Small Business Success | Small Business Mentoring

Written by Alan Rigg

Do you have blind faith that, if you can somehow convince a prospect to engage in a sales cycle, you will eventually make a sale? If you do, watch out! This belief can waste your time, effort, and company resources.

Unfortunately, time and resource investments do not inevitably produce sales. How many of the opportunities in your pipeline have been stalled at the same step in the sales cycle for weeks…or months? In how many opportunities have you and your company invested enormous amounts of time, energy and resources (conducting product demonstrations, writing lengthy proposals, providing product evaluations, etc.), only to have the prospect decide they don’t WANT to buy, or prove INCAPABLE of funding the purchase? Even when you make sales, how many turn out to be “nightmare” customers who are always dissatisfied and consume huge amounts of post-sale resources?

All Prospects Are NOT Created Equal

You DO need to help your prospects explore whether their business problems are substantial enough to justify investing time in a sales cycle. However, you also need to figure out whether each prospect is WORTHY of your time and resource investments! If a prospect is not a good fit, gracefully exit from the opportunity. (Why not refer them to a competitor and let the competitor burn some cycles?)

How can you determine whether a prospect is worthy of your time and resource investments? Many sales skills training courses teach an acronym, M-A-N, that stands for Money, Authority, and Need. The basic idea is to determine whether:

1. The prospect is willing to commit enough budget dollars (Money) to pay for the product or service
2. The key decision makers and influencers (Authority) have been identified; and
3. The prospect’s pain (Need) is severe enough to justify investing in a solution

Unfortunately, even when you do a good job of M-A-N qualification, you can be “blindsided” by issues that delay sales cycles or destroy opportunities outright. For example:

• Some prospects prove incapable of securing financing. They may have a budget, but they are not “credit worthy”, so they can’t FUND the budget.
• Some decision makers need to have specific information provided in a specific format before they can authorize a buying decision.
• Sometimes you invest considerable time and effort in troubleshooting complex problems and designing solutions, only to be informed that the prospect must take the proposed solution OUT TO BID. This can lead to the opportunity being lost to a low bidder or the profitability of the opportunity being pummeled.

To avoid these issues, add additional questions to the M-A-N qualification process. The acronym that I have assigned to this revised process is M-A-I-N BP, which stands for Money, Authority, Information, Need, and Buying Process. Here are sample M-A-I-N BP questions:

MONEY

• How will your prospect pay for the product or service?
• Has a budget been established?
• Are they credit worthy?

AUTHORITY

• Who (in the prospect’s organization) needs to approve an acquisition of this nature?

INFORMATION

• What information do the decision makers require before they can make a decision?
• What format does this information need to be in?

NEED

• What are the prospect’s business problems?
• How compelling are they? In other words, can you quantify (associate dollars, percentages, and time frames with) the pain the prospect is feeling?
• Are the quantified business impacts substantial enough to warrant investment by the prospect’s organization (and YOUR company) in identifying and fixing the problem(s)?

BUYING PROCESS

• What is the prospect’s buying (procurement) process?
• What impact might this process have on the profitability of the transaction?
• What competitive advantage will you receive if you invest your time and resources in designing a solution that goes out to bid?

If you decide to add M-A-I-N BP qualification to your sales opportunity qualification process, here are some final thoughts to keep in mind:

• If you don’t know the answers to ALL of the M-A-I-N BP questions, it is highly likely you are wasting your time and resources!
• Opportunity qualification is NOT A ONE-TIME EVENT. As an opportunity advances through the sales cycle, you should frequently ask whether any of the answers to the qualification questions have changed. If an answer changes, it could impact the length of the sales cycle and even destroy the viability of the opportunity. At minimum, an answer change will probably require a change in focus and/or a reprioritization of planned activities.
• Never feel bad about disqualifying an “opportunity”. The amount of opportunity in most sales territories is virtually unlimited. If you carefully qualify and re-qualify each opportunity, and only invest time and resources in qualified opportunities, you will maximize your return on time and resources invested.

