Free Advice

Have a plan to increase revenues

Grow your top line and see the bottom line grow. This article will cover strategies for non-retail businesses. A future article will cover retail.

Get Busy

Often ignored and yet a key issue is the needed activity to generate the sales you want. This means figure out your market and how many calls it takes to generate a new customer. For many businesses this means working backwards.

Here’s an example. A few years ago a client was putting together a sales plan for her sales reps. Nobody had any idea of how to determine what it took to get a new customer. We started with the end result, a new customer.

• How many prospective customers (those who have a problem and who have agreed to listen to your solution) do you have to ask to buy in order to get a new customer? In this case, let’s assume two. In other words, our closing ratio is 50%.
• How many people must you see to determine if they have a problem you can fix and who are willing to listen to your solution? Let’s assume it takes three interviews to find a solvable problem.
• In order to see somebody on a sales call, how many people must you talk to on the telephone? Again, let’s say it’s three. This means for every three people you reach on the phone, one will agree to see you.
• Finally, how many phone calls must you make to reach the decision maker? (We’re assuming you’re always meeting with the economic buyer. The person who can say yes and issue a check, PO or start the project.) This is where it gets tricky because cold calls may take many more calls than a referral. We’ll figure these are all cold calls and it takes 10 times dialing the phone to reach a decision maker.

Working backwards we can determine that we generate a new customer for every two we ask to buy. Since it takes three interviews to get someone to ask, we must have six interviews. Because one in three phone conversations turns into an interview we must talk to 18 decision makers. To get to those 18 decision makers we must dial the phone 180 times (10:1 ratio).

Determine your target market, where they are and how to reach them. If you’re like the example above, every time you dial the phone 180 times you’ll get a sale. Improve your telephone skills and/or in-person skills and see the results improve. Remember, those 180 dials means a lot of voice mail messages (if you even care to leave them). Want to improve your ratios dramatically? Get better at getting referrals.

Your most valuable resource

Existing customers are your goldmine. They generate repeat business, referrals and references. But they can’t do any of this if you don’t stay in touch with them.

Auto Consultants Northwest is located in Edmonds, on Highway 99. ACNW is an auto broker. They help their customers locate and purchase any make and model of car, new or used. They are a buying service and appeal to the 20% or so of the population who don’t want to go through either the negotiating process at a dealership or trying to be the first one on the lot every Saturday morning to get the loss-leader that’s in the paper. Their goal is to provide a very fair price along with exceptional service.

A database of over 8,000 satisfied customers provides good news and bad news. It’s great to have all those customers and a challenge to keep in touch, especially since they have the normal employee turnover.

Ed Wilder is one of the owners and has been in charge of the marketing. Here’s a few of things Ed has done:

• Send out a monthly e-mail postcard with some interesting facts and a reminder of exactly what ACNW does.
• Publish a periodic newsletter with car facts, tips and strategies.
• Mail an annual holiday card.
• Regular telephone calls from the sales team.

The goal is to have your happy customers immediately call you when they need what you have.  In the case of ACNW, it works. A lot of repeat business and referrals. There are a lot of ways to get this done. Last month I outlined how a lumberyard used special offer flyers to keep their customers up-to-date. Industrial suppliers have used faxes, e-mails, newsletters and more to keep in touch. The bottom is to do something consistently. It’s almost like when politicians say that there’s no such thing as bad publicity. People have short memories for details but not for names. You want your name to be the one that pops up when the need arises

Be thorough

You must understand your sales cycle. Diagram it with your sales team. Detail how many in-person calls it takes before you can generate a proposal or quote. Take leadership and manage the process, but don’t shortcut.

As mentioned above, make sure you are dealing with the economic buyer (the decision maker). Don’t waste your time on people who can say no but not yes. Sometimes you’re misled so you have to ask the right questions. Those include: Can you sign a check or authorize payment? And, can you implement the project or place the order without anyone else’s approval? 

It’s important that you have an agreement on what is needed before you propose or quote. This is called agreement in principle or conceptual agreement. You get this when both buyer and seller understand the problem, the solution and value to solving it.

Of course your solution must provide more value than the cost. Why do people drive around with a car that leaks a little oil? Sometimes it’s an older car that’s not worth the money to fix it. You can be the best mechanic in town but the economics aren’t there to get the job.

We live in very turbulent times. It’s tough for a lot of businesses as the economy reels, world events cause concern and a lot of decisions are on hold. This doesn’t mean roll up in a ball and hibernate. Just the opposite, get your activity up, pay special attention to your happy customers and pay attention to all the details. Most important, help your customer understand the problem you’re solving, the implication to solving it and the value they will receive via the outcome.

© Copyright John Martinka 2003. All rights reserved.