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.

Redefine Sales Excellence in Today’s Constantly Changing Marketplace!

Sales key performance indicators (KPI) must now match the complexities of today’s global marketplace. Gone are the days when small businesses could measure their sales team’s performance solely by the amount of revenue or gross profit they generated. No longer are smaller enterprises able to rely upon these antiquated and outdated performance measurements, only to reconcile their true costs of sales at a later date. Granted, the value of a sale and its corresponding gross profit will always be important. However, equally important is the type of product the team sells, their sales forecast accuracy, their ability to liquidate slow moving inventory and ultimately, the team’s ability to help the company reduce its cost of capital. It's time your small business track these very same measurements!

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?

Today’s Sales KPI Must Measure Inventory & Receivable Financing Costs

It’s not uncommon for companies to go sales KPI crazy. After all, there are a number of ways a company could assess the value of a given sale. However, if there was ever one sales key performance indicator every company should use, it would most certainly have to be those benchmarks associated with reducing the company’s inventory and receivable financing costs. Why should companies use these two financing costs to measure the value of a given sale and the overall performance of their sales team? Simply put, these financing costs determine the gross profit on sales, and in today’s economy, these financing costs are substantial.

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.

Meeting Customer Expectations on Product Designs: Don’t Complicate Things!

Does your enterprise have a hard time meeting customer expectations on new product introductions? Do you often find that your engineering department includes far too many "bells and whistles" and that these added features do nothing more than raise your prices so high, that your product offering is no longer competitive? If you’ve answered yes to each of these aforementioned questions, then it’s time to define how best to balance real customer needs versus expected customer needs. Your engineering department may think they now what your customers need, but are they basing these opinions on factual assertions, or on assumptions? More importantly, are they taking an approach predicated on dictating what customers need, rather than listening to what these customers want?

A TOWS Analysis Can Make Your First Quarter Your Best Quarter

Can the TOWS analysis help your company navigate the upcoming year so that it's well positioned to tackle whatever challenges await? No doubt you want to make your first quarter your best quarter, but how does the TOWS analysis go about laying the groundwork to start every year off on the right foot? More importantly, how does this planning tool help define last year in terms of what went well, what didn’t go well, what market changes occurred and what your enterprise must do to replicate success from your first quarter, and every quarter thereafter? We’ll answer each one of these questions in detail by providing insight into how your company can use the TOWS analysis to define action plans, set priorities and lay the foundation for a successful new year. So how can your company use this strategic planning tool?

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.

Defining Strategic Partnerships Between VARS, Integrators & OEMs

Is your business that of a VAR (value-added reseller) whose strength lies in how it manages large amounts of inventory? As a supplier of time-critical parts, are you looking to enter into a strategic partnership with your market’s largest OEM (original equipment manufacturer)? Or, are you an integrator servicing the equipment manufacturer’s end-user customer base, a customer base that forces you to rely upon the VAR for spare parts, and the OEM for technical expertise? Regardless of whether you find yourself in the middle as the integrator, as the VAR servicing the OEM’s customers, or as the equipment manufacturer itself, there are opportunities for each party to enter into a strategic partnership. So, what would one of these partnerships entail? More importantly, what must you do to ensure your partnership addresses your company's specific needs?

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?

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.

Sales Negotiation Training: Never Sell on Price, Sell Savings & Solutions

When discussing sales negotiation training with my customers, I always tell them to never sell on price, but to instead sell savings & solutions. Now, most business professionals are convinced that salespeople sell on price because they lack the ability to sell properly. However, in many instances it’s the company itself that forces the salesperson to sell on price. This often happens because the company views this approach as the only way to guarantee the order. Unfortunately, lowering the price does nothing more than lead to the dreaded price war, and nobody wins a price war! Declining prices do nothing more than reduce gross profit margins and force your company to pursue a portion of the market that nobody wants. So, what can your business do to correct this?

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.

Reducing Travel Expenses for Small Businesses: The Benefit of the Per Diem

Earlier this year I wrote a post entitled “Critical Steps to Reducing Small Business Travel Expenses”. In it I made the case for using four simple strategies to reducing travel expenses for small business owners. One of those suggestions included implementing a daily Per Diem instead of asking individuals to justify their daily expenditures on meals and other miscellaneous items. Recently, a small business customer of mine brought up using Per Diem after reading my post and wanted to share his thoughts on how it worked.

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?

Higher Commissions for Prepaid Orders & Faster Turnover Rate Products

Most companies ignore the benefit of paying a higher commission to salespeople for securing prepaid orders and focusing on faster turnover rate products. These companies simply ignore their daily cost of money and its impact on the product’s gross profit. They fail to account for the company’s financing costs of inventory and the company's costs to finance receivables. For instance, if the product is retained for months on end, the salesperson still gets the same commission. Consequently, if a customer takes 30, 60 or even 90 days to pay an invoice, again the salesperson still gets the same commission. However, doesn’t it just make sense that the company’s sales team should be compensated for ensuring that inventory moves quickly and that customers pay faster? It most certainly does!

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.

Protecting Vendor Interests in Consignment Inventory Agreements

Consignment inventory agreements are an excellent tool to grow your company's market share. They can help retain existing business or be used to pursue and close on new opportunities. However, as the vendor in these agreements, your company must be aware of both the pros and cons of consignment inventory. Granted, your company may see these agreements as essential to winning new business. Regardless, there are some aspects of consignment inventory that must be clearly defined between you and your customer. If not, your company risks losing gross profit on each and every sales transaction.

Small Business Management: Calculating Gross Profit on Sell Price

Calculating gross profit on sell price is a preferred pricing method because it is the exact same reporting structure small businesses use on income statements. The focus is on defining the product’s direct expenses, accounting for the company’s overhead and then using a simple and straightforward calculation. While there are companies, or distributos, that adopt a “cost-plus” pricing model, the more common approach is to determine gross profit within a product’s overall price. So, what are the steps to determining gross profit on sell price?

Product Life Cycle Management: Grow Market Share by Selling at a Loss

Can companies adopting product life cycle management strategies actually grow market share by selling at a loss? Well, while conventional wisdom states that products & services must derive a profit, there are some cases where companies intentionally sell at a loss. For these companies, selling at a loss implies they must at some point either raise prices or lower costs, right? Well, not exactly. While some companies know they’ll be able to secure lower costs at a later date through increased volume, some companies merely sell at a loss in the hopes that their customers will accept a price increase later. Unfortunately, this isn’t wise and leads to customers buying on price and not on a product’s features & benefits. Therefore, is there an instance within product life cycle management where selling at a loss makes sense, even if the company never changes its price or reduces its costs? Surprisingly, there is!