Copyright 2005-2008 — Alan Rigg

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance: A Step-by-Step Guide to Building and Managing Top-Performing Sales Teams, and the companion book, How to Beat the 80/20 Rule in Selling: A Step-by-Step Guide to Achieving Top Sales Performance. His company, 80/20 Sales Performance, helps business owners, executives, and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales.

For more information and more FREE sales and sales management tips, visit http://www.8020salesperformance.com

Written by Josh Davis

What is your time really worth? When you first start a business or go self employed, one of problems many face is not knowing how much their time is worth. If you’re just starting out, you’re obviously going to offer a lower hourly rate that your competition, so that you can get some gigs under your belt, build a client base and portfolio. There are some hidden dangers here that you need to be aware of. By being the “cheap” guy you’re going to get some crummy jobs and crummy clients to go along with them. You’re also at risk of taking a job that starts out small and ends up being double the work because of the typical lack of experience in dealing with clients, expectations, creating scopes and sticking to your guns. We’ll get into that further in a future post.

To find out what you should charge as your hourly rate, you need to break down your expenses – your living expenses, auto payments, equipment, office supplies, credit card payments, food (approx) and gas(approx) for an entire year. Categorize them into personal expenses and business expenses. Do NOT forget to calculate your taxes! If you’re unsure of this number, consult a tax professional or to be safe add your personal and business expenses together and multiply that number by 40%. There is a certain minimum you must make each year to pay for the above expenses. Now you need to add some profit on top of that – What do you want to make this year? $20k? $40k? Add that number with your yearly expenses and you’ll have roughly what you need to make that year.

For example, if your personal costs were $35,000, your business expenses were $10,000 and your taxes were $18,000 then you would need to make $63,000 to stay in business.

Now you need to find out how many billable hours you’ll have for that year. Keep in mind that as a self employed person, you ONLY get paid for the hours you work, where as a salaried employee can surf the net for a few hours a day and still collect the same check each week. Do not think you can bill 40 hours each week, it’s just not possible (unless you’re spending 80 hours in the office and have projects standing in line out the back door) In reality every hour you bill will be accompanied by an hour of non billable work such as accounting, searching for work, calling clients, marketing yourself or surfing the net. Consider sick time or vacations as well. Let’s be really conservative in the following calculation:

(52 weeks – 4 weeks vacation – 1 week sick time) x 5.5 days a week x 4 billable hours a day = 47 x 5.5 x 4 = 1034 billable hours a year.

And you had $63,000 worth of costs. To find your hourly rate, you need to divide that number by your billable hours:

$63,000 / 1034 = $61 per hour

This is just to pay your bills and break even. You need to find out how much you want to make, and factor that into the equation.

You need to study what the competition is charging as well. If everyone else is charging $40/hr and you’re charging $61 you might have a problem.

Always think in terms of your billable hours. If you need to charge $61 or even $40 an hour, think twice about accepting a gig that you can only get for $15 an hour, because you’ve just created a loss in those hours, you didn’t meet your minimum.

Now, this is difficult if you’re just starting out, but you shouldn’t have that many expenses and you’ll likely not have that 4 weeks of vacation time each year which will lower your minimum hourly rate to stay alive.

Josh is owner of iBot Web, a Fort Worth-based company that designs and develops websites and print ready marketing materials, and also owns and operates a photography studio specializing in exotic vehicle & glamour photography. He also is a director for the Tarrant County Entrepreneur Club which holds monthly meetings for small business owners, entrepreneurs and decision makers in north Texas.

Written by Alan Rigg

Here is a question I recently received from a home electronics and appliance salesperson:

“I sell electronics and appliances at a Sears store. My biggest difficulty is selling to a customer who does not “need” a 42″ plasma screen, but just wants one. If someone feels they need a product I am very capable of selling it along with upgrades and accessories. Yet, when someone would just like to have something, the percentage of actual buyers drops off quickly. How can I close more ‘I want’ sales?”

What is the primary driver for demand for your product or service? Is it need or want ? This is an important question because the sales process can differ substantially based upon which situation you are dealing with.

