Posts filed under 'Selling'
An article in today’s New York Times describes a possible change in the way federal contracts are awarded, and it specifically calls out facility service contracts.
Plan to Seek Use of U.S. Contracts as a Wage Lever
The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.
By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.
Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases. (read the full article)
How might this effect Facility Service Contractors?
Is this good or bad for contractors, those going after federal contracts? Why?
Obviously, this is for federal contracts only….at the moment. If this change were successful with federal contracts, would city, county and state be far behind?
What about the private sector? Specifically high profile firms like those in consumer goods, banks and academic institutions. Their purchasing decisions already pay attention to maintaining a good public image.
I’ve started asking contractors what they think about this change and here’s the first response.
I think it would be great if we could all compete on an even playing field with hours, wages and benefits set in advance. I believe our company (IH Services) provides the type of work environment, management expertise and forward thinking that could get us more contracts in this environment. We do not have employment violations because we follow the rules, not like some of our competitors.
Taylor M. Bruce, Jr., President, I H Services, Inc.
What are your thoughts?
What do you think? Share your comments in this post. I’m very interested to hear your perspective on the future.
~~~~~~~~~~~~~
Chris Arlen
President, Revenue IQ
February 26th, 2010
Is the only benefit of sales personnel their ability to secure a signed contract?
Consider this; you’re the one responsible for bringing on new business, you’re boss oversees your sales efforts as well as all other business performance.
As a result, your boss looks at the bottom line performance of sales, which means what’s been sold this month.
But when you don’t hit all the expected sales goals for the month, can your sales efforts still add value to your firm?
That would be a resounding yes. Read further.
Benefits Beyond Signed Contracts
Here’s how sales efforts add value beyond signed contracts, they can:
- Develop customer relationships for continued contact after the bid process, and that:
- Gain the pre-bid info needed to win the contract
- Build brand reputation through a great showing as a 2nd place finish in the bid process
- Gain industry knowledge of market pricing & common issues facing other prospects
- Raise customer awareness to your firm’s abilities as a potential alternate
Marketing through Selling
These benefits are significant to contract service firms.
Why? Because traditionally many of these activities would be carried out by a fully staffed marketing department.
However, the norm for contractors in the facility service industry is to carry selling personnel, and not specialized marketing resources. So, marketing falls on the shoulders of the sales resources.
Gaining Recognition for Marketing-Selling Efforts
This academic understanding probably doesn’t help you with your boss.
Here are a few thoughts about how to bring your boss up to speed about your contributions that don’t immediately show up in signed contracts.
1) Make it Personal
Bring your prospects in to meet face-to-face with your boss, either to your offices or at a lunch. Even though these prospects may not have signed a contract you can make it tangible for your boss by showing these people really exist.
Your prospects will appreciate the time and effort you’re showing them when they’re not an immediate contract. That’s relationship building, isn’t it?
2) Take it to the Trade show
Bring your boss to a trade show where your prospective customers are exhibiting. Let your prospects know you’re coming so they’ll be aware.
Introducing your boss to your prospects at their trade show will definitely make it more real for your boss. Additionally, your prospects will be that much more impressed with your commitment by coming yourself and bringing your boss.
3) Create a Pipeline Scale
Moving prospects along a path to an eventual signed contract can take years.
So define the steps it takes to get them there, and then show your boss so she/he understands the steps in the process.
Define the major steps, three minimum, but no more than five. Keep it so your boss can easily understand. Clarify in writing, and in your mind, what it means when a prospect is in a particular stage so there’s a minimum of ambiguity.
Color code the thing, or assign symbols, or name levels. Whatever it takes to make your boss understand quickly and easily where prospects are in the process. Remember, your boss is busy with many other aspects of business performance as well as monitoring your sales.
4) Report Pipeline Status Frequently
Frequently and routinely publish and report on the status of prospects in your pipeline.
This means creating a simple 1-page pipeline report (of course tracking status within your CRM, ACT or Outlook) and presenting briefly but concisely in regular meetings with your boss. Best not to wait for a quarterly review. Better to present monthly, if not weekly.
5) Don’t Fake It
Save yourself the aggravation of over reporting a false optimism. Be brutally honest with yourself first. Then report that concisely to your boss.
Once you recognize the true state of prospects in your pipeline, you’ll be motivated to take action and won’t have to wait for your boss to tell you to.
Good luck & good selling (inside and out)
~~~~~~~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
February 18th, 2010
I asked a contractor-friend of mine what his biggest pain in contract sales was.
His answer was “not getting the opportunity to make a presentation after submitting a proposal in response to an RFP.” After all, he’d spend 20+ hours preparing a proposal and then not get the chance to present.
