Tag Archives: Pricing Strategy

Why It’s NEVER the Economy, ALWAYS YOUR Fault

THAT’S a pretty broad statement, isn’t it?  After all, don’t you read pretty much every day how the Economy is struggling?  Now, before you get yourself on the defensive, read on…

“People just aren’t _______ (buying, eating out, playing, advertising, insert your product here) these days.  The Economy is tough.”

How many business people (or YOU?)  have said this as one of the challenges they are facing with their businesses?

But, the fact is, in just about EVERY case, it’s not a matter of some external “Economy” causing individual businesses to not do as well they had hoped; it is because the strategy and tactics to handle the situation were not sound.

Whether you are in IT or Interior Design, you are rarely the only competitor out there.   So, even if the pie is shrinking, you can increase your share of the pie.

How Do You Increase Your Share of a Shrinking Pie?

1.  Change your Marketing Strategy & Tactics

– Do the research on why your customers buy from you; why they buy from your competitors, and then adjust your marketing to make your offering more attractive to more prospects (NOT WITH PRICE).

 – Stop targeting “anyone who breathes, eats, has a house, etc” and start targeting your “Bullseye” customer.  This is in perfect harmony with the point right above; because almost everyone has ideal customers who are doing business with a competitor.

2.   Become more systematic in your Sales Process

 – Either learn how to sell better yourself (NOT ideal); or hire better Salespeople by actually having a process to understand their behavioral styles and motivations, rather than hiring them because they are a “friend,” “a friend of a friend,” or “just a doggone nice person.” (by the way, if you own a restaurant, your servers are salespeople. That is NOT bad, because a good salesperson ALWAYS has their customers’ best interests at heart)

– Even if you DO hire a great Salesperson/Server, have a script and a presentation that they use with leads and prospects.  Having a consistent script has been proven to increase productivity by 200% to 300% (yes, that’s right).

3.   Close your doors so customers stay with you longer and buy more.

–  Have a customer loyalty program based on data and research, not what YOU think will work.

– TALK TO THEM more.  The minute your customer gives you money is the WORST time to move on to the next prospect.  Instead, it is the BEST time for you to communicate with them about the amazing choice they made and then what else you can offer.

– Offer a better warranty/guarantee.  One of my clients was constantly hearing from his returning customers that the reason for their loyalty was his willingness to stand behind his product AND his work years after their purchase.  Considering how much it costs to get a new customer; we just chalked his warranty work up as marketing and the Return on Investment was AMAZING!

So, the fact is, unless you are on a remote island, with only  you and a few prospects; there ARE buyers out there who will buy your product or service.  Your job is just to get better at getting more of them to come to YOU, instead of your competitors.

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Besides helping business owners create a business that works on its own, without enormous time and stress from the owner; my extensive marketing education AND experience help me work with clients to create unique strategies and tactics that help them profitably increase their share of their target market.

More Sales + More Profits + More Free Time = VERY HAPPY and RELAXED Business Owner.  Last year, for example, a client of mine was able to sell his house, move to his vacation home, and still increase his business by 40%+.

Be ready to have your business TRANSFORMED from OK to Greatness.  Click here and schedule a free 15 minute Strategy Call; where you will get at least 2 new ideas for your business, and we will see if you are ready for the next step.

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A Homeless Mom learns how to convey Value..

As many of you know, I volunteer every Thursday morning at The Star of Hope Homeless Mission; teaching job search, resume-writing, and interview skills to the residents there.  This particular mission is an emergency shelter for women & families; and we have been packed (www.sohmission.org) .

This week, I had a wonderful conversation with a woman who was getting ready for a couple of interviews.    I cannot go into detail, but let’s just say that she has really turned her life around.    The great news is that her husband just landed a temporary job working with computers.  The tough news is that her high-school senior daughter is living with grandma while they are at the homeless mission (not enough room at grandma’s for everyone).

As she was talking, you could clearly see how much this lady wanted a job; so, it was a great opportunity for me to help her with a few lessons:

1.  Consider what your value is; then, believe it.  When she was talking about her interview,  her first thought was to say, “I hope they will pay me $10-12/hour.”    My question to her was: what do you think your skills are WORTH.  For her, as well as many individuals and business owners, you must know exactly what value you can bring to others.   Whatever that number is, believe it!

2.  Once you believe it, then focus on how well you will COMMUNICATE your value.  For this homeless mom; after I asked her what her skills were worth, we worked on how those would be clearly communicated to the interviewer.  One of the biggest things I help both the homeless residents AND business owners with is that your value is not WHAT they can do; it is the benefit others feel they will get from you.  So, instead of saying on your resume’, “I answer phones”; write, “You will find that my Customer Service skills and positive attitude will provide your callers a friendly, helpful voice to serve their needs.” (secret..this also helps with automated screeners and search engines).

