How much do you charge to make a healthy profit?

It is difficult to decide on a price, and too easy to lower your price so that your customer will buy your product or service. What you should really consider is “what is valuable to your customer?” and “How valuable is it to your customer?”

If you can show your customer how they will get back more than what they put in, the amount they put in is not as important (as long as they can afford it). This is the best pricing strategy. Always charge as much as you can, while still showing your customer how they are getting a great deal!

Here is an example that will show you how to be profitable. You figure that it will take about two hours making a video advertisement for a customer. It is a very simple idea, and only requires $30 in props. How much do you charge? There are a few things you need to consider:

1) what is the customer’s budget? Ask them! Remind them that they need to save some money for promoting the ad, or buying advertisement space.

2) Take one third of the budget. Does that much money pay for enough time and material that you can complete your work?

3) What does the customer get out of it? Make sure the customer knows this, and gets excited about it. Remember, this is their initiative, If they want a product or service, it is because they want something out of it. For the example we are using, the customer might expect to make 5 sales worth $10,000 in profits from people that visit their website. Can you give them what they expect? If not, that is ok! You just need to manage expectations, and explain the value that they are getting. First ask them “how many people need to visit yourwebsite to make a sale?”  Based on this number, you will know how many people you need to send to get 5 sales.  Even if they do not make 5 sales, as long as you make sure they get the number of visitors they expect, they will feel like you did your job.

I will probably add to this post later… It’s getting kind of late.  See the copyright notice in my last post, it applies to all posts.

Do you have any bad habits when trying to make sales? Do you ever find yourself creating countless revisions of a proposal or quote for a customer?

Sometimes we feel like a customer wasted our time .  Does it frustrate you?  I used to think it was the customer, but after analyzing the parts of a sale, I found that there are some things we miss.  By paying more attention to these things, we can avoid experiencing those customers that can never decide, those ones that love to take up our time without buying a thing.

I developed a cycle that you can follow to save time and increase sales.  I broke it down into parts: 1. Initiate Dialogue. 2. Qualify. 3. Create Value (and the Value Circle*). 4. Close the Deal or Close the Conversation

1. Initiate Dialogue

To increase sales, you need to fill your “funnel”.  By talking to more customers, you can uncover more opportunities.  These will eventually trickle out, or pour out the bottom of the funnel as closed deals.  If you want it to pour, you need to open a conversation with as many potential customers as you can handle. You can find twice as many customers, maybe more, by networking. Simply ask every customer that you encounter if they know any one else that might be able to use your product or service. Are you too busy? Well, the time saving part is knowing how to end these conversations quickly.  This leads to:

2. Qualifying your Customer

Before you do ANY work for someone, you need to qualify them.  Does it make sense to sit down, crunch numbers, put together a proposal, and give it to someone hoping that they will like it and pay you for your product or service?  Well it depends.   Maybe the customer is really interested in your product! Great!  Except after spending time preparing more information for this customer, you might find out that they don’t have any use for it, they just wanted to know more.  Or maybe it is out of their budget.

Again, do NOT do any work until you qualify your customer!

3. Create Value (and Keep Qualifying)

Before you even think about giving a quote or price, you should think about how much your customer expects to pay.  Let’s say that you are selling a widget.  The customer might think it is only worth $5.  But, if you emphasize how it will save one of his or her employees half an hour a day, you can put a dollar amount on that value.  At $20 an hour, they will save $50 a week!  Most customers do not think about the value of a product or service they are considering. They think about how much it probably costs to make such a widget. It is YOUR job as a sales person to find out what is important to your customer, and show how your product or service will create value for them.

There is the Value Circle* that makes this very easy. Step 1 is entering the circle.  Then you rotate around the circle made up of step 2 and step 3. You then exit with Step 4.

1. Enter the circle and ask “If I show you how my product or service will (insert benefit here) will you buy it from me?”

2. If the answer is no, ask “Why?” and try to narrow their reason to be as specific as possible.

3. Ask “If I am able to satisfy that reason, will you buy from me?” or “My product or service can satisfy that reason by (enter feature and benefit here).  Now do you want to buy it?”

The circle is between step 2 and 3.  Repeat step 2 and 3 until you achieve one of two things:

A. The customer commits to buying from you, provided that you can satisfy their “buying needs” (in which case you justify any work that you are going to do such as a proposal) or

B. The customer gives you a reason that they will not buy from you.

There is a snag… people might say they are not ready without reason.  Whatever they tell you, once one of the above conditions is satisfied, you can exit the circle with step 4:

4. Exit the circle by asking “When?“  Here are some more specific examples to help you close the deal:

If they are not ready, ask “ When will you be ready?”