Wasn’t there an implied reciprocity with customers that he’d at least get the chance to present it in person? He felt he should be showcasing his firm’s differentiation, he had the better service and knew he was cost competitive.
He knew how important making the presentation was because he measured it. When his firm was able to make a presentation they won 88% of the time (and that’s very impressive).
However, when his firm didn’t get to present, they only won 15% of the bids (less than half the industry average*).
So, it’s obvious. Get more presentation opportunities.
But customers didn’t always see it his way – they saw it their way.
How to Get More Presentations
The number of presentation opportunities you get is determined by two factors:
1) Your customer wasn’t planning to allow a presentation – no matter how many hoops contractors had to jump through
-or-
2) You, as the contractor, didn’t make the cut. The customer judged, and they judged you lacking.
Overly simplistic, yes, but this is reality. Let’s look at each of these and see what can be done.
1) Your customer didn’t allow presentations
This happens because:
1.1) Inexperienced customer – they’re too green and didn’t know they should have held a presentation (doesn’t happen often, but it does happen)
-or-
1.2) Customer intentionally chose not to hold presentations, because:
* They decided to make a decision solely on the submitted proposal
-or-
* They were not really going to make a change, but had to fulfill a rebid compliance issue. In other words, they were going through the motions and it was a Hollow RFP.
What to do if a customer wasn’t going to allow presentations?
Even a small increase in the number of presentations can reap huge rewards. And you know there are no sure things, but consider trying the following. These tactics are in 2 scenarios, depending on your situation:
Scenario A) They’re not likely to change their minds and allow presentations:
* Get out before you spend the time and effort writing up a proposal. This means qualifying the heck out of them up front, which really means:
* Asking tough questions during your first contact and getting firm, unambiguous answers to how they work their bid processes
* Asserting yourself to get their commitment to hearing your presentation if you provide a proposal
* Doing both the above without upsetting the customer contact and making an enemy for life
-or-
Scenario B) You believe you can change their minds:
* Get them to see the value in holding presentations. Of course, if you persuade them to take your presentation you’re also probably getting your competition the opportunity too. But why not? Your persuasive aren’t you?
2) What to do if you didn’t make the cut?
Unfortunately, this probably happens more often than our egos care to believe.
The good news is that it means the customer was at least going to hold presentations. And it’s also good news in that contractors can work to improve this area.
If you don’t make the customer’s short list for presentations:
* Get outside yourself. Have new eyes to look at your proposal responses and get their help.
* You can do the above with a team of trusted colleagues from your firm. Task them with reviewing, rating and critiquing your latest proposals. Heads up: this path can be political and time consuming although it won’t cost you anything.
* Get an outside consultant to do an assessment (a bit of self-serving promotion here) to find areas of improvement. Heads up: this will mean investing money, but it can happen faster and with a greater insight into the industry than your in-house colleagues may have.
* The bottom line in this situation is to improve the persuasiveness of your proposal document. As importantly, to improve your sales intelligence gathering skills to acquire the essential customer info needed for a persuasive proposal.
RFPs always lead somewhere
It’s true, but you just may not want to go where they lead. So to the best of your ability, figure that out at the start. Then if you do decide to take up the challenge, make sure you’re doing it with the best chance of success.
Good Luck
* This is a very rough industry average based on an informal survey we did several years ago. If you think it’s a good idea to recheck that number and would like to participate in a new survey, let me know. If there’s enough interest we’ll try it again.
~~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
February 9th, 2010
Here’s a customer-contractor situation that, although it doesn’t happen too frequently, is extremely dicey when it does.
Your customer wants a non-contract service from you, but the project isn’t in their budget.
To pay for your project they need an amount from you so they can find a place to allocate that unplanned spend.
You provide an estimate to be billed on actual per-unit-pricing because you know the scope of this particular service varies hugely. Not because you’re a poor estimator or a sloppy provider, but because customers always get excited and want more, or your customers’ end-users want more.
Either way, your scope typically increases substantially from the original estimate and that’s why you provide pricing based on a per hour or item basis.
But here’s the rub. Your customer took your estimate as an absolute, and communicated it upstairs for approval. Without your knowledge your estimate is now a fixed fee.
Sure enough, you get started with your non-contract service and your customer gets excited and scope expands.
You believe it’s all covered because you priced it on a unit cost and your customer is happily increasing scope.
Unfortunately, once the work is done and your bill arrives, your customer changes from ectastic with your results to letting you in on their little failing. Your estimate became their not to exceed budget.
Customers do that sometimes. Either because they feel they can’t get their pet projects funded, or don’t want to upset their bosses with a larger, more conservative number in the first place.
