ImageArticle: Go On; Spoil Your Customers (December 2012)

We are often asked by clients “How can I improve my marketing?” - Often this means - “How can I get new customers?” Indeed, most businesses put most of their marketing effort – and budget – into new lead generation.

However, it's amazing how few businesses are effectively marketing to their existing customers. Most business owners are sitting on massive untapped potential in terms of their existing client relationships. How do you unleash that potential? Try answering these questions:

  • What cross-sales, up-sales, new products/services could you offer your existing customers?
  • And when did you last let them know? In fact, when was the last time you wrote to your customers or emailed them or phoned them. And what kind of response rate did you get?

If you doubled the number of times you contactes them what would happen? One retail client used a brochure to market to his client base and generated hundreds of thousands of pounds in turnover each year from this method. The brochure was sent out once a year, in springtime. We asked him to try sending it again in autumn. Guess what happened! Play the easy game. Make sure you have a database with all your existing clients listed. And then……speak to them……pamper them……offer them special previews and promotions……ask them to tell their friends.

Remember It costs six times more to get new customers than it does to increase sales to existing customers and 64% of customers don’t purchase from your business a second time because of the perceived indifference with which they are treated.

If you want to reduce your marketing spend, or the cost of customer acquisition, reinvest your pounds into strategies that will retain your customers, so they keep buying from you. Investing in customer relationship strategies – the payback is stunning.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: Are You Ready To Sell More? (April 2012)

Often at our seminars and events we survey business owners to discover the challenges they face within their own businesses and one topic often comes through loud and clear; ‘I need to sell more’. But whilst I agree that growing sales is an essential component of business growth it is often not the real solution to their problems.

Before you embark on a sales campaign first examine the following questions:

  • How do you intend to cope with increase in demand?
  • What will be the impact of a successful campaign on cash flow?
  • Can the business sustain any growth long term?
  • How does this campaign fit with the long terms goals of the business owner?
  • Are the sales processes effective?
  • Are the staff sufficiently trained?
  • Is the marketing plan robust and will it generate the levels of inquiries necessary?
  • What are your motivations for growth?

Let’s start with the last point first; why do you want to sell more? Far too often the motivation in the first place is wrong, and many owners see selling more as the solution to long hours, poor cash flow and low staff morale and productivity, often with disastrous results.

Recently I worked with a business owner who had spent the last 4 years chasing bigger sales with good success. Sadly as the business grew so did his headaches; cash flow just got tighter, already creaking systems began to implode, the demands on his time became greater whilst profits remained static. The harder he seemed to work, the harder it all seemed to get; worse, his home life was rapidly heading for trouble, his relationships with loved ones being eroded by his long hours and short temper. His dream of owning a £1,000,000 + business was rapidly becoming a nightmare.

I can’t begin to imagine how he felt, he was successful! He had set a goal for growth, gathered his team around him and cajoled, motivated and trained them to the best of his ability and it had worked! He had hit every sales target he had set and yet somehow his only reward was a bigger overdraft (and pressure from the bank) and a larger mountain of work, hassle and issues to deal with. It must have been a devastating moment when he realised he was the author of his own undoing. Sadly this is an all too common tale.

So where did he go wrong? The truth is that it costs money to grow and businesses are limited by the rate at which they can grow safely and securely. Furthermore if the motivation for selling more is to relieve a cash flow problem or to create enough space to employ more staff to reduce hours (meaning you are already over capacity) then more than likely you are setting yourself, and your business up for a very bad fall. Our poor business owner had simply magnified the problem by not dealing with the core issues which created the lack of cash and profit (not to mention time) In the first place.

When we work with business owners we check a number of key factors within the business before we will allow them to go out selling and I suggest you do the same.

  • Firstly and most importantly, look at the end game; where do you want to be in 2, 3 and five years time? Selling more just to solve a problem is not healthy as we have already discussed.
  • Secondly check and get control of the finances of the business; how much stock do you hold, how long do clients take to pay, how quickly do suppliers expect payment, are you pricing correctly and can overheads be reduced? These parts are crucial as they have a major impact on profitability and cash flow and EVERY business owner should know these metrics for their business off by heart.
  • Next take a look at the people who will help you achieve your goals, these can be split into three major groups:
  1. Customers: Do you truly understand your target market, do they want what you have to sell and why do they buy from you?
  2. Staff: Do they work late without asking for extra pay? Are they part of the team and working with you to achieve the businesses goals or are they leaving you alone at the end of the day to finish off? If the team is not motivated and behind you, growth will be a very rocky journey!
  3. Suppliers: As you grow so will the amount of trade you do with suppliers. Are they willing to give you the credit you need and can they meet the increase in demand? What impact will this have on their selling price to you?
  • Now take a look at your systems and processes. Do you have a manpower plan for when the business grows, and how will staff be recruited and integrated quickly into the team. How will you cope with expected demand?
  • Lastly Conduct a SWOT of your business (Strengths, Weaknesses, Opportunities and Threats) to determine if you have covered everything and put a plan in place to address these issues before you go on a selling spree.

