thinking: relating- celebrating :-)

There was an extraordinary news item a few months ago in Sydney. An accounting firm there decided to cull some of the less profitable clients and came badly unstuck. When they sent out communications to those ‘unwanted’ clients some of their more valuable customers got caught in the crossfire.

This may relate to a poor understanding of the concept of customer lifetimes. In any business it would be useful to know which customers were the most profitable and then how to manage the client mix so that PR disasters like the example don’t happen.

For the record the firm was WHK Horwath and the full story is available under the title – “Quick Flick Reflects Badly” by Neil Shoebridge on page 49 of the Australian Financial Review on 13th of August 2007. Customer lifetime has been defined as:

“The net present value of the profit an organization expects to realize from a customer for the duration of their relationship. Customer lifetime value focuses on customers as assets rather than sources of revenue. The volume of purchases made, customer retention rates, and profit margins are factors taken into account…” from Bnet

In other words once you win a customer you should look closely at how that customers activities can be enhanced by your services over a longer period of time – and how they are looked after.

For many large projects the cost of winning new business is high and it is not until the 2nd or 3rd project that you might start making a profit out of the relationship.

Business life cycles are all different – however there is a general rule of thumb that it is 9 times easier to win business off an existing customer than to land a new customer. Regardless of the multiple – the point is look after your customers and they will look after you.

I suspect that the accounting firm looked at a short time period of time and not at a 5 or 10 year cycle which might be more valid. I wonder how many companies know where their business really comes from.

For example do some clients refer customers to their preferred suppliers? Sometimes this does happen – but it is unlikely to show up in a cashflow. If the business owner sees customers as an asset though - the results will show up on a balance sheet over the longer period.

For example many professional services firms work on sensitive projects for their clients. Sometimes they don’t want their competitors to know what they are up to and so a standard referral programme probably wouldn’t work.

However – If I am a potential client and I’m looking for a supplier – it would be helpful and indeed confidence building to know at least some of the names of customers who have been helped by that particular supplier.

Being able to supply a customer list adds credibility but it is hard to value in the context of simple financials.

In the case of the Sydney firm they accidentally sent an “unwanted client” letter to a valued client of 20 years standing. There had been a mix-up between the two lists. I suspect the admin person was not aware of the marketing implications – and in my experience this happens fairly often especially if ther task is seen as admin when it requires some sales insight.

Unfortunately for the Sydney firm their mistake was to send the wrong letter to Neil Shoebridge who is a high profile Marketing columnist at the AFR.

Here are some questions we should be asking Business Managers

1. What is a customer lifetime in our industry?
2. What is does the customer lifecycle look like?
3. Are their times in that lifecycle when profitability is impacted and does that improve later?
4. Do we have a way to value customers? (including referrals)
5. How do we measure customer profitability?
6. Can we increase our “share of wallet” – that is can we sell them more products and increase our revenue and / or profitability?
7. Can we service them is a different way – that improves profitability?

Perhaps you have some other questions – let us know?

Sales research is a regular part of my role in helping to develop better results for my customers and their projects. Increasingly the first contact most of us have with a new business contact is via their website and that may be all the contact we have.

The question is- are we making it easy for strangers and prospects to do business with us. From a recent project where I looked at some 300 sites in NZ (+ Australia & elsewhere) – the answer is not very.

In fact there were still quite a number of companies without websites at all which makes it much harder to guess how they might be useful. There just isn’t enough time to call everyone any more and chances they’ll answer the call are also slim.

Usually I’m looking for a clear indication of what is most important to that business and some reason to explore further and maybe call them. Like many prospects I want to save time and get a clearer idea of specific areas where that company might be able to assist.

As I work on multiple projects in NZ and Australia there is a very wide range of sites and industries. Your future customers may be offshore and they too will likely check your website first.

Here are three of the better examples of sales positioning from the U.S, Australia and NZ.

