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Sales Strategy & Management

Why Creating Value For Your Customer Beats Giving Price Discounts

Customers want value for money. It’s time to rethink your pricing strategy (without losing your margins).

Ed Hatton

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Win More Sales

Businesses that can prove and deliver the greatest value can ask their price.

Pricing strategy may be low on the priority list, but complaints about competitors’ low prices get a lot of attention. It’s time to rethink your pricing strategy and rules.

For most of us, pricing is a cost-plus system, the calculated cost of an item is marked up by a percentage to get the selling price, which may then be discounted to match competitive prices. This method assumes that your cost is the lowest it could be, which is rarely true. It is likely you could drive down costs by smarter purchasing or more efficient manufacturing.

The second wrong assumption is that the mark-up percentage is correct; it is more likely to be a long-ago rounded off thumb suck of what you need to run the business, and out of date in this economy. Crucially, cost plus pricing ignores the value that a customer gains when buying the product.

Research shows that customers increasingly seek value for money and will even pay a premium for value. This is especially true of young people, but all classes of buyers, from giant corporates to very poor individuals, seek value over price. Many tenders are not awarded to the lowest bidder but to the supplier best able to deliver. Very poor people buy expensive branded food because they are trusted.

Companies hesitate to switch suppliers only for price, particularly where delivery and quality are vital. With all this evidence that value is important, it’s time to rethink your pricing.

Related: Take Your Sales Skills To The Next Level With These 5 Simple Steps

Determining value

Ask your customers what factors are important when choosing suppliers. Price will always be one factor, but focus on the others. Your goal is to become the supplier that best matches all their needs. In many cases, you may even be able to increase your price. Bottled water sells for anything from R5 to R50 a bottle, simply based on the buyer’s perception of the health and other values of that brand. You can get a website and brand identity for less than R10 000 or more than R1 million — neither are the wrong price, it depends what the buyer needs. Get all the information you can and don’t rely on your own or your sales team’s perception of customer needs.

What happens if you cannot make money at the price the customers see value in the item? Start a harsh examination of your buying or manufacturing efficiencies. At the same time re-examine the margin calculation — lean businesses need less margin than lazy ones. If you still cannot make or buy it economically, consider changing your pricing strategy.

Pricing strategies

Convenience pricing is offering a bundle of goods and services for a single price or monthly fee. The customer can easily assess affordability and decide if this offers value. Cell phone suppliers and motor dealers adopt this pricing method. You buy a car for a single monthly fee including the car, warranty, maintenance plan, roadside assist, financing and other items. Both customer and seller are satisfied.

Value-based pricing sees the price determined by the value of the product or service to the individual buyer. The most skilled value-based pricing experts are the street hawkers who are quick to assess the value a student, a businesswoman or a tourist may put on an item. Public speakers have different prices for different audiences like large businesses, start-ups and NGOs — I use this method.

Related: Accurately Predict Future Sales With These Two Things

Incentive-based pricing is widely used in the IT and construction industries. It works on the basis that the price is variable and depends on the performance of the supplier. An IT project may have a nominal price but bonuses are paid for early completion, being below budget or developing more than the requirements. Conversely, not meeting deadlines, delivering late, poor quality or incomplete systems will reduce the price eventually paid. Consider if your business can use one of these highly effective pricing strategies.

Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.

Sales Strategy & Management

What Is Customer Intimacy And How Do You Use It?

If you think that maintaining a close relationship with customers is not as important as selling your products, you are wrong.

Clarissa Fleischer

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Knowing your customers well is a major part of being a successful marketing company. When companies do not connect with their customers, this is when they lose loyalty, revenue and positive customer sentiments. And in today’s world of hyper-connectivity and improved brand interactions, not being connected to your consumers can damage your brand in the long run.

If you think that maintaining a close relationship with customers is not as important as selling your products, you are wrong.Customer intimacy should be a top priority for any company who wants to maintain their success.

But, what exactly is customer intimacy?