3.  PRACTICE with visualization how you will communicate your value.   What I helped this lady understand is that your brain cannot differentiate between vividly imagined experiences and actual experiences (this was a big “a-ha” to her).  And, aren’t we often better when we do something the 5th time versus the first?  So, if you are going into an interview, a sales presentation, or just a networking event; spend some time visualizing the best possible outcome.  Do this when there are no distractions around; and you will be amazed at the power of your mind (and your increased success) when the “real” thing happens.

The fact is: if you are an employee or a business owner, and are not receiving what you believe you are worth; then your next step is to find a way to better define and communicate your value to others.

So, do this simple exercise:

  • Sit down and just start writing down everything you do that has value.
  • When you have done that, then ask yourself how you could communicate each item so that others will see the value in your offering.
  • Finally, spend time visualizing how you will communicate that with those who could benefit from what you offer.

Comment below if you find any “aha’s” between what you have BEEN doing (and perhaps not been getting the results you want); and what you will change going forward.

If You Love Your Business, Let It Go

How many of you are working INCREDIBLY hard, keeping all the pieces of your business together?  Sure, you have a team; but you find it essential that the important decisions are made by you.  After all, your business is your baby!  No one else cares as much about your business as you do. And, if you do not steer the ship, the economy will catch up to you.  Right?

The challenge is…you are not running your business.  Your business is running YOU!  And  it seems like there is no end in sight to this chaos.

So how do you stop this?  You need to “let your business go.”

No, not sell it.  But enlist and/or hire a team to take over  the day-to-day aspects of running the business so that YOU can focus on the Vision and Strategy.

Will your team make mistakes?  Certainly.  But, you can minimize them by using a structured Apprenticeship Program along with a well-developed Operations and Training Manual (including job descriptions and workflow documentation).

Will it take time to write manuals and train the team?  Absolutely.  However, the time that you spend documenting what needs to be done,  and training someone, will be MORE than made up for once you hand off that  task.  Even if the job, for example, takes you 2 hours per week; you could spend 20 hours writing a manual and training someone, and you would be “time positive” in less than 90 days.

And what could you do in your business if you had an extra 104 hours, or 2 ½ weeks every year to work ON your business instead of IN your business?  How happy will your family be (or will YOU be?) if you can get home at a reasonable time in the evening?

So, if you really do love your business, let it go!

Why your Success is Holding You Back

A few months ago, I read a terrific book by Rebel Brown, called Defy Gravity.  In the book, Rebel very eloquently lays out the case that sometimes the way that you achieved success in the past is exactly what is holding you back from future success.    (I recommend that you read the book, as it is full of great insights).

This week, a business owner told me that “the Economy” has really hurt his retail store.  I asked him what he was doing differently now that could help change the tide; that perhaps we could sit down and see what opportunities existed.   After all, I saw that you cannot order products directly from his website (it says “Contact us”).

His response, “I have 30 years of Retail Experience.  You could not teach me anything I do not already know.  The Economy is just bad.”

Uh-oh.  That is a sure sign of the “Gravity” that afflicts so many business owners.  In his mind, he knew what needed to be done; but it was some unchangeable external things which were the problem.  If only those would change….

As a Business Coach, the biggest obstacle I find in clients and prospects is NOT that they do not WANT success.   It is that they do not want to CHANGE THEMSELVES.

And I get it…many of you have built your business to maybe $100k or $500k or $1 Million dollars in revenue; often by pure force of your knowledge, your will and tremendous effort.   However, the business climate is changing; so you must be willing to change your approach to your business.    Try new approaches, even those completely against what you may have done in the past.  Get help from DIFFERENT people, even if they go against everything you think you know.

The best analogy I can give is that many business owners have been standing in sunshine for years.  But, now that it is raining, too many are just assuming that they MUST get wet.   Maybe it is time to get out the Umbrella!

4 ways to Pick Your Prospects to Power Your Profitability

You probably do not need to be told this: some customers are more profitable than others.  If you can learn to pick the RIGHT prospects to be your customers, you will truly accelerate your profitability.

While this is more challenging to do than to say, there are some things you can do in your marketing to bring yourself more profitable customers.

1.  Target those prospects with a bigger reason, or “Why,” they want your product.  This is not a question of how they will use your product.  It is really about the emotions associated with what you sell.    A good example is a landscaper who markets not to people who just want a nice-looking flowerbed; but to the people who want top win “Yard of the Month.”  So, instead of dropping flyers off at the houses with ugly  lawns; they introduce themselves to the people with the BEST lawns in the neighborhood.

