DriveYourSucce$$

Salespeople Who Can’t Say No and the Consequences that Follow

What are the consequences of a salesperson who just can’t say no? Surprised to hear that the best salespeople often have to say no in order to win business? Surprised to hear that simply saying “yes” isn’t the best course of action when closing orders? Don’t be. It’s easy to say “yes” when working with customers. Yes is the easiest of answers because it is the simplest way to please a customer. It’s less confrontational, easier to say and is often seen as the surest way to keep customers engaged. However, sales success has never and will never, just be about saying yes. Sometimes, salespeople must be able to say no. In fact, not saying “no” means the difference between business won and lost and ultimately means the difference between a happy or unhappy customer.

Unqualified Marketing Leads: The Consequences and Outcomes

What exactly does a qualified marketing lead look like to your enterprise? As an enterprise focusing on business to business sales, should that definition be based on your potential customer’s size? Should it be structured around the products they buy or their geographical location? Or, should you also consider their technical requirements and the amount of money they could spend? Properly answering these questions requires you first start by segmenting your customer base into their unique business models, strategies and approaches. Every customer falls under a different customer segment, and each customer segment fills a different role in a given industry or market. Understanding these unique customer segments allows your enterprise to immediately identify qualified and unqualified prospects. If not, then you’ve forever set the table for producing one unqualified marketing lead after another. So, what are the consequences and outcomes of not producing qualified leads because your marketing strategies lack focus and direction?

Defining Customer Benefits in Supply Contracts: Essential Negotiation Strategies

As the vendor in a supply contract, how would you define the benefits of these contracts for your customer? Would you focus solely on the savings your customer enjoys by committing to a long-term contract, one where your enterprise is able to reduce your customer’s pricing through their economies of scale? Or, might you focus more on how these contracts help your customer reduce their turn times on finished goods? Most vendors assume these are their customer’s main benefits. However, other vendors understand that there are additional benefits, ones they can outline with their customers in order to strengthen their own negotiation position. They define these additional benefits in order to accentuate their company’s value proposition. So, what are these other benefits and how can your enterprise use them to strengthen your negotiating position?

Price Skimming Sales Strategies: Remove Middlemen in the Value Chain

When someone talks about price skimming, what exactly are they referring to? Are they referring to a pricing strategy, or about focusing on a particular type of customer, or both? In order to answer these questions, think of how some companies are able to get a higher price for their product by focusing in on a couple of unique customer segments. They have a product offering whose cost-per-use benefits are clearly ahead of their competition's offering. However, because they operate in a price sensitive market, they focus on a specific customer segment in order to get the highest possible return on sales. Therefore, it’s a pricing strategy that is predicated on appealing to the needs of specific customer segments. So, how does this work?

NRE Multiplier, Custom Designs & Customer Change Requests

What role does your NRE multiplier play with respect to better managing customer change requests on custom designs? Well, while there are varying opinions as to how a company should manage these changes, the best advice I can give is to first determine what your non-recurring engineering multiplier is, and then focus on the fact that any customer changes are exactly that, changes driven by customers who should cover those costs. By this I mean that once you’ve moved past the design phase, and have gone to full-scale production, any and all changes requested by the customer must be charged back to the customer in order to cover your holding costs of inventory. The best rule of thumb is to remember that these stop-and-go changes don’t just affect your production of their custom-made product, but that they ultimately affect your ability to service your entire customer base.

Blanket Orders and Kan Ban Contracts: Which Supply Agreement is Best?

Most of my customers make the common mistake of confusing blanket orders and Kan Ban contracts, with some referring to both as JIT (Just in Time) agreements. Unfortunately, it’s never that simple. Very few Kan Ban contracts are ever able to meet the strict delivery requirements of a JIT agreement. Granted, they are similar, but their differences must be understood in order to structure the supply agreement to meet each party’s unique needs. After all, there are buyers and suppliers who enter into these agreements and both must be cognizant of their appropriate roles, responsibilities and liabilities as they pertain to the inventory needed to make these orders work.

Lower Customer Acquisition Costs With Analytical Marketing Practices

Can marketing be used to lower a company’s costs of acquiring new customers? Can marketing justify the universal claim that it costs companies anywhere from three to four times more to find new customers, than to retain existing ones? Well, the simple answer to both of these questions is a resounding yes, it can. Most companies hear that it costs them more to find new customers, than to keep existing ones, and chalk up this statement as just another erroneous business cost that can’t easily be quantified, or one that is merely a soft cost not to be concerned about. Unfortunately, for them, and fortunately for you the reader, they’re dead wrong.