Simply put, it is a business strategy that is based on paying close attention to the needs of your customers and ensuring that these needs are met and prioritised at all points of their journey with your company. It often involves close contact with customers using a variety of different channels and techniques. You need them to know that you care about their needs and understand what they are asking for.

You could think of it as segmenting your audience and creating specific offerings to precisely match their needs. If you want to excel at using customer intimacy, you will need to combine your in-depth knowledge of your customer with the ability to be flexible in your operations. This way, you can respond to any customer needs as quickly as possible, maintaining the high standards they have come to expect from your brand.

How do I use it?

Now that you understand what customer intimacy is, you are ready to delve deeper and figure out how to use it. There are some simple tips that you can use to implement customer intimacy in your current marketing strategy. Outlined below are just some of these effective methods.

Always prioritise your customers

This is the first step to any successful customer intimacy strategy. Prioritising your customers means that you need to set up operational processes which are “customer first” in their thinking. You will need to start by listening to customers and analysing their concerns. Only once you understand these concerns, will you be able to provide solutions.

It is important to look into processes that prioritise these concerns rather than react negatively to them. An example of this is avoiding looking at how many calls your client service team takes in a day but rather looking at the goals that they achieve when answering customer queries. Have they answered the customer’s question? Is there a resolution in sight for the problem? These are a more important metric to look at than how many calls are answered in a day.

Try to resolve problems

In order to become more customer-intimate, you should strive to solve the problems that arise rather than discourage people from coming to you with issues. And your brand should make customers feel as though they can share their grievances, either by contacting you directly or by writing a review on your social media page.

Statistics show that customers share a bad experience twice as often than they do a positive one, which could be highly detrimental to your company. So, when your customers do take the time to contact your business with either a positive or negative review, you have to have steps in place to resolve these problems. Use these complaints to improve your processes and your customer service section, so that the next time someone contacts you, it will be with compliments and not complaints.

Set goals that your entire company must follow

One of the most effective ways to become a customer-centric company is to set common goals that all of your employees must follow. For example, one goal could be to answer customer questions within 24 hours with a solution that is realistic and achievable. Or you could aim to improve your project turn-around time by gathering information from clients at every stage of their journey.

Whatever goals you set for your business, you will need to ensure that every employee adheres to them. Leaders need to set an example for their staff so that the customers, ultimately, reap the benefits. But be sure that your goals are attainable. You cannot expect your employees to reach the unreachable, as this will negatively impact the level of customer service you can provide consumers. Look at the data that is coming in from customer calls and interactions and use this to come up with goals that you can reach. 

The customer is always right

We often use this saying in a joking or derivative way, but it is truer than you might think, especially for marketing companies. In today’s world, the consumer wants brands to focus on them. In fact, if a brand ignores even the smallest form of contact with a customer, there could be an issue. And this is why you need to become a customer-intimate brand.

You need to prioritise the needs of the customer at every touchpoint in their journey with your brand, solve any problems that might arise and ensure that everyone is on the same page in your company. Soon you will see that your customers are singing your praises to everyone they meet.

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Sales Strategy & Management

How To Use Sales Skills To Build Your Business

If you want to build your business up, read on below for how to use sales skills to do so.

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Building your business from the ground up is no easy feat. You might feel overwhelmed by all the ways and methods that are available to you but there is one way that can help your efforts immensely, and that is by using sales skills. Sales skills might not seem like they are applicable to building a business, but what is a business without sale people?

You could look into a sales accelerator for business development course to improve your selling skills. Sales training courses can be useful, as they will teach you about sales techniques and sales strategy, which you can apply to other aspects of your business. So, if you want to build your business up, read on below for how to use sales skills to do so.

Listen to existing customers

An effective way to improve your business offerings is to listen to your existing customers. Listening is actually more complex than it seems, and it means that you have to do a lot less talking. This will help you to truly hear your customers and take stock of what they are saying.