2.  Make your Advertising about your most profitable Customer.   I am sitting here looking at numerous ads that are basically a list of items or services.   When you do this, you are BEGGING people to shop you around.  And those people who are looking to “shop” you are very price sensitive.    A construction company that says they do Patios gets less profitability from their customers than the contractor who offers Backyard Entertainment Areas.

3.  Position yourself as an INVESTMENT instead of a purchase.    Interestingly enough, many businesses strip away features and benefits from their offerings to be able to offer (what THEY think is) the lowest price.  Unfortunately, this moves you closer to becoming a purchase instead of an investment; and, when that happens, you end up targeting prospects who are MORE price sensitive.   Wal-Mart can sell bicycles to children who want to ride them around the neighborhood; you should sell bicycles to people who are looking to ride in triathlons.

4.  Focus your marketing on customers for whom your product is a LOW % of their cash flow.  The smaller the percentage; the easier it is for you to get them to “try it out” if they have never used your product/service before.   The key word in this rule:  FOCUS.    This rule is almost never broken intentionally; but because you think that promoting yourself to “as many people as possible” is the way to go.    Whether you have $1,000 or $100,000 to spend on Marketing;  focus your resources on those who can more easily afford more of your product or services.    As an added benefit, once these prospects become your customers: you can increase your profitability by offering them more opportunities to invest in and benefit from your products and services.

In your business, the more you work you do around making sure you are marketing to the RIGHT prospects; the more likely they will come to YOU, and the less work you will do trying to convince them to buy.

Coach Roger’s 9 Question Business Checkup

Just like your body, your business needs to undergo regular checkups to ensure peak performance.  Whether your business is large or small, you must review the overall health of your business at least once every year.

Here are 9 questions you should answer for your “Business Checkup”

  • How do your year-to-date sales compare to those from the last couple of years?  Don’t be satisfied if you managed to match prior years’ sales; because, if sales have stayed the same, then you’ve achieved zero growth.   Given the impact of inflation, this flat growth line is a warning sign for more trouble down the road.
  • What  percentage of your business is from repeat customers? This is important to know because the estimated cost of getting a new customer versus retaining an existing one can be as much as five to one.
  • How long has it been since you offered a new product or service?  Loyal customers like to see you changing and progressing with the times.  If
    you’re stuck for an idea, ask your customers what they need.
  • Have you evaluated your marketing and advertising expenses?  How you look at the money spent in these areas affects your willingness to spend money at all.  Would you look at prescriptions as a waste of money?  Marketing is really about investing in you, your vision, and your company.  The old adage that you must spend money  to make money is true; but you must spend it wisely.  Spend it on ads that are pulling responses and orders; and, if they’re not, maybe you need to change tactics.
  • Do you  know what PR is and how to use it to positively position your business in  the media?  I’ll bet that at least one of your competitors does.
    Nearly every mention of a company or business in the newspapers and magazines is a direct result of publicity efforts.  Being quoted or featured in an article speaks volumes to your clients and readers; who are your potential prospects.  A good PR consultant can do that for you, and show you ways to extend the shelf life of that publicity beyond its publication.
  • Do you do anything special for your regular customers?  You should.  If your customers don’t feel special when coming to you for products of services, why should they remain loyal to you?  Have a customer appreciation day or a special invitation only sale for your regulars.  Create a mailing list of your regulars.  Send occasional post cards or greeting cards for special events or just to keep in touch.  Learn to recognize them on sight and greet them by name when they visit you.
  • How long has it been since you really talked to one of your customers?  Just as you appreciate when your Doctor takes time to talk to you, your customers will appreciate you if you take an interest in their needs.  If you have a service business; have lunch or coffee periodically with some regulars – even if they only contact you once or twice a year.  The personal touch in an impersonal world will be remembered.
  • How is your business doing compared to your competition?  Every company, no matter what the size, has competition – even home-based businesses.  Is their business growing or downsizing? Is their pricing or service better than yours?  If so, what can you tell potential customers about the price difference?  Think about how you can improve your service to meet or exceed your customers’ expectations.
  • Are your employees happy?  Don’t ask them directly; but observe them throughout the day.  Watch, listen and learn.  Employees who like their jobs don’t
    watch the clock for quitting time, aren’t habitually late, don’t have poor body language, don’t spend time on personal phone calls, and don’t look like they never smiled.  Observe how they interact with customers.  Be aware that not everyone is a match for direct contact with the public; so make sure you don’t have an employee who is driving business away.

In the end, you must give your business “regular checkups” to make sure it lives a long, healthy life!

Why you should stop trying to be better at Customer Service

You need to stop trying to be better than everyone else at “Customer Service.”

