Do your potential clients ever say any of the above to you even though you sell a high-end good or service? It is a reality of our existence that our clients and customers have been conditioned to ask for, or demand, loss-leader or low margin pricing- chalk this up to the side-effects of the Made in China/commoditized world we live in. But, if you sell non quantity priced goods or services, how do you avoid falling prey to "the cheapest goes the sale" syndrome?
It is admittedly an uphill battle but here are a few tips to help you avoid cutting your own profit margin and selling on quality:
1. At $4.00/cup, Starbucks' prices brand them as quality. Are you doing the same? Remember that the paramount concern for every client/customer is "what's in it for me?" They may not realize you are selling a quality good or service immediately because they are thinking of the me factor. Show them that you are a quality good or service with your price point, branding and sales/marketing collateral. How does Starbucks get away with charging $4.00 for a cup of coffee? They put the coffee in fancy cups, have a great logo and their stores reflect a high-end design not traditionally seen in coffee shops. Starbucks has set the stage for customers paying $4.00 a cup of coffee without ever saying a word by the environment they create when you walk into their stores. If your product/service invokes the same sense of quality by its pricing, branding and marketing material you are implicitly sending a message that you do not engage in quality pricing.
2. Know who the quantity pricing clients are and walk away. Being a lawyer gives you a glimpse into human nature and I am often surprised by how convinced people are that they can change someone's mind. In my experience, rarely is this the case when it comes to spending someone's hard earned money. If potential client leads with questions or comments like "how much do you charge?", "I would like a free demonstration/consultation" or "I want your best price" at the outset of the conversation, chances are it will be hard to sell on anything other than quantity pricing. Avoiding cutting your profit margin means knowing when to pick your battles and walking away from the quantity pricing clients.
3. People will pay to feel special. The paradox of our market is that people will either demand loss-leader prices or pay for luxury (don't believe me? Look up the stock prices for businesses like Ralph Lauren or Gucci). Small businesses will pay a premium if they feel their solution is a customized for them and just not off the shelf- people like feeling that they are not just another number. For example, I have seen and heard of small businesses paying in excess of $15,000 for a website designer to build a customized and "one of a kind" website tailored specifically for the business. Clients don't usually have a large issue paying for such luxury pricing because they know they are not buying a website built by easily downloadable templates. If you can customize or tailor your product/service, you can increase your chances of charging quality pricing.
4. Keep it simple though. Apple has a very devote and loyal following among certain sub-industries of the small business world. Why? An Apple computer is a luxury item (by industry standards) but it is easy to use. You get what you pay for in life; people will pay a premium for a simple and easy to use product/service if the alternative is cheap but troublesome. For example, Herman Miller, a furniture designer, has not had too many problems selling $1,000 office chairs since they are simple and elegant to use whereas the $100 knock-off may give you a bad back and may have to be replaced every year.
5. At the end of the day, it is always about the relationship. Building customer loyalty and trust will increase sales success no matter what you are selling. Apple's remarkable turn-around is due in large part to the amazing brand loyalty and trust it has built with its clients.
If you want to sell to small businesses, you must be willing to invest your time building relationships. The most important lesson to learn about small business owners is that, although they may have years of corporate experience, they make decisions differently now that they are investing their own money. They take longer to buy a product or service and they understand that they can buy that product or service from a variety of vendors. At the end of the day, their decision to buy is not based on functionality, but on value, and that means that they buy the "who" not the "what".
In other words, they are buying you. And at the top of the list of qualities that they look for before they buy from you are trust and credibility. Since telling someone to trust us doesn't work, we have to show them. And that takes time. To be successful, we need to build relationships with those small businesses that represent our best customers. The most effective way to build a relationship is not cold calling or selling; it is networking.
Through networking we meet small business owners and executives on safe ground, where we can begin the process of getting to know each other. This may begin at a Chamber of Commerce After Hours Event, a Tradeshow, a Rotary meeting or any number of places. But no matter where it begins, we must recognize that sincerity is the key to success and that we need to be ourselves, we need to be authentic. And we need to recognize that we are building relationships, which may take a year or more, not selling products and services.
Following are the goals we should set in relationship building:
1.Establish Trust
2.Establish that the interaction is important
3.Establish that we can help each other via this social interaction
4.Recognize that because we trust each other, have shared something mutually important and both have benefited from it, we can establish mutual acceptance and say to each other, "I'm a good person and so are you!"
Last month I wrote about Getting Involved In The Community To Build Trust Instead Of Selling in which I mentioned how Jordan Arron from the BDC was able to become the first outsider to come in and present his company's value proposition to my Mastermind Group members.
Jordan took the right approach and wanted to build relationships instead of selling. He was genuinely interesting in helping my members and did not come with the "always be closing" attitude.
I asked Jordan if he wanted to write about his experience to help others who are trying to make connections and sell into the small business market. Here are his thoughts:
"Last month was my first opportunity to introduce myself to the business owners of Evan Carmichael's Mastermind group. It was a tremendous opportunity which I had the privilege of being a part of for two reasons. Firstly, because not only did I get the chance to hear Frank Cianciulli of Enunciate speak about his experience growing his business, but I was also given the chance to introduce myself to a very targeted group of individuals to grow my business.
As an Account Manager at the Business Development Bank of Canada my one mission is to support small and medium sized businesses by providing the combination of aggressive and customized financing solutions, with consulting services. The way I become successful at this is by being as deeply rooted into the various networks of business as possible. The challenge in this task is that people are always busy, and groups like the Mastermind groups are highly solicited, which can make it difficult to present your offering to them. It was only after I was given the chance to speak to the group that I realized that it was because of my approach that I was given this opportunity.
I think that if I were to summarize my approach, that it would have two specific characteristics (which I will admit, certainly are not unique, nor do they reinvent the wheel). This first characteristic is that I want to listen more than speak. So often people in sales are trying to tell people what they are selling or offering, without being able to understand who they are talking to. Not only does "active listening" allow you to collect your thoughts, and to understand your counterpart better, it also doesn't give such a "hard sell" approach which can put some off quite quickly. Even if you are about to sell something as simple as a pen, people will jump to all the features of that given pen, as opposed to understanding if the person is looking for a $0.50, $50, or $500 pen.
My second habit is that I naturally want to help people in any way possible. Even if I am not going to be lending money to them, I always look to leverage my network by putting them in touch with a potential joint venture partner, purchaser, supplier, or other financial institution. I realize I've actually started building strong relationships with people that I didn't offer money to. This approach in its truest form, works excellent amongst like minded individuals, and in the end they often end up pointing people in their network back to me.
In summary it was great meeting the members of the Mastermind group, and I look forward to the next event I can be part of. As Evan was kind enough to let me enter this circle of individuals, I will look to make every new relationship a two way street where I not only support group members with BDC financing or consulting services, but to just always keep in mind what they do, and to make appropriate introductions for their business where possible. I consider it a privilege and truly enjoy working with entrepreneurs and learning about their visions of success. When I can make a contribution to this success, it's even better."
EvanCarmichael.com is the world's #1 website for small business motivation and strategies. Evan also runs a series of successful Mastermind Groups in Toronto for entrepreneurs.
Guest Contributor: Albert Luk
