STRATEGIES TO DOUBLE YOUR REVENUE

1.) Dramatically Reduce Sales Cycle Time

The first is from Dr. Victoria Medvec, negotiations expert from Northwestern University and author of the series Nothing Improves Cash Flow and Revenue More Than Reducing Your Sales Cycle Time. And an important technique to dramatically reducing it is to use synchronous communication throughout the sales process.

“This starts with NEVER presenting a sales proposal to a customer without being on the phone or meeting them in person,” notes Medvec. Emailing a proposal to a customer ahead of a meeting doesn’t give you the opportunity to react immediately to potential concerns and objections that might arise as they read through your proposal.

It has been found that the more time the customer has to ponder an objection and potentially pollute their colleagues with negative reactions (or spouse if it’s a business to consumer sale), the more difficult it will be to move the sales process forward.

Even if the customer is adamant about receiving a proposal ahead of a physical meeting, suggest it will save them time if you can review the proposal over the phone and that you’ll email it to them a few minutes before a scheduled phone call. What you and your sales people want is the opportunity to see, hear, or at least sense specific objections, as you review the proposal, so you can react immediately. And then you want to continue to utilize various communications for the rest of the sales negotiation process i.e. if a customer emails back a question, pick up the phone and discuss with them vs. simply emailing an answer back – it gains you more clarity, builds the relationship, and avoids misunderstandings that come with email.

“I’ve seen this single technique reduce sales cycles from months to weeks and even to days,” concludes Medvec. Fred Crosetto, CEO of Seattle Ammex, who has seen his company achieve record revenues the first part of 2009, is so convinced of the power of this technique that he’s driving it across his entire company using Medvec’s series.

2.) Pricing with Confidence

Of the four P’s of marketing (Price, Product, Promotion, and Place), Price is the only one which directly puts money to your bottom line and into your pocket. Yet I continually find companies setting price with little or no strategy behind their decisions. And panicked decisions about pricing in troubled times can be costly in both the short and long run. For answers, read Reed Holden and Mark Burton blog. Pay particular attention to Rule Three in their book where they outline three simple pricing strategies all firms can use.

Noted Burton in a recent conversation, “too many firms have gotten caught flat-footed and are using price discounts in a panic to try to keep demand that is going away no matter what they do. The firms that do this are creating two very significant long-term problems. First, they are destroying the integrity of their pricing and the value of their brands. Second, they are training their customers to negotiate for every last penny thus undermining their most valuable asset – trusting customer relationships.”

Both of these forces will make it extraordinarily difficult to bring prices back up when the economy finally does turn. In addition, it will take much longer to bring prices back up to a level that reflects the true value of the goods and services being sold.

Burton suggests the way around this is to look objectively at pricing as a strategic tool that must be managed systematically based on value, market demand, cost structure, product lifecycle, and firm capabilities. This view leads one to make decisions on the basis of preserving and gaining pricing power be it through reducing capacity to match demand, introducing low price – low value offerings, or making systematic adjustments to price lists so that list and street prices are more in line.

3.) Multiple Channels

“Place” is one of the other four P’s of marketing. And research by Neil Rackham, modern sales management techniques, reveals that companies with more sales channels trump competing firms with less. This means setting aside all the debate about protecting various territories and giving your customers as many options for purchasing your product as you can. In the end, you can’t dictate from whom and how your customers will purchase your products and services. They all have different preferences and will find competitors who give them these options.

In turn, it’s up to your various sales channels to earn their right to distribute your services. If the customer wants high-touch, value-added consultative help in purchasing your product, they’ll utilize that channel. If instead, they prefer to “do-it-themselves” then give them that option as well. Read Michael Masterson and Mary Ellen Tribby book as they detail how to utilize a dozen different marketing channels for your business.  She said, I’ve been visiting with a Sydney-based entrepreneur who has seen his revenue jump 70%. One key is a website he’s launched that allows his do-it-yourself customers to purchase products direct from his factory versus through his normal channels. To smooth over what could be contentious channel conflict discussions with his agents, the website does offer a slightly different product line and it trades under a different name. However, he’s utilizing multiple channels nevertheless and it’s driving revenue.

4.) Half the Customers; Twice the Attention

Though a repetition of Neil Rackham’s advice, more than ever you need to identify your best customers and shower them with twice the attention.

Chet Holmes, author of Mega-Hit, drives home this point in Chapter 4 of his book. Holmes, who doubled sales three years in a row for nine divisions of Charlie Munger’s firm (Munger is Warren Buffett’s partner), encourages firms to focus on their Best Buyer or Best Neighborhood and then create a nurturing marketing campaign that touches these customers 10 to 15 times with educational information. If you’re not familiar with nurturing marketing, also read Jim Cecil’s book it starts with doing a thorough job of researching the benefits of your product or service. For one major roofing company, Holmes’ market research firm found that a large percentage of the time a roof is replaced when it only needs repaired. In turn, greater than half of all building maintenance problems emanate from problems with the roof.  Armed with this research, the company structured an educational campaign that reached out to the owners of large facilities every two weeks over a period of months, which dramatically increased warm leads for the sales team to close.

5.) Web 2.0

The third P of marketing “Promotion” has taken on a new twist given the power of the Web to reach customers. Given the confusing array of terminology and options, read David Meerman Scott’s best-selling book. The title itself gives you a flavor for the array of inexpensive promotional opportunities available to a growth firm. And his book is the first to explain the options in a way that non-tech growth company executives can understand and implement.

