Hold Onto What Youve Got
You probably spend a great deal of your time looking for new
customers or clients. However, are you sure your doing
enough to hold onto the ones you've got. One of the least
costly ways to grow your business is to get customers to
come back and buy more of your product or service. How many customers have you lost this month? I'm sure it's
not something you want to think about too much, however it's
inevitable that you'll lose customers and clients for a
whole range of reasons many of which are out with your
control. I read a survey some years ago that suggested customers
leave a business for four basic reasons:
14% leave because they're dissatisfied with the quality of
the product or service,
9% leave because of price, 5% leave for other reasons
and a whacking great 72% leave because of "supplier
indifference". Too many suppliers give customers the impression that they
don't care about repeat business. I've stayed in hotels,
dealt with banks and building societies and dealt with
suppliers who didn't seem to care whether I came back or
not. We need to continually let our customers know we care about
them. We need to keep in touch, write to them, send them
information and occasionally 'phone them. When they contact
us we need to make sure we sound warm and friendly, pleased
to hear from them, efficient and maybe even look and sound
like we're fun to do business with.
It's not a lot different from our personal relationships. If
we don't keep telling
the people close to us how much we care and keep writing and
'phoning, then we shouldn't be too surprised if they leave
us one day. Use logic and emotion to keep your customers. Give them the
best products and service and give great value for money.
However, always remember, your competitors will be doing
much the same thing. The difference will be determined by
how you communicate with your customers on an emotional
level, either face to face, on the 'phone, by letter or
email. I bought a new car from a local dealer a few years ago. I've
never heard from them since. A dealer for the same brand of
car fifty miles away writes regularly with details of
special offers. They send a regular news letter and the
occasional very courteous 'phone call. I'm going to change
my car soon, guess who'll be getting the sale? Discover how you can generate more business without having
to cold call! Alan Fairweather is the author of "How to get More Sales
without Selling" This book is packed with practical things
that you can do to ? get customers to come to you .
Click here now
http://www.howtogetmoresales.com/Without%20Selling.htm
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Why cutting your prices is like cutting your own throat.
It's the oldest sales tactic in the world?
And one of the worst?
Price cutting.
Before you make your next price cut in the face of sales resistance, the question you have to ask yourself is not, "Does it work?," but rather, "Can you live with the bargain?"
Here's a pop quiz: you ? in your role as salesperson ? go for the close. You ask the prospect to make a commitment and they don't. What's your first response?
Well, if you are like most people in a selling situation ? whether you are the hired sales guy or the CEO-your first response to people not buying-for whatever the reason-is to say, "Would you buy if? ?," and the "if" is always some variant of, "...if the price was lower?"
And you ask it almost before you ask them WHY they won't buy.
And it's not only when they tell you they won't buy. Many people in sales mentally calculate the discount into their profit calculations, and start discounting even before they try to close the deal. In almost every sales job that I've worked in, people faced with an end-of-quarter crunch to "make the numbers" start playing the discount game. In many industries, it's become common practice to give away all the profits, and many customers are trained to expect it.
Trouble is, people are not usually 'not buying' because your price is too high.
If you've taken the trouble to establish the real of your product or service, you ? and your prospect ? already know that the value far exceeds the price you are asking. (If not, you better go back and rethink the math.)
So if they are saying "no," or simply not saying "yes," it either means they are experienced buyers waiting for you to spontaneously cut your price, or it means they just do not see a sufficiently compelling value?yet.
Cutting your prices will almost never lead to new sales if they didn't plan on buying in the first place, and the effect on your profits can be devastating. Follow these numbers:
Let's say you sell a product for $100. Your cost is $70. That means it carries a thirty percent margin-your profit is $30. Now, to make a sale, you are "forced" to cut your price by twenty percent. Your new selling price is $80. All things being equal, your profit is now $10-instead of $30. That means a 20% price reduction cost you 66% of your profits.
TWO-THIRDS OF YOUR PROFITS for a 20% price reduction!
Cut your price much more and your profit quickly goes to zero. Or lower.
And that's not even the worst of it.
Once you lower prices, they tend to stay low. That $100 widget you just sold for $80? Well, sorry to say, but it's now an $80 widget.
Even more damaging, your like-minded competitors will almost definitely lower their prices, and you, my friend, are in a price war. To win in this scenario, you need deep pockets to sustain a losing position for the duration.
So for these three reasons-depressed profit margins, permanently lowered prices, and the devastation of a price war-it's a bad idea to lower your prices to buy business-regardless of the economic climate.
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Here's an interesting example. One of my clients-a software company-had a hot prospect who didn't want to buy the typical contract for software maintenance. They felt that 18% per year was just too expensive, and wanted to pay ad hoc instead.
My client knew this was a bad idea. Customers without maintenance contracts typically become your worst. Why? Because they know it's going to cost them each time they pick up the phone for support, so they try not to. Thus, they don't get the right level of service, they don't know how to use the product and they don't get the results they paid for in the first place.
And even though it's their fault for skimping, they point the finger at you and badmouth your company.
On my advice, my client offered the prospect a four year non-cancelable maintenance contract, and gave them the first year for free. And although it was a 25 percent reduction in total purchase price, it never lowered the per year pricing, and it actually guaranteed more than the prospect's original commitment.
Plus, my client locked in that customer for four full years, during which time they rightly expect to sell them additional products and services.
Price cutting is the "lazy man's" response when it's hard to make sales. Unfortunately, it may not boost total revenues, and results in drastically lowered profits on the sales that do get made. Often the outcome includes permanently reduced prices and margins, and even a price war, which has disastrous consequences for all players, except very deep-pocketed ones.
Sell the value instead. Spend the time to discover what your prospect is trying to accomplish, and make sure your product or service helps them do that. Then establish the quantifiable financial impact, and sell them that. Or package, bundle or go for the long-term, multi-year commitment.
There are other approaches that not only maintain price levels, but even support higher ones. To get an overview of those approaches, visit http://www.lemberg.com/tipsandtools.html and download "5 tactics to avoid price cutting."
--PL
© Paul Lemberg. All rights reserved
Reprint rights freely given. Please click here for details.
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