Listening to existing customers is one of the best sales and marketing strategies you can use to improve your business. This is especially true if you have built a relationship and rapport with your current customer base, as this will encourage them to give you insights into any issues they might be facing. Whether you are a small business or a large company, listening to customers is always helpful.

Related: The 15 Characteristics of People Who Succeed at Sales

Try to solve a problem

Solving a problem is a marketing plan that is effective and sure to work in building your business. And a great salesperson knows that solving the problem of a potential customer is a sure-fire way to improving the conversion rate of their business.

You will need to do some research into the problems that your target market faces and then focus on how your products or services can be used to solve these problems. This ties into the first step of listening, not only to your existing clients but to potential ones too. Listen to what people are saying and learn to read what is being said. This way, you will be able to ascertain the problems your customers are facing and you can come up with solutions to fix them.

Use word of mouth

Existing customers can be a huge help to your business, in that they can provide you with positive referrals to use to boost your client base. If a customer is happy with the services or products you have provided them with, you can ask them for the name and contact details of other business owners who might benefit from your help.

You can also ask for positive testimonials from customers that you can place on your business site and social media platforms. You should always ask permission before using testimonials, and be sure that they are factual, true and relevant to your brand. Referrals and testimonials are common sales tactics that can be applied to boosting a small business or improving the reputation of an established company. And while nobody enjoys receiving negative reviews, it is important that you use these reviews to learn from your mistakes and improve your customer experiences.

Sell your vision

Building your business might involve reaching out to investors to help with monetary issues, and this is where your sales skills will really need to shine. This is because you are not only selling your business, but you are selling your vision of your business as well.

You will need to give specific details as to how your offerings will help customers to solve problems and answer questions. And you will need to sell a successful vision to your investors of how you want your business to success. Show them that your employees will be happy with how well they are taken care of and that customers will live a better life by using your services or product.

Related: Take Your Sales Skills To The Next Level With These 5 Simple Steps

Exceed customer expectations

When a salesperson goes over and above what the customer expects, it is likely that the customer will become a return customer. And this is what you want for your business, right? So you should look into ways in which you can meet and exceed customer expectations.

One of the benefits of always exceeding expectations is that you will no longer have to rely on the “hard sell” to encourage people to use your business. Word-of-mouth will travel about your excellent customer service, which will sell your business for you. If your brand is passionate about providing customers with the best possible service, you will be selling your business and improving it all at once.

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Sales Strategy & Management

Key Tips To Retain Customer And Improve Sales In Ecommerce Sites

If the ideas you are selling are fresh, innovative or even intuitive, you might gain customers, but retaining them actually determines the exact ROIs you can gain from your venture.

Peter Davidson

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Ecommerce in simpler terms is the activity of buying and selling of goods and services over the web.  With the increasing reach and accessibility of internet day by day, online mode of business transactions is gaining prominence. For any business, retaining customers is more advantageous than acquiring new ones.

Number Check

The root of customer retention for any business digs deep. And here are few stats to show the depth of its importance:

  1.  Almost around 41% of online revenues generated are from retained customers that too just by 8% of the retention rate.
  2.  If an ecommerce site can increase their customer retention by mere 5% rate their sales can increase by 25% to even 125%.
  3. Unsatisfactory customer service takes a toll on a business. About 71% of unsatisfied customers end their relation with the vendor.

As the importance of customer retention is being cleared, the next question to pop up is the method of retaining customers. You have to keep note of the important aspects that lead to retaining customers effectively. Here are a few handpicked proven ways to retain your customers and thus improve the sales.

1. Gesture of appreciation

A simple gesture of appreciation or offer or discount can do wonders in enhancing sales. Unexpected surprises or gifts are something which is appreciated by everyone and can cement your relation with your customers.

For this you can add extra discounts, offer vouchers or can send the customer some gifts with a handwritten ‘thank you’ note couple of days after buying. This unexpected gesture of appreciation will divert customers’ attention towards your site.