Now I know this seems a lot to do and it is and maybe this is the reason so many businesses don’t do it. Indeed I have heard all sorts of excuses in my time from “it is unnecessary“(a foolish notion) to “I’ll do it after this next big sale which is going to make everything all right” (It won’t).The truth is often they don’t know how to do it or they are trying to take a short cut, sadly you can’t, and in general those businesses that try, fail.

It’s an old and tried mantra but businesses that fail to plan are planning to fail, and it’s truth is something that irks us business advisers no end! We watch time and time again as people struggle without asking for help. I have never tried to build my own house, make my own car or grow my own food; I am simply not qualified. Yet the average business owner tries to grow his or her own business on the same basis, and wonders why he/she fails losing their dreams, homes, self respect and relationships along the way.

So go on, get your business ready to sell more; give us a call and ask for a health check and I promise to leave the tools in the garage......

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: Find Your Highest Potential Customers (February 2012)

The 80/20 rule – that 80 percent of your sales come from the top 20 percent of your customers – applies to most businesses. Nurturing that precious 20 percent means focusing your marketing programs on the customers who drive your company’s profitability. A laser-like focus on these high-profit buyers also prevents you from expending too much effort on lower profit customers.

Remember that profitability does not necessarily correlate with the amount of money a customer gives to your business. In many businesses, smaller sales can be highly profitable, while larger sales can cost the company a lot to administer or deliver, and therefore have a smaller profit margin.

Use the tips here to unearth your most profitable customers.

Calculate acquisition costs

To assess customer profitability, you need to determine how much it costs your business to attract each customer. Many SMEs will be able to get away with a cost of sales analysis that is much simpler than what larger companies use. Keep in mind that the cost of sales numbers produced through these calculations are averages, to be used for rough evaluations of your customer base.

To conduct a simple analysis, first review the effort involved in closing a typical sale. Be sure to include expenses like a salesperson, direct mail, Web site development or other advertising costs. Estimate the total cost of your outreach and divide it by the number of sales you close annually to do a quick analysis.

Calculate cost of customer service

It is important to track your customer service expenses to measure how profitable your current customers are. The equation is similar to the cost of sales analysis. Apply costs for service-related items such as order taking personnel, project manager salaries and delivery of your product or service to each customer. Estimate the average cost of servicing each customer by dividing by the number of customers you serviced during the year. If you need help determining key service expenses in your industry, ask your accountant for industry standards. Keep in mind that the cost of service numbers produced through these calculations are averages, to be used for very rough evaluations of your customer base.

Create a high-potential profile

With the two figures above and the revenue that each of your customer provides, you can determine a rough sense of individual customer profitability. You can use this information to develop a profile of your high-potential customer. Look for common characteristics and behaviors. Do they fit into specific demographic or geographic categories? Do they have certain shared attitudes or values? Do they make their buying decisions in a similar way? This profile will help you develop the most effective marketing programs to reach these targets, extend their value to your company, and attract more high-profit customers.

Some businesses might want to go a step further and develop a customer potential pyramid – a three-segment hierarchy that breaks out the company’s high-potential, medium-potential, and low-potential customers. The purpose of this profile is to look for marketing tactics to migrate customers into the high-profit categories.

Reallocate efforts around least profitable customers

In support of your focus on the top 20 percent of your customer pool, you should make an effort to not attract unprofitable customers. Review your records for those customers who cost you valuable time and money and create a profile of them in the same way you built a high potential profile. To the degree that you can, be sure that your marketing programs exclude these customers, to keep you efficient and profitable.

Since every relationship is an important link to other customers, try to avoid alienating anyone by telling them you don’t want their business. Instead, just avoid focusing resources on reaching them.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: Marketing Magic Comes Before Sales (November 2011)

If you are like most business owners when it comes to marketing, you’ll be unsure of what works and what doesn’t or at worst, you’ll have a long list of things that don’t work because you’ve wasted thousands over the years. Well here are a couple of key facts to help us feel confident about our marketing:

  1. Marketing is predictable: If I get a mailing list and write to the first 100 names and get 3 enquiries; I can be pretty sure that I will get in the order of 30 enquiries if I send the same letter to the next 1000 on the list! If I invite 20 past customers to an evening reception at my shop to launch my summer range of designer shoes and I get 5 acceptances; I’m going to get around 50 acceptances if I invite 200 past customers!
  2. Marketing doesn’t need to be expensive: Now I know it’s predictable, I can do small marketing campaigns and repeat and extend the ones that work.

So here are the tips:

  1. Commit to test at least one new campaign per week or month depending on your business. This needs to be small. Send 100 letters, make 30 phone calls, send 100 emails, and increase the prices on one product line….
  2. Measure the enquiries you generate.
  3. Do more of what works! And continue to test and measure.


