The War on Debt

Throughout history wars have been about power and resources. In all previous wars physical or even chemical weapons have been used.

Currently the weapon used for the current Third World War is debt. Countries (bonds, funds and loans), companies (loans and bonds) and people (mortgages and credit) rely upon loans and most are heavily indebted. This debt has strangled growth and prosperity for both people and companies as austerity seems to become the new rule.

The good thing about this Third World War is that no blood is being shed and no people are being killed physically. People might not get hurt or die, but the psychological and mental pressure due to debts and lack of growth can be life threatening too.

The War For Power

Still the goal of this Third World War is still obtaining more power.
The problem is that it is unclear:
- Who is the enemy: a country/countries or a financial institution(s) ?
- Who is likely to become the winner ? Will there be a winner ?
- How do you define winning ?

Reserve Currency

The first set of countries (Russia, China, Iraq, Iran, India,…) are starting to pay for goods or energy in gold. Maybe these countries are not exchanging physical gold, but might be using bank drafts on the gold value or exchange only the differences netting of the trading differences in value by exchanging gold.

One thing is clear that the Dollar as reserve currency will be over one day.
- When and how this era will end is not clear.
- What will be the next reserve currency is not defined: another currency or gold ?

Business Survival

The first question is what will this imply for your business ?
During the War on Debt business will continue like before but probably at a lower growth magnitude with less expansion or even a shrinking business as a forecast.

Once the reserve currency is beginning to falter then:
- If you trade locally in one country or one currency region, there will be changed but not dramatic as you can keep invoicing in the current currency.

- If you trade between currency regions then times and business will become complicated as exchange rates will fluctuate beyond expectations making your imports and exports unpredictable.

Meanwhile the first problem is solving the debt you or your company has in order to survive.

What do you expect from the War On Debt ?

More than often the product positioning remains the same for a product throughout its’ lifetime.

Solution changes

This is questionable as throughout the life cycle of a solution more functionality and features are added upon demand of the customers or the salesmen. Due to all these add-ons and changes it is likely the positioning of the solution should be changed. From a straight forward solution due to the additional development the solution has expanded and could target a whole new market segment or even solve a different kind of problem.

Many small can make a big difference

The problem is that these changes are in many case apparently small apparently non-significant modifications or extensions of the solution. However all these small changes can make up quite a different total solution which might no longer fit the original target market or even address a whole new market as the solution has become different or more complex to use.

Market is moving target

On the other hand the market the company used to sell into, will change over time with other needs or different requirements. The market could also diminish in size, becoming so small the market is no longer economically viable. The market is a moving target.
Your original solution that addressed only a small market could become a widely used solution as the market changed in favor of your solution at the right price. Then it is up to management to decide if the sales price can be lowered in order to obtain many more customers.

Market positioning assessment

This is why market positioning of your solutions needs to be questioned and investigated. After each significant change a new assessment should be done in order to see what is the market and type of customers that would require such a solution. A result is a possible different product positioning.
Why else would a company invest in new function and features ?
How would a company ever get a return on investment if the market positioning would remain the same?

Investigating and making an assessment about the market and potential customer type is a must.

When did you make the last assessment of the market positioning of your solution?

Recurring Revenue

The best business models are those that allow for recurrent revenue. This can be subscriptions, consumables, utilities or insurances.
The benefit for the business owner is the predictable, stable and can be counted on in the future with a high degree of certainty. The same applies for the salesman as he will get a steady or fixed commission income from these recurring revenues.
Moreover with each customer won, the business revenue increases for the long term.

Recurrent Billing

Although the automatic recurrent billing is the best for driving your revenue as the customer gets billed anyhow. And he will need to take action in order not to get billed anymore, this method is not preferred by the customers. Customers hate the idea to sign-up for a service or a deal which they need to cancel in advance – within the time defined in the contract – in order not to get billed again. It is just too much hassle and not customer friendly as they feel tied up.

Recurrent Billing Issues

There are other issues with recurrent billing: for example if the price is related or a function of consumption or use which can easily change over time: like consumption level, time used, number of visitors, number of calls.
Any price change will that are billed without notice, will generate questions by telephone, emails and letters which increase the cost of operations significantly as you are dealing with unhappy or even agitated customers. Not exactly the best way to keep your customers.

Price Buckets

In order to cope with small fluctuations in the use of the service, buckets are the best means for keeping the price steady as customers don’t like price changes. Each bucket having an lower and upper limit for the use of the service, consumables, utilities.
Still if the consumption or use of capacity increases beyond the limits of the current bucket, you need to change the price which is a hassle using fully automated recurrent billing systems. Make sure you don’t bill twice or bill the wrong amount.
Moreover you need to inform the customer before invoicing and billing him more as you need to respect your customer. So when will you change the automatic billing amount ? How much time after informing him ? How will he respond to the price change ? What to do if he doesn’t accept it as his contract is not cancelled ?