To keep it under the radar your customer presents the financial picture in it’s most humble light. They figure they can sort it out after the fact. And of course that means you’ll help them figure it out.
What to do?
At this point in time almost every solution will be uncomfortable, for you and/or your customer.
The following are some possible ways out, but they’re not for everyone. If any of these make you feel uncomfortable, by all means skip them.
Bill overage onto 2nd smaller invoice
Spreading actual amounts above the estimate onto a second smaller project your customer can get through on a different Purchase Order (PO). Customers usually have other projects and some will have a little left over space on another PO.
Of course you only take this approach with your direct customer’s full knowledge and approval.
Carry overage onto 2nd project
Hold off billing for the overage on this project and include it on the next project. Ask your customer to guarantee the next project and get a start date. However, if projects are competitively bid it’ll be tough to cover overage costs this way.
And again, you only take this approach with your direct customer’s full knowledge and approval.
Eat the overage & not bill
You can take the loss and not recapture your billing. It’s the least palatable for you but may be required depending on your customer relationship. Also, the size of the overage will also dictate whether you can live with this option.
If you go this route, make sure your customer knows what you’re doing. Hopefully it’ll be worth the brownie points.
Hold fast & bill full amount
This may be the least palatable for your customer. But if you submit your bill with your written proposal that clearly states billed per actual unit then you’re telling the customer “you made the mistake, you sort it out”.
This option depends on your customer relationship and the overage amount in question. Also, even after approval, your payment may take a while to get paid if your customer is no longer willing to shepherd it through their A/P process.
Educate & communicate with a hammer before doing the work
The best solution is always to avoid the problem in the first place. When asked to provide a pricing, consider your customer may likely consider that a budget amount. Since you can’t reasonably provide a fixed amount, you’ll need to educate the customer to why you’re pricing the work on a unit basis, to bill on actual incurred:
Try:
- Communicating the variables beyond your control
- In person or on the phone, explicity cover the per unit pricing & how those variables impact total spend
- Always confirming everything in a written proposal/estimate
- Adding text to your proposal/pricing confirmation in bold & caps THIS IS AN ESTIMATE, NOT A FIXED PRICE, BILLING ON ACTUAL INCURRED
No Guarantees
Customers sometimes are wild, unfathomable beings. As contractors we can only do our best. In this budget vs. estimate situation, being proactive and a good communicator is your best defense.
~~~~~~~~~
Chris Arlen
President, Revenue-IQ
February 1st, 2010
Frequent buyers are your existing customers, those already under a base contract for an on-going service.
Base contracts provide revenue, non-contract services (aka project work, TAGs, etc.) provide profits.
Customers under contract are as close to a captive audience as contractors will ever get. You have a relationship, you’re already in their A/P system, and you have credibility (hopefully). Why not sell more of the profitable work?
Most contractors say they do focus on selling to existing customers. But you can bet it’s more of a piecemeal process. One that responds to customers’ requests rather than a proactive approach.
A World Class Frequent Buyer Program
Nordstrom doesn’t waste selling opportunities. It builds stronger, more loyal customer bonds by selling more rather than timidly waiting around.
Nordstrom’s Fashion Rewards is an example of a world class frequent buyer program.
Yes, Nordstrom sells to consumers. Yes, they have tens of thousands of items to sell and millions of consumers to sell to.
But they recognize the lifetime value of customers. They recognize their need to capture as much of their customers’ spend as possible.
Worthy aspirations for every service contractor. A frequent buyer program must be:
- Formal & thought out, not someting tossed off between emails
- Branded & marketed with a name, logo, tagline & collateral
- Committed to the long-term with incentives for your sales staff, as well as customers
3 Keys to a Frequent Buyer Program
Here’s a quick look at three keys to help contractors build their own frequent buyer program modelled after Nordstrom’s Fashion Rewards.
1) Incentivize customers to make more non-contract purchases
How NORDSTROM does it:
Nordstrom’s Level 1 in their Fashion Rewards program provides customers $20 gift certificates for every 2,000 reward points earned.
Points are earned in Nordstrom purchases. They’re tracked and monitored using data from the Nordstrom credit or MOD cards. These are the only forms of purchase allowed in the program. (A MOD card is a Nordstrom card that direct debits from a customer’s bank account, just like a bank’s debit card, except the MOD is good only at Nordstrom. Customers voluntarily sign up for those $20 certificates.)
SERVICE CONTRACTORS can:
Easily track and monitor non-contract services as it’s included in your monthly billing.
Create a points system (like Nordstrom) or a dollar volume discount, rewarding total spend with lower per unit pricing. This is your Level 1 incentives.