The “I Need” Sale

When you are pursuing an “I need” sale, the prospect usually has one or more fairly significant problems they need to solve. If you can help the prospect solve his or her problems and provide an attractive return on investment (ROI) , you will probably make the sale.

Here are some typical steps in an “I Need” sales process:

1. Asking questions to determine which problems the prospect is facing
2. Asking questions to determine how each problem impacts the prospect, both professionally and personally . (This engages the prospect’s emotions, which is a critical step in motivating an individual to make a buying decision.)
3. Asking questions to help the prospect quantify (associate dollar amounts or percentages and time frames with) the impact of each problem
4. Comparing the price of your product or service to the quantified impact of the prospect’s problems

While “want” can certainly be a factor in an “I need” sale, in many cases the most critical factors factor are the significance of the prospect’s business problem(s) and ROI. The larger the difference between the quantified impact of a prospect’s problems and the investment required to fix the problems, the easier it becomes to close the sale. If the quantified impact is a multiple of the required investment (for example, a quantified impact of millions of dollars versus a required investment of thousands of dollars), the buying decision becomes “a no-brainer”.

The “I Want” Sale

The “I want” sale has a completely different dynamic. While it never hurts to ask questions to see if a prospect is trying to solve specific problems, in an “I want” sale the prospect usually doesn’t have any compelling problems they are trying to solve . Instead, the prospect is looking for the gratification that comes from owning something they perceive as desirable.

If you decide you are dealing with an “I want” opportunity rather than an “I need” opportunity, emotion and visualization become the key drivers that will help you make the sale.

Here are some typical steps in an “I Want” sales process:

1. Once a prospect tells you they want something, ask them, ” WHY do you want it?”
2. Once the prospect explains why he or she wants the particular product or service, help the prospect visualize what it would be like to have it…in glorious detail. Again, use questions to help you accomplish your goal. Here are some sample questions:
   • How will you use it?
   • Who is going to use it with you?
   • How would it feel for you to be able to show this off to your friends, family, or business associates?
   • How will it fit into your lifestyle?
3. Once you have helped your prospect build the most vivid possible mental image of what they want, it’s time to find out how BADLY they want it . Be detached and maybe even challenge your prospect a little by asking:”(Prospect’s Name), what you’re describing really sounds great! But, is it great enough to justify investing (name the price of the product or service)?”
4. If the prospect responds positively, ask:

   “Will your husband/wife/significant other agree? How will you explain your purchase to him/her?”

The benefits of this approach are twofold. By helping your prospect visualize what it would be like to own the product or service they want, you engage their emotions . Then, when you ask them how they will justify the purchase to others, you are helping them build a factual case that will help them avoid buyer’s remorse (a key factor in product returns).

Conclusion

Whenever you begin working with a new prospect, it is important to determine whether they are being driven by need or want . If an opportunity is being driven by need , ask questions to determine:

1. The problems the prospect would like to solve
2. How the problems impact the prospect, both professionally and personally
3. The quantified impact of the prospect’s problems

If the price of your product or service compares favorably with the quantified impact of the prospect’s problems, you will be likely to close the sale.

If you determine an opportunity is being driven by want , take a different approach.

1. Ask questions to determine why your prospect wants the product or service. (Answering your questions will engage their emotions .)
2. Help your prospect visualize (in glorious detail) what it would be like to own the product or service.
3. Ask questions to determine how badly the prospect wants the product or service.
4. Ask the prospect how they will justify the purchase to others. (This will help them justify the purchase to themselves and avoid buyer’s remorse later on.)

If you are detached and willing to challenge your prospects a little, you will quickly separate the lookers from the buyers and close more “I want” sales!

Copyright 2007 — Alan Rigg

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance: A Step-by-Step Guide to Building and Managing Top-Performing Sales Teams, and the companion book, How to Beat the 80/20 Rule in Selling: A Step-by-Step Guide to Achieving Top Sales Performance. His company, 80/20 Sales Performance, helps business owners, executives, and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales.

