You don’t charge enough

Nearly every business leader I meet is keen to tell me how good they are at what they do, and how much their customers value them. That’s great, but often that value is not reflected in the financial results for the business for one simple reason.

You don’t charge enough

In the speaking world, I advised a speaker to charge almost 3 times as much for an event as some of my colleagues thought she should. Her message to me was “I went for it. But only because you gave me the confidence to do so”

If you don’t ask for it, you won’t get it

It’s probably obvious that if you are a speaker or a business advisor what you charge is fundamental to how much you take home.

In every business, pricing can make a really significant difference to the bottom line. Imagine a high volume, low margin distribution business that has a turnover of £10m and a net profit of £1m. (I am keeping the numbers easy!)

If that business could increase its prices by 10% their profits would increase by £1m. Their profits would double.
You may be saying “I can’t put my prices up by 10%, I’d lose too much business” but I’d encourage you to think carefully about that and take a look at your model.

If my distribution business is making a 20% gross profit now, that means every £1 of sales generates just 20p in gross profit. When they put their prices up, the 20p becomes 30p so you would have to lose an awful lot of business to be worse off

If 10% is too much for you to risk, how about 2%? Increase your prices by 2% every year and the effect on profitability is amazing in a very short period of time.

All your secrets are revealed

In any business and in any department managers will be concerned to reduce doubts and remove fears and uncertainties from them their team. That’s great when the news is positive, but what do you do when it is not so good?

I have learned that in many businesses there are no secrets and trying to keep secrets just creates more problems than it is worth.

The fastest method of communication has always been the rumour mill. I think it breaks Einstein’s laws and is actually faster than the speed of light!

The messages sent and received by the rumour mill are like those on an old radio. They are subject to heavy distortion, some of which may be intentional and some accidental. There are individuals who seek to benefit, if only emotionally, by spreading their distorted view of events. 

Who are you thinking of, right now?

If you want to make sure that all right message goes out to your team you need to control the message and the only way to do and that is to get ahead of the game.

There will be times when you don’t want the team to know everything but if you say nothing they’ll make up their own minds.  The trick is to give them enough to keep them feeling they are “in the know” without revealing the sensitive information.

This is never more relevant than when you are selling your business.

It is self-evident that you don’t want to tell the whole team you are considering selling. If you do, the next question will be some way towards “What does that mean for me?” which you, as the vendor, cannot answer. What the new owner does with the business and the team is down to them!

The acquirer is quite likely to want to see the business, so you need to tell the team something and the closer to the truth the better.

How about “We are exploring how our businesses might work together?”

It’s a lot more credible than the old “prospective customer” especially when you don’t usually have customer visits.

Look for the cause

Whatever business you are in, it is worth considering cause and effect whenever something good or bad happens.

It’s a bit like a doctor diagnosing the illness that is causing the fever, not just treating the fever, but far too often we focus on preventing the bad stuff, not repeating the good stuff.

The same principle applies to quality systems. There are procedures and processes like root cause analysis and the 5 whys principles that help you determine the real cause. Once you have done that you can prevent the root cause, which prevents the effect.

I am at least as interested in what went well as I am in what went badly. Eliminating errors and preventing problems is great, but doesn’t move the business forward.

A few months ago I had a meeting with a prospect who was initially quite hostile, so much so that I struggled to get him to agree to a meeting at all. I’d been introduced by a colleague, so he had expressed an interest in getting his business ready for sale, but even so he was difficult.

The meeting went OK. It was not the most positive experience, and I think if you’d asked me to rate my chances of securing work immediately after the meeting I would have said perhaps 30%.

Two days later, I had a phone conversation with this same person. He was really enthusiastic, telling me that he was just off on a business trip but that he would be in touch and we would be working together.

I like the effect – having a prospect tell me that he will be engaging with me is good news, but without knowing the cause I could not repeat it.

When you have a sales meeting that fails or a marketing campaign that didn’t work, I suspect you have a review process to determine why. Do you have the same process when you win?

(By the way, I think my prospect became my fan as a result of reading my book, Deal Finance)

What’s new about social proof?

At your local fruit and veg market, the stall holder doesn’t just serve you and take your money. He or she is quite likely to loudly tell everyone in earshot (and that’s a long way for a market trader) what you’ve bought. The other prospective customers hear that you bought a lovely bunch of bananas (or even coconuts.)

When you’re looking for somewhere to eat in unfamiliar circumstances, you are likely to look for the restaurant that is busy and avoid the one that is empty. You can see that other people are eating there, so it must be ok.

If you go to a trade show or an exhibition, you will pass by the stands with no visitors but if there’s a crowd gathered around a stand, you will wonder “What’s going on there?” and perhaps join the throng.

I keep hearing about this new thing “Social Proof” which I think of as “the reassurance that people like me are buying this product that I am considering” and examples abound all over the internet, from Amazon reviews through to holiday sites offering user ratings and the Internet Movie Database (IMDB) with film and TV show ratings.

I don’t buy anything without checking the reviews, and I don’t think I am alone. How many times do you see the word “trust” used in marketing efforts today?

If your marketing material and your website don’t contain customer testimonials and reviews, you are like the lonely exhibitor with no one to talk to. They are all over at the busy stand. Worse than that, the prospect who is considering you may look at the lack of reviews and decide they are the one making the mistake. No-one else is buying from here, that’s a big risk, too big a risk for me. I’ll find an alternative where there’s some proof.

Social proof isn’t new – but gaining access to it as a buyer is easier than ever. Ignore it at your peril, get those testimonials and reviews

Sometimes it is good to wait

When we are in conversation, there’s a natural rhythm and most of the time we read the signals, we know when the other party has finished speaking and make our comments at the appropriate time. When that goes wrong, we end up interrupting each other and failing to listen.

If you are not a fearsome interviewer called Paxman or Humphreys that is probably accidental, or it is driven by emotion – usually anger.

Interrupting someone by speaking over them is bad manners, and can provoke the speaker being interrupted.

It can be necessary, especially if you have someone veering from the point of the discussion, to bring them back on track but you don’t have to speak over them – or worse shout to get your voice heard.

Often, a quizzical look is enough, but if that doesn’t work try raising your hand and waiting. Most people will pause, and that pause offers you the opportunity to comment.

You can use one of several phrases at this moment. You might say “That’s interesting, can we come back to that in future?” or perhaps “Fascinating, but we were discussing XYZ and I’d like to complete that discussion before we move onto this topic”

The pause is one of the most powerful – and underutilised – conversational (and public speaking) techniques.

Try inserting deliberate pauses into a conversation when you are trying to elicit information, or want to convince your conversation partner to contribute more. We don’t like silence and the temptation is to “fill in the blanks”

Combine it with the technique of asking open questions – simply questions to which the answer cannot be Yes or No – and be patient.

In a one to one or small group conversation, the other parties will feel compelled to share their thoughts.