Archive for July, 2009
At times selling service contracts can be as much fun as slamming your fingers in a drawer – over and over and over again.
That painful repetition is a sign of being mentally stuck.
Here’s a koan to help shift that mindset. (Koan: a story, dialogue, question, or statement, generally containing aspects that are inaccessible to rational understanding, yet may be accessible to intuition.)
What would you talk about with prospects if:
1. You had to talk to prospects, you couldn’t not talk to them
2. You were handed appointments with prospects interested in your company, you’re pre-qualified
AND
3. You couldn’t ask for a sale
WHAT WOULD YOU TALK ABOUT?
~~~~~~~~~~~~~~~
Chris Arlen
President
Revenue-IQ
July 22nd, 2009
Welcome to our reality. The U.S. economy is suffering: GDP shrunk 5.5% in Q1 2009 and unemployment rose to 9.5% in June ‘09. No one can predict how deep or how long it might last, but some guesstimates have 10% unemployment by year’s end and 3-5 years before GDP growth returns to normalcy.
The Hit to Facility Service Contractors
An obvious casualty for service contractors was their bottom line . This was brought about by three types of customers.
Expired Customers
These customers were in declining industries (not their fault), or through their performance (their fault), have given up the ghost and are no longer with us.
Once these customers go under, contractors have lost both top and bottom line.
Collaborative Customers
Many customers (the collaborative ones) are working with contractors to lower their price so customers can stay in business (hopefully this means lower scope too).
Contractors who are flexible and creative enough are retaining their business, but with much smaller profit margins.
Opportunistic Customers
However, many more customers are bidding out contracts looking for immediate savings.
These customers may never have developed a partnership with their service contractor, or hadn’t received the expected value for their spend.
Either way, there are exponentially more opportunistic customers than collaborative and expired customers.
Crisis Breeds Opportunities
Service contractors can forget those profit margins from the past (and some would say they were always skinny), and accept the near-term future as profit anorexic.
With that said, contractors should do everything ethically and legally possible to bolster their bottom line. But it ain’t coming back to what it was, not any time soon. So it’s time to adapt.
This current economic climate does provide an opportunity: that of growing the top line.
The Business Strategy – Customer Grab Now
A business strategy for these recessionary times is to gain many new customers now (below normal profit levels) – then hold them until the economy comes around.
When the rising tide starts lifting customers’ profits, so will service contractors’.
That’s anywhere from 1 – 5 years, but it won’t happen all at one time, it’s likely to be a gradual incline over years.
Better to be the incumbent at that time (with the opportunity to turn opportunistic customers into collaborative ones) than trying to to get in from the outside.
Things That Must Be Done
For this strategy to work, all of the following must be done.
* Sales efforts must be more than the normal, pre-recession selling and marketing – use more resources & effort
* Go after as many legitimate bids as possible
* Get used to very lean, low profit contract pricing (make it up on non-contract work)
* Get hyper-precise estimating job costs & pricing
* Understand market pricing intimately
* Once you have the work – manage costs rigorously
* DELIVER EXPECTED VALUE (combination of desired results & process quality, see The Service Ecosystem)
* DELIVER EXPECTED VALUE
* DELIVER EXPECTED VALUE
* DELIVER EXPECTED VALUE (no, these are not typos – it’s that important to deliver the expected value)
* Once you have the work – work to make opportunistic customers collaborative ones
* Work profit margins back up as customers recover, using your performance history as bedrock
Summary
Opportunities are time based, they have their own window.
Bringing on many new customers now, AND DELIVERING EXPECTED VALUE, will provide you more opportunities for rising profit when the economy rebounds.
~~~~~~~~~~
Chris Arlen
President
Revenue-IQ
July 15th, 2009
The following story is fictitious, but you’d have guessed that anyway.
The marketing and selling lessons in it are true AND absolutely essential to marketing and selling anything, but even more true (if that’s possible) for selling contract services.
Here goes…
I’d just moved to a foreign country where I happened to speak, read and write the official language (lucky for me it was English).
While I was settling into my new home and work, I started hearing about something that I absolutely must buy: Yorwin.
My neighbors praised Yorwin.
My colleagues at worked swore by Yorwin.
I saw newspaper and TV ads imploring that I buy Yorwin, telling the story of the greatness that is Yorwin.
I read on the Yorwin web site about the founder and his struggle from poverty to undreamed of wealth and prosperity.
I even received a visit from a Yorwin salesman at work. If I could have gotten a word in edgewise I might have been able to ask my Yorwin questions.
But the salesman was a non-stop river. At 120 words per minute I heard the Yorwin story (already knew it from ads), about the Yorwin founder (already read about him on the website) and the Yorwin community (already overwhelmed by recommendations from neighbors). After the salesman left my office it took me 25 minutes to refocus on my work.
However, at this point in time I was still in the dark. Everyone told me that Yorwin is the name of a company, based on a founder named Yorwin. Everyone knew Yorwin.
So, I admit, I was curious about Yorwin.
But curious about what?
Not the story of Yorwin, that was everywhere.
Not the size and strength of Yorwin.
Not the ubiquity of Yorwin (seeing Yorwin embossed paper towels in public restrooms sealed that perception).
What I Didn’t Know
This is what I didn’t know as a potential buyer:
- What is Yorwin for?
- Why do I need Yorwin?
- What will Yorwin fix for me, that I need fixing?
- How will I feel once I buy Yorwin, whatever it is?
- What is Yorwin going to cost me relative to what I’m getting from it?
I didn’t know the answers to any of these questions. I was numbed.
I was blind to its ads and positive Word of Mouth. I was unenlightened about the value one gains from Yorwin.
In the end, I didn’t buy Yorwin.
Marketing Lessons from Yorwin
There must be a message about value, one that solves customers’ pains, delivers their goals, and does so at a price much less than the cost of NOT fixing those pains or achieving those goals.
This universal message is for the mass audience in a marketplace.
Selling Lessons from Yorwin
The universal marketing message must be revised to fit an individual buyer during the sales process. Otherwise, it’s a hit and miss affair on a buyer by buyer basis.
The only way to target the universal message into a specific buyer is for the salesperson to ask the buyer questions and get explicit answers.
Only then can the salesperson define and communicate value to their buyer.
The Moral of the Story
You can’t sell a company’s wares without communicating the value their offering will provide to a specific buyer’s individual needs. Otherwise, there’s no point for a buyer to buy.
Just remember Yorwin.
~~~~~~~~~~
Chris Arlen
President
Revenue-IQ
July 9th, 2009
