by MHolland | Feb 25, 2021 | Selling Tips
What is the greatest thing in your business? The tools you use?
Nobody Cares What Tools You Use
Imagine you are a home builder. And, you have the absolute best tools in that industry. You have the Triple A, skookum, best-in-class power widget tools out there.
Maybe you have custom tools that no one in your industry even heard of.
Does your customer care?
I can prove it. A guru home builder has the ability to make you a stunning home with a hammer, and handsaw. You see where this is going, don’t you?
It is so easy to make this mistake, though.
I do it all the time. When we started our amazing, skookum, best-in-class outsourced, online, fixed-fee accounting service 20 years ago, NO ONE was doing it.
We developed custom scanning/upload software to do it.
We were immensely proud of that, and our custom servers, and dual monitors (at a time when most considered that wasted screen real estate). So…we…talked…about…our Cool Tools.
We signed up clients, but not because of our cool tools.
Nobody Cares How Great Your Team Is
Ok, so you zip your lip on the cool tool topic. Great!
Do you think your customers/prospects want to know how amazing and skilled and peachy your Team is?
I could talk about our amazing Team for hours. Why? Well, they are simply amazing. And I am proud of them.
Prospects do not care. Why not?
They do not know them like you do. You might as well talk about how cute your children are!
They do not care. Sorry.
Nobody Cares About your Systems, Features, Price, How Long You Have Been in Business…
You can tell that headline could be 9 miles long, right?
This blog could have been one sentence long. Nobody cares – gives 2 cents – about you, or your business.
That is really the truth, isn’t it?
Selling is exactly like dating.
The person you are interested in dating is not interested in anything about you. Yet. That will come.
They want to know what difference dating you will make in their life. What experiences you will bring. The fun. The joy. The laughter. The romance. The future. The children. Ok, you get the idea…
Prospects Have One Thing. And They Are Looking to You for One Thing Only
Prospects have a problem. In many cases they do not know they have a problem.
Your job is to uncover it. Your job is to be the solution.
Talking about the tools you use, the Terrific Team you have, or any other feature is of zero interest to them.
They need to hear you say exactly what their problem is. They want you to say it in a way they can hear it. (They may be embarrassed about their “problem”).
You have to find their pain.
Because emotions are involved. They want to feel great about their decisions.
Great selling can be summed up as:
- Find their problem
- Find their pain
- Be the solution that makes them feel excited
Do you never talk about your great Tools, Team, and Techniques?
If they ask. But keep it short and focused on the results/solution you will bring to resolve their pain and have them feel excited again.
Thanks for reading…
by MHolland | Jun 11, 2020 | Selling Tips
How do you forecast future sales?
The word “forecast” means – “to predict or estimate (a future event or trend)”.
Cash is tight. You must get your sales forecast to determine your cash-flow.
People make one fundamental error in forecasting sales.
They treat sales like it is one thing.
Sales are not one thing. Sales are three things.
And, those 3 things must be separately measured. It is the only way you can gain control of your forecast.
Sales are a lot like profit. We measure net profit and we measure sales. But they are more like a scorecard result than an item you can impact directly.
Let me give you a simple example. Take the game of hockey. You want the score to go up. (Think of the score like sales).
How do you do that? You are the coach. How do you score more goals?
More shots on goal might lead to a higher score. So, focus on “shots on the net” in order to get a higher score.
What are the 3 things that make up sales? You will groan because it is so obvious. Yet it is missed all the time.
The first is….
Number of Customers
The first question to ask is – “how many active customers do we have right now?”
They must be actively buying from you. Not just on a customer list.
Sales are from customers buying stuff. To increase sales, you must look at increasing the number of customers.
The first number to “find” is your number of customers.
Let us say you have 300 customers. Great, that is what we start with.
The second number we must find is…
How Often Do They Buy?
How many times (on average) does each customer buy from you?
This is called “Transaction Frequency”.
You get this number by dividing the total transactions in a given period (1 year, for example) by the number of active customers.
In our example, let us say you had 15,000 sales transactions last year.
You divide 15,000 by 300 customers and you get 50.
Fifty is the average number of times each customer is shopping. (300 x50 = 15,000).
Said another way, they are shopping a little less than once a week throughout the year.
You now have two critically important numbers.
Number of customers, and, the frequency that they shop, on average.
The third number in our secret formula is…
The Average Sale Per Transaction
How much does each customer spend when they purchase from you?
To get this number you first find your total sales for the period. Next find your total transactions.
Imagine your sales for the past 12 months are $3,150,000. We know the total transactions are 15,000 (see above).
The average sale per transaction is $3,150,000 divided by 15,000 = $210
Putting it all together we have 300 customers shopping on average just over once a week (50 times a year) and spending $210 per purchase.
30 customers x 50 times of shopping x $210 spent each time = $3,150,000.
Why is this so important?
You cannot make the score go up in hockey by staring at the scoreboard. More shots on goal are needed.
You cannot make sales go up without focussing in on these 3 separate items. You will need a separate strategy for each one.
Before we look at strategy, let us look at how the numbers interact.
Take a look at this table:
|Components of Sales:
|Number of Customers
|* Average Purchase Frequency per annum
|Number of Sales Transactions
|* Average Sales Value
|| $ 210
|Total Sales Revenue
Note the amazing power of a small 5% increase in each of those 3 areas. Compare that to concentrating on only one area!
Sales can increase by $500,000 in this example. How? With a 5% increase in 3 areas:
- 5% increase in number of customers
- 5% increase in how often they shop on average
- 5% increase in how much they spend when they shop
Each area has a different strategic focus. To get new customers is expensive. To get them to come back more often requires a different mindset. It is also way less expensive.
So, the lesson is this – when forecasting sales do not just add a percentage to last year’s sales and hope for the best.
First break down your sales into this 3-part formula.
Finally, work on increasing each of the 3 parts with a different strategy. That is more for another Blog.
Thanks for reading…