Sample Kan Ban Contract: Finished Inventory, Semi-Finished Inventory & Raw Materials Inventory

Today I decided to include a sample Kan Ban contract that specifies the liabilities for both a buyer and supplier as they pertain to the finished inventory, semi-finished inventory and raw material inventory within the agreement. These contractual agreements work when both parties clearly define these aforementioned liabilities and are willing to negotiate in good faith. However, it’s essential that these agreements are signed by both parties, as the amount of inventory needed to make these contracts work is quite substantial. Use properly, the Kan Ban agreement can help reduce the buyer’s inventory holding costs, while providing the supplier with consistent manufacturing volumes.

Identifying Value-Add & Non-Value-Add Process Steps in Product Management

As a product manager, do you take the time to isolate those value-add (VA) and non-value-add (NVA) service features that may or many not be needed by your customers? Are you a manufacturer of custom-made parts who needs to weed out those processes that do nothing other than add unnecessary time and increase costs? More importantly, when trying to nail down those product and service features customers are willing to pay for, versus those they aren’t, do you take the time to isolate your value-add versus non-value-add business processes? If not, then this might be worth a look. We’ll explain the importance of isolating VA and NVA process steps within your product and service offering.

VOC Data and Simplified Kano Analysis Steps for Product Managers & Marketers

If you find the above title a little intimidating, don’t worry. We’ll simplify this entire process. Using voice of customer (VOC) data techniques and employing a Kano analysis can be daunting. However, while the tasks themselves are involved and the process of gathering data somewhat laborious, they are very straightforward methods of quantifying those product features and benefits that customers want, versus those they don’t need. Every company has its internal and external customers. Each push their own solutions and their own initiatives. As a product manager, your must isolate those VOC data points that dictate what your product must have for market entry.

Bad Credit Customers: The Cure for a Cash Strapped Business World

Conventional wisdom dictates that bad credit customers are just that, bad. After all, it’s nearly impossible to plan inventory purchases against customers who might be here today, gone tomorrow. Most companies shy away from customers who must prepay orders, or those customers with a less than stellar credit rating. However, there is another school of thought that espouses pursuing bad credit customers at all costs, especially in cases where cash flow is a going concern. 

This doctrine dictates that in a cash strapped business world, where credit is hard to come by and delayed customer payments are the norm, companies should refocus their efforts on customers who’ll reduce their receivables financing costs and improve their cash position. So, given the reality of today's economy, should your company pivot and start looking for customer who must prepay orders?

Benefits of Customer Consolidation Through Multiple Distribution Channels

Most businesses have heard of the benefits of vendor consolidation, but few have considered the benefits of customer consolidation. The approach is to reduce the customer base in order to reduce the company’s sales transaction costs. The mechanism that makes this possible is to use multiple distribution channels to market, or multiple sales agents. This is often a goal of companies whose costs on sales transactions are simply too high, whose manufacturing is fractured by infrequent customer orders and cyclical demand, or whose customer volumes are too small to service. Imagine the costs of selling 3 units to 100 different customers, as opposed to selling 300 units to a single customer. Obviously the second transaction has lower costs and is therefore easier to manage. So, how can companies benefit from customer consolidation through multiple distribution channels?

Manage Your Customer’s Expectations and the Rest Should Follow

What’s the most important part of a new customer relationship? What must all salespeople be able to accomplish with respect to how they sell and service your customer base? More importantly, how can your sales team set the table for your customer service department to succeed and for your company to position itself as your customer’s vendor of choice? In order to answer these questions, think of the importance of managing customer expectations. Think of how the expectations of customers vary and how these expectations are based on prior experiences. If your company doesn’t properly define your service capabilities, your customer will do it for you!

Sample Customer Scorecard Excel Sheet: Grading Your Customer’s Value

What factors do you consider when it comes to grading your customer’s value to your business? Like most enterprises, does yours simply base this value on the amount that customer spends? Or, do you base it on other criteria, in addition to how much they spend? To help you answer these questions, I’ve decided to include a sample customer scorecard excel sheet that not only accounts for how much your customers spend, but also takes into consideration their payment habits, their contribution to your inventory turnover rates and their impact on your inventory and receivables financing costs.