Written by Alan Rigg

My wife and I recently moved to a new house. As we planned and executed the move, I couldn’t help noticing striking similarities between the activities involved in managing a successful move and the activities involved in selling. Read on for the sales lessons that can be learned from a successful house move.

1. Planning is Paramount

The last time my wife and I moved we hired a moving company to move all of “the big stuff”. We figured we could handle the small items on our own.

BIG mistake! There is a lot more “small stuff” in a house than there is “big stuff”. Plus, as you fill boxes with small stuff, the boxes can get pretty darned heavy. We ended up doing a lot more heavy lifting than expected, and it took us a lot longer to complete the move than expected. So, this time around we paid a moving company to pack up all of our possessions and move everything to the new house.

There were a number of other factors that we needed to consider in our planning, including:

• Finding a mover who could move us on specific dates
• Finding specialty movers for a pool table and an aquarium
• Turning on utilities at the new house
• Purchasing (and scheduling delivery for) some new furniture

What sales lesson can you extract from these moving-related activities? The primary lesson is you need to really plan your sales activities! Don’t just be reactive – think ahead and try to identify anything that could delay a specific sales cycle. If you are proactive in addressing potential issues, every one of your sales cycles should proceed as smoothly and rapidly as possible.

2. Purge Outdated Information

Moving is a great time to go through all of your belongings and decide what to keep and what to sell, donate to charity, or discard. Here are some questions my wife and I considered as we went through our belongings:

• When was the last time I used this?
• How frequently do I use it?
• What is the likelihood I will use it again in the future?
• What would be the cost to replace it if I get rid of it and discover later on that I need it?

Consider these same questions as you examine the contents of your desk drawers and file cabinets. If you see anything that is old and outdated or anything that you have outgrown, sell it, donate it, or throw it away. By getting rid of the old you make room for the new. You also reduce clutter and make it easier to maintain focus on the just the most CRITICAL information and sales activities.

3. Make Effective Use of Expert Resources

In years past moving homes involved imposing on friends and buying lots of beer and pizza. These days our friends (like us) are older, busier, and a whole lot less interested in performing the backbreaking labor involved in moving. Plus, we have a whole lot more “stuff” to move. So, we now hire experts to move our belongings for us.

There are many expert resources available to help you sell. Who are they? You can identify them by answering the following questions:

• What experts are available from within your own company?
• What experts are available from suppliers and business partners?
• How effectively are you leveraging these experts to help you manage sales cycles and win business?

The old saying goes, “time is a salesperson’s only inventory.” If you try to do all of the activities involved in selling all by yourself, you are guaranteed to be less productive than you would be if you outsourced specific tasks to expert resources. The most successful salespeople focus their time and attention on THE THINGS THAT ONLY THEY CAN DO, and outsource everything else to experts. This enables them to maximize the use of their time and dramatically boost their sales productivity.

4. Take Responsibility for Mistakes and Correct Them UNEMOTIONALLY

After all of our belongings were delivered to our new house my wife and I started unpacking. When we finally quit for the day we were looking forward to a nice, hot shower. Unfortunately the shower water was only lukewarm. I turned up the water heater temperature and promised myself a nice, hot shower the next day.

When shower time came the next day the water was colder than it had been the day before! Our water heater is fueled by gas, and I wondered whether the problem was with the water heater or the gas supply. I tried turning on the burners on our gas stove and nothing happened. That is when I realized I had forgotten to contact the gas company to schedule turning on the gas! Since the gas company scheduled service appointments a minimum of five business days out, it appeared we were going to be taking cold showers for the entire next week!

The following Monday I called the gas company to do a little begging. By asking nicely I was able to take advantage of a cancellation and get our gas turned on in just a couple of days. I’m convinced that part of the reason the gas company representative was so helpful was because I was very cordial and pleasant during our conversation. I didn’t demand that they change their policy for scheduling service calls. Instead I worked with the representative to identify a creative way to improve our gas turn-on date.

