Archive for the ‘Sales and Pricing’ Category

Use This Easy And Proven Tip To Supercharge Sales

July 19, 2010

by Doug Smith, President, The Woodhaven Group

Are you a retailer?  Worried about whether you will  have enough cash flow from your business to buy inventory for the all important Christmas season?

Do this now with the fall merchandise coming into your stores and create the cash needed for fourth quarter. 

Hold a one day private pre-season Fall sale.

Follow these proven tips to make it a huge success:

  1. Send out a personalized letter only to your customer’s announcing that the sale will be for one day only.  Do not extend beyond this one day.  It creates a sense of urgency.
  2. Discount 40% on any merchandise purchased on this one day only.  This will especially work if you are a retailer that does not have your inventory on sale 24/7.
  3. Include in the letter a coupon at the bottom that must physically be presented at the time of purchase.
  4. Do not email this announcement.  Sometimes it is better to get something in hand that has to be brought to the store.  Save the online coupons for another time.
  5. If you sell apparel, offer free alterations for anything bought on this one day only.
  6. Personally sign the letter with your direct phone number listed.  Advise them that if they are going to be out-of-town that day to call and you will ring up the sale for them.
  7. No holds for a later decision.  At the end of this day the sale is over.
  8. Have all sales staff call their personal accounts and set an appointment to meet their customers in the store. Again, this creates a sense of urgency and shows that the sales staff cares about their customers.   
  9. Make the day a major in store event.  Maybe have wine, appetizers, live music. You get the idea.   

This sale can turn into an annual event that only you and your regular customers will know about.  It’s your own little secret. About the third year you do this event you will see some customers taking a vacation day from work just to be there early when the doors open.

A side benefit will be that you can get an early read on what  styles, colors, and fabrics the shopper is really going to be interested in for this fall and holiday season.  Now you have direction on what to buy for November delivery.

Also, don’t be surprised when your customer comes back  the week after the sale and pays full price for that item she chose not to buy the day of the sale.

Oh!……and one other benefit.  You have just supercharged your cash flow early in the shopping season.

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10 Creative Ideas To Increase Sales Now!

July 13, 2010

by Doug Smith, President, The Woodhaven Group

As a business owner or CEO you must create and maintain positive cash flow in your business.  It is your #1 priority.

Let’s be clear where that cash flow is not going to come from.  The amount of loans to small businesses fell in the 1rst quarter of 2010 compared to 2 years earlier.  Banks and other private lenders are being more choosy about who is getting any type of small business loan.  Regardless of good cash flow projections and collateral, some businesses still are not receiving the lines of credit needed to operate their businesses.

As an owner, I would not automatically assume funds will be available from my local lender.      

There is one solution that will work.  The small business owner must find ways to increase sales.  The smart owner has already cut expenses, gotten extended terms from suppliers and probably tapped into personal investments.  More sales will bring more of the business cash flow your company needs to survive and grow.

Your company will need to do creative and unique tactics to spring loose the purse strings of the consumer or business who is your customer.

Start doing these 10 things today to increase sales:

  1. Learn more about the needs and wants of your customer.  Find better solutions to their problems and market to that.  In one word, “listen” to the individual customer more than before.  You may find that there is a whole category of products or services your company should have been selling to him that will increase your sales.
  2. Monitor and use social media.  There are many ways to use social media to generate sales.  The overriding method is to use social media to build relationships with customers and noncustomers.  Monitor for  complaints about competitors and offer a solution.  Monitor for complaints about your own company and be there to take ownership of the problem.  Incorporate surveys, contests, and links to websites, including your own.  All of this can position your company as a credible source of information. The end result will be an opportunity to create a new customer.
  3. Use email marketing to strengthen customer relationships.  This is not an opportunity to just email blast special offers constantly.  Instead, use emails to target a message about the benefits of your product, new information on your industry, an interview with a local business leader or an update on coming events involving your company.  Email marketing is an inexpensive way to stay in touch with your customer.  A call to action can still be included to trigger additional purchases.
  4. Get lapsed customers reinstated.  If you sell to other businesses then call on the company.  If you sell to consumers then send a personalized letter to each customer with a special coupon.  Don’t let them forget about you.
  5. Offer extended terms.  Help your customer finance the purchase.  Chances are your customer needs your product.  Here is a way to show that you are there to help them.  Instead of normal 30 day terms, extend out to 60 or 90 days.  Of course, make sure this offer is to creditworthy customers.
  6. Offer an unusual promotion.  Check the gross margin of your most popular products and offer something different to pry loose the spending of your prospect.  It may be a discount, a free service with purchase or a bundling of products.
  7. Run a 3 day limited promotion.  Make it unadvertised and exclusive to your customer database.  Communicate this with an email and followup contact by phone or in person.
  8. Offer a special after hours private shopping event.  If you are a retailer, tie in with a local not for profit and include their database in the invitation list.  Have a portion of the proceeds go to the charity.  Include wine, music, and giveaways at the event.  This could easily be held on a Saturday or Sunday evening.
  9. Create a white paper.  Your prospects and customers are probably having cash flow issues also.  Offer tips on how to save cash.  This will work for both businesses and consumers.  They will appreciate the free advice and use their new-found cash to spend on your products or services.
  10. Ask for and get testimonials.  Then send them out with a promotion to both prospects and customers.  There is no method of advertising more effective than a third-party advocate.  By including existing customers it will reinforce that they made the right decision by buying from your company. 