B2B Customer Management: Moving Customers up the Value Scale

In my recent post entitled B2B Customer Management: Determine a Customer’s True Value, I covered four criteria companies could use in order to determine the true value of a customer. These four criteria included, 1) how much the customer spends, 2) the products the customer purchases, 3) the customer’s payment habits and 4) whether the customer helps to increase the company’s inventory turnover rates. The company would apply a grade to each of these criteria and then use a weighted average score to determine the customer’s true value. The focus of this post is how a company can move customers up the value scale.

B2B Sales Management: A Full Sales Funnel Maintains Customer Urgency

Have you ever notice how much more effective salespeople are when their sales funnel is full and they have more than they can handle? Granted, this is a fairly obvious statement. However, it’s important to note that some salespeople are more effective at creating that sense of urgency with customers than others are. It’s this sense of urgency that is so conducive to closing orders. It’s this sense of urgency that often forces customers to act. The intention isn’t to strong arm the customer into making a decision they normally wouldn’t. No, in this case, it’s to use the salesperson’s natural abilities to identify and close on more opportunities by keeping their sales funnels full.

B2B Customer Management: Determine a Customer’s True Value

What are the steps needed to determine a customer’s true value? How does a company distinguish between valuable customers, opportunistic customers and ones that are too costly to service? Is this decision based on the amount the customer spends, the products they buy, how fast they pay their invoices, or how often they consume inventory? Well, when it comes to B2B customer management, each of these criteria plays a role in determining whether that customer is too costly to service, whether they should only be viewed as an opportunistic sale, or whether they are the kind of customer the company should build its business around. The idea is to grade each of these criteria in order to provide a weighted average score, a score that helps to distinguish the customer's true value.

Strategic Business Planning: Top 5 SWOT Analysis Applications

In my recent post entitled Strategic Business Planning: Use TOWS to Move SWOT to an Action Plan, I outlined how the TOWS analysis can turn the items under each SWOT heading into an actionable plan. The approach is to be succinct, to the point and not go overboard in assessing the four quadrants of the SWOT analysis; Strengths, Weaknesses, Opportunities & Threats. With this post I wanted to go over the top 5 applications for the SWOT analysis with respect to the content on this blog. Suffice it to say, this strategic business planning tool has multiple applications.

Sales Negotiation Training: Creating a Sense of Urgency With Customers

 
Can a salesperson create a sense of urgency with customers and use that urgency to incentivize them to place an order? In fact, they can. However, there are some conditions that must be adhered to. For instance, laying the groundwork for that “sense of urgency” must be subtle and not so direct or confrontational that it makes the customer feel uncomfortable. Otherwise, the salesperson risks overplaying their hand and if the customer balks, then the salesperson has few options to explain how that ‘urgent’ situation, wasn’t entirely urgent. Therefore, when it comes to sales negotiation training, what must salespeople do when trying to create that sense of urgency with customers?

Critical Steps to Determining Your Financing Cost on Sales

What exactly do companies mean when they refer to their high financing costs on sales? To answer this question, think of the company’s financing costs to support its inventory and its financing costs of supporting its receivables. The longer it takes to sell inventory, the higher the costs. The longer it takes a customer to pay their invoice, the higher the costs. These aren’t soft costs by any means, but real, identifiable and quantifiable costs that directly impact a product’s gross profit and the company’s bottom line. So what are the critical steps to determining your financing costs on sales?

Strategic Planning: Reducing Inventory & Receivable Financing Costs

When it comes to strategic planning, few approaches are as important as reducing the company’s inventory & receivable financing costs. When a company looks at its financing costs of inventory, it is really concerned with its daily cost of money. Even after the product has been invoiced, the company will continue to cover this daily cost of money for everyday their receivable goes unpaid. This is why a number of companies only consider a sale finalized once the invoice has been paid. However, just how impactful are these financing costs? More importantly, how does a company reduce its inventory & receivable financing costs?

B2B Sales Strategies: Using Reward Programs to Track Market Pricing

In one of my earlier posts entitled Sample Back-End Rebate Excel Sheet for Customer Retention , I showed how a back-end rebate and reward program could be used to improve customer retention in B2B sales. While most of us associate these reward programs with larger consumer focused companies, the right back-end reward program can improve customer retention and dramatically upgrade your B2B sales strategies. More importantly, using customer reward programs will help your business better track market pricing, thereby allowing it to remain one-step ahead of your competitors.

