Category: Growing Profit

Don’t Let that Prospect Just Walk Away

What happens when a prospect isn’t ready to spend the amount you’re charging?

Short version: they leave.

Whether by walking out of your brick-and-mortar store or closing a browser tab, if a prospect decides not to buy your offer, they’re gone. They might try to find a better option elsewhere, or they might not.

If you don’t have a strategy for capturing that prospect’s business, you could be leaving money on the table.

What is down-selling?

Down-selling is nothing more than offering a prospect an alternative at a lower price when they decline your original offer.

The goal is to turn the prospect into a client. You not only get the short-term financial benefit, but you also​ gain the opportunity to do business with them again in the future.

Gyms do this all the time. They always start by trying to sell new members a full one-year membership.

If the prospect declines, they’ll offer a 90-day “health makeover” membership. If that fails, they may go to a 30-day or possibly a one-week “trial” membership.

Gyms and health clubs know if they can just get a prospect to buy something, the odds of them staying with them in the long term goes up exponentially.

Small sales add up to big results

Consider the local florist.

Many people show up at a florist to buy roses for their better half—Valentine’s Day, a birthday, an anniversary, Mother’s Day, and so on.

But suppose a bouquet of a dozen roses costs $50, and they don’t have that much money to spend. If the florist didn’t have other options, that’s a prospect out the door and buying at another shop.

If the florist has a less expensive alternative—say, a dozen carnations for $25—the florist might make a smaller sale (instead of no sale at all).

This seems like a minuscule move, but it makes a big difference.

If our hypothetical florist only used that down-sell once each day, this would still add up to almost $8,000 in additional annual revenue.

I do this in my business, too: My highest priced offer is one-on-one coaching, but I also offer group coaching at a lower price point. More affordable still is my e-learning site. By providing high-quality options at multiple price points, I make my services more accessible to a wider portion of my prospects.

Having a solid down-sell strategy increases the value of each prospective customer by turning a no-sale into a smaller sale.

How to create a down-sell offer for your business

What’s your current price point for what you currently sell?

Cut that price in half and try to come up with an alternative for this new price.

How many of this new product or service would you conservatively estimate you could sell each week?

To see how this strategy can affect your revenue, multiply your reduced price by your number of weekly sales, then multiply that number by 52 weeks to reveal your annual increase.

And that’s just one down-sell. How many additional down-sell opportunities would you estimate you could easily develop?

In addition to less expensive bouquet options, our florist could create down-sell alternatives for weddings, lower-priced options for funerals, less expensive boutonnieres for prom, and so on.

Ultimately, a small sale is better than no sale. And if you really “wow” them, if you over-deliver on your promises, if you give them an exceptional experience, they’ll want to keep coming back and giving you their business over and over again.

Want to understand down-selling better or learn more about how this might fit in your overall profitability strategy? Grab your free copy of my e-book, Mind your Profits, from my website www.profitminds.net.

Why aren’t my prospects buying?

The Buyer’s Journey

You have a great product at a no-brainer price. Your sales copy is excellent. Traffic is coming to your website at reasonably consistent rates.

And yet: almost no one is biting.

This can be so frustrating because we know our product or service will help prospects solve their problems. We’ve spent so much time and energy making our product/service into the best solution out there.

It can feel like we’re one of those sign spinners—pointing the way, sweating in the hot sun, and dancing until our muscles ache—and no one’s making the turn.

What gives?

The fact is, only 1% of prospective customers are ready to buy right now. The other 99% still have to go on a journey before they’ll be ready to buy.

Think of the customer relationship like a romantic courtship. While maybe 1% of people are ready to fly to Vegas to tie the knot then and there, most need to go through a few key steps before they’re ready to settle down.

By recognizing the buyer’s journey, you can better understand where your prospects are along that path, what they’re thinking about, and what they need from you at each stage.

1. Future Buyers

For most buyers, the journey starts when the prospect is still a “future buyer.”

These prospects aren’t comparing companies, weighing options, or picking out which color product they like. Prospects at this stage likely don’t even know that they want a product or service to begin with.

The question they’re asking (and the question you need to answer) is “why should I buy?”

Not “why should I buy from you” but “why should I buy anything in the first place?”

How do you answer this question? By highlighting the benefits of a purchase. They need to know what problem your product or service solves and why they want a solution.

This is a very different question from what most small-business owners try to answer on their websites. Their content most often focuses on choosing a vendor once the buying decision is made—but that marketing content is skipping crucial steps.