Use one or more of these ideas to pump up sales and increase cash flow.  Keep track of results and show your banker the action plan, goals, and the resulting increase in sales. 

You may see your banker wanting to make a loan to this well run growing business of yours.

A Fool Proof Way To Generate Business Cash Flow Now!

July 11, 2010

by Doug Smith, President, The Woodhaven Group

Do you have customers who purchase from you daily, weekly or monthly?

Would you like to have those customers help you with your business cash flow?

No problem.

Here is what you can do.

Let’s say you are a chiropractor who charges $50 per visit and your average customer comes to you for 2 visits per month.  Offer your customer a discounted package of 12 visits, 30 visits or 52 visits if they pay upfront.

Impossible to do, you say.  It is happening everyday across America.  Currently, the average person earns maybe  1-3% at most on their cash if they invest in Treasurys or CDs.  The chiropractor might offer a discount of 10-15% for a package of visits.  It is a great deal for his customer (patient) and he gets use of the cash immediately.

Here is a sampling of businesses that could benefit from this pricing strategy:

  • Hair salons or barber shops
  • Massage therapists
  • Yard maintenance companies
  • Physical Therapists
  • Oil change companies
  • Car Washes
  • Commercial window washers
  • Residential cleaning services

An added advantage to using this approach is that it takes your customer out of the market.  If your customer has “prepurchased” from you, then chances are they will not be going to your competitor.  The only caveat to remember is that you have received your cash upfront.  It may be smart not to spend all this cash at once as this future cash flow will not be coming in as it has in the past.  A good cash flow forecast would be in order to assure there will be  no short falls.

Discounted packages are a core pricing and sales strategy for many small business owners.  You may want to test this program to see if it is right for your company.

Use This Depression Era Program To Increase Business Cash Flow

July 9, 2010

by Doug Smith, President, The Woodhaven Group

Layaway programs are helping both consumers and retailers who are cash strapped.

During the Depression of the 1920s and 1930s, layaway programs were started to help shoppers buy items for Christmas from retailers.  For a small down payment, the retailer would hold the merchandise while the customer made weekly payments.  When the final payment was made the retailer handed over the merchandise to the happy consumer.  

As credit cards became more popular, layaway programs were eliminated.  Today, more and more consumers are either cutting up their credit cards or reducing the amount charged.

Smart retailers and businesses are reinstating layaway programs as a method to generate sales and help the shopper’s cash flow as well as the cash flow of their own business.

It’s amazing the variety of products and services that are using layaway programs.  A few I have seen are for:

  • Furniture
  • All types of big-ticket apparel
  • Jewelry
  • Vacation trips
  • Tickets and lodging to music festivals
  • Toys
  • Televisions
  • Cosmetic surgery of almost any type

In my opinion, one of the leading retailers using layaway most effectively is Sears and their subsidiary, Kmart.  To get ideas how to structure your own layaway program go to Sears layaway site right here.

Is layaway the right program for your company?

I would suggest doing your own research, talk to retailers and businesses who have tried layaway and test it on a few products or services.