Recurrent Revenue vs Recurrent Billing

Recurrent revenue is the best business model ever.
Recurrent billing is not really liked by the customers:
- They don’t like to be tied up with your billing
- Consumption fluctuation requires to adjusting prices requiring to inform the customer
Hence in our view it is better to inform the customer before the end of the subscription about the change in pricing (higher or lower) and at the same time inviting him to make a payment for the next period or quantity.
In this way the customer can easily end the contract by simply not paying and he feels free instead of being tied to you as a provider. of course you should ask why he is no longer interested in your services.

LEADS Explorer will inform customers at the end of the subscription about the price for next subscription and at the same time invite them to make a payment. The customer is free to choose to continue or not.

Perceived value is not the list price

In all sales deals there are two values:
- The cost price or the actual value
- The perceived value

In any case the perceived value should be higher than the actual value. People will only pay a premium over the cost price for your product or services in case the perceived value is higher. In all other cases it is likely they might just not buy at all. maybe in an exceptional case the customer will buy on this occasion due to all kinds of circumstances beyond this sales deal, but that won’t happen again as he wants a lower price than his perceived value.

Increasing the perceived value

The trick is to add on value by services or features to your product that increase significantly the perceived value to your product or services at a lesser cost for your product. This allows inflating the list price without any significant cost increase. Sometimes people are to much blinded by the additional services or features that they miss to see at what cost (price) they come.
For products adding functions or features – which they might never use – or add on a service ‘for free’.
For services it requires demonstrating tangible and/or intangible benefits that appear to bring value.

The higher the difference in value between the perceived and the real price increases your margin significantly.

The higher marketing or the salesrep can push the perceived value, the higher the margin on products, thus the more profit will be made.

How much does the perceived value of your products differ from the real price ?

In order to succeed in business with your business or sales you need to know your business and your offering by identifying:

1. The value proposition:
What value does your business or solutions bring ?
What is your value proposition ?

2. The uniqueness:
Many companies have me-too products. Still most of them have at least one unique function or feature that sets them apart.

3. The no competitors:
If you have a completely unique offering then be aware people won’t know about the offering or solution you bring. You will have an uphill battle to explain your solution as hardly anybody has ever heard of your solution.
It is better to have some competitors than none.

4. The perception:
How do you want your business or products to be perceived ?
Outstanding, high quality, low cost, cheapest on the market, exclusive, average but without any risk, market leading, innovative, conservative, …

5. The match with perception:
How does the reality matches with the perception you portray ?
If there is a discrepancy or a gap between portrayed perception and the real stuff, you will need marketing to fill the gap.

6. The business specialty:
Does business have a specialty ?
If your business is common and plain, then how will it get noticed ?
What sets you apart from the rest ?
If your business has a specialty then your marketign can focus on this making it easier and less costly.

7. The target market:
Have you identified your target market ?
The more precise you can identify your target market the better, cheaper and more effective your marketing campaigns can be runt successfully as you don’t need to address to the masses.

8. The target market demographics
Your target market consist of companies who are staffed with people. You should know the demographics of the people that advice on the type of solutions you offer (influencers) and the type of people that take the decisions like:
- Age
- Gender
- Education
- Personal interests
Don’t offer free football tickets in a golf or sailing environment. Know your demographic profiles.

9. The proposition:
According to the type of people you address and communicate a different message is needed:
- Users want functions
- Influencers van features
- Managers advantages
- CXOs want benefits
What change or improvement can your business or solution bring for the people in each of these subgroups of your target market ?
Who will get you the easiest or best to a successful deal ?
Who do you want to promote too and who do you avoid to address ?

10. The SEO:
As your website is an important part and tool in any B2B lead generation and sales process, you need to make sure you use the best SEO in order to get the people from your target market based upon the demographics and the proposition.

11. The channels:
Besides the website you need to consider other channels that are appropriate to send out your marketing messages as they need to match your the demographics of your target market and be suited to carry your proposition.
This can be email, online ads, printed ads, direct mail, cold calling, trade shows, conferences or even social media.
try to figure out which channels are likely to be used by the people in the demographics of your target market.
If they don’t read newspapers then don’t advertise in newspapers.
If they don’t visit trade shows then don’t waste money on trade shows.

12. The lead qualification:
Can you define the qualities or characteristics your lead has to have in order to qualify ?
The better and earlier in your sales process you can qualify your leads or you can dismiss your leads the lower your sales costs will be.
At the same time your feedback to marketing will be faster allowing marketing reacting or adjusting their marketing campaigns.