For example, if I’m selling air conditioners, at this stage I’m not talking about my appliance’s features but about the benefits of having an air conditioner. I’m talking about the discomfort of hot rooms and unsightly pit stains. I’m talking about the comfort of cool air after working in the garden all day.

If I’m an accountant, the future buyer doesn’t need to know my expertise and qualifications. They need to understand what a relief it is to let someone else manage their books and completely remove any concern about taxes.

2. Soon-to-be Buyers

The next stage is the “soon-to-be buyer.” These prospects understand the benefits of buying a product or service to solve their problems.

The question they’re grappling with at this stage is “why shouldn’t I buy?”

This is the stage when all the objections come out of the woodwork: Is it worth it? Will it be too expensive? Is it time-consuming to implement? Sure it works for some people, but will it work for me?

The information you provide at this stage should work to overcome those objections. Soon-to-be buyers need to know that the solution you’ve presented (a) will work, and (b) will work for them.

Soon-to-be buyers of air conditioners, for instance, might be concerned about how an AC unit will affect their electric bill. Effective marketing, then, would address the importance of energy efficiency, or how energy-efficient appliances can save money on electric bills in the long run.

An accountant’s soon-to-be buyers might be wondering if they actually need to pay for a professional: “Couldn’t I just have my nephew keep track of my books?” Marketing in this stage, then, could address “return on investment” and how professional management of cashflow can actually add to a business’s bottom line.

3. Now Buyers

The “now buyer” is that 1% we talked about earlier: prospects who are ready to make a purchase right now.

Their main concern is vendor selection. Now that they know they want to buy, they’re asking “who should I buy from?”

Now buyers are ready to hear what separates your product from the competition. Why my air conditioners are more energy efficient than other brands. What expertise and certifications make my accounting services first rate.

The issue is most marketing starts with this step.

While setting yourself apart from competition is important, most prospects aren’t going to care about this until they’re ready to buy.

By nurturing your prospects with the valuable information you have provided through every stage of the journey, they already trust you more than your competition by the time they make it to this stage.

The answer is simple

Why aren’t prospects buying? Short answer: They don’t know you.

A slightly longer answer: They don’t know you—yet.

The goal, then, is not to sell to the prospect right away. (You wouldn’t propose on a first date, after all!) Instead, the goal is to nurture the prospect along their journey so that when they are ready to buy, you’ve given them all the information they need every step of the way. This builds trust and makes them naturally want to buy from you.

To learn more about how to nurture your prospects, check out my ebook, Mind Your Profits.

How to Discover Your Ideal Customer in 2 Simple Steps

How to Discover Your Ideal Customer in 2 Simple Steps

How do you describe your perfect client avatar?

When it comes to marketing, many business gurus offer some version of this advice:
• figure out who your ideal customer is
• be really specific
• then sell to that person

Most entrepreneurs know they need to have an ideal customer (or ideal client, or ideal customer avatar, etc.) in mind. Understanding the specifics about the person you’re selling to can be incredibly helpful, whether you’re crafting your message, working on your marketing, or developing your products.

But when it comes to actually figuring out that ideal customer, the strategies these gurus suggest tend to be pretty abstract, asking us to “imagine,” “picture,” or “visualize.”

We’re supposed to “imagine a day in the life” of someone—but how can we do that if we don’t know who that someone is?

The old way works (sometimes)

While ideal client visualization exercises can be helpful once you know who they are, visualization can be challenging if you don’t immediately know the type of prospect you’re looking for.

Some business owners know instinctively who their ideal customer should be. If you’ve been selling a service for a long time, you may have a sense of who you enjoy working with (and who you don’t enjoy working with—but that’s a topic for a later blog).

Others start with a specific client in mind and design a product around their needs. That approach is a little better, but it doesn’t help those who already have a product or service and need to figure out who to target in their new marketing campaign to take their business to the next level.

Unfortunately, most business owners lack a strategy for zeroing in on their ideal customer avatar.

Consider my client, Elaine, who is a coach for women executives. While “women executives” may feel specific already, Elaine knows that the more specific she is about who she serves, the more effective her marketing campaigns will be.

But waiting for a client avatar inspiration is no way to run a business. We need a strategy.

Here’s a new approach:

Step 1: What is your unique selling proposition?

Instead of trying to pull an idea customer avatar out of thin air, start by looking at your offer.

What is unique about your product or service?

What is the superpower that only you can offer?

An accountant, for example, might be especially good at sorting through an unorganized mess of documents and receipts. A painter might be especially good at capturing the dynamic movements of water and the ocean.

