Archives For budget

My first exposure to buying timeshare investment properties started with a free trip to the Carolina shore, and an overnight stay at one of their properties, with a tour of possible investment properties to follow.  It started with a call most of you have received – a special offer for a free overnight stay at one of your choice locations.  They had to know right then and there on the phone, no time for thinking about it or checking with past buyers.  When we arrived, the tour involved one of their vacation properties, but the overnight stay was in a run down hotel down the street – surprise!  In the morning, they loaded us up for the tour and headed down to the properties; timeshares for sale.  I have to admit, the properties were nice, but at the time I was not in a position to buy.  As we drove around, the person driving would make announcements about properties that had been sold.  It was like they were disappearing before our eyes.  Then, when the tour ended, we were ushered in to a room with a high pressure sales person with an assumptive close.  Again, the pressure was strong and most of the selling directed to my wife.  They wanted me to feel guilt for not buying, and needed a commitment right then and there to get the deal.  Timelines have been used for centuries to press people into buying – often leading to poor buying decisions.   What happens when this same tactic is used by purchasing?

The Strategy

You, the seller, receive a last minute call.  Budget is available, but only so much and it must be spent today.  The buyer has in mind a specific need, and offers you the money.  The only question is, can you do the deal?  This sort of timeline pressure places tremendous pressure on the seller.  In fact, on a coaching call today, my client related a story about a sale he recently made where he left out software licenses on the product portion of the deal, all because of a short timeline.  In another case, one of my clients quoted a deal at his cost by accident.  These are common errors, made simply because the client was in a rush.  The most common mistake I see is where the sales person takes the offered amount, and assumes they can make the project work.  It’s an easy close, so they are willing to take the risk.  In the end, the deal turns out to be non-profit.

Counter Strategy

First, hasty decisions rarely turn out in your favor, so avoid them.  If a client has money to spend, don’t go with their initial proposed scope, but rather build your own.  If the client is in a rush, let it be their hasty decision to approve your scope rather then your hasty decision to go with it.  If the budget dries up tomorrow, chances are they can’t find another provider in time to make this happen anyway, so propose something you know will work.    I understand there is not always time to go through the proper steps, but you can’t afford to over commit.

© 2011, David Stelzl

Advertisements

Here’s  a great question on Getting Your Message Out – becoming an Adviser, from this week’s Making Money with Security workshop (Virtual).

Question:

You gave some excellent information on what to say and do when you are in front of the executives/asset owner…when communicating by email and by other electronic means…

You mentioned that sound bites alone are ineffective and how you throw most of your marketing mail away. I agree with both of these statements, so with that said, do you have any suggestions for what I can do to increase our chances of getting our marketing messages heard/read?

Answer:

Content is the key.  When your goal is to sell, people feel sold.  When your goal is to educate, people feel helped.  The key is in finding things that are helpful to the buyer – the asset owner.  Most asset owners are not technologists, so educating them on products, or anything technical, sounds like an opportunity for demotion.  Expect to be delegated back down to IT.

Sound bites, or statistical data may be somewhat interesting, however it must be presented from a source they care about.  If the Wall Street Journal publishes it in their daily paper, chances are it appeals to business people.  However, statistics, as we stated in class, lead to judgmental thinking, not emotional buying.  So while, sound bites do build credibility, don’t expect them to lead to a sale.  Use them as attention grabbers only.

In my book, The House & the Cloud, I talk about “Idea Emails”.  These are ideas that I present to prospects to create knowledge gaps.  “I have some ideas I’d like to share with you on how to make sure your employees are not stealing company secrets”.  Idea emails are one example of creating curiosity through a knowledge gap that potentially helps a client/prospect with something they would care about.  Other messaging might be “How to” posts on your blog – how to educate the organization on safe data handling or presenting “Seven things your employees need to know before traveling with company laptops”.  This type of education can be written to appeal to asset owners in a non-technical, business format.

In summary, create content, use knowledge gaps to generate interest, and then educate with your content.  This education should lead to action using services your firm provides.  As an example, my wife was reading a document on the harmful effects of amalgam fillings (dental).  The document began describing all kinds of symptoms people complain of every day.  The article went on to explain the importance of removing these fillings using a special process that prevents serious side effects including possible fatality from poisoning.  The doctor writing included several case studies showing how patients had been improperly diagnosed and treated for major diseases including MS.  He described the procedure for removal and then recommended using other synthetic metal-free materials.  Of course, both my wife and I had the metal removed from our mouths.  While we did not use the doctor who wrote the article, we would have, had he been local and had he called on us.

© 2010, David Stelzl

Here’s a great example showing just how much you lose when you discount services or consulting efforts.

Let’s assume you quote a job, fixed price, but calculated by estimating your time.   Here are some considerations you use in your quotation process:

1. Engineering rate: $150/ Hour.  (example rate).

2. Company’s published burden rate: $75/ Hr.

3. Hours estimated to do the job: 8 (one full day)

4. Total proposed price (Fixed Fee): $1200

5. Expected burden cost on the deal: $600

6. Expected gross profit (GP) on the deal: $600

So you put together your proposal and submit it to the client along with whatever products are to be installed.  The client looks at it and figures there’s no harm in asking for some discount.  “How about if we just go with $1000 even?”  Well,  that’s fair.  After all, it’s so close.

Assuming your engineer does complete the work in 8 hours, the client get’s billed $1000.

Looking at the numbers more closely:  That is about 17% off.  Not a huge discount, so you’re not worried.  However, let’s look at the GP discount:

Your fee: $1000

Actual burden cost: 8 X $75 = $600  (Same as above)

Realized GP: $400

Whoa, you gave away $200 right off the bottom line.  That’s a 33.33% discount which is about twice the discount you thought your were giving!  No wonder the numbers don’t work at year end…

© 2010, Dave Stelzl

We completed day one of Mastering Boardroom Presentations, in Raleigh.  As I’ve said before, the presentation always seems to be the weak link in the sales call.  If you want to increase sales, perfect your message, and become the best at presenting in!  Some the key take aways from today’s participants were:

1. “Focus on assets, not products – this is what drives budgets”

2. “The most powerful objection handling technique is a customer success story.  Creating a great story takes some work and practice, but once mastered, will become one of the most valuable tools you have  to close business.  I don’t know why other sales courses don’t make more use of this.”

3. “I’ve never been through a sales training class that gives practical instruction on the mechanics of presenting to decision makers; how to present, where to stand, how to demonstrate confidence, etc.  This will change the way I sell and deliver proposals and recommendations.”

4. The most important thing I learned today was how to meet someone – how to leverage an introduction in a way that moves to a meeting.  I can see it takes practice, but I also see the tremendous potential in answering the question “What do you do?” with something other than, “I’m in sales”.

5. “I learned more in one day than I did in a week of Vendor sponsored training.”