Why competition is good… I used to hear people say, competition is a good thing and think they were mad! But here’s a test for you: You are looking at a busy street and you want to open a new gourmet burger restaurant. There are two vacant premises. One is situated at the end of the street between a book store and a chemist and opposite a small supermarket. The other premises is at the other end of the street between a McDonalds and a Burger King and opposite a Kentucky Fried Chicken Restaurant. Which unit will you choose for your new venture? Lots of people opt for the one next door to the book shop on the basis that because there is no competition, they will ‘clear up’. Sadly what these people find is that they struggle because all the hungry people are at the other end of the street because the big chains have huge marketing budgets. The smart person opens their gourmet burger bar between McDonalds and Burger King but instead of competing directly, they differentiate their offer and say – look, these guys are great, but if you fancy paying a little more for a gourmet burger experience then give us a try! Let McDonalds and Burger King build your footfall for you – then all you have to do is offer something a little different.

Marketing advice to help you prosper in tough times: The lesson we have learned from past recessions is that we must continue to market. Those that do, will be the winners. They win during the recession and perhaps more importantly, they win even more after. With this in mind, below are the reasons people buy from the people they buy from. This gives us an important insight into how to gain and retain customers. In reverse order, the top five reasons were as follows:

  • Price: During tough economic times, contrary to what some might say, price is even less important. Customers do become much more value focussed though. If your customers are arguing the price either they can not afford you (so stop selling) or they do not see the value in what you are proposing.
  • Range or Selection: Having an enormous range is not the point here. Make sure you understand your customers well enough to offer them the choice they want.
  • Product / service quality: . The features of the product or service are important to your clients. They want to know how it will deliver the benefits highlighted in your marketing campaigns. Make sure you are good at what you do.
  • Customer Service: Specifically, this means doing what is required to make sure your product or service does what it says on the tin. Sometimes we fall short of this. When we do is the time to go the extra mile.
  • Confidence: Here we are - the biggest reason people buy from us is because they have confidence in us to meet their need better than our competitors. You need to maintain this confidence with regular contact so your customers remember that you care. Our own research has shown that 68% of customers who leave, do so because of perceived indifference. If you care about your customers; make sure you show it. 
Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: 6 Sales & Marketing Problems Solved (October 2011)

The recession has thrown the sales and marketing strategies of entrepreneurs into disarray. Customers have become more hesitant to buy, sales teams are struggling to get deals over the line, and the marketing budget isn't looking as healthy as it used to.

But don't despair - we have asked our nuOrder, Business Advisor network can help solve 6 major problems that are confronting business owners.

Most of the advice won't cost you anything to implement, and you will also be able to create more robust sales systems and processes that will last you long into the recovery.

Problem: Customers are crying out for discounts.

Solution: Don't drop your prices - find another way to get them over the line.

There is a big problem with discounting - once your drop your prices, it is nearly impossible to raise them again.

Our network agrees. We discourage discounting with all our clients because that has a negative impact on the business as a whole. Particularly during the global financial crisis, people may respond well to those in the short term, but they cause long-term damage.

Companies must find other ways to persuade customers to buy, mainly through offering improved service. Offer customers better terms of trade (by giving them longer to pay), offer priority delivery or think about giving them a little gift with every purchase.

The key is to try and get more revenue out of each customer.

Problem:Two of our sales people are doing well, but the other eight are struggling.

Solution: Get the stars to teach the laggards.

While we all admit the sales environment can be cut-throat and sales people can be very protective of their intellectual property - that is, their sales methods, but good companies need to break down these barriers and force top sales people to share ideas.

A lot of sales models can be very competitive, and sales people can operate in their own silos. That’s counter-intuitive to a business that is genuine about doing the best by its customers.

We suggest getting all sales people together for a brainstorming session to create a sales process that everyone can do. Naturally, this should be led by your sales stars, who will hopefully pass on tips and advice to help other members of their group start climbing towards their level.

Problem: I don't know what my sales process should look like.

Solution: Develop strategies to win, keep and grow accounts.

The business advisors from nuOrder believe that the sales cycle (from lead generation through to client management) generally stretches out when the economy slows as customers guard their cash, and it is during these times that a robust sales process becomes crucial.

We believe a sales process really needs to have three phases - a sales process for creating an opportunity; a sales process for managing opportunities; and a sales process for retaining and growing accounts won.

A down economy is a good time to review your sales process to improve its effectiveness.

Problem: We haven't really had to sell for five years.

Solution: Make every employee part of the selling process.

One of our advisors was recently approached by an engineering firm that had a big problem - no-one in the organisation actually knew how to sell. They could work on tenders, they could manage projects, but the business just hadn't needed to be sales focused in the past. Now they needed help.

nuOrder concentrated on getting the firm's top management to understand the importance of putting sales at the centre of the firm's strategy and to demonstrate that everyone in the firm had a role in selling, from the admin staff to the accountants to the project managers. It's about getting everybody and the same page and getting everyone to understand how they engage customers.

Problem: Customers don't seem to "get" what we do.

Solution: Develop a clear sales message.

Businesses must give a clear, concise message of what exactly their business does before they can even think of making a sale.

