Archive for May, 2010

Your Boat Has a Leak

May 28, 2010

I frequently use the phrase “my boat has a lot of leaks” to convey the number of ways my family wastes money.  But as much as I preach otherwise, the largest “leaks” in my household aren’t Target, JCrew, Earth Fare, or Lowes.

The largest sources of wasted money in my life are the hours and minutes I waste each day.  As I wrote in a recent post, each one of us has a market value.  Boil that market value down to an hourly rate, and you can put a finer point on how much your time is worth. As an example, if you make $150,000 per year, your time is worth $72 per hour.

So the question is, what are you doing with your time?  Are you blowing $150 a day surfing the web and catching up with high school friends on Facebook?   Or are you doing productive work?

If you take the time to look (a suggestion:  write down, at the end of a work day, what you spent your time doing), I’m willing to bet you’ll find a leak or two that you didn’t realize existed.

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Your Customers Know

May 25, 2010

Have you seen this sign?  Its in nearly every hotel bathroom in the country (I haven’t been in a Ritz or Four Seasons lately, but something tells me they refrain).  On the surface, you might be tempted to applaud the hotel industry’s new found sensitivity to waste, their desire to (as they say at the top of the sign) “Save Our Planet”.

But I’m not buying it.  I don’t think they give a damn about the environment.  I think they care about one thing:  Reducing Operating Costs.  What really bothers me about this campaign is that they think I’m stupid enough to believe it, and they’re willing to exploit a legitimate cause to guilt me into action.

Why hide their true motivation?  Why not write something like this: “Washing towels costs this hotel a lot of money.  Like everything else, we pass these costs on to you by increasing nightly rates.  Help us keep our rates reasonable by using your towel more than once, like you do at home.  Oh, and by the way, its good for the environment too.”

What’s the moral to this story?  Customers know when you’re being genuine.  They know when you pretend to care but you really don’t.  So just be honest with them.  They’ll respect you a lot more for it.

Fish or Cut Bait

May 21, 2010

Nobody likes rejection.  But the sooner you come to terms with the fact that not everybody’s going to like you (and not everybody’s going to buy from you), the happier you’ll be.  Our lives are cluttered with pending transactions, pending consummated relationships (in the business sense), some of which we allow to linger for weeks and months.

It can be difficult to confront the situation, to sift through your list of opportunities and find those that are real, those that are true.   We are taught to look at the positive side of things, to see the glass half full.  But face it:  some of the customers you call on will never buy from you, and some of the proposals you have on the table will never close.

Your time is worth something, so don’t throw it away on deals you only wish would close.  Force the issue.  Go for the “no”.  Get these make believe deals off of your radar screen.  The sooner you get to an answer, the sooner you can move on to genuine opportunities that deserve your undivided attention.

Find A Mentor

May 18, 2010

I hate to break it you, but everything you have ever done, or will ever do, has been done before.  As Ecclesiastes 1:9 says, “there is nothing new under the sun” (and that verse, by the way, was written almost three thousand years ago).

Don’t be despondent.  This is actually good news.  It means that someone (or several thousand someones) out there has gone through what you’re going through right now, and has made it through to the other side, successfully.  That someone is actually looking for somebody to pass down this knowledge to, someone whom they can mentor (you).

You may be tempted to think that you don’t need a mentor, that you can get along just fine without any help.  You may be right, but consider this:  Almost everyone who accomplished great things, was mentored by someone who had been there before.

Doug Flutie mentored Drew Brees.  Ralph Waldo Emerson mentored Henry David Thoreau.  Bing Crosby mentored Frank Sinatra.  Eddie Merckx mentored Lance Armstrong.  And the list goes on.

Life is too hard go it alone, especially if you don’t have to.  Make it a little easier by finding a mentor.

Please Stop Talking

May 14, 2010

Who is always the least interesting person at a party?  The guy who talks about himself all the time.  And who do people find interesting?  The girl who asks questions, shows genuine interest, and is engaged in the conversation.

Most sales people (including me) love to hear themselves talk.  Its hard to ask open-ended questions and wait for your customer to finish, intently taking in their answers.  Instead of listening, we’re preparing the rebuttal, anxious to take over the conversation so that we can dive into our pitch.

