Profitology

Category: Sales

  • Profit from the Psychology of Pricing

    Profit from the Psychology of Pricing

    It is often said “You get what you pay for” with the perception of quality of product being linked to the price you pay. More often than not, this turns out to be true, cementing the belief that the amount you are willing to pay does reflect the quality of the product or service you receive.

    When setting prices, business owners are often misguided in to setting a price based on what they think their customers are prepared to pay. Generally, this is lower than necessary to deliver sufficient profits resulting in the business owner working long hours with very little, or no reward.

    Adopting a pricing strategy which positions your brand as delivering quality and value-based products presents the product or service as an attractive option, often gaining more customers and sales.

    This is evidenced in the case study from Robert Cialdini’s “Influence”, which discusses how a local jeweller managed to sell out of turquoise jewellery because it was accidentally priced at double its initial price, instead of half (which is the price she had intended).

    The inflated price now made the jewellery irresistible to buyers, who had before ignored the colour over all others (which was the initial reason for the intended price cut).

    Now that the price had been raised, the context of turquoise jewellery had a “high value” in the buyer’s minds, even without an explanation!

    How do you increase your prices without scaring your customers off in droves?

    If you are innovating a new product or service, customers do not have a price point to reference to and are more likely to accept any price you nominate.

    However, if you are competing with others in the marketplace and choose a high price point you need to give them a reason to choose your product over others by standing out from the crowd.

    Apple is an example of a company which has established its brand as a high quality, yet highly priced product with people lined-up to purchase its product.

    Apple has created this image through the use of its high-quality packaging so that the experience of opening the item out of the box is a thrill to the customer. Further, the product launches create scarcity by limiting the number of sales per day.

    How do you amplify your product or service to gain market appeal?

    Quite simply, to position your product or service at the top end of the market is to make it look fabulous.

    You do this by:

    1.      Creating a story about your brand which attracts interest as well as fulfilling a need

    2.      Understanding the desired outcome of your target market, and ensuring the product not only delivers, but is how it delivers is communicated

    3.      Articulating the benefits of the product or service to the customer

    4.      Providing testimonials and case studies from existing customers

    A final point for consideration, buyers are irrational and tend to believe that the most expensive option is the best. Let’s face it, if there is nothing setting off their alarms, why wouldn’t they?

  • 3 Tested Elevator Pitch Examples for Every Business Owner

    3 Tested Elevator Pitch Examples for Every Business Owner

    I almost cringe when I hear the term “Elevator Pitch” these days. It has been used so extensively that I automatically think “Warning, warning – sales pitch alert!” However, there is certainly a time and place to pull an elevator pitch out of your business “toolbox”.

    Where might an elevator pitch be suitable?

    At any given moment, you need to be ready to grab people’s attention and get them curious or excited about what you do. Any interaction can present an opportunity to talk about your business, yet a well-prepared elevator pitch will come in handy at:

    1. A networking event
    2. A business conference or event
    3. A friend’s party

    Being able to capture someone’s attention with a catchy, witty description of what you do is far more engaging than simply stating “I’m an accountant”, or “I’m a plumber”. When you respond with a job title, they automatically place you in a “box” based on their experience and knowledge of what they think you do. You will be missing a great opportunity to impress or attract potential customers or investors.

    But if you can engage them in a conversation by explaining how you solve a problem or fulfil a customer’s need, you have a far greater chance of securing a lead or referral. So rehearse a brief, persuasive elevator pitch and use it to seize every business opportunity.

    So, how do you write an elevator pitch?

    An effective pitch includes the following elements:

    1. what you do – a pithy message that shows what your business is about and what makes you unique
    2. an enticement to learn more – a hook that intrigues people, prompting them to want to know more about you and your business
    3. an encouragement for lead or referral – a clear and concise call-to-action

    There are different ways to create your pitch. The most appropriate one depends upon what you are comfortable with and the situation you are in. So, how do you craft an effective elevator pitch?

    To get you started, here are three techniques that are used quite a lot because they work:

    The Slogan or Tag-Line Approach

    This is a single line statement that hints at what you do and creates curiosity for your audience. For example, for my accounting business, my tag-line pitch would be:
    “I keep Small Business Owners on Target”
    This provides an indication of my ideal clients, and encourages the audience to probe for more information.

    The Value Proposition

    As a business owner, you need to identify your winning difference – the quality or qualities that set you apart from the competition. Here’s a template you can follow:

    • Our (Products and Services)
    • Helps (Customer Segment)
    • Who want to (Task to be completed)
    • By (how you reduce the customer’s pain)
    • And (how you provide a win for the customer)
    • Unlike Your competitor

    This end part, although not said aloud, helps you to fine tune the pitch. Using the example of my accounting firm:

    Our accounting firm

    • Helps small business owners
    • Who want to take control of their business and their figures
    • By taking care of the red tape
    • And conducting quarterly meetings to discuss the business performance
    • Unlike most other accounting firms

    The Geddes Pitch

    Another way of writing a powerful elevator pitch is by proving that you can get results. The Geddes Pitch format forces you to think of a convincing proof that your product or service works.