For Elaine, her superpower is helping women speak with voices that will be heard. So often, diversity is treated as a checklist; while women and people of color may be invited to the meeting and allowed to “sit at the table,” their ideas are not always taken seriously. Elaine’s unique selling proposition is helping people position those ideas so others will really listen.

Step 2: Who is going to benefit most from that proposition?

Once you’ve zeroed in on what you offer and why it’s unique, use that to brainstorm your ideal client.

Who is going to benefit most from your superpower?

Who is going to want or need your unique product or service the most?

That accountant who is good at making the disorganized organized could be especially helpful for business owners with ADHD. That gifted ocean painter could market their work to avid surfers.

As Elaine and I started working together, we realized that the person who most needs her superpower is the female chief diversity officer. This woman not only clearly gets the problem—she lives it every day in her job.

And here’s the beauty of this particular avatar: After Elaine is effective in helping the chief diversity officer be heard, she is a great conduit into the C-suite, with potential introductions to other women executives who experience this same problem on a daily basis.

Stop waiting and start strategizing

The days of aimless visualization are over. We no longer need to close our eyes and cross our fingers, hoping the perfect idea for an ideal customer avatar will somehow fall into our laps.

Instead, we can use a concrete strategy to reverse engineer our market based on what makes our offers unique.

It’s a simple exercise, but it works. By taking the guesswork out of developing an ideal customer avatar, this strategy leaves more time for us to dig into the details of who this person is and what is motivating them so we can actually put the avatar to use in our marketing.

If you try this exercise, comment below to let us know who your ideal client is!

How to Get More Referrals from Business Partnerships

partnership
shaking hands

The business world is going through a major shift right now.

For many, business is very slow indeed. Some businesses may find themselves unable to work the way they normally do because of the lockdown.

But if you can’t work in your business—work on your business.

As more and more people are able to connect using video conferencing technology and other communication apps, this is the perfect time to build relationships.

One great relationship to cultivate right now is a joint venture partnership.

A joint venture, or JV, refers to any situation where two parties engage in a commercial enterprise together while retaining their individual identities and businesses. A common example is giving referrals in exchange for some amount of affiliate income.

Seems simple enough, right?

Unfortunately, a lot of small-business owners are going about joint ventures the wrong way. And this can significantly limit how effective those relationships are—and how much profit they can bring in.

The mistake you’re probably making:

Here’s an example of the typical way most joint ventures work: “I’ll send you a referral, and you send me 10% of whatever you make from that referral.”

This quid-pro-quo is how most small businesses are thinking about joint ventures.

Typically, a small-business owner will look for potential partners who solve different kinds of problems for a similar client base. For example, one of my clients is an interior designer. Homeowners who hire her are probably also looking to hire a contractor to complete her designs.

If she went about it the usual way, she would partner with a contractor or two and send the homeowner to them to get bids. Then the homeowner would pick one and that would be the end of it. Perhaps one or both of the contractors would send referrals to the interior designer, and maybe there would be some money that changes hands in exchange.

And that would work.

But there’s a much more powerful way to connect with referral partners that has the potential to bring in a lot more clients.

Do this instead:

Think about the problems that your referral partners have when they work with your common clients.

What are the hot button issues for these potential partners? What are their concerns? And how can you or your offerings help alleviate those pain points?

My interior designer client noticed that contractors really don’t like working with clients who constantly change their mind. When clients can’t make a decision, it usually results in lots of change orders for the contractor. It can really impact the schedule and it’s a huge hassle.

When setting up their referral relationship, then, this interior designer stresses to the contractor that she will help them deal with those client issues. She explains how she’s not just a designer—she’s a project manager, too.

She doesn’t just throw her design and the clients at the contractor saying, “it’s your problem now.” Instead, she stays with the project from start to finish—and even helps coordinate deliveries of hard goods like cabinets and appliances. She takes care of all the things that distract the contractor from doing what he’s there to do.

By emphasizing these aspects of her work as an interior designer, she helps contractors understand how she can solve their problems.

As a result, her JV contractors are much more likely to send clients her way.

Here’s another example:

As a business coach, accountants are a great resource for me. One of the biggest problems they have is when their clients come to visit them in March with an overflowing box of receipts and invoices and expect them to solve their tax issues in two weeks.

I help my CPA partners by guaranteeing that the clients they send to me will come to see them at least two to four times per year, if not more. This way, they get an opportunity to work with clients throughout the year, instead of dealing with a mad scramble to get things done during tax season. The CPA can finally move from being a bookkeeper and on-demand tax preparer, to building a valued relationship with that client.

