Raising the bar

I recently was called to be the auctioneer for a near-by auction house when their regular auctioneer had to be away for the week.  When I drove to the auction I found they had a very nice facility.  The owners were very warm and friendly.  As we talked about how they operated one of them told me that their primary problem was that people didn't want to give anything for what they bought.  I was told, "We have a lot of one-dollar bidders here."  When I began looking at what was being offered I understood why.  I personally wouldn't have given a dollar for much of what was being sold that night.  As the auction began I noticed something that I've seen at other auctions.  Better quality items were bringing some decent prices, but the people were not going to pay much for the inferior items.  I thought to myself that this is not rocket science: if you want higher prices you have to sell better quality items.

Unfortunately, the problem is that the regulars who come to this auction have been conditioned to buy things cheap.  The risk to the sellers is that even if they began to bring in higher quality items, for which they've probably paid more to get, the buyers have been taught they can buy things cheap and may not bid much to get it.  This has happened to me several times when I've sold items at an auction and they brought much less than I paid for them.  I've learned that there are some auction houses I can take only lower quality items to sell because these are what I call "$2.00 auction houses."

What needs to happen in these facilities is that they need to quit accepting low quality items and begin to raise the bar for what they are willing to sell.  With better merchandise they can afford to do more advertising to attract the buyers who are more likely to pay what the better items are worth.  In time, these auction houses will be known as the place to sell top quality goods for a fair price.  The sellers make more on what they sell, the buyers are buying top quality items at a fair price, and the auction house sees its commissions increase.  It's a win for everyone, but it's not going to happen until the auction house raises the bar and insists on only selling quality items.

This is true for any small business.  In another business I owned I had a sign where our walk-in customers could see it.  The sign read, "We sell the highest quality merchandise, offer the best service in town, and have the cheapest rates.  You may now pick two out of three."  I knew we had competitors who offered less expensive equipment than we did, but we weren't competing for that business.  We had competitors that charged less for their service work than we did.  That was OK too because we felt we offered better service than they did.  We wanted to set the bar high enough to attract what we felt would be quality customers who knew the difference between cost and value.  I still believe that is a business philosophy that works for small business owners.

Some stores just don't get it

A few days ago my wife and I went to a local store to buy some items.  We found what we were looking for and went to the counter to pay for our purchases.  The clerk took my check for $240.00 and ran it through their approval system.  In a moment her machine spit out a ticket that said the check was for too much money.  She called a manager who said she seemed to remember something that said they couldn't take a check for more than $200.00.  At that point we picked up our check off the counter and walked out of the store tearing up the check as we left.  I told the manager that was one of the dumbest policies I had ever heard of and she responded that it wasn't their fault.  We went to another store in the same shopping center and purchased the items we wanted, and for less money.

When I came home I sent an e-mail to the company's main office describing our experience.  I told them what I told the manager, that was a dumb policy.  At a time when retail stores need to find ways to attract customers and make their buying easier and more enjoyable, this company decided to make it difficult for their customers to do business with them.  Not surprisingly, nearly a week later the company has not responded to my complaint.

Like many retail stores, this company spends a lot of money on advertising, and many of their products have been marked down to sell.  Why bother?  Why spend the money to get people into the store when store policies make it difficult for them to give the company their money?

Maybe I'm just more sensitive to this problem because when I had a business many of our policies weren't particularly consumer-friendly.  In fact, I included an entire chapter about that mistake in my book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.  Our hours were for the convenience of our employees, not our customers.  For many years we continued the practice of previous owners in not offering credit card options for payment.  We did not offer a wide enough selection of products from which our customers could choose.  The book covers these issues and others. 

I learned from those mistakes, but many small businesses still have not.  The store that had a limit on the size of check is one of a small chain that is unlikely to get much bigger if they do not change their policies and become more consumer-friendly.  And to be so arrogant as to not even respond back to a complaint from a customer is an even greater mistake than the check limit.

How long has it been since you've reviewed your customer service policies?  Do they make it easier for your customers to do business with your company or harder?  Are they easily understood by both employee and customers alike?  How do you view customer complaints?  Are they recognized as being the potential benefit to your company that they are, or are they a nuisance that wastes valuable time?  Does your company have a policy that requires that every complaint be answered within 24 hours?

This extended recession has helped close the doors of many small businesses.  In my opinion, if and when this recession ever ends, small businesses will continue to struggle to be profitable.  The ones who succeed will be the ones that have made it easy for people to do business with them.  Those that struggle, and perhaps eventually close, will point their fingers at any number of problems, but most of those fingers won't be pointing at their own store policies that doomed their businesses.  These will be the stores that just never understood the importance of customer service.  They just never got it.