If they say “sure”  ask “Are ready to buy right now? How do you plan to pay?  Do you have a budget for my product/service?  Do you plan to save up for this?  How long do you think it will take to save up enough money?”

The Value Circle* is designed to quickly qualify your customers and create value at the same time.  These is is the most important sales tool.

4. Close the Sale or Close the Conversation

a. No opportunity? Close the conversation.
If you and the customer determine that there is no opportunity, first ask if they might be able to use your product or service in the future. If so, ask if you can follow up in 3 months or 6 months.  Close the conversation by thanking the customer for their time and asking if they know anyone else that might benefit from your product or service, and if they think of anyone to please let you know.

b. Opportunity? Close the Deal.
Great! You found a customer that is willing to buy.  Now you need to keep your side of the deal.  Give the customer the proposal or quote in a timely manner. Remember to include all the points you uncovered when you were in the Value Circle* in the proposal, or along side the quote. You need to remind the customer that you are selling them something of value, and they are getting a deal! It is a good idea to get the customer excited and make them feel like they are getting a deal so they will feel good after the purchase rather than coming back to you with buyer’s remorse.

Finally, and most importantly, you must ASK FOR THE BUSINESS!! Make sure you include an order form or contract or a template purchase order with your quote or proposal.  Ask them”how long will it take you to get a payment ready?”. This will get the customer in the mind set that they are committed to buying and they have a method to pay you.  Make your customer aware that you are waiting for payment by including a form with payment options when you give a quote or proposal.

If you make it this easy for your customer, I guarantee they will not look for your competitors. Everything is in front of them and they will think “chances are other companies will charge around the same price”, so they might be too busy or lazy to do the extra work of looking at the competition, giving you a higher rate of closing.

*Value Circle is a trade mark of Frank Forte. If you want to reproduce any content written by Frank Forte, please contact him, he is a really nice guy and would be happy to share, but only with his written permission.  If you do not have written permission from Frank Forte, be prepared for his team of lawyers and the legal costs you will incur by either defending yourself and/or (more likely “and”) settling by paying him and his lawyers a substantial amount of money. He has a highly trained robot named LawBot** constantly searching the internet at light speed to protect his work.

**LawBot is also a trademark of Frank Forte.

Notice:  Following advice you find on the internet has a high amount of risk. If anything bad happens to you as a result of comments or advice posted on this blog or website, even if it is my fault for telling you something or providing you with information or links to other websites, I assume no liability. You are responsible for your own actions.

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There is an important thing that you can do to improve your website that is so easy. Last month I achieved a 0% bounce rate on my employers website by using this strategy (from visitors that found the website through a Google search).  “Bounce rate” is the percentage of visitors that leave your website right away.  A high bounce rate is bad, because visitors quickly decided your website is not worth their time. I want to share this advise with you because I want you to be able to get a 0% bounce rate too!

How did I get a 0% bounce rate?  I can summarize it in one line:

Always have a follow through link at the end of any web page.

This will keep visitors browsing through your website, and it will direct them straight to the content you want them to see. Without it, visitors have no where to go. Unless they know that they can find exactly what they want in your menu and don’t have to scroll back up too far to find it, they will probably leave your website using the trusty “back” button and continue their Google search.

Is this the only thing you need to do?  The short answer is “no”.  You need to get their attention before you can ask them to go to the next page.  There are some other strategies that come into play (which I will describe in future posts…  subscribe to my RSS feed), but just like in many sports the “follow through” is probably the most important. Based on my research, putting a link at the bottom of any content is a winning strategy, especially if you ask the visitor for action or endorse the page where the link leads. I would call this a “trial close”.  In sales the “close” is when you get commitment from a customer to buy (signing a contract, giving you a cheque, etc.). The “trial close” is a call to action to find out if visitors are interested in your product or service. By clicking a link (i.e. “click here to find out more” or “click here to buy this product”)  they have committed more time on your website. They have committed to learning more, or have an interest in buying.  The “trial close” will tell you if the customer is ready to buy into your product/service. This is also the ideal place to ask for customer information. If they are commmitted to learning more or buying the product, they will probably give you their contact information so they can get the information or product from you.

I hope this information helps you develop your online business skills, specifically online sales.
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Frank Forte

I’m sure you have found yourself  reading over a simple email that you just wrote, and then decided that you don’t like it.  You probably tried a number of versions, hoping that your message will be clear.  You probably worried that you would have to write two or three more emails to clear up the message if the recipient(s) did not get the right idea.

I was consciously thinking about the efficiency of email, and realized “What a waste of time!”.

I found on a number of occasions that a simple email could easily take up to an hour of my time, and I am sure you have been in this position. Sure this would be great if you were (are?) a lawyer and charged by the hour. But I am not a lawyer and don’t get paid to spend more time writing emails.

Let us look at the reasons we like email so much:

1. Getting things in writing
2. Avoid phone tag
3. It’s “fast”
4. You can “proof read” it, so you give the right message
5. It is in your “comfort zone” and you can take time to get your message right.

We agree that email can take more time than expected. In fact a simple message can take a lot longer because we want to make sure the person receiving the email does not misunderstand what we are trying to say.

Marshall McLuhan said “The medium is the Message”.

I am going to dissect each reason above, and make some points about why email might not be the right choice when communicating.  There are some amazing reasons we should not default to sending messages by email or “texting”, and think about all the other methods of sending a message. Remember, you are not limited to one medium. Your message can be more effective by using more than one medium, and more efficient by using the available media in a specific order. Choose wisely and you can complete tasks faster, avoid extra stress, and communicate more effectively.

1. Getting things in writing

Yes, there are people that will throw you under the bus. How often does this happen? How often do you need to go back in your email and send a copy to convince people that things are different. For me, this is not often. In fact, when you are in a rush to send that email out quickly, you might make a mistake, and it is hard to back-track. It is in writing. Permanent. On the other hand, speaking to a person (in person or over the phone) you can back-track and correct yourself.
Point: Decide if you need it in writing before choosing email as your method of communication.

2. Write an email to avoid phone tag

Sure, you can send your message when you are ready, and wait for a reply. Unfortunately some people are too busy and might not read your entire email.  The subject line that you write might not even get their attention. This happens to me quite often when I send an email to my boss. Ever happen to you?

Well the good news is that you are not limited to one medium. There are actually three mediums that we are considering in this point.  Email, voice (over telephone)… and voice mail.

I believe the best order to try and get your message across is: 1) telephone, 2) voice mail, 3) email.

If they pick up, you get your message across quickly, get your answers quickly, and continue without waiting for a reply.  If not, you might still get the message across quickly by leaving a voice mail.  Worried your voice mail will be too long? You can still avoid phone tag if you are prepared to use voice mail as a medium.   I have not been prepared for voice mail in the past and fell back on the line “It’s Frank, please call me back when you get a chance”.  What do you usually say when you expect someone to pick up and hear their voice mail.  I bet you just hang up half the time and go straight to email.  If you’ve read this far, now you will know better. You will remember to prepare an effective voice message. Example:

“Hello Boss, I am going to send you an email about why we should consider using a phone when calling a customer before or instead of writing an email and the reason is we can be more efficient and productive at work”.

Note that an effective voice mail will include the subject and the reason.

Your message will be more effective because:

a) If they get the voice mail first, they will pay more attention to your email or
b) If they get your email first, the voice mail will ensure that they read it, and remind them of the message that you are trying to get across.

Point:  Call first so your message can get across faster and more effectively. Make sure you are prepared to use more than one medium (prepare to use voice mail and email together if someone doesn’t pick up).

3. It’s fast

Yes.  when you compare email with snail mail, it is fast. It’s electronic, it can be sent at light speed!  But it is still mail and not a live conversation.  There are faster ways to get your message across. Even “texting” wins here since you and the recipient do not need to be at a computer (not really applicable to blackberry users). Still, voice is faster, and may be more appropriate in professional communications.

Point: Email is not fast

4. You can “proof read” it, so you give the right message

Does it make sense to “proof read” a conversation?  If you are sending a report, then point number 4  is a good reason to use email (although it might be better to create a document and attach it to an email). If you are asking a question or replying to a message, then you are wasting time proof reading extra content.  This is part of the reason this post is labeled “Email Versus Productivity”.  You do not need to proof read a voice mail or phone conversation.  I want to emphasize a point I made above: prepare an effective voice message. This will allow you to ask a question and get a reply without really playing “phone tag”.

Point: don’t create content that needs proof reading unless it is necessary

5. It is in your “comfort zone” and you can take time to get your message right

Communicating in person or over the phone allows an interactive conversation.  You can spend a small amount of time answering one question the other person may have about your message, rather than explaining everything in your message, and having a long email that people might not even read. Getting your message right does not mean it will be effective.

As for “comfort zone”  I will direct you to an article by Drew Laughlin that explains why reason number 5 is not a good reason to use email: Are You Gutsy, or Wimpy?

Point: Try to think about the goal of your communication. Consider stepping out of your comfort zone to communicate more effectively. You don’t need email to get your message right.

Note: The content in this WebLog (blog) is copyright © Frank Forte
You may not reproduce this content without written permission by Frank Forte.
I would be happy to let you use my content, just ask! But don’t use it without my permission or I will release my lawyers. It will be just like when Mr. Burns releases his hounds, only the hounds will be lawyers, and you can’t run from my lawyers.