Archives For discount

Here are some ways to increase fees without penalizing your clients.

  1. Measure risk – Impact and likelihood, of a disaster, jointly place a value on it and set your fee accordingly.
  2. Look for problem areas that consistently show up across the companies you do business in.  Come up with solutions and use this material to call higher.
  3. Trade product gross profit for recurring revenue.  This builds annuity rather than a one-time transaction.
  4. Use Assessments rather than traditional open-ended questions to discover larger opportunities.
  5. Be willing to give away assessments in order to reach higher-level people in the account.  This leads to selling larger value priced deals.
  6. Propose options to build adjacent business in the accounts you are already working.
  7. Build greater expertise into your consulting group to offer more complex solutions
  8. Develop presentation skills that appeal to the executive level.  You’ll find that you are worth more to them than the next guy.
  9. Pass up smaller transactions to create more time for complex deals that offer greater reward.
  10. Develop stronger marketing programs to position your company as the expertise leader, rather then the low price leader.

© 2011, David Stelzl

Advertisements

Traditional thinking says that more sales will lead to a higher income.  Here is one more example demonstrating the deception in this type of thinking.  I frequently come across sales people working for smaller VARs, selling into small mom & pop companies.  These customers don’t spend much, so the deals are smaller, yet the VAR model was built on high-involvement sales; making calls onsite, taking people out to lunch, and perhaps performing demos or providing evaluations of the products being represented.  The problem is, they are transactional, and so volume becomes a focus.

So let’s say each deal is priced in the neighborhood of $1500 (which is typical),  and most of the deals are product install.  For argument sake, we’ll say the product is two-thirds of the deal, with a half  day install.

Total Deal Price: $1500

Margin: $350 (Assuming ten points on product and the balance on services)

Income based on 10% payout: $35

(and all if this assumes that the rep priced the services correctly and didn’t go over)

So how many of these transactions do you need to make a reasonable income?  With a 30K base, you would have to do about 166 of these each month to make 100K annually!  You can extrapolate from there, but the point is, you don’t want more deals, you want larger deals, recurring deals, and margin-rich deals.  Stop selling transactions and start solving big problems.

In a recent discussion I had with a young entrepreneur, he asked, “But can this company afford the larger project?”  Great question!  If it’s central to his Twenty Million Dollar business, he can.  If it’s just some new cool technology, he can’t.  So once again, you have to ask, “What problems am I solving, and how much are they worth?”

© 2010, David Stelzl

P.S.: Happy New Year Everyone!

Vendor to Adviser

December 20, 2010 — 2 Comments

If you missed my teleseminar last week on moving from Vendor to Adviser…Here are some examples of how I’ve turned mundane deals into profit-rich, consultative relationships:

  • A firewall upgrade opportunity referred by a vendor/partner turned in large profit and product.  Rather than going in with quotes and features, I presented cybercrime trends to an executive VP, identified their mission critical applications, data, and some process, and showed them how current trends are attacking companies similar to theirs.  The meeting ended with an agreement to perform a simple assessment, which was then expanded to a $65,000 contract.  From there we spent over a year implementing security controls, locking down operating systems, and eventually signed a three year security management agreement.
  • A firewall replacement opportunity from a non-active client turned into a larger assessment and perimeter security initiative with dual-authentication and application security consulting.  In this case, the client wanted to review competitive quotes.  Rather than responding with numbers, we called a meeting with the VP of operations, reviewed mission critical applications, and discovered a need for stronger application security and authentication for users who are members but not employees of the organization.  We proposed a simple assessment which closed for $35,000, and demonstrated the need for two-factor authentication, intrusion detection with event correlation, and upgraded various components of the perimeter as well as website security for the application in question.
  • An intrusion detection opportunity with a newspaper company turned into a larger policy consulting project putting us in front of all major company stake holders.  Rather than responding with numbers we were able to show the need to identify company policy in order to properly place and managed intrusion technology.  This effort led to a portal based policy server, intrusion prevention technology along with managed event correlation.  Future projects were easier to win with our new executive level sponsorship.
  • A large network project was put on hold at a major southeast university.  Instead of giving up, I was able to convince them to conduct an operational efficiency and risk study on the need for new network equipment.  This allowed us to gain entrance to all major stake holders positioning us for future project business.
  • At an educators symposium I was offered a breakout session to speak for free.  I used that platform to present trends on cybercrime, approached being taken by large organizations, specifically in the education/university space, and was able to follow up with one of the attendees with economic buyer status.  Our team conducted an assessment for $125,000, and then leveraged that relationship for introductions throughout the southeast.  Similar projects followed in North Carolina, South Carolina, Georgia and Florida, many of which required remediation efforts.
  • A similar speaking opportunity was given to me at a CLEC symposium for NC, SC, and VA.  Similar results followed the educator symposium.
  • A small staffing role was awarded to us to install some server technology in a large multimillion-dollar financial application project.  By researching their proposed plan we were able to show how their approach was not going to produce the results they were looking for.  At the risk of losing our position on the project, we proceeded with recommendation on how to change the program, putting us at the helm of a 3 million dollar initiative to role out a lending application nationwide.

You get the idea.  Taking existing product opportunities, free speeches, and by proposing contrarian approaches, a savvy sales person can move up.  One who has taken the time to stay on top of trends and developed consulting skills, can move to a consultative, and highly profitable position within the organizations they are already calling on.

© 2010, David Stelzl

It seems like most sales opportunities start out as product sales.  We’ve become dependent on lead sharing, referrals, and opportunities already in process.  It is extremely difficult to move from this type of selling to that of creating business opportunities from nothing, however, the latter deals lead to more high-end business, architectural sales, assessments, and advisory work, which in turn drive more product at higher margins.  Business creators quickly become business advisers, and once that happens, it becomes hard to lose a client.  The value is no longer a “price thing”.

© 2010, David Stelzl

Justifying your Fee

October 29, 2010 — 2 Comments

My son has never had pizza!  Can you believe it…you should know by now that I eat pizza at least once a week, and that’s a bad week for me.  Why have I deprived me son?  Be cause he is allergic to everything.  Gluten (which knocks out just about every restaurant bread), wheat, corn, dairy…that is, until yesterday.

After seeing numerous doctors, some local, some far away, we finally have the problem solved.  The local doctors offered him cortisone to treat skin rashes which covered his body head to toe when he was an infant.  My wife, believing the surface treatment was the wrong answer, began researching this.  She soon discovered the food allergy problem, which is actually the result of your body not properly digesting a food, which leads to a toxic substance in the body rather than properly digested food, which in turn must come out of the body, generally in the form of a rash.  Well, with a long list of allergy foods in hand, we were able to keep Tiny Tim (as I call him) somewhat free of rashes.  The problem is, that means Tiny Tim can only eat a hand full of boring foods while watching the rest of us enjoy pizza and ice cream.

Then a couple of months ago someone refers us to a doctor just three hours from my house.  Two visits, three weeks of treatment using natural products (no drugs), and he’s free to eat whatever.  Of course Insurance doesn’t pay for this type of treatment…it’s all out of pocket.  But do you think I questioned the fee?  Did I send out RFQs, collect three bids, push the doc for a 30% discount, count his hours?  No!  He solved a serious problem using his intellectual capital.  He earned the right to advise me, charge me, and convince me to call him the next time I have a medical need.  This is the essence of becoming the trusted adviser.  This is not a commodity.

PS.  Tiny Tim and I are having pizza tonight!

© 2010, David Stelzl