Posts filed under 'Selling'
The bathwater. The baby. New is better.
Too frequently a “new” sales practice comes out that’s the next answer for every sales woe (and you should buy the book and attend the seminar too).
With the “new” comes the exhortation that the “old” was a failure, or else why would you need the “new”?
But some of the old sales practices (used appropriately) are still valid, and required. For example, the sales process in the book “Never Cold Call Again
” needs a few “cold calls” in the beginning to get started. That in spite of its clever title.
Starting a new opt-in, permission-based mailing? You’ll need help getting the attention of potential subscribers. An effective way is to use online ads or direct mailings offering promotions to subscribe. Yes, the new millennium still has a place for ads and direct mail.
Even though online commerce has changed many things, there’s still a need for the intelligent use of traditional sales and marketing.
The (really) new sales practice: MarSpecTing
Here’s my attempt at marrying the best of the old with the new: MarSpecTing. Making up a new word? Yes. Hypocritical? Yes. Clever title? No.
MarSpecTing is for individual sales people. It combines selling 2.0 with the relevant bits of old-timey selling. It’s evolutionary, not revolutionary. And as you may have guessed, MarSpecTing is a combination of:
- Marketing-by-salesperson
- Prospecting
- Networking
As you’d expect, prospecting and networking are legacies from old-timey selling – though they’re flashier now because of the web (twitter, LinkedIn, etc.).
And as most facility service contractors don’t have marketing departments, that leaves marketing out in the cold. MarSpecTing fixes that by folding marketing into individual sales practices. Voila! Marketing-by-salesperson.
But marketing-by-salesperson is only a part of MarSpecTing, and with the other practices can help sales people achieve their individual sales goals.
Marketing-by-salesperson
WHAT: One-way messages out to the anonymous masses in your marketplace. Maybe you’ll reach a qualified prospect, maybe not. Align your expectations with reality: marketing never made a sale, it can lead to, but not finalize the deal.
BENEFITS:
- Raise prospects’ awareness
- Establish your credibility
- Earn the opportunity of sales speaks with prospects
HOW:
- Ads
- Direct mail & email blasts
- Digital newsletters
- Seminars
- Publishing articles, blogs, sharing subject matter expertise
- Trade shows & sponsorships
- PR
AVOID: Misplaced expectations & overspending (match investments with measurable goals)
Prospecting
WHAT: Seeking the first LIVE contact with a qualified prospect for a two-way conversation. Phone calls, web meetings and IM chat can allow you to more efficiently identify a prospect from a suspect. However, most facility service sales require a face-to-face at some point to get down to the nitty-gritty of data gathering.
BENEFITS:
- Luck out with the “right-place, right-time” prospect who is actively seeking what you provide right now!
- Begin developing long-term relationships
- Gather data on individual prospects
HOW:
- Telemarketing for face-to-face appointments
- Smokestack for drop-ins (old-timey definition: drive around until you see a smoke stack, then drive in)
AVOID: Wasting prospects time by NOT knowing anything about them and/or NOT having a concise positioning statement (why would they spend their time with you?)
NETWORKING
WHAT: Accessing qualified prospects through the people you know. It’s critical that you’ve defined your targets very well. Knowing who you want to talk to drives who you may know that knows them.
BENEFITS:
- More face-to-face warm meetings & returned calls
- Access higher ups within prospects’ org
- Understand the inner politics, situation & lay of land inside prospects’ firms
HOW:
- Social media (LinkedIn, Facebook, twitter, etc.)
- Professional networking groups
- Traditional networking events (Chamber of Commerce, Rotary, etc.)
AVOID: Falling into social media’s sink hole of squandered time & DON’T throw handfuls of business cards into the air (ala confetti) in the stadium when your home team scores a touchdown.
MarSpecTing is a comprehensive approach to individual selling. One that adds marketing to the salesperson’s traditional activities of prospecting and networking.
The new millennium ain’t like the old one, but that doesn’t mean leaving behind that which works. It only means being selective, intelligent and working diligently. But you’re doing that, right?
Good Luck
~~~~~~~~~~~~~
Chris Arlen
President, Revenue IQ
May 12th, 2010
Sales people have strange beliefs.
Not you.
Some of them though.
They must have, judging by their actions with customers.
Here are a few interesting ones. What do you think?
#1 Customers share their most compelling needs
- The truth is NOT: customers will not share with you their most compelling needs
- Because their most compelling needs are to fix their biggest failures
- Customers are extremely reluctant to have their biggest failures publicly examined & discussed
- Because these failures are often personal – they blew it and badly too
- Who would want to put their own job at risk in that manner?
So, why do sales people only gather information from the customers’ manager?
Why aren’t sales people talking with Procurement, Safety, or other departments, as well as other suppliers to learn as much of the inside scoop as they can?