You just may find this is one more tactic in your sales and pricing strategy that will help increase your overall cash flow.

One Simple Low Cost Method To Increase Sales

July 1, 2010

by Doug Smith, President, The Woodhaven Group

If sales are down try this low-cost method to increase sales and instantly improve your business cash flow.  The best part is it takes zero advertising dollars.

Look back at the last 3 years and calculate the average revenue or sales per customer that was generated for a year.

Make a list of your top customers and rank them in order top to bottom by year to date volume and determine who is trending to hit or exceed the yearly average.

Now,  make a list of those customers that are trending below the average, set a specific goal per customer to close the gap and have the sales department assign these customers to the top sales people in your company.  Their mission is to move sales volume up on each of these customers so by year-end their volume is at the predetermined average.

Why would this approach work?

First, you have already invested dollars to get them as a customer so no new advertising is needed to get these sales.  Second, the customer likes your company and what you have to offer since they are purchasing from you.  They are just not buying enough.

Try the following steps to increase sales with these customers:

  1. It sounds crazy but ask them to buy more.  It could be that the sales department has just been taking orders and not trying to build the sale.  Tell the customer how much the company values them as a client and would like to do more business than they currently are doing.  Believe me, this will work by itself with some customers.
  2. Increase sales by identifying a product or service that they are not buying that would be a good fit for the customer.  This becomes new sales for your company and sales that should have been generated with this customer all along.
  3. Offer a rebate or some incentive if by the end of the year their total volume hits the target goal.  If you get pushback, tell them the goal is realistic and is just the average amount purchased by the typical customer of your company.
  4. Review the payment history of this account and if it has been good, inform them that as a valuable loyal customer their credit limit has been increased. Like many users of credit they may purchase up to their credit limit.

I would do all 4 of the above suggestions for each customer.

Bonus method to increase sales:

After you have implemented the above program to increase sales with the “below average” volume customers, do the same steps with the “above average” volume customers.

The result will be a spike upward in the overall annual average revenue per customer.  This all happens without bringing on any new customers.  You are just maximizing the potential with your current customer database. 

Your business should see a jump in sales, cash flow, and profit.

Have A Down Payment Pricing Policy To Speed Up Cash Flow

June 29, 2010

by Doug Smith, President, The Woodhaven Group

Does your business perform a unique service or make a custom-made product?  If so, start including a down payment requirement when quoting a price for services or products.  This will dramatically speed up your business cash flow.  Combine this with extended terms from suppliers and that line of credit at the bank may not be needed.

Many companies are reluctant to ask for a down payment out of fear that it will upset the customer.  Our society has trained customers to expect to pay a down payment when purchasing certain products and services.  Most consumers would expect to be asked for a down payment when purchasing a home or car.  Unless your business is a retail transaction in a store where the customer gets the product immediately (ie:  restaurent, drug store, oil change, etc.), then try this tip and see your business cash flow take off.

It should always be a policy that any custom product or service  should require up to 50% down payment.  These funds early in the transaction can be used to offset materials & labor, marketing, and sales cost.  Or, just put the cash in your bank account and earn interest.  By receiving a down payment it also shows commitment on the part of the buyer.

Examples of a few products or services that should be getting up front down payments are:

  • Landscaping projects
  • Website design
  • Home or commercial remodeling of any kind
  • Caterers
  • Interior decorators
  • Direct mail design and production
  • Tailoring
  • Machine shops
  • Excavation
  • Dock repair or replacement
  • Mold remediation

Always make sure a complete purchase order or contract is signed by both parties spelling out the contract price, amount of down payment and balance owing so there is no misunderstanding at the end of the job how much the final payment will be.

Put this pricing policy in place today and watch your business cash flow immediately increase.

The Personal Value System Of A Salesperson Can Quickly Kill Your Business Cash Flow

June 20, 2010

by Doug Smith, President, The Woodhaven Group

One mistake many sales people make when selling to a consumer is to project their own personal value system into the selling process.

That is a major mistake that can be the difference between closing the sale or being disappointed with the outcome.  The result is no sale and no addition to your business cash flow.  The prospect ends up buying  from the competition and your company needlessly lost revenue.