Make it easy and visual for customers to tell what they’ve earned. Is that a quarterly email or printout with certificate?
2) Increase customers rewards for reaching higher purchasing levels
How NORDSTROM does it:
Customers reach Nordstrom’s Level 2,3, and 4 when their annual purchases reach a certain volume. For example, in addition to the $20 certificates, incentives at Level 2 include:
- Free trial size beauty products (no purchase needed)
- Nordstrom On Call to a Peronal Stylist for help with last-minute wardrobe needs, gift shopping, etc.
- Complimentary shipping for online or in store purchases (actually a charge with a $10 refund on the next statement,clever huh?)
- Early access to shop the Nordstrom Anniversary sale
- Invitation to the Private Holiday Shopping Party
SERVICE CONTRACTORS can:
For customers attaining specified purchasing goals, consider:
- Labelling the level attained, make it special, such as Most-Favored Client status, or Corporate Platinum level
- Providing a valued service free (possibly one the customer had never before used)
- Provide faster access to your account service rep, either through more frequent site visits, emails or calls
- Include customer contact on your firm’s Customer Advisory Board
- Invite customer to new product/technology demos your suppliers put on
- Invite customer to participate in service roundtables hosted by your trade associations
3) Plan customer incentives for specific times of the year.
How NORDSTROM does it:
Nordstrom has a yearly calendar identifying dates were double and triple reward points can be earned. These are in addition to regular purchases throughout the year.
These dates appear aimed at the slower summer season as well as increasing buying during retail’s high season over the holidays.
SERVICE CONTRACTORS can:
If there are identifiable purchase seasons, incentivize the off season, as well as the high season for those types of purchases.
The profitability of non-contract services will offset a volume discount offered.
And as importantly, the more services customers buy, the more they’ll value you as a service partner.
The critical part is to schedule out special times where your discounts are greater than usual. You need to get customers’ attention, as Nordstrom does with its Double and Triple reward points boldly marked on their collateral’s calendar.
Getting Started
Once a comprehensive Frequent Buyer Program is developed, branded and formalized, your ready to take it to your customers.
Customize a portion of the program for each contract customer. Make the minor changes to incentives, services, schedule and fees required for a particular customer. The goal here is to have a program that’s 97% static and 3% customized.
~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
January 25th, 2010
The old game for selling throws lots against the wall and something sticks – numbers comparing thrown to stuck.
And it’s still true, something sticks, eventually. Even one becomes the justification to continue the old game.
It’s the cost/benefit ratio that’s changed. The benefit keeps getting smaller relative to the cost.
But the throwing continues, because as it’s gotten less effective, it’s gotten more efficient. Grind-em-out salespeople, mail order catalogs and spam only take the rare few sales to keep playing.
Their throwing no longer produces the expected results, even from just a few years ago. Unfortunately, it only takes one to feed the habit.
The new game
Selling is still a numbers game, but a new one.
The numbers are humans (salespeople) working with other humans (customers) who are a lot smarter in 2010 than customers sold to in the 1950s.
Because customers are in different stages of their buying cycle, most salespeople need to be busy with more than one.
The new numbers game is based on:
- Salespeople not selling in ways that make themselves feel less than human
-> customers buy from other humans
- Customers are more valuable to salespeople over the long-term
-> high customer turnover is death to easy sales
- Salespeople build relationships with a customer through the accumulation of all that customer’s experiences with that salesperson & company
-> salespeople are branded as much as their company
- Salespeople engage customers to help solve customers’ problems & realize customers’ benefits
-> what else are salespeople for?
- Customers live in stages of their buying cycle
-> not salespeople’s selling cycle
Playing the new numbers game
Sellers counsel customers through stages of the buying cycle.
To play the new game requires that salespeople:
- Are known, respected & trusted by customers
- Understand customers’ buying cycle
- Identify where customers are in that cycle
- Empathize with customers’ buying situation (risks, gains, fears, etc.)
- Make continual effort towards all the above
What game are you playing?
~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
January 15th, 2010
Service contractors can should learn a great deal from web marketers.
Web marketers are data diligent and process aware.
They’re focused on “conversions” – points in their online process that are measurable, lead to a tangible next step, and eventual sale.
They track performance at those points and with that data continually tweak presentation and offering for incremental improvements.
Conversion results are regularly reviewed and improvements continuously made.
Stuck in the mud
Compared to web marketers, service contractors are prehistoric. They focus on “advances” – those major steps in the selling/buying process.
Contractors rarely define their new business process at the granular level, not to mention measuring and improving steps in the process. It’s almost entirely done on an ad hoc basis.