    • You Know How…
    • We do…
    • In Fact…

    Again, applying this pitch to my accounting firm:

    • (You Know How…) Most small business owners struggle to keep on top of their tax obligations and have little understanding of the financial aspects of their business?
    • (We do…) At Archer Business Consulting, we offer quarterly review meetings to enable small business owners to manage their tax obligations and gain clarity around how profitable their business is on an ongoing basis.
    • (In Fact…) We have seen our clients achieve growth in the range of 2x to 4x by working with us on an ongoing basis in reviewing their figures.

    Final tips for developing your pitch:

    Here are some bonus tips to remember when writing an amazing elevator pitch:

    1. Have a memorable hook.
    2. Don’t ramble.
    3. Be authentic.
    4. Ensure the pitch aligns with your personality.

    When you know yourself and your business well, you can use any of these top techniques in creating the elevator pitch that is consistent with your brand and resonates with your target audience. If you have written a pitch before, see if you can tweak it a bit for more impact.

    Over to you

    Which technique on this list would you like to snag? When in doubt, try to write your elevator speech by using all these techniques, and then select the one you like the most.
    Use your improved elevator pitch as often as you see fit. Try it with with different people at various situations and observe the number of lead or sale that you generate from the pitch.

  • How a Win-Win Offer Can Help You Close Sales

    How a Win-Win Offer Can Help You Close Sales

    A successful sale happens when a buyer and a seller agree to the terms of the offer.

    When crafting an offer, majority of small business owners make one of these two common mistakes:

      • They offer their goods or services at very low prices.
      • They make a sales offer that does not encourage future negotiation.

    There’s a third extremely effective sales technique that hardly anyone uses.

    A method that satisfies your customer’s desire for quality products or services while also persuading them to agree with your best price. How is this possible?

    Crafting an Irresistible Offer to Attract Sales

    By foresight, observation and practice, you can create an offer that delights everyone involved. It’s not a painless or effortless process but it’s very doable. Perhaps the easiest way to show it is through an example…

    Recently I met with a client who told me about an offer from one of his suppliers who was trying to win their loyalty.

    The offer consisted an arrangement whereby if my client used the vendor as their sole solution provider, they would give a 5-year warranty on their product and decrease the sales price.

    This means that my client would be able to offer a solution to their customers with the added value of increased warranty. Further, since my client can enjoy a decrease in the cost of sale, his gross margin will increase for this particular sale.

    This is an example of a Win, Win, Win for all parties involved. See how the supplier remarkably reconciled the varying needs and demands of all parties involved?

    The supplier gains the sale of all product items, my client the increased gross margin, and the end customer, a longer period of warranty.

    Such is the power of a win-win offer.

    So always be asking, ‘how can I create a marketing offer that leads to a beneficial outcome for all parties involved?’

  • How You Can Win Business With Persistence

    How You Can Win Business With Persistence

    Those of us with kids, or who are often surrounded by children, can nod knowingly at this all-too-common conversation:

    Child: Can I invite some friends over?

    Me: What friends? You don’t have those.

    Of course, I was just jesting at the last part. Kidding aside, if you have spent a considerable amount of time around small children, you have seen their sheer tenacity when they want something. They will repeatedly ask for it and won’t stop until they get it.

    My children’s favourite at the moment is asking if a friend can come over. So I am asked this question on a daily basis. One morning, they have even woken me up asking for the same thing.

    It’s frustrating to say the least. Usually my response is to either give in or snap and put my foot down. And regardless of my answer that day, I can guarantee you, they’ll be back asking the same question the next day. They persist until they get the answer that they want.

    When Persistence Wanes

    As we get older, we stop badgering people even if we want something so much.

    We learn that repeatedly asking for the same thing frustrates others. And if we keep doing so, people avoid or reprimand us. Through time, we instinctively learn that’s it’s polite and adult-like to patiently sit back, wait and hope for our wishes to be fulfilled.

    But if you think about it, which behaviour gets the most favourable outcome? By favourable, I mean, a result that we want to achieve. Passively waiting and silently sulking? Or actively pursuing our goals, dreams and visions through persistence and persuasion?

    Persevering like a child more often than not leads to getting what we want.. ‘Giving up’ has not rewarded anyone. Success certainly doesn’t just fall on our lap – we need to actively seek it and work for it.

    Persistence Leads to Success

    Your first call to a client may never convince him to buy. But a series of calls and meetings that build your company’s reputation and win the client’s confidence might lead to a sale. That’s how persistence pays off.

    In business, you often have aspirations and goals you’ve always wanted to accomplish. If you take a lesson from the tenacious child, you can learn that regular prodding, asking, prompting will help you get where you want to be. And it’s much quicker than if you just sit back and hope that an opportunity will present itself to you.

    So if you’ve got a target, take the bull by the horns – make that phone call, send an email, knock on the door. Don’t give up until you get the answer you are looking for. Majority of your competition will stop at the first rejection but if you persist, you’ll be an exception. That’s how you’ll win with persistence. Try it and see the difference.