#2 Customers admit they’ve made a bad supplier choice
- The truth is NOT: customers do not admit they’ve made a bad supplier choice
- First, it’s hard for customers to tell if their supplier choice was an absolute failure unless and until there is an absolute failure – absent that it’s just degrees of poor choice
- Second, customers can beat up their bad-choice supplier to try for some degree of performance & compliance
- Third, see #1 above
So, why do sales people neglect to deal with this proactively in their proposals?
Why don’t they raises customers’ curiosity about all suppliers’ abilities (expect their own because of the evidence they proactively provide)?
Why don’t they attack by stating their strengths that highlights their competitors’ weaknesses?
#3 Customers see black & white differences between competitors
- The truth is NOT: customers do not see black & white differences between you & your competitors
- Customers don’t have to drink a supplier’s kool-aid
- They’re exposed to many suppliers pitching different wonder solutions
- All suppliers (at a certain level) have roughly similar programs in quality, hiring, training, safety & technology
- Customers see these as antes into the supplier-bidding game – suppliers have to have them to play
- As a result, customers see a gray scale of differences between you & competitors
So, why do suppliers stubbornly believe their competitive differences are as wide as the Grand Canyon, when in reality customers see their differences as narrow as a gutter?
#4 Customers & RFPs tell suppliers the way things really are
- The truth is NOT: customers do not tell suppliers the way things really are, nor do their RFPs
- Customers withhold the true state of their situation
- Out of self-protection – they fear suppliers will take advantage of their weaknesses
- Out of loyalty – a desire to protect their firm’s reputation for saintliness
- Out of self-preservation – see #1 above
So why do sales people willingly accept the first thing their told?
Instead of investigating deeper into the more compelling and persuasive truth?
I’m certain you don’t have these unbelievable beliefs, and that you bring a healthy dose of skepticism and curiosity.
~~~~~~~~~~~~~~~~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
May 3rd, 2010
Business is simple. It can be hard, but it’s simple…to understand.
Take selling service contracts.
Or, managing those who sell them.
Or, increasing sales.
It all comes down to dots.
These are your secured sales contracts.
If last year’s, they were revenue.
If this year’s, they’re sales goals.
These are bids submitted to secure contracts.
This is your win ratio by number of contracts bid.
Work harder? Smarter?
Your secured contracts really look like this.
One large, several medium, and many smaller.
More whales, tuna or sardines?
These are bids submitted to secure contracts.
This is your win ratio by dollar volume of contracts.
Productive pipeline producing persuasive winners?
Just sales dots.
~~~~~~~~~~~~~
Chris Arlen
President, Revenue IQ
April 20th, 2010
Moving up the business food chain requires understanding nuances, whether as an employee inside or salesperson from the outside.
Yet there are business practices that occur 1,000s of times and we botch them as if we have our head in a bucket.
Simple little things, but with huge impacts.
Like this one: What’s the difference between a meeting and a presentation?
The question is rarely asked and virtually never answered.
You’re probably thinking “why does it matter?” Stick with me here because at the bottom of this post there are 6 Tips for Persuasive Presentations. But before that, let’s explore this idea a little further.
The hair splitting between meeting and presentation becomes more important the more sophisticated your world becomes.
Those who don’t understand the difference between a meeting and a presentation inevitably:
1) Treat a presentation like a meeting and end up making awful presentations that fail miserably (sayonara sale)
-or-
2) Treat a meeting like a presentation and end up irritating participants and wasting their time (adiós funding)
Each meeting or presentation is a time-based opportunity.
You have the chance of working with others who can impact your business. Who knows when these individuals may be around, or in their current capacity, or frame of mind?
But if you’re holding a meeting when you should be making a presentation – or presenting when you should be holding a meeting – you’ve just wasted an opportunity.
What’s the Difference?
Although you can present information in a meeting, and meet for a presentation, as business practices they exist for different reasons and have different strategies for successful outcomes.
Unfortunately, the words meeting and presentation are not well defined in dictionaries for business. Most of us can’t make a clear distinction in practice either.
As a starting point of departure, here’s a couple of dictionary definitions:
Meeting: an assembly for a common purpose
Presentation: Something presented as a descriptive or persuasive account (as by a salesman of a product)
While these definitions don’t help much, they do provide a step towards defining meetings and presentations in a way that enables us to be more successful.
Meeting: Defined as a Business Practice
Business meetings are held for many reasons, i.e. to inform, delegate, gain consensus, train, etc. Their purpose differs.
Because meetings are held for many different reasons, they’re best defined as a business practice, rather than by their purpose.
Therefore, meetings are something that’s done, without always having the same purpose. And that’s what makes a meeting different from a presentation.