Sample Back-End Rebate Excel Sheet for Customer Retention

It simply doesn’t matter what type of market your business operates in, if you aren’t doing everything you can to retain customers, you’re dead in the water. It's just that simple. Customer retention is an essential part of business growth. It’s one thing to capture and close on new opportunities, but it’s something else entirely to retain business for the long-term. With this in mind, I thought I would provide a sample back-end rebate excel sheet for customer retention. The process is simple and straightforward and is ideally suited for B2B sales.

B2B Sales Negotiation: Defining Your Market’s Decision Makers

One of the more important aspects of success in B2B sales negotiation is the ability to identify an account’s main decision makers. Most sales professionals understand that a company’s decision makers are never the same from one customer to the next. However, within every market there are a set of norms or common practices with respect to who makes decisions. For instance, industries that are heavily reliant upon custom-made designs, typically depend upon engineering & product manager decision makers. This contrasts to industries where products are priced like commodities and have no differentiating indicators, thereby putting the decision in the hands of procurement managers. Defining your market’s unique decision makers is paramount to closing on opportunities.

Managing Customer Expectations: Explaining NRE Charges to Customers

Managing customer expectations is perhaps the single most important aspect of sales success and a vital step when it comes to discussing NRE charges with customers. If your company is in the business of manufacturing custom-made designs, then you know full well how important it is to charge for engineering time. After all, your customer is purchasing a part they likely can’t get from another company. So when it comes to explaining non-recurring engineering charges to customers, what’s the best approach? More importantly, how should your company manage your customer’s expectations when discussing NRE charges?

PERT Analysis Essentials for Project Managers, Integrators & VARS

PERT (Project Evaluation & Review Technique) is one of the most recognized tools for Project Managers, Integrators and Value Added Resellers, or "VARS". Its essential purpose is to apply values to multiple variables in order to determine the most likely outcome. Successful PERT analysis requires the ability to use historical data, compiled from previous projects & installations, as well as the ability to segregate the project’s critical and non-critical paths. By defining the importance of these paths, and their roadblocks, project managers can quickly decipher which tasks are essential to completing a given project. We'll review how PERT can be used within project management in order to determine not only the project's overall timeline, but how vendors are able to deliver upon what they promise.

Maintaining Safety Stock Leads to Customer Service Excellence

How does your company define customer service excellence? More importantly, do you understand how your safety stock plays a role in ensuring your company meets your customers’ expected ship dates? Properly managing safety stock means your company is actively reducing the impacts of stock outs and their negative impact on sales. In fact, stock outs increase a company’s inventory holding costs because they lead to lost sales. In this case, properly managing your safety stock ensures you’re not only excelling in customer service, but that you’re ultimately improving customer retention.

B2B Sales Negotiation: Four Ways to Handle Customer Scare Tactics

How do you handle customers who resort to using scare tactics? Do you capitulate and give in, retreat and assess the situation, or stand firm and try to move the negotiation forward? Most importantly, do you understand why your customer uses scare tactics as their negotiation strategy? Unfortunately, most salespeople don’t really understand why customers use these tactics. As a result, they often give in to customer demands. However, there are other salespeople who understand why customers resort to using these negotiation strategies. Instead of capitulating, they are able to get at the root cause of these threats, identify their meaning and provide a solution. We’ll analyze why these scare tactics are used and provide four approaches to dealing with customers who resort to using threats in negotiation.

Protecting Receivables: Tracking Customers Who Extend Credit & Terms

Do you make it a point to track your customers’ order patterns? More importantly, do you know your sales cycle times and how some customers may simply be trying to extend their credit & terms by spreading out purchases amongst multiple vendors? If not, then it’s about time your company become more aware of the practice. It’s an approach many companies use to extend their credit and its one that becomes more prevalent in difficult times. By spreading out purchases, customers are able to max out one credit limit before moving on to another. Unfortunately, your company may be the next in line!

Defending Price to Overbearing & Demanding Customers

Salespeople always seem to have a hard time defending price with  overbearing and demanding customers. Either it’s their inability to handle adversity, their concern of losing business or merely their unease with assertive customers. Regardless of the reasons why, standing firm on price is much easier said than done. However, is it really the customer who forces salespeople to lower pricing, or is it the company training the customer to make demanding price requests? In a number of cases, it’s the company and its sales team that actively train customers to buy on price. Instead of standing firm, the company forces sales to capitulate. Ultimately, this trains customers to make purchasing decisions solely based on price and nothing else.