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START USING THE SAME BUSINESS MODEL AS FORD

Quarter after quarter for almost two years, the news out of Ford Motor was astonishingly good. Under Chief Executive Officer Alan Mulally, who’d joined the company from Boeing in 2006, Ford had not simply avoided bankruptcy and a federal bail-out, it had turned itself into the world’s most profitable automaker. It beat analyst estimates for seven consecutive quarters and drove its stock to a nine-year high of $18.79 on Jan. 27, up from $1.26 on Nov. 19, 2008. Last year, hits such as the Fusion family car and Fiesta subcompact propelled sales of Ford models upward at twice the rate of the overall market. And the 65-year-old Mulally, a gifted and relentlessly upbeat salesman, wasted no opportunity to look into the eyes of analysts and reporters, squeeze their forearms, and remind them how “fabulous” Ford had become.

Late IN 2009, however, Mulally began to see some new signs of trouble. Inside the Thunderbird Room on the 11th floor of Ford’s Dearborn (Mich.) headquarters, the windowless conference chamber where Mulally meets around a circular table with his 15 top executives every Thursday at 7 a.m., some of the news suddenly wasn’t good. At these 2 1/2-hour meetings, known as BPR (Business Plan Review), he requires his direct reports to post more than 300 charts, each of them color-coded red, yellow, or green to indicate problems, caution, or progress.

At the BPR, Ford Chief Financial Officer Lewis Booth might give an update on debt reduction, or Americas chief Mark Fields might go over the mix of red, yellow, and green on new model launches. (Fields is famous for being the first Ford executive to put up a red light four years ago when he delayed the launch of an SUV because of a balky tailgate, earning him applause from Mulally for his honesty.) Afterward, the adjoining Taurus and Continental rooms are papered with these charts so Mulally can study them. As the CEO likes to say, “You can’t manage a secret. When you do this every week, you can’t hide.”

The Ford executive who couldn’t hide in December and January was European chief Stephen Odell. His slides told Mulally that heavy discounting was going on in the European Union, a market where there were too many car factories and too few buyers. Mulally had assured analysts that Ford would make money in Europe, but the risk of a fourth-quarter loss was rising. As the rectangles on Odell’s slides turned from green to yellow to red, Mulally decided not to follow his competitors into the bargain basement. He was trying to elevate Ford’s reputation; unloading cars at just above cost might have helped his quarterly return, but he was certain it would hurt his brand.”

The Rockefeller Habits

Interestingly enough, Ford adopted the Dashboard concept of Red, Yellow Green in the prioritization of their reporting systems.  This concept was originally authored by Verne Harnish, in the book, Mastering the Rockefeller Habits.  Here is the simple explanation . . .

Green = Define Your Goal

Red = Decide on the Minimum level of acceptable performance

Yellow = Between Minimum and Goal

Super Green =  Exceed Goal by a Significant Margin

Every business owner can adapt this reporting method, with minimal time investment and resources.  When you take a quick glance of your Dashboards, each category tracks critical areas of your KPI’s (Key Performance Indicators).  From this, you get a 5 second visual check of the critical areas of your business.

Much like your car, when the Oil light is flashing Red, you know that something is happening in your engine (or in the case of your business) that needs your undivided attention and immediate action.

As we said earlier, when you have a Dashboard, which tracks all of your KPI’s  . . . . “You can’t manage a secret. When you do this every week, you can’t hide.”

THE FOUR D’s OF EXITING YOUR BUSINESS

Death:

The issue of the death of a business owner should be considered during the start-up of a business. Unfortunately, during the creation of many buy/sell agreements the issue of death is only addressed at the urging of a life insurance agent. At the meeting, you arbitrarily decide how much insurance you can afford and how much your company is worth, when in fact you do not know.

Disability:

Death is not as likely to end the business relationship as disability. The business survival will often take prescient over paying a disabled partner. If the person is important to the business, the financial strain impacts the business and the family who depends on the income.

Divorce:

You can imagine the torn feelings if a disability occurs, but what if the partners cannot get along? How do we split a partnership without financially ruining each other? It may be complicated by many personalities, some may not even be a part of the dispute, yet may be affected financially.

Departure:

You may all be happy working together, but your partner or you may decide to leave for another opportunity or simply to take life easier. Who is going to do the work? What is owed the leaving partner? Where is the money coming from? All important considerations for your business exit strategy.

A Fair Buy/Sell Agreement

For the business owner, each one of the four D’s has special demands on: family, income, taxes, and transfer of control of assets. An agreement, commonly called buy/sell agreements, can be used to handle the four D’s. The concern of the family or income can conflict with the business. The business exists as a separate entity. Reduce conflict by developing mutual fair agreements and the desired level of income.

Creating a Business Exit Strategy

– Find a method of determining the value of the corporation that can be done at least annually and will qualify under IRS standards

– Develop an employee benefit plan that will assist with the departure of each partner in case of death, disability, or retirement

– Plan for who retains company ownership and who gets paid off

Conclusion

The great American dream is to: build a business of your own; bring it to life; and make it successful. How you plan your business exit strategy will determine your financial success. Just as building a successful business takes planning, hard work, and a little luck, so does leaving it.