Don't be this salesman

On Christmas Eve I drove to Best Buy to get myself a Christmas present, a sound bar for our TV.  I had done some research and had two model numbers written on a piece of paper that I was interested in.  Soon after walking into the correct department a young salesman asked if he could help me.  I asked him to show me my first choice of a sound bar which he did.  However, almost as soon as we got to it he began telling me the flaws in that model.  That surprised me a little as it had been one of the highest rated sound bars on the Best Buy website.  He offered to show me a better one in the same price range which turned out to be my second choice.  After spending a couple of minutes telling me about its features I told him I would take it.  He then told me he didn't think they had any in stock!  He spoke with another salesman who came over and told me they had just sold the last one earlier in the day.  Of course, he offered to order one and didn't seem too pleased when I told him I could order one myself.

It being Christmas Eve I wasn't bothered by the fact that they had sold out of that model.  What was so bad was that no one even asked if I would be interested in the first one I had looked at or another one in the same price range.  Why in the world would the salesman try to talk me into buying a different sound bar than the one I asked about knowing that they didn't have any in stock?  I drove one hour to that store with the intention of spending $300.00, and I walked out of the store with that $300.00 still in my pocket because two salespeople do not have a clue how to sell.

Sales is difficult enough without talking yourself out of the sale.  It is one thing to try to talk a customer into an upgrade.  If he or she is not interested you can always return to the item they are interested in purchasing, but to lose a sale trying to make a lateral sale is stupid.  A smart salesperson would have affirmed the positive qualities of the product I asked about and sold it to me.  If there were no positive qualities about that product then, first of all it should not be carried in the store, and secondly he should have pointed me to a product they actually had in stock.

Some might be wondering why I didn't ask about buying my first choice after the one was not available or why I didn't ask about other models that were available.  I considered it, but I don't feel it's my job to train the salespeople at Best Buy on how to do sales.  By the end of the week I will be in a different city near me with many stores like Best Buy and I'll buy my sound bar at one of them.  That store will get my $300.00.

Would your salespeople know how to have handled this potential sale?  Why don't you run this scenario by them and see how they would have responded?  You may need to do some training of your own if they don't respond properly.

The power of knowing your customers

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When I sold my business a few years ago I did so at an auction.  Quite frankly, we had it for sale for some time with no interest.  We had already closed it which meant there was no money coming in, but there was still money going out.  An auction would at least stop the bleeding.  The nature of the business meant it would not be something that the general public would be interested in attending the auction which concerned me.  Fortunately, the auctioneer I chose had a long list of persons who had bought items at previous auctions, and they were listed in his computer by the types of things they bought.  He assured me he could send letters to at least 100 companies who were in the same business I was selling to invite them to the auction.

That may be why he was successful at what he did and our company was not.  I never compiled a list of customers by their interests so I could send them information about new products or services they might be interested in purchasing.  I often read that direct mail to past customers was one of the best marketing strategies a company could use, but my few attempts at direct mail were all sent to prospects, and none of them resulted in a single sale.  When it came time for the sale, most of the vehicles in our parking lot were from companies similar to mine.  His direct mail worked and brought out buyers who may not have known of the sale otherwise.

Since that auction I began going to occasional auctions myself.  I've been to enough of them that the auctioneers know what I'm most likely to buy.  Today I received a letter from the auctioneer who conducted my sale letting me know he has an auction scheduled for this Friday evening.  He wanted to make sure I knew there were a lot of items that I've purchased in the past that would be available.  He even sent a list of many of the items and directed me to a site on the Internet where I could see pictures of those items.  I plan on going.

Several years ago I purchased a number of suits from a salesman in a nice department store in a nearby city.  After the first or second suit I bought I began receiving notices from him letting me know about sales his department were having.  He noticed I always bought my suits when they were on sale, so he made sure I knew upcoming sale dates, not only for suits but for other menswear items as well.  Over the course of three or four years I purchased a new suit from him about every six months.  I also bought a number of dress pants and dress shirts from that same salesman.  He left for another job, and I never received another contact from that store again.  Now that I think of it, I never bought another suit there either.  That salesman knew me, he knew what brand suit I liked, and what I would pay for it, and he made sure I always knew when I could buy one for that price. And, I usually did.

How well do you know your customers and what they want or need that your company can provide?  What are you doing to intentionally stay in contact with them?  How often do you send direct marketing material to them?  Studies find that it's much easier to sell to a current customer than to a prospect, and it costs much less to get their business as well.  If you don't have a current client list you need to begin developing one and begin marketing to it.  It will add to your bottom line.

If it ain't broke...break it.

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Many of us have heard all our lives  "If it ain't broke, don't fix it."  It was a warning that messing with something that was working well might create more problems than it was worth.  That may have been good advice at one time, but it's lousy advice now.  I encourage people that "If it ain't broke, break it because it will soon be obsolete anyway."