13. The distribution:
If there is/are a middleman(me) in your distribution (distributor and/or resellers), you need to know how profitable your business is for them. Is it worth for them to invest time (training) and money (storage space) in your business ?Can they make enough or more money on your business or products compared to competing products and solutions.
If there is noting in it for them you won’t sell.

14. The feedback:
All feedback from your channel (distributors or resellers) and end-users is utmost important as you always can improve.
Find ways to get feedback. Even if it comes at a high cost.

The better you understand your business, the better you can promote your business and sell more.

How good do you understand your business ?

Instead of just focusing and pitting all your marketing effort on one channel or one type of marketing will have less effect as multiple touches.

Difficult multiple touches

Once people have seen an ad or marketing campaign on one channel, they seem to be able to filter it out during the next appearances.
Of course if your messages are quite different then multiple touches using one channel can be effective. However what product or brand has enough interesting features or stories to tell in order to have multiple touches ? Even if your product is outstanding, you can only tell once it is outstanding. The next time on the same channel this message will be more or less ignored.

Multiple channels

Hence it is more effective to promote your product or brand using different channels as for first every time of remarking the brand or product on a new channel the interest will be increased.
The more you can make your product or brand be remarked using different channels, even with the same content, the more likely it will stick with your potential customers.

these different channels can be:
- Email marketing
- Direct mailing
- Print advertising
- Online advertising
- Telemarketing
- Social marketing
- Questions or replies on forums and discussion boards
- Press releases

The idea of multiple touches is great, but most products or services are not that interesting in order to generate enough interesting multiple touches.
Instead using more or less the same content or statements on multiple channels will be more effective.

The best would be if you could achieve multiple touches on multiple channels.

Are you using multiple touch or multiple channel or both ?

Missing a deal due to a missing feature

On many occasions salesmen claim they missed the deal because one or more features or functionality were missing.
The most obvious reaction of the Sales Manager or even the CEO is to demand this additional feature or function in order not to miss the next deal. If the solution cannot be found or developed in house then even an acquisition can be evaluated.

This push for more features not solely comes from sales but can also originate from marketing or product marketing as they require new features in order to be able creating new messages and campaigns or to have a me-too product.

The Feature Creep Monster

The Feature Creep Monster appears while slowly more and more features and functions are added to the product or solution.
If a sales rep or product manager can obtain a feature change or addition, it will be very difficult to explain why not to add the next required feature: that’s when the Feature Creep Monster gets into the drivers’ seat of product management.

Then more features are added until it becomes complex or cumbersome to use. The core of the product will go beyond the original specs. At the same time the group or market segment that was originally targeted when designing the product could get less focus or they might even no longer consider your product anymore as it falls into a different category.

Feature disaster

After adding one or more features, no client ever seems to require the added feature that had cause the loss of a deal previously. The issue the company now has that it needs to support the additional feature in every next revision of the product. What seemed to be a minor cost to add an additional feature that could bring significant more sales, has turned out to be a money burning feature that brings no revenue. As more and more useless features or features without impact on sales are added the Feature Creep Monster has turned into a feature disaster due to the high costs involved to maintain these features year after year.

Avoiding feature creep

In any case you have to shed that “The Customer Is Always Right” mentality. The customer just wants more at the same cost or the customer needed to find a reason to grant the purchase to a competitor.

Every change of a feature or each time an additional feature to be added is discussed a cost benefit analysis should be made:
- How much more sales or how much less sales will be missed
- Costs of developing, adding, promoting, selling and maintaining the feature

In any case don’t rush into adding a new feature as once you have added the feature it will be almost impossible to remove the feature. Investigate first by doing a market research which is beyond the one customer that asks for the feature. Also try to find out if your competitors have actually closed a significant number of deals thanks to the demanded feature or if it was just a one off.

Feature creep will happen with any product, just make sure it doesn’t make your product and sales creepy.
Also learn to say “No” to your customers when they want another feature in order to tale the Feature Creep Monster.

How much feature creep have gotten your products ?
How did you tame the Feature Creep Monster ?

Elected by a corporation

The CEO’s of small companies are always proud if they receive an order or proposition for cooperation from a large company for development or R&D purposes.

However when a large corporation addresses to or asks a small company for researching or developing a specific solution, this is not because the large company can’t develop it or misses the capacity to develop it, but merely to avoid internal problems such as:
- Writing the business plan for the new development
- Getting the budget approved
- Avoiding internal politics
- Wasting time over a long procedure to get a new development started
- High research or development costs that needs to be justified

Benefit for the corporation

The small company can probably research into or even deliver the required solution much faster at a lower cost without all the hassle of the hierarchical organization of the large corporation. Moreover the large company could get the research or development done at a very low price by teasing with the carrot of possible large orders and a long time cooperation.