Ask not what your partners can do for you, but what you can do for your partners.

When you set up a joint venture, don’t just think about how you and your JV partner can solve your mutual clients’ problems. While that can be a useful first step in finding a good referral partner, it is not the only ingredient in cultivating a fruitful relationship.

In addition to solving your customers’ problems, think about how you can solve your JV partner’s problems—especially the problems that arise when they work with your mutual clients. If you don’t know, perhaps that can be a topic of conversation at your next (virtual) coffee meeting.

When you emphasize how you can make their work easier, smoother, or more profitable, they will be even more motivated to send their clients to you.

It’s the very definition of “win-win.”

The Simple Way to Find More Money for Your Business

The Simple Way to Find More Money for Your Business

man working with calculator to calculate numbers.
Saving money by reviewing your expenses

The current pandemic crisis has made things especially difficult for small businesses. Funds are low. For many, business has slowed to a crawl—if not halted entirely.

Many business owners are concerned that their businesses will fail. They worry that people will stop buying, and they’ll lose all of their customers.

But here’s the truth: no one goes out of business because they lack customers. Businesses fail because they run out of cash.

Every business owner should have 6 months of expenses in reserve, but most do not. Why is that?

Consider one of my clients (we’ll call her Amy). Her interior design business was growing, but her expenses were growing, too. Her business was making just barely enough to break-even.

Even in her best quarter she wasn’t able to bring much of that hard-earned money home—and she certainly wasn’t able to keep enough on reserve.

This wasn’t for lack of clients. In fact, Amy had more business coming in than she could handle all by herself. She needed to hire a junior designer to help relieve some of the workload, but didn’t think she could afford one.

The issue? Expenses.

Amy’s expenses were simply too high. And when expenses are high and growing as fast as revenue, it’s difficult to increase the bottom line, no matter how many customers are coming in.

This is why it’s so important to review your expenses. You may be leaving money on the table!

 

The simple way to audit your expenses:

Reviewing your expenses is a simple, straightforward way to figure out how to cut costs and improve your bottom line.

I recommend following the process laid out in Profit First, by Mike Michalowicz.

First, get out all of your bank and credit card statements. You may find it useful to print them out.

Next, categorize your expenses using the following metrics:

1. For anything that creates Profit, mark those expenses with a P.

This might include employee payroll, necessary software, and professional development resources.

For Amy, this included things like Quickbooks, her customer relationship management system, her project management software and her part-time office manager.

2. Label expenses with an R if they are Replaceable.

Are there expenses you might be able to switch to a cheaper option?

Now is a great time to review all of your expenses and see if there are better rates available. Some vendors may cut you a deal rather than to lose you as a customer.

For Amy, this meant looking at her internet and phone bill and asking a Technology Services Agent to review her service to see if she could get a better deal. We also reviewed her business insurance to see if she could reduce her costs there as well.

3. If expenses are Unnecessary, mark them with a U.

These are expenses you can do without entirely. For example, if you have a gym membership, are they still charging you even though they’re closed during the lockdown?

Amy had signed up with a credit card processing service, expecting clients to pay that way—but none had. She was able to cancel that $70/month contract.

She also discovered her 401(k) plan was costing her more money than she was saving in taxes, so that became another unnecessary expense.

 

Now it’s time to cut

Once you have marked all of the items in your statements, it’s easy to see where to cut expenses.

Eliminate anything marked with a U, and look into alternatives for anything marked with an R.

Keep the items marked with a P, since those are what actually create profit. Ideally, these goods or services should essentially pay for themselves.

This process also allows you to spot redundancies.

For example, Amy had switched project management software but had neglected to cancel the old one, so she was paying twice. We were also able to trim back marketing expenses by cutting out the services that were not bringing in new prospects.

Once we reviewed all of Amy’s expenses, she realized she actually could go out and hire that junior designer for at least 20 hours a week. Taking away some of her workload (and her stress!) will allow her to continue to grow her business—and continue to service her clients with the quality of attention they deserve.

 

Don’t leave money on the table

Many entrepreneurs think of increasing profits as solely increasing the revenue that comes in—but the expenses that come out of that income are just as important a part of the profit equation.

Furthermore, freeing up expenses allows business owners to put more money towards things that will actually lead to generating profit—like marketing, professional development, or hiring an assistant or a business coach.

What will reviewing your expenses make possible?