We live in a rapidly changing world that requires people to adapt quickly or be left behind.  Your business plan from 2007 is probably not as effective today as it was just five years ago.  Hopefully, you're not even using that plan any more.  If your equipment is more than five years old it's probably outdated and inefficient.  If the goods and/or services you offer your clients have not been updated in the past 2-3 years they are probably coming across as stale and unappealing compared to what your competitors are offering.  Have you taken a fresh look at your marketing strategy to see what's working and what's not?  Have you checked out new vendors to see how they can add value to your business?  How often do you change out your displays to showcase new items?

One of the mistakes I made when I took over our business was seldom changing anything.  You can read about that, and many other mistakes I made, in my e-book Mistakes: Avoiding the Wrong Decisions that Will Close Your Small Business.  You can order it for your NOOK reading device by clicking on the book cover on the right column on this blog.  I made very few changes in how we operated as a company, and the changes I did make were often too small and certainly too late in coming.  Our competitors ate our lunch because I didn't want to change things that had stopped working.

Several days ago I admitted I liked watching Bar Rescue on television.  One of the things that the rescuer does is change virtually everything about the bar.  He changes the name, the decor, the items on both the food and drink menu, the uniforms the employees wear, and the way they go about their business.  One of the reasons the bars are not profitable is that nothing has been changed for years, and he wants to help create a new brand for the bar.

When you walk into your business tomorrow take a long look around.  Try to imagine what it would look like to someone who had never been in your business before.  Would they find it vibrant and exciting, a good place in which to do business, with goods and services that appeal to them?  Or, would it appear to be tired and outdated with people who look like they would prefer to be just about anywhere but there?  You may want to ask someone to be a secret shopper so you can get an honest opinion from someone with new eyes who may see things you'll overlook.

Change just for the sake of change is stupid, but making changes that improve your organization makes a lot of sense.  Don't hold on to something just because it used to work or your employees (and you) find it a comfortable way of doing things.  Business is too competitive and customers are now too demanding to hold on to things that no longer make good business sense.

The secret to business success: Selling

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There are so many things to do when starting a small business.  There are business plans to write, inventory to purchase, supplies and equipment to buy, perhaps hiring team members, and finding a good location.  You have to ensure that the facility is kept clean, that paperwork is kept in order, taxes and vendors are paid in a timely fashion, and you are adequately marketing your company.  This list could go on and on.  But, nothing has really been done until you've sold something.  Everything else may be important, but none of them mean anything if you are not selling goods or services.  You're not in business to keep your shelves full and tidy, you are in business to make a profit, and you can't do that until you sell something.

I've met store owners and employees who didn't seem to understand that.  Clerks have made me wait to check out until they finished filling up the shelf they were working on.  Some were clearly frustrated when I interrupted what they were doing with a question on how to find something in their store.  I want to give them my money, and they want to finish dusting a shelf.  Here's a novel idea for a business:  Take the money.  Make the sale.

The most important thing that happens in any small business is sales.  Without sales you have no income, without income you have no profit, and without profit you soon won't have a business.  Every team member reporting for work should have one clear focus: to sell something.  That should be their focus every day.  They may not be in the sales department, but every person in your company needs to understand that everyone is in sales.  Some may be selling the product or service your company offers while others are in the business of selling your company and its brand. 

It's funny that even some salespeople do not understand how critical sales are for a business.  Such salespeople may be great at doing a sales presentation, but they forget to ask for the sale.  They work hard at developing a relationship with a possible client, but never get around asking for the sale.  Or, if they do ask for the sale, many times they make it easy for the client to say no.

Here are some things your salespeople needs to consider when talking to your clients.

1. Know your product, your client's needs, and how your product or service can better meet that need than your competitors.
2. Ask questions.  This is how you learn your client's needs.  After asking your questions, shut up and listen.  Your client will tell you what he or she wants.
3. Use their comments in your close.  Few people will reject their own ideas.
4. Sell the sizzle, not just the steak.  People are much less interested in your product or service as they are in how well your product or service will meet their needs.
5. Make it easy for your clients to do business with you.  Offer financing.  Meet with them at a time that is convenient for them, not you.  Develop policies that are client friendly.
6. Be prepared with several possible closes and use them at various times in your presentation.  If they agree to purchase your product or service, stop your presentation, take their check and get a signature.  You've already sold them.  There are no extra points for completing your presentation.
7. Accept that call backs are a part of sales.  It may take 7-8 call backs before you make the sale.  Sometimes this is the result of poor presentations or the salesperson's failure to clearly ask for the sale in an earlier presentation.  Work to lower this number.

Obviously, there is more to know about selling than what's listed here.  For a fresh approach to selling I recommend you read Dan Kennedy's book No B.S. Sales Success.  Kennedy doesn't mince words and doesn't provide his readers with a lot of fluff and theory.  His books are filled with practical advice that he has learned as an entrepreneur and business owner.  You can order the book simply by clicking on the image below.