Archive for May, 2007
This week I spent several days training a contractor’s sales staff. Inevitably during training, the primal, fearful scream of low price comes up.
And it usually sounds like this: “Customers only buy low price - how can we compete?”
My response to that scream has three parts to it:
1) Price is meaningless…without value
2) Communicating value is the contractor’s burden
3) Customers only pay within their market’s price range
1) Price is meaningless…without value
It’s true. Price only matters when customers know what they’re getting.
Think about this: “Does low price win every time”? Of course not. Because if it did, then only low price contractors would exist.
Let’s put it another way. Imagine a janitorial market where the average price per square foot is $1.10 per year.
In this hypothetical scenario, LazyBoy Cleaning (my made-up company) comes in to town and starts pricing janitorial bids at $0.25 per square foot, per year.
Any poor customer who hires LazyBoy Cleaning will be sorely surprised to find that for our $0.25 my brother and I only come into their building twice per month and empty one trash can each. And that’s all.
The moral of LazyBoy Cleaning is that customers expect something in return - for whatever they’re paying. Their money in exchange for value. Now customers may not pay much, but they’re still expecting something in return.
Separating value from price makes price meaningless. It’s what customers get for their money that matters to them.
2) Communicating value is the contractor’s burden
Customers often have a hard time figuring out the value contractors will provide.
As contractors we’d like to imagine that customers look into our souls and select us every time because we’re nice people and darn it, we deserve more business.
So much for fantasy.
Since customers have the money, it’s the contractors’ responsibility to communicate what customers get in exchange for that money.
If contractors don’t communicate value, customers have an easy out. They use price to choose. Who can blame them? It’s right there in front of them. All the contractors provide pricing. It’s numerical. Low number wins.
So, like it or not, contractors have the responsibility of value communication. That’s what contractors’ proposals are for.
3) Customers only pay within their market’s price range
Customers buy services in a marketplace made up of a range of prices. That range comes from contractors’ pricing to a specific bid. A customer looks at those prices, and voila! They have their market price range - top, middle and bottom.
No matter how wonderful a contractor’s service is, customers won’t pay outside that market range. Customers, constrained by budgets, use that market range for what they should, could or might pay.
The good news for contractors
Each market range has a top end. And if a contractor can successfully communicate their value to a customer, they’re in position to win the contract at the premium end of the pricing range.
And it’s a rare and wonderful day when a contractor is the sole bidder. It does happen, I’ve heard.
In the final analysis
Contractors win or lose bids on their ability to communicate value in the bid process.
The first step is to figure out what customers value. Then what price customers are willing to pay for it.
How well do you communicate value?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: selling, proposals, low price
May 24th, 2007
Imagine you’re in a job interview. You want the job. The interviewer needs to hire someone to fill an open position. Simple enough.
In the beginning, the interviewer tells you lots of things. Making statements about what the job entails. Stating the needed qualifications and credentials.
And then, after 45 minutes or so, the interviewer shuts up. Stops talking. Sits there. Waiting for you to reply.
The Problem: RFPs without Questions
This is what happens to a surprisingly large number of Request for Proposals (RFP). In these RFPs, customers make lots of statements, but forget to ask questions.
Don’t laugh. In the last three weeks I’ve come across several RFPs, each for multi-million dollar contracts for airports, universities, etc. No questions in these RFPs. Just statement after statement after statement.
Why So Many Statements in RFPs?
Simply put (yes, it’s an over simplification), RFPs try to accomplish three things:
1) Provide legal Kevlar to protect customers from lawsuits
2) Provide legal ammunition against contractors’ non-performance
3) Provide enough information (specifications) for contractors to price their bids: see Apples Playing on a Field
What’s missing in that list is “Helping customers make the best contractor choice”.
Why are RFP Questions Important?
The RFP is the opportunity for a mutually beneficial match between customer and contractor. One that meets both their needs.
However, that requires specific information from the contractor for the customer to chose. Not generic brochure, ad copy stuff. But specifics.
RFP questions give that specificity. They focus contractors’ responses. Giving customers the essential info they need to chose wisely.
An RFP is really an Interview in Writing
The process behind an RFP looks like this:
1) A customer asks (via RFP) a number of contractors to submit a proposal so one can be contracted for work.
2) Contractors want the work. They submit their RFP responses to the customer.
3) The customer decides.
OK, sometimes customers use an RFP to boil down a list of contractors to a few for a presentation.
But in all respects, the RFP is a written interview.
Contractors are being interviewed, even when RFPs only have statements.
How to Respond to Questionless RFPs?
Write the customers’ questions for them. Here’s one way:
1) Imagine the customer is interviewing you.
2) When reading the RFP’s statements, think what the customer is asking specifically
3) What is the customer trying to find out? What are they afraid about? What could go wrong?
3) Write down those questions - from the customer’s perspective
4) Now, answer those questions - from your (contractor’s) perspective
5) Answer specifically - who will be doing what, when and how
If you’re feeling brave, you might consider starting each of your sections with that imagined question. It’ll certainly give your responses more bite and focus.