Conversions in contract service sales
Switching one’s thinking from “advances” to “conversions” can increase sales by focusing on the data and process in manageable chunks.
Then focusing on accomplishing the smaller goal directly in front of you.
It helps that you can see what needs to be improved and have the measurements to assess results.
Start at the web
The truth is that almost every prospective customer will check out a contractor’s web site. Even if the contractor was referred by a trusted source. Web site’s are a quick and easy check. Who doesn’t Google or Bing?
Starting at the web for conversions makes sense.
The thought and discipline used for online conversions can be used with customers off line as you begin selling.
Getting started on the web requires setting up web analytics, which…
…requires defining your conversion goals, which…
…requires defining customers’ actions in measurable ways, which…
…fully shows all the steps you need to secure contracts, which…
…provides metrics to track results and identify improvement areas, and which…
…shows the improvements you need to make on your web site and in your sales process.
All these conversion activities are valuable to the off line sales process. Even more so when you consider that sales don’t occur until the end of the process. A lot of effort, time and money can be spent up front and then lost in the end because the final off line steps were weak.
A quick look
The following graphic highlights common conversion points that can be tracked. Once tracked, they identify easily managed improvement projects. What’s to stop you?
How are your conversion points?
~~~~~~~~~~
Chris Arlen
President, Revenue IQ
January 7th, 2010
I’d like to thank you for making 2009 a successful and productive year for Revenue IQ. As the weekly blog for facility service contractors, it’s the only sales posting (I know of) that’s not for beginners. You, dear reader, are interested in post graduate education in sales and marketing.
And with those flattering words, here are the best posts of this year. These are the “best” because:
a) They received the most page visits as tracked by Google Analytics
b) They generated the most reader feedback (via email, hoping to get you to comment online in 2010)
c) I felt they were the best out of what I’d written
The Best of Revenue IQ in 2009
These are grouped for easy navigation but aren’t in any ranked order. Enjoy, and please let me know of any topics you’d like explored in 2010.
Selling, Proposals & Presentations
Customers & Buying
Marketing
Happy Holidays and a healthy and prosperous 2010
~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
December 22nd, 2009
Last week’s post, The Greatest Sales Question, drew numerous reader responses. A number of them were around a common sales issue facing service contractors.
Why aren’t customers more (open / responsive / interested / curious / concerned) about how to improve their service?
To simplify this would be to say:
Why won’t customers talk with me about how I can help them? -or- Why won’t customers let me sell them?
It’s All in the Mind of the Customer
Sales and marketing activities must be (should be) dictated by the customer’s place in their buying cycle.
That’s in their buying cycle. Not where we are in our selling cycle.
Recognizing where customers’ minds are focused is a sales essential.
It’s like going fishing and standing at the river but not knowing:
- What kind of fish you’re fishing for
- What they eat
- Where they’re safe from predators
- Where they hang out to conserve energy
- What kind of food they eat
- What part of the river they find their food in
The 1,000 Word Picture
Describing how to deal with this sales situation can be very wordy. So I’m presenting the following graphic to put a voice to where customers are at, relative to our wanting to sell them. It’s all about hearing their voice, and then directing our sales and marketing actions accordingly.
Here’s the graphic:
What to Do
If you haven’t already read the 3 Stages of the Buying Cycle you should. It lists specific sales and marketing actions to move customers towards selecting your firm depending on where they’re at.
By starting from where the customer is at, your actions will be more effective and eventually produce the results you want, whether that’s:
- A returned call or email
- An introductory appointment
- Getting on their bid list
- Making their short list in an RFP competition
- Securing their contract
- Re-securing their contract
~~~~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
December 11th, 2009
What’s important to you?
Or put another way, what is your single most pressing challenge today?
That pressing challenge is the one keeping you from getting or enjoying what’s important to you.
So, that’s it. That’s the question – what is your single most pressing challenge today?
As a reader of Revenue-IQ you are……my customer. You’re developing new business and/or holding onto what you already have.
I want to know because…
The more I know about your challenges, the better I can share industry and market knowledge that might not have come across your radar screen.
Your Answer
Not looking for a perfectly worded, formatted or even rational answer from you. Just what’s on your mind regarding getting new, and/or keeping existing service contracts.
How to Answer
Post Comments Online
Try posting your comments on this blog. Use an anonymous screen name if you like. Here’s a quick
8 Easy Steps to Start Posting Comments.
Email Me
If commenting online isn’t for you, just email me at carlen@serviceperformance.
Heads up: If this is the first time you’re emailing me, you’ll have to prove your human. That is, I use SpamArrest, a web service that asks you one time to verify you’re not a spam mail robot.
~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
December 3rd, 2009
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