Customer advocacy works!
This summary from a real estate agent got my attention. Hat tip to Andy who mentioned her in passing. There is almost too much information there including a video intro which I think we’ll be seeing more of. (Scroll to the bottom of the linked Mary Pope-Handy page. )

The style of the overall site is not to my taste but the real key in this is to make a meaningful connection with prospective customers.

Conveying credibility, honesty, respect and trust in a few paragraphs is not always easy but here is a paragraph that would have convinced me if I was I was looking for this particular service.

“Folks who are buying and selling homes in Silicon Valley are highly sophisticated. They don’t need a “sales job” but an advocate who provides them with good data and a way to make sense of it so they can make intelligent decisions that will have long-term benefits.

I work to help them, every step of the way, to analyze all the facts and stay current on everything affecting the buying and selling of homes: new laws, contractual changes and implications, trends, environmental issues and, or course, market conditions.

I use a lot of high-tech tools but keep an equally high-touch approach and am excellent at staying in constant communication. I am fortunate to always work with clients who are nice, honest, and committed to buying and selling – but also clients who refer me enthusiastically.

They tell me that they appreciate my knowledge, skills, dedication and determination, but above all else they recognize that I put their best interests first.”

Recognising that your customers are smart and that you need to add real value to the engagement process is critical. Understanding how to be professional and personal at the same time can win first chance at a new sale.

Law and legal services is a complex area and many prospects are wary of the expense and time commitments. Here is a great example of sharp positioning from Dilanchian who are intellectual property and innovation specialists based in Sydney. The site has almost too much information which is exactly opposite many of the larger law firms. One post in particular caught my eye - as sales positioning it has street appeal.

10 conversations about business models

“Listed in this post are 10 topics for telephone conversations we would happily have free-of-charge. If you want to discuss the topics call us whether you are a client, collaborator or a stranger. We’re proposing an open conversation to exchange thoughts, play cards and see where that might lead.”

1. What is affordable for you to do to increase the value of your business or go to the next stage?
2. How can you improve and secure revenues from intellectual property and fee for services?
3. Which branding and trade mark registration strategies help in an age of product proliferation?

Go there to check the other seven reasons and let me know what you think?

Collaboration Excellence
Also in the complex services space is the business of Michael Sampson who is focused on effective collaboration strategies and practice for a range of local and international clients.

“Michael Sampson helps people, teams and organizations improve performance through effective collaboration practices and technology.”

This site is is also information rich and engaging and but right there on the front page there is a single positioning sentence and a eye catching which cuts to the chase quite nicely. See speech graphic below.

So – does your website generate sales leads and support your business well? If so let us know what your top examples are. If not perhaps we can help. Ironically my services page needs an update now.

The most successful businesses that I know follow a clearly structured sales methodology and a detailed plan to get there. It shouldn’t be too surprising that in order to get to a big sales goal there are a whole series of much smaller structured activities that need to be followed through.

Here are some outlines on key learnings from many years of successful marketing and sales campaigns.

1. Define Objectives

Typically a business will select a CRM because they want new customers or new business. They see this as a sales hunting exercise and often have other sales people for farming or account management duties. The sales “farmers” are looking to grow the business by selling more products or more volume of the same products and services to the same people.

So the first step in more successful sales plan is to decide whether you have new customers/new business goals or account management goals and your strategy will be different. Remember – a CRM allows you to treat different customers in different ways according to their needs, goals and desires.

2. Tips for Lead Generation

I was talking to a business owner recently about their needs. The owner has a number in mind for new business and is looking for the best way to get to that point. The traditional approach is to hire a business development manager who can understand the market and work out where the business will come from.

Except that in this example, little or no marketing has been completed to date. Marketing is the brains of sales. An effective marketing plan has to be part of the sales plan otherwise the risk is that that sales team resources are wasted on chasing deals they have less chance of winning than they should.