The basic solution is that you need to have a clear marketing message of intent. What do you do? How do people understand what you do? You need to sell the right way and to do that you need to ask what it is exactly that you do for people.

Being pro-active and talking to people is great, but if you're not clear about what you do then they're not going to understand.

Problem: Where do I start with sales and marketing planning?

Solution: Get your sales targets clear.

Companies cannot afford to be complacent in a downturn and must figure out a plan to survive, and part of that strategy involves setting clear sales targets.

Look at the numbers to decide what you have to do. If you need X amount of revenue, then look at what your average sale is, and out of that ask how many sales you need to make each year, how many prospects do you need to talk to for sales and ask how many people you need to contact.

A lot of business owners rely on websites and such, which is nice but they in themselves do not make you a sale. They keep your brand out there, but you have to pro-actively put yourself out in the market.

You need to look at details. Know what markets you need to be targeting. Who do you need to be in front of, and how often do you need to do that?.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: The Economy Seems To Be Recovering .. How Do I Adjust My Sales Strategy (October 2009)

The short answer is - go back to basics. Treat your company like a start-up business by getting hungry and enthusiastic and don't think yesterday's successes always guarantee today's.

Over the past eighteen months, from what nuOrder have observed, the companies that resisted temptation to adjust their sales strategy drastically are the ones that remained most buoyant through these tough times. The business leaders who hit the panic button and shed resources (and valuable IP) during this time are now the companies needing to adjust yet again.

Reactive by nature, these companies are frantically rethinking their strategy - in doing so rehiring people for the same positions, in some instances at triple that of what it would have cost to have retained them in creative ways. Suffice to say, their recovery will take some time, but at least they're still trading right? Well, we guess that depends on your end game and at what cost.

Let's be honest, business is tough in any market. The companies nuOrder see succeed over the long-term invariably have a way of being that enables them to maintain their entrepreneurial spirit through thick and thin times. Not just hungry for new business, but an appetite for knowledge, learning and growing, always. In tough times you need to work smarter and harder, but you also have to do more of what works, not less of it.

The companies that look for easy, quick-wins with no risk are often left ‘reacting' and ‘reinventing the wheel' periodically based on market and external forces. There is a distinction between being adaptive and reactive we should note: To be reactive is to be guided by external forces, while being adaptive is using external forces as part of your strategy. In sales, you can never control the outcome - all you can effectively control is the process to help facilitate the outcome. Lose control of your process and you lose the ability to facilitate the outcome.

Your sales strategy should not need to change that much, particularly if it works. The strategy you develop should be adaptive and yet set on a foundation of planning for what is foreseen on the horizon. We could all see the GFC coming. The dark clouds were imminent for some time, and the media were not short of making sure we saw the potential for the storm, if not adding to its ferocity.

There will always be dark moments in business, particularly following overly optimistic sentiment and business decisions being made as such. History suggest every 10 years we see a correction take place in some way, so don't be too shocked when it happens next. Our advice is, as a sales leader, take responsibility and be proactive by constructing a more adaptive strategy that allows for peaks and troughs and plan for corrections rather than waiting until it's too late.

Having the ability to stay the course in tough times is a sure sign of confidence. It also sets a positive tone with team members and sends a message to customers that you believe in what you are selling and how you sell it. In turn this will make your customers more confident in choosing you. And guess what? With confident team members and customers you will ride the recovery much quicker by being able to maintain momentum rather than attempting to move the bolder (once again) from a standing start.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: How to deal with falling sales (March 2009)

If your latest sales forecast is dipping you need to understand how to reverse the trend before any serious issues arise. The other approach is cost cutting which offers different threats to the business.

Please find some simple tips on how to deal with falling sales:

  • Be positive - get your head up and treat the recession as an opportunity.
  • Do more tactical marketing - Firms that cut marketing in a downturn loose out when things to get better. You can divert spend to areas of marketing that actually do deliver results. The key is just to work out how.
  • Effort should be targeted more than ever - Identify your best possible customers and focus on them rather than time-waster. 
  • Shift old stock in a clearance sale - Create a breathtaking offer on 'clearance stock' that generates cashflow and new customers.
  • Improve the sales team - The use of harsh but fair performance targets can be really useful to ensure all sales staff work to maximum effect. Take time to retrain people is they have spare time.
  • Incentivise people - everyone in the organisation should be asked to sell and rewards should be given to motivate this.
  • Be carefull who you sell too - Remember a sale is not sale until the cash in banked. Sales targets need to reflect money in the door not debtors.

Please ensure you remain positive - if you throw in the towel and say 'who will buy from us' that is the way things will go.

Get in touch and ask us to conduct a business evaluation and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: The Customer is always right  (June 2008)

Sales is not just about finding new clients, it's also about making sure you don't loose existing clients. When you only have a few customers, it is pretty easy to keep track of who is getting what, when they are getting it, how they are getting it and maintaining the relationship. But, when you have several employees, an ever expanding customer base and no system, things can get out of hand.