Although the perception of the CEO of the small company is that they have been elected for their quality or professionalism of work but actually it is just to avoid any problems or major delays for the research or development of the new solution.

Contract – agreement required

Hence the CEO of smaller companies should think twice and negotiate a contract or agreement with the larger corporation in order to really be able to reap the benefits from the research or development done for the large corporation. Moreover the efforts should be paid for – and not given away for free. If the solution is crucial to the corporation and proves to be successful, it is likely the corporation will go over to an acquisition.

Has any cooperation with a large company brought you any benefits?

In sales you have Winners and Losers.
Some salesmen win all the time.
Others seem to lose all the time.

Attitude

The Winner will see the gain.
The Loser will see the pain.

The Winner sees opportunities.
The Loser sees problems.

The Winner always has a guideline.
The Loser always has an excuse.

The Winner is nothing impossible.
The Loser will find all too difficult.

The Winner is always part of the solution.
The Loser sees only the problem.

The Winner will admit his mistake.
The Loser will try to blame it on someone else or the system.

The Winner compromises but stands firm on values.
The Loser stands firm but compromises on values.

The Winner has dreams.
The Loser has schemes.

Anticipation

The Winner will learn from his mistakes.
The Losers will avoid all risks.

The Winner is a part of the team.
The Loser is apart from the team.

The Winner will see the future potential.
The Loser will see the past loss.

The Winner seeks to learn and explore.
The Loser seeks to continue like before.

The Winner chooses what he says.
The Loser say what he has chosen.

Reaction

The Winner will do it for you or at least help you.
The Loser give suggestions which are obvious or might not help.

The Winner will look for alternatives.
The Loser will continue like it always was done.

The Winner makes commitments.
The Loser makes promises.

The Winner will execute.
The Loser will discuss what could be done.

The Winner will do something.
The Loser will hope someone else does it.

The Winner is self-controlled.
The Loser will only report.

The Winner uses soft words with hard arguments.
The Loser uses soft arguments but hard words.

The Winner makes it happen.
The Losers watches it happen.

Are you a Loser or a Winner ?

The Winner takes it all
The Loser standing small
Besides the victory
That’s her destiny.

The customer is always right

The customer is always right according Stew Leonard:
- Rule 1 The Customer Is Always Right!
- Rule 2 : If The Customer Is Ever Wrong, Reread Rule 1.

This should be adjusted to:
If the customer is wrong, then they might not be your customer anymore.

In the event

At a moment of time or during:
- The sales process
- A first project with a customer
- A standing relation with a customer

When:
- Increasingly more service is needed without price adjustment
- Harsh terms are imposed
- Changes of direction are required
- Clueless customer is requiring your attention
- The ever complaining customer is wasting your time
- Discussing every item on your invoices
- Decreasing revenue due to less sales
- Utterly important customers generating little revenue
- Not paying after extended payment terms
- Employees feel threatened or abused by a customer
- Ever changing purchase orders

Then
It might be time to think about firing the customer.
Serving unprofitable customers with exhausting relationships is not sustainable.

Math: cost vs benefit

It comes down to cost benefit analysis:
- Cost:
How much does it cost to keep the client and service, support, discuss for each and every item ?
Thus wasting your capacities and resources.

- Benefit:
What’s the benefit of having this customer?
What does this customer bring ?
Revenue, margin, word of mouth, lead generation, referral.

You have to do the math

Not keeping unhappy customers

Maintaining unhappy customers will only cost you money:
- They will consume more time, effort and capacities from your workforce and company
- They will not recommend you to their peers
- They could spread a negative buzz into your market

Whatever you do it will not rape the benefits as you could receive from other customers in the same time, with the same effort or capacities.
So in the end you are losing twice: more time and no leverage.
Hence firing these customers might be your best deal ever.

How to fire tactfully

Firing your customers takes courage, but it is for the best of the company and business.

Instead of increase your prices in order to drive your customer away, it is best to have a meeting or at least a conference call explaining your services are no longer meeting his demands and needs.
If there are any disagreements then they need to be addressed and clarified.
Allow for discussion and explaining their concerns.

In this way you can separate and end the relationship without a fight divorce.

Offer alternatives: other services or your competitors

Of course during the meeting or conference call issues can be explained and understood. Just make sure you take the right decision. One of the main goals is to keep your business in good public standing.

When was the last time you evaluated your customers on cost / benefit analysis ?
How many did you fire last time ? None or one ?