What this business needs for their new Business Development Manager is a lead generation campaign so that a reasonable sales pipeline* can be built up. (*Sometimes called sales funnel – typically a list of potential customers ranked in order of their closeness to a sales decision.) Note: lead generation can now be outsourced.

The sales team needs to have directed, relevant, useful engaging conversations with their strangers or suspects, prospects and their customers to understand the most compelling reasons why they should do business with you.

3. Work your Sales Funnel

To have a relevant conversation with a business you only suspect may have a need of your product or service some form of lead development is needed.   A marketer would have a target list of suspects and some form of communication to those people is then triggered. Often this is a multi format communication like a direct mail piece to the decision makers, a case study in an industry magazine and possibly even advertising in trade publications so that the target businesses have some idea of who you are / what you do.

At this point the phone may begin to ring – however – many of your competitors are doing the same, so you really need to “close the loop” by making contact with as many people on your target list as possible. This means making a series of phone calls to decision makers so that you can earn the right to be heard when that business has need of your services.

Many sales people make 1 or 2 calls at this point – however the golden number is 5. If you make fewer calls you will get to less people but if you haven’t reached a person after 5 calls then you should probably add them to a later campaign. There will always be a group you can’t get to in any campaign cycle. When you have spoken with each contact, determine how much lead nurturing they might need in future. When is the best time to call them again and what do they need to know about so that the relationship is nurtured to the point where you can bid. 

4. What Others Say About You Wins Business

So lets say you have seeded the market with information about your positioning - what do you actually say to those suspects / prospects if you can get some of their valuable listening time?

This is where careful thought on call scripting is needed. A script needs to frame your messaging about capabilities and credibility in a way that can cut through all the other sales messaging in your market.   You probably have 3-10 seconds to say something relevant to that person at that business before you get turned away.

What really works at this point is to get the suspects attention by telling them of a well known industry success where you were the supplier. This is especially powerful if you can quote that customer in their own words. A customer testimonial has major social capital and is much more significant that anything you can say about your own business.

As Brian Clark says

“What other people say about you is more important than what you say about yourself. This is the foundational aspect of linking and the backbone of social media.

Testimonials and media mentions are important because of the concept of social proof. We all, to vary degrees, look to others for indications of what to do and how to behave. Social proof is the basis of buzz, word-of-mouth marketing and fashion trends, but it’s also an important aspect of our day-to-day lives. We avoid sensory and information overload by looking to social indicators for judgmental heuristics that help us make decisions.”

More to the point – the suspect is more likely to believe you and give you another 30 seconds to communicate the “why” you are calling. This progressively wins you the right to more time to talk about the how and hopefully earns you an appointment where you can engage more fully in person.

5. Structure Your Sales Process

A sales call is therefore very important and needs to be carefully structured so that the prospect/s needs goals and objectives can be identified along with timelines, compelling events and other material factors like budgets and people.

So the next time a business owner asks you to sell – be very clear on all the key aspects of messaging, positioning, and proofs so you can build a quality pipeline. Every sales call needs to be a step closer to a sale for your product or service. Many times you will still have to wait for a budget cycle – but that is part of the discovery process and if you know that you can be in the right place at the right time.  Those prospects will already know who you are and you should make the shortlist for serious consideration.

The other part of the sales conversation is to be clear on the other 6 key decision metrics about that particular sales need.

6. Fine-tune with Customer Relationship Management (CRM)

If we follow a structured sales plan then we can use our CRM to fine tune these process steps and maximise our chances of success by making certain we are “in the frame” when an important opportunity comes up.

It is time to improve your strike rates with new business. We believe the notes above  provide an essential guideline for your business. To get help with sales planning and lead generation contact me now for a no obligation chat.

Find out the 6 key decision metrics you absolutely need to know.

If you would like more CRM related content please see these earlier posts

• CRM is not a Magic Bullet
• CRM & Knowledge Management
• What to Look for in CRM Strategy
• CRM as a Process Platform
• What is CRM Used For?
• CRM Thinking about Strategy 1

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