To help, we are giving you several techniques which will get your customer service policy rolling and keep track of those customers who aren't happy.

Customer service policy

Put it in writing. This could be a statement or a detailed description which lays the basis for how your salespeople or employees are going to resolve the issue. For example, you may have a statement that advises employees they have the right to give unsatisfied customers a 20% discount on their purchased product/service.

Support systems

There should be established support systems that provide employees with clear instructions about the level of service required. This setup will allow your employees to acknowledge possible problems and initiate superior customer service at all times.

Measure customer service

Acknowledge and reward those employees who practice good customer service and maintain a high standard. Ensure you set a precedent for customer service and your employees will happily follow, as they will see the benefits financially and in the long term.

Be committed

Be committed to providing good customer service. Make this a reason why your customers would recommend you to others and return to purchase more. As a competitor to others in your industry, customer service is where you can beat them every time.

Happy phrases to make your customer smile...

These are simple and can be used to diffuse anger in a customer, resolve an issue or just be helpful and assertive.

"How can I help you?"

"I can solve that problem for you."

"It will be exactly what you ordered."

"I will take responsibility."

"I will keep you updated on that if you like."

"I appreciate your business."

Get in touch and ask us to conduct a FREE Business Evaluation Meeting and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: In Sales The Relationship Is Everything (May 2008)

As a salesperson, your objective is to serve, not to sell.

Whenever you go in to see a client or prospective client, and especially when you meet someone for the very first time, you have to go in wearing your problem-solving hat.

Your objective is to help your prospective client find solutions to their problems / desires, for example, to increase their business, to increase their profits etc. Only by increasing your customer's business can you increase your own.

If you're going in with the purpose of pushing your product (being a product peddler), you're going to have to work very, very hard to make that sale.

On the other hand, a sale becomes a natural progression when you go in with a focus on how you can meet their needs and desires and bring value to this individual and their company. That may mean using some creative thinking along with your knowledge and experience to come up with ways to improve your customer's bottom line.

Therefore, this is the time to ask yourself: 

  • "What can I do differently? What would be the ideal solution to this problem, and how close can I make that happen?"
  • "What challenges are my prospective clients facing right now and how does my product and / or service help them?"

Get in touch and ask us to conduct a FREE Business Evaluation Meeting and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: Design a commission plan that drives sales (April 2008)

If you establish and oversee the commission package for your company's sales force, you should consider numerous components to create a plan that both fairly compensates and adequately motivates the sales team. Ultimately, your plan should keep your salespeople happy while supporting and advancing company goals.

Ground Rules 

You will find that methods for creating a compensation plan vary widely and often reflect industry-specific standards. However, some ground rules cut across industries and they can provide a framework for establishing or reviewing your company's sales incentive package. Some of the more important rules include:

  • Start with the outcomes and behaviours you want to foster
  • Prioritize behaviours
  • Keep the incentives flexible so that they can evolve along with your company's goals
  • Make the compensation plan easy for everyone to understand
  • Benchmark your competition to stay competitive
  • Review regularly for relevance

Start with results

Of fundamental importance is to determine what results you want to encourage and to design your plan from there.

A sales team's goals should reflect the company's larger goals. Consider reprinting corporate goals in your sales agreements to underscore a unity of purpose. For additional clarity, you may want to include work objectives, even if they are not tied to commissions.

Some carrots are larger than others

Every incentive in a commission plan is a carrot, but some carrots can be larger than others depending on the behaviour they reward. Prioritize the behaviours you want from your sales force. You then can set up a system of rewards that encourages top-priority behaviour, as well as motivates salespeople for situations that are clearly distinguishable.

For example, you may want to commission third-party products at a different rate. You also might consider commissioning services differently than products.

You can implement an accelerator plan, which provides flexibility in the commission percentage earned and paid. In this case salespeople are paid at a lower rate until they meet their target.

After that, they are compensated at a more accelerated rate for every pound they generate in excess of the target.

Keep it simple

A commission plan needs to be easy for your sales team to understand. Not only do sales people need to see clearly what is motivating them, but you don't want to spend your time haggling over commission payments.

Clearly identify how commissions are earned and keep the calculation formulas straightforward.

You can check your plan's simplicity by creating a few sales scenarios and asking the sales team to derive the compensation. If the plan is easily understood, everyone should come up with the same numbers. If different figures are calculated, consider reworking the plan.

Know your competition

If you want to retain a top-level sales force, your plan needs to be competitive. Gather intelligence on how your competitors compensate their sales professionals. You can work out what commission levels are reasonable and competitive for your industry or profession through many methods e.g. internet search.

Human resource specialists in an industry often can help you locate surveys with compensation information; or sales professionals always know what their industry pays and can share documentation. You also can tap in to your industry's professional association or ask your peers how they structure their commission contracts.

