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Tuesday, July 16, 2013

Are You a High-Margin Business?

Profits are the key to long term growth and survival for any business. Profits are what allows a business to invest and grow. Some businesses have higher profit margins than others. That can be due to the type of industry, the competitive landscape, and economic conditions.

There's often a direct correlation between the margins a business can charge and the amount of pain their products and services help to ease in the minds of the customers who buy them. Increasing this real and perceived value will directly impact profit margins.

Most businesses have a mixture of customers. To become a high-margin business, your goal must be to move the needle from lower-value customers to higher-value ones. The first step is to identify the types of customers your business attracts and pursues. Here are a few general characteristics to consider.

Low-Value Clients:
  • A large number are required in order to sustain profitability

  • Typically cause the most headaches

  • Want you to lower your prices

  • Make you feel like a commodity

  • Position you as the lower-value provider

  • Can and will leave you for a lower price at any time
High-Value Clients:
  • Provide greater profitability, so fewer are needed to help you reach your financial goals

  • Generate higher value with fewer headache

  • Help position you as an authority and valuable partner vendor

  • Give you higher credibility in the eyes of your other prospects
So how can you increase your perceived value?
  • Educate - Sell by teaching and sharing your expertise. Nothing is more powerful in positioning you as a business that is worthy of higher fees than actually showing how your products and services solve problems for your customers.


  • Show Results - Include testimonials and success stories from your past customers to help prospects understand what kind of real-world value you provide. Third-party validation works much better and is more believable than the same information stated as your own.


  • Offer a Powerful Guarantee - Guarantees not only help remove some of the doubts your prospects may have but also show that you believe in your products and services enough to stand behind them. Strong guarantees and warranties allow you to justify charging higher margins.


  • Get Endorsed - When possible, get an endorsement from a well-respected and known personality who can verify the quality and value you bring to the table. Your prospects will know that such a person would not vouch for a shoddy business or service. This increases the perceived value of your business in their eyes.


  • Promote - Promote your awards, achievements, membership associations, charitable contributions, and any other resources that will speak to your involvement in the community and the values you bring. Each of these builds further trust in the eyes of your audience. Each bit of added trust allows you to charge higher fees and margins in your business.
By increasing both the real value for your customers and the perceived value seen by your prospects, you will be able to increase your profit margins. Lots of companies can solve problems for their customers. Those that are able to tell the story of what, how, and why they solved those problems -- and to do so in a way that resonates with prospects -- are the ones that achieve higher margins.

Friday, July 5, 2013

Beware the Cycle of Doom -- starting with no sales prospects

The cycle of doom is the nightmare of every business owner and salesperson who works to attract prospects and customers. It occurs when you find yourself without a steady, predictable stream of high-quality prospects that turn into customers. As the cycle progresses, every day can feel like a challenge. Where are the next leads coming from? Where are the customers you're looking to gain?

"Your present circumstances don't determine where you can go; they merely determine where you start." - Nido Qubein


If you're stuck in a cycle of doom, you need to establish a system for attracting your ideal leads -- the people in your market who are looking for what you sell. Rest assured, such people do exist. The problem is that not enough of them know about your services and products.

That's where your lead-generation system will come into play.

"The fact is, everyone is in sales. Whatever area you work in, you do have clients, and you do need to sell." - Jay Abraham


Thousands of books and articles are written each year about the marketing and selling process. There are many variations and specific nuisances, but most of these resources can be distilled down to three relatively simple, uncomplicated steps.

The first is to determine exactly who your ideal customer is. The next is to make them aware of the solutions your products and services provide to solve their pain. The final step is to engage and answer any questions and objections before closing the sale.

Any lead-generation system you create needs to employ these strategies in order to make it a predictable source of continuous, high-quality prospects. Testing and measuring for what works best for your business is a never-ending and continual process. The important thing is to have an actual framework and base system in place to build upon.

Outbound marketing (direct mail, telemarketing, and traditional media) still works today, but you need to have a strategy in place first to attract and convert the type of audience you are hoping to reach. Blasting out unwanted information to the wrong audience didn't work well in the past, and it doesn't work today either.

Many businesses have learned that non-strategic social media posts and email blasts have the same characteristics as any other marketing fail. Offering low-value content leads to non-engagement, which ends up producing low-quality leads and zero customers.

The scariest feeling in business is not knowing where your next sale and customer are coming from. Everything is unsettled. You don't have the necessary confidence, and you don't control the conversation. As a result, you end up bending and twisting on price just to get a sale.

"Discipline is the bridge between goals and accomplishments." - Jim Rohn


Getting out of the cycle of doom requires strategic thinking. Who do you want as a customer? What does this customer need in order to make decisions before they purchase what you sell? Where are the places you can communicate these messages with this customer?

Creating a system sets the groundwork for a predictable pipeline -- one that allows for a reserve of prospects and suspects you can rely on and pull from as needed. It also has the added benefit of giving you the luxury of turning down prospects who are not a good fit for your business.

When you have a systematic approach and tweak it until it works predictably, you control the process. Your business is in demand, and your services are valuable and scarce.

Become a valuable resource for the prospects you seek. Let them know on a consistent basis about the value you provide. Make it easy for them to find your valuable information. Systematize your process, and the cycle of doom will be an old nightmare that gets buried for good.