What’s the sales lesson here? The lesson is that no matter how well you plan your sales activities, mistakes WILL sometimes happen. You can go ballistic and try to browbeat people into solving the mistakes in unrealistic time frames. Or, you can take some or all of the responsibility for the mistakes and work calmly and collaboratively with the appropriate resources to expedite correction of the mistakes. Which approach do YOU think will be more effective?

5. Buckle Down and Work Hard

The movers packed up our possessions in one day and moved them to our new house the next day. As soon as the movers finished their work my wife and I started ours. We pursued our unpacking with a single-minded intensity and finished the job in a little over four days. Have you ever heard of anyone moving the entire contents of a four-bedroom house and being completely settled in just six days?

In sales it is critical that you leverage expert resources whenever you can. But, there are still things that only YOU can do. The more of these things you accomplish, the greater your success will be. There simply is no substitute for working HARD and working SMART!

Conclusion

If you want to maximize your sales success, apply to your sales activities the strategies my wife and I used to complete our house move in record time:

1. Plan your work

2. Purge outdated information

3. Make effective use of expert resources

4. Take responsibility for mistakes and correct them unemotionally

5. Buckle down and work hard

If you make a good-faith effort to implement each of these five steps, you should see a dramatic improvement in your sales performance!

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance: A Step-by-Step Guide to Building and Managing Top-Performing Sales Teams, and the companion book, How to Beat the 80/20 Rule in Selling: A Step-by-Step Guide to Achieving Top Sales Performance. His company, 80/20 Sales Performance, helps business owners, executives, and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales.

Written by Alan Rigg

In Part 1 of this article we examined two primary reasons why so many product demonstrations fail to produce orders. Then we discussed two activities that must be completed before product demonstrations are scheduled.

In Part 2 we will explore how to structure product demonstrations to maximize the number of demonstrations that convert into closed sales.

Step #1: Review business problems and quantified impacts

Why should you review the prospect’s business problems and quantified impacts before beginning a demonstration? There are two primary reasons:

1a. To re-engage the prospect’s EMOTIONS. It may have been some time since you last spoke with some of the people that are attending the product demonstration. You need to make sure every demonstration participants’ emotions are engaged during the product demonstration, as emotions are a key driver in buying decisions being made.

1b. To find out if any NEW business problems and quantified impacts should be added to the list. How often have you walked into a room to deliver a product demonstration and found people in the room you had never met before? The larger a prospect company is, the more likely this is to happen.

These new participants may have different concerns than the other demonstration participants. If they do, you need to make sure the new concerns are identified (and the related business problems quantified, if possible) before proceeding with the demonstration.

Step #2: Focus the demonstration on the SPECIFIC product features that solve the prospect’s SPECIFIC business problems

Remember, the goal of a demonstration is to prove your company’s product can solve the prospect’s specific business problems while avoiding information overload.

It doesn’t matter if the features that will solve the prospect’s business problems constitute just a small percentage of the product’s capabilities. You should focus the demonstration on the specific product features that deliver the return on investment described in the proposal. The prospect can learn about your product’s many other wonderful capabilities after they buy!

Step #3: Carefully manage expert resources

Unless you are a real product expert, I always recommend having a product expert be involved in delivering a product demonstration. This increases the chances that all of the prospect’s questions will be answered accurately during the demonstration.

With that said, there must be no doubt as to who is running the show. You must be willing to take on this responsibility!

You must ensure the demonstration follows (as closely as possible) the predetermined script. You should ask questions to clarify the intent of demonstration participants’ questions prior to answering the questions (or prior to asking the product expert to answer the questions). You should also be prepared to “reign in” the product expert if the expert gets into excessive detail or begins to address product capabilities that are not critical to the prospect’s buying decision.

Step #4: Gain agreement regarding “next steps”

Hopefully the next step following completion of a demonstration will be processing the prospect’s order! But, if you are not successful closing a sale at the end of the demonstration, make sure there is clear agreement regarding the next steps in the prospect’s decision process.

Summary

If a prospect doesn’t have the kinds of business problems your company’s products and services can solve, or if the impact of the prospect’s business problems is not severe enough to motivate them to invest in your company’s products and services, it doesn’t matter how wonderful the demonstration is. The prospect will not buy!