In a recent post, Wil Brawley @ Schedulefly.com suggests that asking “why” like a five year old forces you to justify the decisions you make – and make adjustments to your business based on the answers you come up with.  His post reminded me of how important it is to ask questions, and how valuable (although difficult) it is to let your customer do the talking.

Try this:  The next time you talk to someone (in a social or business setting), make a concerted effort to ask questions and listen intently.  You may be surprised by how much you’ve been missing.

The Whores of Corporate America

May 11, 2010

We are the Whores of Corporate America.  We succumb to outside pressure and do unnatural things in order to close business to satisfy an artificial time-line.  It starts innocently enough, with an offering of a discount on some small transaction that we’re being pushed to bring in before the end of the month.  But as time goes on, we, our managers, and customers get used to the “end of the month” or “end of the quarter” deal.  We come to expect it.

The problem, of course, with this lowest-common-denominator sales tactic is that it sends the wrong message to our customers.  Instead of conveying to our customers that they always get a fair price for the goods or services we provide, we inadvertently tell them that if they wait us out, they’ll get a better price.  And so, instead of transactions closing naturally, in line with an actual need, our deals get bunched up at the end of a reporting period.  Stress levels go up, prices come down – all because of some day that we’ve decided is more important than others.

The next time you decide to drop your pants to get a deal within the month or quarter, consider the implications.  What are you conditioning your customer to expect on future deals?  How are you changing their buying habits and negotiating tactics?  Is this permanent (and believe me it will be permanent) price action the precedent you want to set?

Before you break down and concede on price, just to meet some artificially important date, remember:  You’ll need business next quarter too.

The Idiot Millionaire

May 7, 2010

You know him, the Idiot Millionaire.  He makes more money than you (maybe more than anyone you know), works half as hard as you, and is not nearly as intelligent.  You are baffled by his success, and if you let yourself admit it, you’re a little jealous of his accomplishments.

What’s so frustrating about the Idiot Millionaire is that he’s where you think you should be, living your life. It’s like God’s playing a cruel joke on you, where the talentless cretins rule the world, while those who should (on paper) achieve greatness, never realize their potential.

But here’s the thing – the Idiot Millionaire has one thing you don’t have:  balls.  The Idiot Millionaire may be an idiot, its true, but your “smarts” are exactly what’s holding you back.  Instead of going for it, you analyze the situation until you talk yourself out of following your dreams, launching the business, or writing the book.  And so, while you “think”, the Idiot Millionaire “does”.

This weekend, do yourself a favor.  Dust off your Big Book of Ideas and pick something, anything, that you think is worth pursuing and take the first step.  This is how all millionaires (Idiot or not) began their own journey to success, and I can assure you, none of them had any more talent than you do.

More for the Same

May 4, 2010

The most popular customer negotiating tactic since in the beginning of time is The Same for Less (TSfL). That is to say, “I’ll buy whatever your selling, if you reduce the price.”  The easy answer, assuming you have adequate margin to absorb this request, is “Yes”.  “Yes” takes the deal off the table, “Yes” helps the customer feel like they got a good deal, and “Yes” allows you to move on to another opportunity.

But a better tactic for you, your company, and maybe even your customer is More for the Same (MftS), which usually appears as a counter-offer to TSfL.  The basic (and obvious) premise behind the MftS tactic is that instead of lowering your price, you offer your customer additional goods or services for the same price.  It requires guts and creativity, but offers some interesting benefits:

  • Price (per unit) Protection
  • Top Line/Commissionable Revenue Protection
  • An Opportunity to Grow Wallet Share by “seeding” other products or services

To illustrate the Revenue and Commision Protection benefits, consider the following examples:

Example 1:  You have provided a customer with a quote for a $1,000,000 solution @ 50% gross margin.  Your customer asks for 10% off of this quote in order to close the deal.  You agree.

After discounting, the new price is $900,000, your gross margin falls to 44.4%, and your revenue falls by $100k.

Example 2: Instead of agreeing to a price reduction of $100k, you offer to add $100k of additional goods and services to your quote at no additional charge.  Your customer agrees.

After this concession, your price remains $1,000,000, your gross margin drops to 45% (assuming an equivalent margin of the conceded product), and the revenue you recognize, for quota attainment and revenue retirement, is not impacted.

It isn’t easy, but if you are successful at changing your customer’s buying habits from TSfL to MftS, you’ll wind up retiring more revenue and hitting your quota sooner than ever before.


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