Is THAT a bold statement?  Yes!

Do I mean it?  Well…partially.

My point is that too many business owners talk about providing great “customer service,”  but fall into one or both of the following traps:

  1. They look at their “customer service” as some generic thing that happens because the owner “cares deeply” about their customers. However, EVERYONE says they offer the best customer service; and how they care more about their customers than anyone else.  But THAT, my blog-reading friends, is a mathematically impossibility.
  2. They set up a customer service differentiator around something that is EXPECTED.  For example,
    1. A mechanic who guarantees that your car is fixed right the first time.
    2. A restauranteur who promises that your fried chicken is hot & fresh.

Both of these are basic expectations, and NOT differentiators.

So what SHOULD you do?

Create a differentiator around your customer service that is:

  1. Specific
  2. More than expected

What are some examples of specific and more than expected customer service?

    1. The auto mechanic who doubles the manufacturer’s warranty.
    2. The restauranteur who guarantees that you will enjoy your meal (even if you are ordering something new).

So, it is not that you should not try to have great Customer Service; rather, you just need to make sure that you can clearly define how your customer service is better with something more than your prospects would expect.

Why You Should Give Your Product Away For FREE

That’s right, I am telling every business owner that their product should be FREE.

HOWEVER (were you hoping I had one of these?), you need to charge for what you do FOR YOUR CUSTOMERS.

How many of you have heard this; but still sell your product and not the benefits?

5 Signs you might still be selling your PRODUCT, and not BENEFITS.

  1. Your price is:  Product Cost multiplied by some number.   This “cost-plus” strategy is clearly product-focussed;
  2. Your customer “flinches,” and you immediately offer a discount.  If you are selling on benefits; then you can be much stronger standing up to this often-used tactic;
  3. Your “Unique Selling Proposition” is your “service” (more on THAT in future BLOGS, so you might want to subscribe);
  4. Your price is what your competitors are charging.  Of course, if you are providing exactly the same benefit as your competitors, then this could be true.  But, if that IS the case, you should change that;
  5. You do not know how you could raise your prices in “this economy.”  When you sell on benefits, raising your prices is a matter of increasing the benefits you provide.

If more than one of these applies; it may be time for you to review exactly what value you provide; and then re-evaluate your pricing strategy.  In future posts, we will talk more about specific ways you can improve your pricing power.

Your Pricing Strategy (or lack therof) Could be Costing You Money

One of the biggest challenges of many business owners I work with is knowing how to properly price their products.   Too many owners believe that the indicator of a good pricing strategy is revenue; however, additional indicators are profit and cash flow.

I have done a LOT of work on both complex and simple pricing strategies.  The more you understand pricing, the better you will be able to actually MAKE MONEY from the products/services you offer.

To help you, here are some quick terms that you should understand; that many businesses owners do not:

  •  Reference Price – This is the price that your customer THINKS your product is worth.  If you are not careful, YOU could set this price incorrectly. For example, if you are advertising consistently with $10 off, 10% off, or some coupon; you could be setting up in your prospect’s mind that your product is only something they should purchase when there is a “deal.”

Or, if you do not know how to differentiate your product from your competitors; you may be stuck with the price THEY set.   For a long time, for example, a 2-Liter of Coke or Pepsi was 99 cents, because of the reference price these players set.

Caution:  once your Reference Price is too low, it takes a lot of education and marketing to convince your market that your product is worth more than that price.

  •  Cannibalization – For those of you that sell more than one item, your pricing for one item could “cannibalize” the sales of another.  If you charge too much for an entree, you may cut out sales of desserts.  If your cost for the shirts are too low, people may buy more shirts to get a “deal”; but buy fewer full-price and higher-margin pants (so you get sales, but your cash flow is low).  This is especially a danger for companies that run coupons and “specials,” as you may create cannibalization impacts that could hurt sales AND cash flow.
  • Stick – One of the easiest ways to get a quick sales boost is to raise your prices. However, because people make choices; not all of your price rise will flow through to the bottom line, as some people will decide not to buy.

 What you must understand with “Stick” is that: some people will immediately decide not to buy based on the price change; others will buy now, but do not come back; and still others will buy, but buy less or move to a cheaper item.  In these cases, your long-term “Stick” could be low, or negative.   Watch out for this especially when doing across the board price increases.  In the end, what is important is how much of your price change “sticks” over the long term.

The fact is:  price your products poorly, and you will find a huge disconnect between your marketing, your sales, your cash flow, and your long-term business success!

Next Post, I will give you a few more tips to help you improve your pricing strategy.  So, please pass this BLOG on, and encourage people to subscribe and learn this valuable information.