Commission structures

At the core of any incentive plan is determining what role commissions play in the overall sales compensation package. Four of the most common commission structures are:

  • Commission only
  • Commission plus salary
  • Commission plus bonus
  • Commission plus salary, plus bonus

Although industry standards carry significant weight when creating a commission structure, ultimately your budget and priorities will determine how you pay sales professionals.

Again, when you hire sales professionals, they should immediately understand their earnings potential. For example, if you are paying commission only, you can specify that the commission will be X percent of the net sale, less any discounts. Or, you can define a base salary along with a target commission amount - the amount the salesperson would earn at 100 percent of quota. You might pay 50 percent base and 50 percent commission, or 80 percent salary and 20 percent commission.

If you pay bonuses, you'll need to determine not only the percentage, but if they are based on company-wide goals, individual goals or both.

Different pay for different people?

If multiple salespeople do the same job, their commission compensation should be equal. On the other hand, if job responsibilities really are different, these expectations should be spelled out and compensated for appropriately.

You might want to reward salespeople through higher base salaries for length of service, experience or stellar performance. Most importantly, be clear with your sales staff and apply any differences consistently.

First-time vs. recurring sales

You will need to address what commission is applicable to first-time sales as opposed to sales to repeat customers. By establishing higher commission percentages for new accounts, you encourage your sales team to bring in new customers.

But, you don't want to discourage sales to existing customers, as this is a strong sign of customer satisfaction with the product. It may be better to pay equally, but to award a bonus to each salesperson who brings in X new customers in a given period.

Timing of commission payment

Your plan will need to specify when commissions are earned. Some options include payment at the time of invoicing or product shipment, when the customer payment is received or a combination thereof.

Paying full commission when a sale is invoiced or when a product ships has the inherent risk of paying out the salesperson on what may be a slow or non-paying customer. To alleviate this risk, some companies pay commissions only after customer payment is received.

Conditions-based payment

Another strategy is to pay 50 percent of the commission at the time of invoicing as long as certain conditions are met, with the remainder payable at cash collection.

You can put in the plan that anything uncollected for more than X-number of days past due will be removed from commissions, motivating salespeople to assist with collection follow up.

The "certain conditions" part of the commission agreement are for behaviours you want to encourage. For example, you might specify 50 percent commission payment for sales containing net 30-day payment terms. For sales with net 45-day terms, commission might be paid only when the cash comes in.

Another condition might be pricing in accordance with the internal discount guidelines. If salespeople get any additional discount approved beyond the guidelines, then you pay a proportionately penalized commission percentage, or pay only when the cash is received, or both.

Get in touch and ask us to conduct a FREE Business Evaluation Meeting and find out about our unique way of designing and implementing strategies to generate sustainable business improvement.

Article: You Are In Sales (March 2008)

How many people will tell you that they are completely hopeless at selling anything and that they couldn’t sell lollies to kids? The answer is lots. We hear this sort of comment all the time and yet we are all in business to provide a service or product. The fact is if you are in business you are in sales.

Like many I don’t feel I am a good sales person but I do know a lot about what I do. I am good at talking with business owners, getting an understanding of their business and the issues that are holding them back. But I’m not good at sales. Or am I? Business owners come to me because they want some help but they don’t know exactly what services I can provide; whether I am the right person for them and what the service may cost. They need someone to understand their problems and provide a service that will help them. I spend a lot of time trying to establish a relationship, understanding their needs and helping them decide if I am the right person to help them. I don’t feel as though I am selling but on reflection I am using a pretty good sales process. The key is building a relationship and finding out what your customers needs are.

Imagine the situation where a prospective customer is looking at a food processor. A sales person comes up and starts “That is a great food processor. It will cut 40 kg of cabbage in 30 seconds flat. It has a 310 horsepower motor that operates at 2000 revs a second and never stops. It’s a great deal, give me your credit card and it can be yours.” Not much relationship here and certainly no understanding of the needs. Chances of a sale – zero.

Compare that with “If you are looking for a food processor perhaps I could outline some of the features of the various products we have?” “Could I just ask you what you are going to use the processor for?” “Well I have a young baby that is just starting on solids and I want something that will process cooked vegetables and stewed fruit.” “So you aren’t looking for something that is really heavy duty?” “No, although if it could dice vegetables for our own meals that would be good.” “Well from what you have said it sounds to me that Product A here would suit your needs. It is relatively light and compact so it is easy to handle; it would easily process cooked foods; it has an attachment which provides a basic dice operation; and it is a very affordable price. If you wanted something that could do a few more things such as……. Product B would do that for you. It is only little bit more expensive but it does that a bit extra and it is very quiet so you can still use it while your baby is sleeping.” Chances of a sale – excellent. You have established a relationship with the client. You have found out what her needs are, provided a couple of choices and outlined the features and benefits of each. Chances are that your customer will take the more expensive Product B, be happy with her purchase and will later return to purchase something else.

Being in business doesn’t mean you have to master the hard sell. In most cases a few relevant questions and your own understanding of your products will win the day.

Article: Eight Ways To Boost Sales Fast (February 2008)

With a wiff or recession in the air now's a good time to boost sales. We look at some tactics and strategies that could help you ride out any storm.