You will maximize your time and resource investments if you delay scheduling a demonstration until after a prospect agrees there is a compelling business case for buying your product.

Remember, product demonstrations should play a specific role in the sales process. This role is proving a product or service will indeed solve the prospect’s specific business problems!

Copyright 2007 — Alan Rigg

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance: A Step-by-Step Guide to Building and Managing Top-Performing Sales Teams, and the companion book, How to Beat the 80/20 Rule in Selling: A Step-by-Step Guide to Achieving Top Sales Performance. His company, 80/20 Sales Performance, helps business owners, executives, and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales.

Written by Alan Rigg

Do you invest a lot of time and resources in delivering product demonstrations, only to see very few of them ever produce sales? Are you sick and tired of watching opportunities stall in your pipeline after the demonstration has been completed?

Why do so many demonstrations fail to produce orders?

There are two primary reasons why so many product demonstrations fail to produce orders:

1. The opportunity was never properly QUALIFIED.

Many salespeople are in such a rush to schedule product demonstrations that they never qualify the opportunity! They don’t have a clue whether the prospect has any of the business problems their company’s products or services can solve, or whether the quantified impacts of these problems are substantial enough to motivate the prospect to invest time and money to fix them.

2. The demonstration gives the prospect WAY TOO MUCH information.

If a prospect sits through a comprehensive demonstration of all of the capabilities of your product, how much information will they receive? Do you think this amount of information might cause the prospect to go into information overload?

What happens when we go into information overload? Are we in a big hurry to make a buying decision? No! We want to take time to review the information. Far too often the end result is analysis paralysis, and a buying decision never gets made!

Let’s face it, product demonstrations are expensive to deliver!

At minimum they consume your (and possibly an expert resource’s) time. If it is your company’s policy to travel to prospects’ facilities to deliver demonstrations, you also have all of the travel-related costs such as airline tickets, hotels, meals, entertainment, rental cars, parking, etc.

There is also an opportunity cost involved in delivering product demonstrations: any time and resources that are invested in demonstrations to prospects that can’t or won’t buy are no longer available to invest in demonstrations to prospects that can and will buy!

What’s the solution?

The solution is for you to complete the following two activities before you schedule a product demonstration:

1. The opportunity must be THOROUGHLY qualified.

Hold yourself accountable for doing a thorough job of sales opportunity qualification. This includes:

• Business Problem Qualification: Does the prospect have any of the business problems your product or service can solve?
• Business Problem Quantification: How significant is the impact of the business problems? Is the prospect willing to attach dollar figures or percentages to these impacts?
• MAIN-BP Qualification: Is the prospect worthy of time and resource investments by your company?

2. A PROPOSAL must be delivered to (and reviewed with) the prospect.

Why should you deliver a proposal to a prospect prior to scheduling a product demonstration? Because it doesn’t make sense to invest the time and resources required to deliver a product demonstration if the prospect doesn’t first agree there is a compelling business case for buying your product!

Let’s examine what happens in a well-written proposal:

• The prospect is reminded of their business problems and the quantified impacts of these problems. This engages the prospect’s emotions.
• The prospect is shown which specific features of your company’s product will solve each of their specific business problems.
• The prospect is shown how the price for your company’s product compares favorably to the quantified impacts of their business problems.

If the prospect agrees the information in the proposal makes sense, all that remains is to prove to them that selected features of your product can indeed do what the proposal says they can do! Now that’s a worthwhile reason for scheduling a product demonstration!

In Part 2 of this article we will discuss how to structure product demonstrations to maximize the number of sales that are closed at the end of or shortly following the demonstration.

©2007 – Alan Rigg

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance: A Step-by-Step Guide to Building and Managing Top-Performing Sales Teams, and the companion book, How to Beat the 80/20 Rule in Selling: A Step-by-Step Guide to Achieving Top Sales Performance. His company, 80/20 Sales Performance, helps business owners, executives, and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales.