In his book Blink, Malcolm Gladwell makes the statement that people form opinions of others in the the first two seconds of seeing them. These impressions may or not be accurate. How accurate they are is irrelevant because people act on their first impressions.

I know this is stupid and doesn’t make sense. Heck, I am the same person whether I am wearing a pair of shorts and a tee shirt or if I am wearing a Tuxedo. It’s the person on the inside that counts right. Wrong, according to research that Gladwell points out. Knowing this you would be wise to package and present yourself in the most attractive manner possible. That means dressing in traditionally accepted business attire. Think banker here.

For years I had a full mustache. And a nice one if I do say so myself. I was proud of that mustache and considered it part of my personal identity. However, when I got in sales I read somewhere that 10% of prospects distrusted men with facial hair. So I shaved it off and have had a clean lip ever since.

If you desire to become a powerful person of influence in business you will ignore your personal preferences by packaging and presenting yourself in a manner that will be impressive to the people you are trying to influence and persuade.

In selling it ain’t about you it’s about them.

In the last 90 days have you given have you given a demo, a full blown quote or proposal or a presentation to a prospect, and then have them tell you they do not have any money or the project has been put on the back burner or they need to “think it over”?

If so, congratulations, you have just been “rolled.”

Yes, you have been rolled, screwed, taken advantage of, out maneuvered, caught off guard and just plain beaten by a better sales person, and the sad fact is that you don’t even have a clue it is happening.

It is incredible how naïve and ignorant most sales people are. They blindly go through the motions of gathering information and making presentations and proposals without a hint of what will happen once they do so. They have been taught by equally ignorant sales managers that the key to success is giving a lot of presentations and proposals, and if they will do so things will work out fine. They blindly and relentlessly do this even though it only results in a sale 20% – 30% of the time.

This is incredibly stupid when you consider that, at best, 70% of their time and effort is wasted giving proposals to prospects who never buy.

Recently, I was talking with my neighbor, a sales person, who works for a local contractor. He was lamenting to me how many bids his company was doing but how few jobs they were actually getting. When I asked him what percentage of bids that he submitted resulted in contracts he said, “No more than 10%”? I then said to him, “you mean 90% of the bids you submit  you end up not getting paid for”? His response was, “you know I never thought of it that way because that’s the way it’s done in the construction industry. If you don’t bid you don’t get the job.”

Trying to let him off easy because he is a good neighbor, I then asked him how much did it cost his company to produce a bid, he responded, “I dunno, maybe thousands”.

Thousands!! What a terrible business model. How can a company make money when 90% of their new business acquisition activity results in failure?

Think about that for a moment. They are not being paid for ninety percent of the man hours that they devote to estimating, drawing of prints, meetings with contractors, in-house staff meetings, sales presentations, etc. That sucks like a Hoover.

I then probed deeper, “how much does it cost your company to acquire a new customer”, “I dunno”, he said. Now mind you this is not some rookie sales person. This person has been in sales for over 30 years.

Although it is a stretch, he might be forgiven for not knowing this information, but his boss, the owner of the company, cannot be forgiven for not knowing this information.

How about you do you know how much of your time is wasted and how much you don’t get paid for? Do you know how much it cost to acquire a new customer for you business? If you do email me sclark@newschoolselling.com and let me know.

Does the price you paid for that expensive wine at dinner influence your satisfaction with that wine? The answer to this question may reside in the folds of your medial orbitofrontal cortex, the part of the brain that registers pleasure. In what should be music to the ears of marketers, the old adage that you get what you pay for really is true when it comes to that most ephemeral of products: bottled wine.

The Research

A recent study by Baba Shiv, an Associate Professor of Marketing at Stanford University’s Graduate School of Business, and a group of researchers at California Institute of Technology concludes that people will experience an increase in activity and pleasure within the brain when they consume wine that they perceive to be expensive even though the part of the brain that interprets taste is not affected.

While many studies have looked at how marketing affects behavior, this is the first to show that it has a direct effect on the brain. In an article, co-authored by Baba Shiv, titled “Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness,” published online Jan. 14 in the Proceedings of the National Academy of Sciences, students were placed in a MRI and given sips of red wine-including the same one twice, with different price tags: $5.00 (the actual price) and $45.00 (a fictional price). The subjects reported that they liked the expensive wine more than the cheaper wine even though it was the same wine - a preference that was mirrored by an increased activity in the medial orbitofrontal cortex of their brains as measured by the MRI.

The Marketing Implications

According to Shiv, the traditional assumption in economics is that a person’s “experienced pleasantness” (EP) from consuming a product depends only on its intrinsic properties and the individual’s thirst. Contrary to this basic assumption, several studies have shown that marketing can influence how people value goods. For example, Shiv has shown that people who paid a higher price for an energy drink, such as Red Bull, were able to solve more brain teasers than those who paid a discounted price for the same product.

Despite the pervasive influence of marketing, very little is known about how neural mechanisms affect decision-making, the researchers said. “Here, we propose a mechanism though which marketing actions can affect decision-making,” they write. “We hypothesized that changes in the price of a product can influence neural computations associated with EP.” Because perceptions about quality are positively correlated with price, the scholars argued that someone might expect an expensive wine to taste better than a cheaper one.

Says Baba Shiv, “What we document is that price is not just about inferences of quality, but it can actually affect real quality. So, in essence, [price] is changing people’s experiences with a product and, therefore, the outcomes from consuming this product.”

The lesson says Baba Shiva is that: “there’s a temptation among marketers to keep reducing prices. We’re saying be careful before you embark on that strategy.”

In keeping with this research marketers would do well to position themselves as the most expensive product or service in their market category. I realize this positioning is counterintuitive to the prevailing thought that most marketers have, and that many readers of this newsletter will have difficulty with this concept.

A Personal Experience

My study of marketing has demonstrated that most marketers want to position themselves somewhere in the middle of the price range in their marketplace. This positioning eliminates any competitive advantage by creating a “me too” perception in the marketplace.

Several years ago, I experimented with this concept by running a year long radio campaign that stated in every ad that “our training is expensive and difficult”. Instead of turning buyers away it actually attracted more of my ideal clients.

Interestingly, when prospects became clients their training experience was enhanced because they paid a handsome sum to participate and they would often brag to others about how “expensive and difficult” this training was.

Sure I lost some potential clients, but I repelled a far greater number of wimps, weasels and yahoos that I had no interest in working with. The clients I attracted were among the elite in their sales profession. They were committed sponges who soaked up every thing they could and they were a pleasure to work with. Since then, I have raised my prices several times, and every time I do so I get more clients and better quality clients.

As a side note, two years after the radio campaign finished I spoke at a local Rotary Club meeting. I gave the president, who was to introduce me, a written introduction for him to read. When he got up to introduce me he said, “well I had an introduction to read to you about our guest but I can’t find it. All I can remember about him is that his name is Steve Clark and you have probably heard his radio ads that talk about how expensive he is. So give a big Rotary welcome to Steve Clark.” That is the power of positioning.

A Military Application

Positioning is not lost on the United States Marine Corps. They are well aware of this concept and position themselves as the elite branch of military service. Their campaign for “a few good men” and “we don’t accept applications only commitments” is a practical application of positioning to attract the best. And while other branches of service struggle to meet their recruiting goals the Marine Corps does just fine.

How about you? Are you positioned as the elite in your industry or are you just a little bit better than most of your competitors? If you are anywhere in the middle of the pack, remember that only the lead dog ever gets a change of scenery.

While you may not be able to implement all of these ten strategies, read each of them carefully and ponder how you might creatively use them in your business or practice.

1. Raise your current prices and fees

This is a no brainer and requires little skill. However, it does require a lot of  courage. The reality is that people will pay you more than you are currently  asking. Maybe not 50% or 100% more but certainly 10% - 30% more. All you  have to do is convince yourself of this and transfer this conviction and  confidence to your buyers. 

2. Change your target market

Start going after the type of clients who are not price shoppers. While price is a  consideration in most buying decisions, research shows that less than 10% of  buyers buy strictly on price. You must retrain yourself that price is not the reason  most people don’t buy from you. It may be that they don’t trust you or they don’t  see you as an expert or they don’t see the value in what you offer. Whatever the  reason, it isn’t price.

3. Stop giving stuff away for free

Sales people are notorious for giving away products and services for free. Some  where in their head they have the idea that if they will be nice and give “more  value” (that usually means the company’s resources) they will be elevated and  achieve exalted status in the eyes of the buyer. That’s rubbish. The reality is that  the more you give away the more they want for free and the harder it becomes to  get them to pay for future products or services. The solution: Charge for everything.

4. Bundle products and services together

 Instead of selling individual items, start selling packages by bundling various  products and services together into one sale. It is much easier to sell three items as  a package deal than it is to make three individual sales.

5. Sell a deluxe version of your product and service

Offer a premium or deluxe version of what you sell. At least 20% of your buyers  will upgrade and by the “platinum” version of your product or service. This is  easy money that you are leaving on the table. The more affluent the buyer the  more likely they are to want the “upscale” version. 

6. Upsell with the current sale

Once you make a sale give the buyer an irresistible offer to buy an additional  product or service or add on as part of the original order. Present this as a one  time offer and have the guts to stick to it. You will be amazed at how many  people will buy it because they don’t want to let the opportunity pass them by. 

7. Upsell immediately after the sale

Immediately after the sale offer the buyer an opportunity to purchase an additional  product or service within a very limited time frame. This offer can be made via  the phone or mail or in person.

8. Build in a renewal program

Offer an automatic renewal program that will lock your customers into future  purchases unless they opt out of the program. This eliminates the need to sell  them every time your current contract expires.

9. Develop a continuity program

Develop and offer a continuity program so that you get ongoing, residual, monthly income from each account or customer. Examples of this might include  newsletter subscriptions, service contracts, etc. Sell once and get paid  repeatedly.

10. Change what you sell and how you sell it

The fastest growing segment of the North American market is the affluent  market. Every 8 minutes a new Millionaire is created. At present there are 8.4  new middle class millionaires in the US alone.

While the middle class struggles, this class continues to amass wealth. They have  plenty of disposable income and are not price sensitive when it comes to  indulging their preferences. Seek them out.  If you don’t have a high end product  or service that targets the affluent you are missing the runaway economic freight  train.

There are an endless number of marketing experts and business people who will line up to tell you how direct response marketing doesn’t work. Don‘t you fall for that line of faulty thinking because direct response marketing is alive and well.

A Real Example

As a direct response experiment, I recently wrote a 10 page sales letter and order form and used it at one of my day long seminars. With 10 pages to read, I correctly assumed that the participants would need some time to peruse it before I made the offer, so I put the letter only on the table in front of them before the seminar started.

After the last afternoon break, I passed out the order form and took 5 minutes explaining the offer and how to fill out the order form. I was very direct that this offer was only good the day of the seminar. (Actually, it was only good until I left the building.)

The Results

The full color sales letter and order form were printed on high quality semi gloss paper, and cost about $4.00 each to have designed and printed. At the seminar, I distributed 30 letters. When I finished my seminar, 8 of the 30 sales people ordered a specially designed package of sales tools and products. One additional company owner enrolled in our year long Masters Sales Program. The total revenue from these 9 new customers was $5300.00.

The total return on my $120.00 (30 letters x $4.00 @)) direct response investment was 4,416 percent! That’s $177.00 for each of the 30 people in the audience whether they bought anything or not. At that rate, I only have to speak to 5,650 people to sell ONE MILLION dollars worth of products and tools. The only question is how fast I am going to do this.

If you would like to talk with me about how to develop a direct response marketing plan for your business email me at sclark@newschoolselling.com.

Good Selling

Steve

PS Want a FREE copy of Prospecting To Fill the Pipeline?

PPS If you know someone who could benefit from this message or the FREE CD please forward this  message to them. It could change their life.
 

I have been invited to give a keynote speech Positioning Your Business in This Crazy Business Market to a group of Las Vegas business owners. Here is a sneak preview of what you would hear if you were in this audience.

I would start off telling you that the business fruit you are now harvesting is the result of many years of cultivation or neglect and that there are no secrets to learn or magic potions to drink or fairy dust that can be sprinkled on you that will change that.