Chistmas is long since gone and wasn't a great time for many businesses with averge sales grow on 2006 of 0.3%. However, some firms outperformed the naysayers and doom merchants; Waitrose, for instance, posted a 4.1% jump, which shows that you can prosper in tougher conditions. Here are eight quickfire ways to give your sales figures a shot in the arm:

1. Make Special Offers

Make your customers offers they can't refuse every now and then. Everyone loved a BOGOF (buy one get one free). However, it is essential that you understand fully what you are trying to improve. If its profitaility then you might be onto a loser. But it its revenue or footfall then it might be a smart move.

Limited time offers are the key to success as it creates a sense of urgency and tailor you deal. 

2. Try Giveaways

What you should be looking for is an item that is both very cheap to source and which fits in with the lifestyle of the people that you are trying to attract. However, you need to be the one really gaining out of the deal, as you aren't doing this just to be nice.

3. Reward Loyalty

Loyalty schemes are a great way to boost profitability as long as you recognise what is of value to your customer bot not expensive for you. Such schemes tend to work well where there is a relatively predictable pattern of behaviour from youe consumer and especially if there is a high profit margin on the product that you sell.

4. Use Points Systems

Air Mile and Nectar are two of the most well-known players attracting many retailers to their schemes. The value of point systems is that they offer a tantaslising benefit at the end of the buying period. Often this is something that normally a customer might not buy, could not afford or would simply love to get for 'free'.

5. Offer Free Trails

You might have a great product but if people don't understand it or aren't sure of its value they won't buy it. For instance nuOrder have offered free 'clinic' sessions to firm to bring in new business - we sent out a mailshot to companies that we would really like to work with and offered and advice clinic for a day either for free or at a very discounted price. Such an offer could result in a very successful viral marketing campaign.

6. Tie In A Major Brand 

Tying up with a company that has more reach, marketing muscle and brand awareness than you is a smart way to piggyback your way to success. Also, niche operators are sometimes very valuable to larger brands as they bring a level of innovation and attention to detail that some of the big companies might lack.

However, you need to get your pitch right and be able to demonstrate that a deal would be in their best interests as well as yours. There needs to be a clear overlap between your customers and theirs. For instance, if you were an expensive watch manufacturer then you might look to tie-up with the likes of Mercedes as you are both premium brands. Or if you ran a business that provides childcare then you should look at children’s brands.

7. Sell Vouchers

Vouchers are now a staple part of most retail organisations and are understood by and popular with consumers. Essentially a gift item, they enable people to buy from you who normally wouldn't. Vouchers for DVDs or books are some of the most well known.

In order to get a voucher system up and running you should have them professionally designed and printed and watermarked to guard against fraud and train your staff in their use. It is essential that you keep track of the number of vouchers you issue and should treat each one as a sale. Vouchers are very effective but warns they aren’t things to be given away.

“The danger for some entrepreneurs is that they give them away without expecting people to redeem them. You have to make sure that you have enough stock to cope with demand.” It is a point that is valid for all special offers. Plan carefully!

8. Improve Your Team

Almost everyone can remember a time when they have received bad customer service that led them to go elsewhere. You need people who are motivated and believe in what you are doing and this should be demonstrable in the way they behave each day. Your staff should treat your business as if it is their own home and customers like they are friends.

If customers have a great experience how much more likely are they to come back? It’s not about pricing and systems it’s about getting your staff to take 100% responsibility and ensure that customers have a great experience. 

Sometimes you have to shake things up a bit e.g. bringing in new staff as sometimes people get complacent in their roles. There's nothing wrong with a bit of churn in the sales department or even bringing in a new manager.

For specific advice on how to design implement these and other strategies in your business, just ask nuOrder to help you today.

Article adapted from Growing Your Business magazine. 

Article: Determine Your Income – It’s as Simple as ABC (January 2008)

What have lead generation, conversion rates, frequency of purchase and average sale value got to do with your business? The answer is everything. They in fact represent your total annual income. They are the ABC formula for your success.

Lead generation is about getting people to the point of considering your product. It is about getting people through your door or getting you through their door. It is in fact the results of your marketing strategy. What – you haven’t got a marketing strategy? Well don’t feel alone – many small businesses don’t - but it is a good time to consider getting one because lead generation is the starting point of your business generating a dollar. Until you have a potential customer to consider your product you don’t have any chance of a sale.

So let’s assume you do have a marketing plan and you do have a customer interested in your product. How do you go about converting that potential customer into a sale?

The proportion of potential customers you convince to actually part with their money and buy your product is your conversion ratio. To get a high conversion ratio you need a good sales plan. There is plenty of information on boosting sales but it is basically about developing a relationship with your potential customer; getting to understand their needs; demonstrating the benefits of your product; and then asking for the sale.

It isn’t rocket science but a good sales system that you use over and over again works wonders and gets that ching, ching sound of the till ringing in your ears.

