your first personal contact needs to focus on learning more about their problems or opportunities, and the payoff of addressing them. Don’t present your solution until you understand their situation. Your value to them will depend on how well your solution helps them. If you want your business to stand out from the competition, solve a more important problem.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727) 532-6800 or go to www.pinellascounty.score.org.

photo courtesy of zizzybaloobah via creative commons license

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Why businesses succeed (part 1): they build a loyal customer base

Spending money to bring new customers in the front door while existing customers leave through the back door is not a strategy for success.

Some businesses have the focus and do the work needed to hold on to existing customers. Here are some of the things they do:

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Start with the basics. Deliver a superior product or service, and provide great customer support after the sale. Give customers a reason to say good things about you.

Emphasize customer experience. How do customers feel when they do business with you? Do customer satisfaction surveys with every customer. How do they use your product or service? How can you do a better job meeting their needs? And contact the customers who leave. If you don’t know why they left, it’s hard to fix the problem.

Do something extra for long-term customers, active customers, and customers who recommend your business to others. Make them feel like insiders. Include them in your decisions. Encourage them to give good reviews and share their success stories.

If your business depends on a relatively small number of customers, use a customer relationship management (CRM) system to keep track of their purchases and your communication with them. (For more on this, check out the Ritz-Carlton Hotel and the Ritz-Carlton Leadership Center).

Put likeable and competent people in customer contact positions. The people who have the most impact on whether customers stay is the ones who deal directly with customers. Hire for friendliness, provide lots of training, and eliminate the policies that keep front-line people from satisfying the customer.

Communicate, communicate, communicate. Keep in touch with your customers. Remember, ‘out of sight, out of mind’. Thank them for their business. Give them information that is useful to them, not sales pitches. If your customers are other businesses, help them succeed. Talk about ways you can apply your products or services to overcome their business challenges. Look for ways to find customers for them. If your customers are consumers, help them make their lives better. And don’t do everything on-line. Meet customers in person. If it makes sense, set up customer events. In a perfect world, your customer events will turn into the equivalent of the Harley Owners Group.

Avoid attracting ‘bad’ customers. A bad customer is one whose needs are a bad match for your product or service, who buy only on price, and don’t see value in what the company offers. They often generate more than their share of complaints, taking up employee time that could be used to satisfy ‘good’ customers. Make sure that all of your external communications appeal to customers who you can satisfy, and the sales process lets ‘bad’ customers drop out voluntarily.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727) 532-6800 or go to www.pinellascounty.score.org.

Photo courtesy of James Morrison via creative commons license

Why businesses fail (part 4): they don’t do the work needed to be different and better

We’ve all seen it. An entrepreneur opens a new business, but before long we notice it’s closed.  They ran out of money before the business broke even. The time and money they spent is gone, and their lender may have a claim on their home and other assets.

How does this happen?

peacock-mark-wheadonA wise person once said, “There’s lots of competition for average”. If you’ve identified an important customer problem, they probably found a way to address their problem before you came along. Prospects can compare ratings, reviews, and prices for you and your competitors online. If you’re no better than everyone else, why should the customer buy from you?

What should you do instead?

You need to create a competitive advantage based on what your target customers think is important. Federal Express knew that its customers needed fast reliable delivery, and their message was “when it absolutely, positively needs to be there overnight”. Superior product design has driven Apple’s success, while low cost keeps customers coming back to Wal-Mart and Costco. Whatever you think about the health value of their menu, McDonald’s wins with consistency, cleanliness and service.  The luxury hotel chain Ritz-Carlton focuses on the needs of their high-end customers, using the slogan “ladies and gentlemen serving ladies and gentlemen”. They share their knowledge with other companies through the Ritz-Carlton Leadership Center. Their quality is regularly praised in the influential Zagat Survey.

Whatever your customer’s definition of quality, you need to deliver excellent value at every point where the customer interacts with your company. This means your email newsletters, how easy your web site is to navigate, your sales process, delivery, billing, and customer service.

On the positive side, think about the online shoe retailer zappos.com. Their sales process is very smooth. They offer free shipping on all domestic shoe purchases. If you’re not satisfied with the shoes when they arrive, you can return them in the original packaging for free. You can return items for up to 365 days, as long as they are in the original condition and the original packaging. Zappos.com has a customer testimonial page with almost 10,000 testimonials. They set the bar pretty high for on-line and physical shoe retailers.

On the negative side, remember the YouTube video “United breaks guitars”? Lots of other people do. It was viewed more than 10 million times. And General Motors probably wishes it had done a better job replacing the defective ignition switches on the cars it recently recalled.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727) 532-6800 or go to  www.pinellascounty.score.org.

Photo courtesy of Mark Wheadon via creative commons license

Why businesses fail (part 3): they don’t attack an important customer problem

We’ve all seen it. An entrepreneur opens a new business, but before long we notice it’s closed.  They ran out of money before the business broke even. The time and money they spent is gone, and their lender may have a claim on their home and other assets.

How does this happen? 

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Third, they didn’t attack an important customer problem, or satisfy an important customer need. The customer or prospect isn’t very anxious to solve their problem. They may have found a work-around that is acceptable for now. They will procrastinate if you ask them to buy, and when they finally do, they will look for the cheapest solution. Not a good market for your business: long buying cycles, low conversion rates, and constant pressure on margins.

What should you do instead?

  • Look for a segment of your current target market, or an entirely different target market, that has an important problem you can solve, or an important need you can satisfy. If you were originally planning to offer a car washing service, focus on people who get a real benefit from a clean car, like real estate agents, executive limousine services, and people who want to sell their cars. If you were planning to open a small book store, offer a subset of books that aren’t available on Amazon, like antique and rare books.
  • After you choose your new target market, you need to reach out to target market customers. Meet with as many of them as you can. If these customers have an important problem or need, they have probably found a solution already. Executive limousine drivers are not driving around in dirty cars. People who want rare books are probably not waiting around for someone to open a new small book store. But they may think their current solution is too inconvenient, or could be improved to better meet their needs, or is too expensive. For example, they may go to an antique book store, but they have to drive a long way to get there. Find out what it would take in terms of delivery or features to make them switch to a new company.

SCORE counselors are available locally or on-line to help you create and manage a successful business. Call us in Pinellas County at (727 532-6800 or go to  www.pinellascounty.score.org.