Related: 6 Steps To Building A Million-Dollar Ecommerce Site In 60 Days

2. Email marketing

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Your customers already provide you with data about their choices and preferences. However continuous email campaign is a subtle but effective way of expanding your customer database. Expand the items that are being added in the emails.

Try to innovate the offers and discounts, add newer items to increase your customer’s preferences and keep tracking them. Track which sequence of emails is gaining the highest hits.

3. Gold membership

Probably the most used, yet efficient way of customer retention is VIP privileges and Gold membership etc. A policy including reward points and hierarchical VIP status enabling your customers to various privileges offers etc. act as significant ways of improving sales. The alluring offers and VIP memberships will entice your customers to shop more.

4. Customer Services

A seemingly consistent and personalised customer service is what controls most of the brands nowadays. Most of the market researches show that it’s the customers who modulate and decide the fates of the brand. So be where your customers are for cementing a professional relation with them.

5. Showing diligence

Just occasional email campaigning and gifts and vouchers aren’t enough for successful customer retention. In the era of high-end competition, if you are not careful about the needs, preferences, requirements and most importantly, the complaints of your customers, no matter how much offers or VIP privileges are provided, customer retention is impossible.

Being proactive to the needs of customers, engaging them continuously as well as collecting and reacting to their feedbacks are the three major steps for any customer retention scheme.

Related: Watch List: 15 SA eCommerce Entrepreneurs Who Have Built Successful Online Businesses

6. Create value for Customers

If you are buying online , will you choose to buy from a website that sells low quality products at a cheap price? The answer is certainly no because everybody desires for quality in terms of shopping. Also, cost alone isn’t valued by customers, there have to be multiple components of value addition to optimise the overall shopping experience for your customers. As an e-commerce company, you need to master the elements of making a successful e-commerce website and later work upon your plan.

7. Limited period offers

Almost all ecommerce sites nowadays follow the policy of giving limited period offers and big bash discounts etc. A large-scale promotion before the said offer period, and some lucrative offers along with VIP privileges can help.

Improvising the existing privileges too can lure the existing customers into more shopping and hence enhance online retail sales.

8. Transparency in sales

Honesty is the key to success in any field of life. An ecommerce business site is no different. It takes painful long period of time for building up a company’s reputation. The only cue card that vouches for the reputation is transparency in sales and company’s policy.

The more transparent you are the better feed you get in return. So, whatever be the service you provide, keeping hidden policies and hidden charges is a strict no-no.

9. Promise and supply gap

It’s good to aspire for more, for bigger contracts, more sales but aspiration shouldn’t blindfold your capabilities. Continuous offerings to customers, more discounts and bigger promise for retaining them shouldn’t go beyond your limits and you end up giving lower outputs in reality.

This, in long run, hinders your company’s reputation to a considerable extent as well. So, promise only according to your limits and not beyond.

Related: The Future Is Now – Ecommerce Retail Trends For 2019

10. Building up a customer community

Humans are social beings by nature. The brand you are selling can actually act as a platform for different customers. Add a community chat room in your site where your customers or the Gold members can login by their credentials and discuss the pros and cons, offer fresh ideas, match and compare their services etc.

This allows for a rigorous service assessment, customer needs, and fresh idea generation for increasing sales and knowing the pulse of the shopper.

11. Enhancing social shares

social-media

This is an add-on feature of the preceded one. Your clients are your potential buyers some of whom are even potential giant-scale buyers. To churn the need of buying in them, incentivise your social platforms. You can do that by putting brand ambassadors’ photographs and ask for a competition amongst the clients.

Alluring offers and gifts for the winners will also make it an enticing professional deal. This can act in both retention and outreaching to newer clients. Also, these gifts and competitions can enhance the word-of-mouth publicity as well.

To wrap it up

Retaining customer is as important as reaching new ones. In fact in long term, customer retention plays a pivotal role. So a proper, polite and courteous customer service, a prompt feedback and complaint resolving team, transparent policies and quality performance on-time are few attributes that can retain customers and take your business sky high.

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