Getting a customer to buy for the first time is the most expensive customer you will have. This is where you biggest marketing expense will be. So what you want is to have that customer coming back time and time again. You want them to like dealing with you. To feel comfortable and to feel a little special when they leave your business or walk away with your product. It’s all about customer service – how you undertake the sale, how you follow up, how you handle the inevitable odd complaint and how you send the customer out the door.

The final bit in this simple formula is about getting customers to buy more while they are there. This doesn’t mean a hard sell to flog something they don’t need. It is about getting the customer to think about things they might have forgotten or selling the benefits to them of a product which is a little more expensive but has additional features they might use. It’s about on-selling and up-selling. It isn’t hard. You just have to remember to do it.

So when you multiply the number of potential customers that you get through your door, by the percentage of those customers who actually buy, by the number of times in a year the customer buys from you, by the average value of each sale, what you end up with is the total income for your business.

Write this formula up on your office wall. Leads (L) by Conversion (C) by Value of each sale (V) by Frequency (F) = Income (I). Your marketing plan may only generate small changes in each of these components but will produce huge changes in your income. Do the calculations. It’s as simple as ABC.

Article: Three Killer Ways to Increase Your Sales Figures Without Having to Spend Money on Getting New Clients (December 2007)

There are a lot of business owners in the market place that think of getting new clients when they want to increase the sales / revenue figures. This month we discuss how to increase revenue without the need to spend money on activities to get new clients.

Killer Method #1

Cross-sell to people that are in your premises (or on the phone, on-site), that are already purchasing and create habits in your employees that will pay dividens for years to come.

When a person is purchasing from you this is the ideal time to get them to purchase additional items as they are already in the buying mode and you may in fact be doing a dis-service by not selling to them.

A Very Simple Retail Example

Somebody purchasing a small two person tent from a camping store may not think to also purchase a foam underlay so they can sleep better at night. A simple cross-sell script “understanding that most of our customers that purchase a two man tent normally pitch them on fairly hard ground … knowing this, we always recommend that you also take a foam underlay to soften the floor so you can sleep better at night … would you like me to also include one of those for you”

A Very Simple Professional Example

Somebody going to their accountant to discuss their profit & loss and balance sheet would not normally think to ask the accountant to provide additional services. A simple cross-sell script “[name] I have been through your accounts for the year and I think your business would really benefit from completing a cash flow and profit builder analysis and report. I think the benefit to your business and personal income could be dramatic … [name] I can schedule that for you over the next week and this way you can take immediate action on increasing your profit and positive cash flow”

The Secret Nobody Tells You

Most cross-sell strategies do not work because management try to have their employees remember too many cross-selling opportunities and as such the employees don’t do any cross-selling – they simply are too confused and do not yet have this habit.

The best method to use in creating a powerful cross-sell habit with your employees is to train them on just one cross-sell item per month. Habits take around 30 days to form – so pick your most sold item and create only one cross-sell opportunity and get them to do this one over and over again for the month until it becomes a powerful habit. Next month you do one other cross-sell opportunity with a new item and get that to also become a habit … the great benefit in the second month is the first cross-sell opportunity is a habit and they will automatically cross sell.

Killer Method #2

Up-sell is different to cross-sell in that you are selling a better model or more valuable model rather than an additional sale. The benefit here is that you may more closely match the persons needs rather than what the person thinks they need.

A Very Simple Retail Example

In the simple retail example used in cross-sell where we were selling a two person tent and cross-selling the foam underlay, in up-selling you sell to a 4 person tent, caravan etc.

A white goods retail outlet would up-sell one model fridge to a higher model. An example script after finding out the real needs of the customer through a series of questions: “[name], I understand you want model and agree this is a very good fridge, my only concern is that the size of your family may place too much burden on this fridge and you come back to me in one or two months unhappy with your choice … I recommend that model y is more suitable to your needs”

A Very Simple Professional Example

The accounting firm is approached by a business owner to complete annual profit and loss statements for taxation purposes. In a normal situation this would be suitable, however the accounting firm could up-sell a package to the new client and both would be happier. After a series of questions to find out the needs of the business owner the following script could be used: [name], now that I better understanding your business and your personal goals I think I would be providing a dis-service if I did not now show you a more productive and beneficial package for you and your business. Most of our clients have been able to take advantage of [x,y,z solution] where it is a more rounded service that you can have your reports and you can also enhance your business through a series of meetings and …”

How to Implement

Simular to the cross-sell example, you need to build a habit over a period of one month. The ideal scenario is to assess your business and chose your most likely up-sell opportunity for the month and train your employees on how to (a) ask the appropriate questions so they can assess the buyers needs when deciding to purchase that item and to (b) train the employees on the script to use when up selling and (c) role play until your employees can clearly demonstrate a positive ability to up-sell in that area of opportunity.

The Vital Key in Up-selling

The customer must perceive that you are providing them with a real benefit and that you do care about their needs. If you do this you will make more money, provide a better service and stand to benefit from repeat business.

Killer Method #3

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