Presentation: Defined by its Business Purpose
A presentation has only one purpose; to make a sale.
Literally, to get your customer (audience) to take the action you want, such as:
- Selecting your firm in a bid process
- Funding your proposed project
- Adding headcount or responsibilities
So, a presentation’s purpose is to make a sale. It’s single purpose is what makes a presentation qualitatively different from a meeting.
In a sale, you have to persuade the audience to select your offering – a much larger proposition that attending a meeting.
Persuasion requires making an emotional connection with the audience and supporting their choice with logic.
All sales decisions are based on emotion and justified with facts. The heart and head connection must be made for the sale to occur.
And that’s what a presentation does, it’s where we connect the audience’s head and heart to our desired outcome.
6 Tips for Persuasive Presentations
As a presentation’s purpose is to make a sale – and a sale requires persuading the audience – it’s obvious that a persuasive presentation is required. Towards that end, here are 6 tips to help:
#1 Design for an emotional appeal
Design your presentations intentionally for an emotional appeal. This means adding a little excitement, a little warm and fuzzy, a scary thought to some old school thinking.
#2 Tell stories & show pictures
Stories and imagery are far more effective than volumes of text and numbers for connecting emotionally with your audience. This doesn’t mean littering your presentation with kittens and bunnies because they’re cute.
#3 Don’t wimp out on passion during the presentation
Make an emotional connection with your audience during the presentation. This means speaking with passion about the important stuff, which can’t be everything because you’ll wear out your audience and yourself. Please, no crocodile tears, ever.
#4 Engage your audience in a conversation
Get your audience asking you questions, which means you’ll have to prep them for that, and then be open to go where they want to. This is a far better way of connecting with them than guessing what they want. Remember, when they’re talking, they’re interested.
#5 Create presentations that can be navigated non-lineally
Design your presentations to enable your audience to direct you to the info they want. They’ll be far more engaged when they get their questions answered when they want to hear/see it.
#6 Help your audience envision your solution
Specifically, in your descriptions, stories and images create a mental picture of your offering solving the audience’s problems and making their life easier. Isn’t this what they’re buying?
Good luck and do the right thing at the right time.
~~~~~~~~~~~~~~~
Chris Arlen
President, Revenue IQ
April 1st, 2010
60,000 = a rough ballpark* for the number of words a customer will read when reviewing four to six contractors’ sales proposals.
1 = the number of contractors a customer will select as their final choice in a bid process.
Of course other factors go into customers’ selections. However, the bulk of the details they’ll receive are in proposal documents.
Are 60,000 words a lot for customers?
Like everyone else, customers are busy. Selecting a contractor, while important, is time consuming and requires a ton of extra reading. Consider this, there are:
- 4,543 words in The U.S. Constitution
- 7,500 words, or less in a typical short story
- 60,000 to 80,000 in a typical mystery novel
- 418,053 words in “Gone with the Wind”
- 770,000+ words in The King James Bible
There are a lot of words swimming around in customers’ heads when trying to select a contractor. Excel, though great for comparing numbers on pricing and staffing, doesn’t capture text nuances well.
What’s it mean for selling service contracts?
Contractors’ sales proposals must do the heavy lifting. It’s the place to communicate their unique service value.
Winning a bid isn’t based on using the fewest words or the most. Inundating customers with 1,000s of wasted words, bludgeoning them with data, sends readers skipping to the pricing page in an attempt to stay awake.
The answer is balance
There are two parts to this kind of balance in sales proposal development.
First, there is balance needed in providing RFP answers in as concise and reader-friendly manner as possible – respecting customers’ 60,000 word reading load.
Second, there is balance needed in presenting your solution consistently in answers to customers’ RFP questions.
#1 Concise & reader-friendly sales proposals
The oft-quoted “less is more” wisdom is rarely followed. It takes confidence in your sales people to believe you truly understand customers’ service pains and business issues.
When sales people are in doubt, in goes the kitchen sink.
Relevant, schmelevant. Any and all proposal content is jammed into the Word document, resulting in proposals running needlessly to 20,000 words, or more.
Even when you’re confident you understand the customer’s situation, your proposal needs to be reader friendly.
This means breaking up long text paragraphs into smaller, digestible bites, by using headings, bullets and tables. Simple flowcharts and process maps quickly and more effectively communicate information than pages of dense text.
#2 Answering various RFP questions with a unified solution
This is a sophisticated balancing act, but one that pays hugely when done. There’s an opportunity for contractors to consistently present their service solution when answering RFP questions.
While contractors must always answer the question, it can be done in a way that repeatedly presents a unified, though-out solution, one that gains traction in customers’ memories.
Not all RFP questions are the same, there are two types: Qualification and Application.