What questionless RFPs have you come across?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: proposal writing, RFP
May 17th, 2007
Tolkien created wonderful character names like Gollum, Gandalf, and Gimli. These names belong to a unique world. When you hear them you know where you are.
Same is true for customers. They use specific names in their worlds. Here’s the problem. If you use the wrong name with a customer, they think you’re from another world.
They’re thinking you:
a) don’t know their business -or-
b) don’t care to (which is even worse)
Obviously this is not how you want customers thinking about you.
Getting it Wrong in Speech
You might get away with mismatching customers names for a little while when speaking with them. Although they’ll look at you sideways when you call their “employees”, “tenants”.
Watchout in Proposals
Beware when mismatching names in your proposals. It’s as obvious to customers as a black widow spider on an angel food cake. And as jarring.
Get it wrong on paper and you’ve seriously hurt your chances of winning the bid.
Names: The Short List
Here are a few names customers use for:
- Structure -aka- building, facility, property, plant, etc.
- Structure user -aka- employee, tenant, staff, etc.
- Your service worker (Janitorial) -aka- cleaner, custodian, janitor, etc.
- Your service worker (Security) -aka- guard, officer, security guard, etc.
Which Names to Use
Typically, names are specific to a vertical market. Customers use the names everyone in their industry does. For example, in the commercial office market it’s “property”, “tenant”, “janitor”, and “officer”.
Preparing for 1st Customer Meeting?
Scan their website, and look for the names they use. If not found on the web, use market specific names in the meeting. And keep your ears open. Catch the names they use, and align. Now you’re bonding.
Writing Proposals
Always scan the Request for Proposal (RFP) for the names they use. Always match those names exactly in your responses.
Names in Schizophrenic RFPs
In some RFPs, customers start by using one name, then switch to another later on, i.e. going from “guard” to “officer”.
What do you do?
Use the name that’s most frequently used in the RFP, and commonly used in the vertical market.
Names with Different Decision Makers
What if different decision makers, in the same company, use different names?
What do you do?
Match names with the decision maker who will manage your service. They’re the one who is seen as the expert within their company. So all your written (and verbal) communication had better match the names that person uses.
What customer names do you use?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: proposal writing, RFP, selling
May 10th, 2007
Business improvement (aka change) is a hostage to subtext.
Change doesn’t occur until subtext becomes text.
You know what subtext is. It’s when we say “No”, but mean “Yes”. It’s the elephant in the room no one talks about. It’s any Harold Pinter play. Subtext is what’s really going on.
And many (most?) times in business we aren’t talking about what’s really going on. To our employees, our customers, our business, or our markets.
Why are we in the dark?
Maybe we’re not aware of what’s going on. We’re too close, it’s too familar.
Or, maybe we are aware. But through habit, laziness, or both we decide not to be. Groupthink is comfortable. It has lower stress levels, better career path, higher compensation. And best of all - we don’t have to do anything.
Either way, subtext is the first, and often major, obstacle to change.
Until we acknowledge the truth of the current moment, warts and all, we can’t find our will or strength to change anything. Much less expect others to join in.
In the filled, silenced conference room, why don’t we answer the CEO’s question when asked “what’s broken?”
Subtext-to-Text
Non-fiction writers bring subtext to text.
That’s what they do. They see what’s going on through intuition, experience or research, and they put it into text. They do it because literally (pun apology) no one else is talking about it the way they see it.
Good non-fiction writers move a large piece of subtext to text.
Subtext Seth - An Example
Seth Godin , author of seven bestselling business books, identifies what’s going on in business behavior and places it on the table. He puts it in conversation. Then challenges readers towards action.
Of course, we don’t always take action. But before we can consider which action to take, we have to become aware.
Which makes subtext-to-text the required first step for any change to occur.
Here’s an example: ads, junk mail and spam. Those unasked for, repetitive, interruptions.
Seth’s book, Permission Marketing said what we all feel about ads. He brought our attention to the irritation and annoyance. He reminded us about advertising’s ineffectiveness. He said what we all were thinking.
Why hadn’t anyone done this before?
Because it was subtext. All of us had accepted it. We grumbled, but decided to stay unaware.
Inside, we knew interruption marketing hurts our customers and our business. We knew it was true. Because we couldn’t stand getting it at home, on TV, in our physical and digital mailboxes.
Seth brought the subtext of interruption marketing into the text of awareness. It had to happen in that order. Someone had to do it - thank you Seth.
Now we can figure out how to market with permission. To boldly go…
True Change - Big & Little
Change begins with seeing things the way they are.
And there are many things we really don’t want to see; about ourselves, our business, or the world.
However, when we decide to make a change, bringing subtext up to text is the literal first step.
What was the last subtext you freed from captivity?
~~~~~~
Chris Arlen
President, Service Performance
Technorati: change, permission marketing, Seth Godin
May 1st, 2007