The tough reality is that the business of growing a business is a long hard up hill slog and the sooner you get busy doing the things that successful businesses do the sooner you will reap more abundant and delicious fruit.

You might be wondering where I would tell you to start.

I would tell you to focus on three key areas:

Business Strategy and Leadership Skills

I would tell you to analyze your self and be honest about your leadership skills, business strategy and acumen. If you have the courage and self honesty to confront and examine your leadership skills, business acumen and strategy and attitudes there is hope. If you are not willing to do that you might as well close the doors because your business is already dead.

Every business owner’s business is a reflection of the owner’s skills, attitudes, and competency. The health of a business is not a reflection of the economy or market conditions or industry trends. It is a personal reflection of the owner’s business skills. Period!

Successful business owners understand and accept this.

The World Inside Your Business

I would tell you to make sure your house is in order before you invite people to come visit. Having your house in order means more than having an attractive and clean physical plant. It means having policies and procedures that make it easy and fun for customers to do business with you; it means having friendly and helpful employees who have a servant attitude and truly enjoy their work.

I would tell you that you need to improve your employee selection and retention process by benchmarking each position and by investing the time, money and energy necessary to hire the best people available. I would tell you that you need to invest heavily in ongoing communication and sales skills training of all of your staff. None of these things will be cheap, easy or quick. The alternative is to do nothing and hope for the best. Unfortunately, hope is not a good strategy.

The World Outside Your Business

I would tell you that you are not in the retail business or the automotive or computer or plumbing or florist or any other business you may think you are in but that you are in the marketing business and you need to learn how to become marketing experts. You would hear that you need to learn to become students of marketing and that you need to quit relying on so called marketing experts who are merely advertising sales people. You would hear that you need to determine what your Unique Selling Proposition is and then you need to craft effective copy to communicate that message. Lastly, and only when you have done the previous two things do you need to worry about which media you need to use to effectively communicate your message.

You would hear that you need to learn to become better direct response marketers and that you need to stay away from image building or marketing that you can’t measure or quantify.

You would hear that you need to become involved in your community and begin to volunteer your time and energy to a cause that you are passionate about.

All of these things will require that you invest more time, energy and money in your business. If you are unwillingly to do that then you need to either learn to be happy with your current results or you need to seriously consider doing something else.

If you like being scared no need to wait until Halloween just flick on the television or open the newspaper.

At some point you have to decide who you are going to listen to.  Are you going to  cower in a corner  like a small child and let the talking network heads tell you what your future will be or are you going to grow up and take personal responsibility for your own thoughts, actions and destiny?

Most of the talking heads that are making noise are simply making noise. There is no real basis for their mindless chatter. They sit and stare at the little red light on top of the television camera and pontificate as if they have a crystal ball and can foretell the future. They can’t. I can’t and neither can you or anyone else.

The business reality is that people are still buying stuff and spending money. Lots of money. People are still eating at restaurants, going to movie theaters and shopping at the malls.  People are still buying insurance, houses, cars and clothing and they are still traveling to exotic vacation destinations. Businesses are still buying advertising, computers, office furniture and everything else businesses normally buy.

The bottom line is that people are still buying the stuff you or your company sells. They may not be buying quite as much or spending quite as recklessly as they were but they are still spending trillions of dollars annually.

As I survey my clients across the U.S. and Canada, I find a common theme. Those companies who are excellent at what they do, have a clear vision, a detailed plan, and aggressively go after market share are growing their sales revenues and profits by double digits.

 Those who are slovenly, unfocused, half committed and operationally mediocre are struggling or shrinking now that the easy money has disappeared.

Let’s face it. When money is easy anyone can make money. When things tighten up we find out who the real players are.

The beautiful thing about the market is that it always separates those who are performers from those who are pretenders. This shaking out process that culls, cleanses and prunes the market of business imposters is healthy.

Today’s economic climate is not a negative.  It is a great opportunity to leap ahead of your competition and become the dominate player in your market.

Are you excellent at what you do? Do you have a clear vision and written goals? Do you have a detailed written plan to achieve your goals? Are you aggressively going after market share?

Stay tuned. In part three we will talk about specific strategies that can help you become a market leader.