Qualification Questions
These questions ask for generic data about the contractor bidder, such as:
- How long have you been in business?
- How many employees to you have?
- What was your last 3 years’ revenue? etc.
Contractor answers are simple and straightforward. The answers are what they are, and the info should be readily at hand.
As you can imagine, qualification questions are rarely the determining factor in contractor selection. If a contractor is being allowed to bid, it’s hoped they’ve been pre-qualified, which isn’t always the case.
Application Questions
Customers ask these questions to learn how a contractor will work for them, specifically how that contractor will be structured, their processes, measurements, tools and delivery.
In short, customers are asking “tell me how you plan to do what you do, but for me, here at my sites!”
To persuasively answer application questions, contractors must have designed their solution for that particular customer situation.
This means, contractors must:
- Lastly, answer the application RFP questions by referencing their unique service solution for that customer, but before that, contractors must…
- Design their unique service solution for that customer (like a blueprint), but before that, contractors must…
- Analyze that customer’s service pains & business situation, but before that, contractors must…
You can see that your sales people must be gathering the real information before the RFP comes out and Procurement drops the cone-of-silence over customer contacts.
Inherent obstacle presenting a complex solution
The last obstacle, and perhaps the largest, is to present a relatively complex solution in the proposal document. There are many moving parts in a service solution, and those customer-asked for details can quickly lose customers – remember their 60,000 word reading load.
Overcoming this obstacle is the final key to successful proposal development, and we’ll take a look at it in our next blog.
______________________________
* Based on a quick, informal survey I made of the word count in a number of contractors’ proposals to RFPs. On average these proposals contained between 10,000 to 15,000 words.
~~~~~~~~~~~~~~~~~~
Chris Arlen
President, Revenue IQ
March 26th, 2010
As a consultant, I’ve seen an unintentional decision playing out among large service contractors (those with dedicated sales resources) and smaller firms as well. Most of these firms are committed to improving sales, but they’re focused almost exclusively on improving efficiency, not effectiveness.
Sales effectiveness and efficiency can sound like vague generalities, but deciding which to improve first greatly affects the size of results and when they’ll be seen.
Yet most service contractors say they’re working on both at the same time – they’re multitasking to improve sales effectiveness and efficiency.
Multitasking is a myth
Multitasking, whether in computers (single core processors) or humans, is in reality a swapping of attention/activity. It’s one thing, then another, then back to the first, giving the appearance of two things being done simultaneously.
Unfortunately, human multitasking doesn’t produce the expected results. The brain shows severe interference when even very simple tasks are performed at the same time.
And that’s the case with service contractors. The efforts to improve sales are not really getting done as successfully as they could if addressed one at a time, in order.
Definitions first
Before making a case for placing either sales effectiveness or efficiency first, let’s define them.
Effectiveness is the capability of producing the desired sales result, i.e. winning the bid, getting an appointment or a return call, etc.
Efficiency is making good use of sales resources, not wasting them, which translates to producing lots of sales activities, i.e. lots of bids, cold calls, direct mailings, etc.
Simply put, effectiveness is about winning each attempt regardless of what it takes, and efficiency is about producing a lot of attempts with minimal effort or waste.
The point is…
The purpose of both sales effectiveness and efficiency is to raise revenue – more is better, and earlier is better than later.
But because resources are always limited, a choice has to be made of which aspect to work on first: effectiveness or efficiency.
Effectiveness first
Logic wins out.
By improving effectiveness first, more of the early opportunities that present themselves will be won. Efficiency should be improved too, but only after effectiveness has been raised to optimal levels.
By making the intentional choice to first improve effectiveness, contractors will:
- See larger revenue faster
- Fund later improvements for the efficiency of sales activities
- Increase results (revenue) exponentially as a higher win ratio is more efficiently generated (when efficiency is optimized after effectiveness)
How to improve Effectiveness
- Uncover the voice of your customer via qualitative research (this is what your ideal customer is seeking & values)
- Acquire feedback from lost bids, closed customer accounts, departing employees
- Upgrade proposal content, templates & appearance (from informational to persuasive proposals)
- Invest in sales training
How to improve Efficiency
- Automate proposal production, such as with SalesProposals.com (this is an affiliate partner)
- Manage prospect / customer data in CRM (Customer Relationship Management) solutions via online services or company applications
- Automate tracking & reporting of sales activities
- Measure throughput, activity & effectiveness
Early, fast wins through intentional decisions
Get intentional about which aspect of your sales efforts you improve first. You’ll be positioned for the larger, earlier, and easier wins. That equates to record revenue increases.
~~~~~~~~~~~~~~
Chris Arlen
President, Revenue-IQ
* Acquire feedback from lost bids, closed customer accounts, departing employees
March 19th, 2010
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
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