I have seen many salespersons not want to build the sale because they personally believed the total price would be too much.  In other cases where financing the transaction is an important option, I have seen salespersons not quote monthly payments because they never personally finance any purchases and do not believe anyone else should either.  Others don’t offer the product in a certain color because they personally do not like that color.  One retail salesperson I knew did not present one line of clothing to customers because she personally did not like the designer.

This happens in sales forces of all kinds and can be a cancer that will kill sales and valuable cash flow.

Sales managers need to train their sales forces to ask questions and gather plenty of information from the prospect about what the prospect wants and needs.  Then tailor the product or service offering based upon that information only.

The next time you see the sales volume of a sales person drop consider that one option may be that they are projecting their own personal value system into their selling process. Correct it and  both your sales and cash flow will increase.

Increase Sales And Business Cash Flow by Simply Asking For The Sale

June 19, 2010

by Doug Smith, President, The Woodhaven Group

As CEOs, owners, and senior managers we often spend countless hours analyzing why a sale did not occur. 

Was the price too high?  Is it poor advertising?  Was our product the wrong design? Are we marketing to the wrong customer?

Many times I have found the reason is very simple. 

No one asked for the sale.  You may be thinking that no way does that happen in my company.  You have a selling methodology in place and your sales manager  reviews it weekly in sales meetings.  Well, it happens.  And it can occur in retail stores,  with in home sales persons and in business to business selling situations.

In a business to consumer company I was involved with, we would follow-up the sales visit with a “quality control” phone call to the prospect that did not buy.  Our conversation asked if our sales person was on time, explained the benefits of our product and answered all their questions.  Invariably the feedback was extremely positive on our sales person and many times when we questioned why the prospect did not buy, the feedback would be that they were not asked to buy.  The call would conclude by asking if they were ready to purchase, the prospect often said yes and we would schedule a manager to go write the sale.

Why do sales people fail to ask for the sale?  I have found many sales people do not ask because they are afraid the answer will be “no.”  It is easier to report back that the prospect wanted to “think it over.”

When asking for the sale everyone wants to hear a “yes.”  However, a “no” answer is not bad because now the sales person can identify the objection and overcome it.  If no one asks for the sale then there is no chance to overcome an objection and close the deal.

How can an owner or CEO prevent this problem  from happening?  The best way to identify which sales persons have this problem is for the sales manager to observe the interaction with the prospect at the point of sale.  By doing this the manager can then coach the sales person on what to say the next time he or she is on a sales call.

Failure to ask for the sale is a problem that is never discussed enough with sales forces.

In my opinion, if you don’t ask for the sale then all that took place was a nice conversation. 

That won’t help revenue, cash flow, or profit.

Increase Sales And Cash Flow With Crossmarketing Alliances

May 26, 2010

by Doug Smith, President, The Woodhaven Group

As a business you must increase sales while not overspending on marketing.  If this is done well, your company will realize more profit and an improved net worth.  The increase in cash flow will allow you to do such things as pay down debt, expand into other markets and contribute back to the community.

The challenge lies in the ability to effectively market your product or service by spending your available dollars wisely.  The marketing options are many.  Depending upon the target customer you may invest in TV, radio, newspaper, special events, trade shows, sponsorships, direct mail, or the many forms of internet marketing.  There are some companies that still telemarket, use billboards or even canvas door to door.  The form of marketing that worked last year may not work this year.  As a CEO  I knew the head of marketing had one of the toughest jobs in the company.

In spite of all the marketing channels available to a company I always thought there was one method that was extremely effective and underutilized.  Executed correctly the marketing cost could be extremely low.  I am talking about using crossmarketing alliances.  What is that?  It is where separate companies with different products market to the same customer together.  In the eyes of the customer there is synergy in the offering coming from the combined approach of the companies.  The customer perceives this combination as added value.

Confused?  Here is a simple example to illustrate a cross marketing alliance that works well.  Think of the bride and groom.  Now think of all the things that have to be coordinated for the wedding.  Imagine if the couple can receive a suggestion from the florist they like to use a specific bakery for the cake and then both companies suggest a reputable photographer.  This can continue with the tux or wedding dress store, limo service and even the location for the reception.  There might be discounts used for the referrals.  This approach works for both the business and the customer. The customer gets what they want and the money the business saves on marketing can increase cash flow and add to profit.  More sales, more cash, and more profit is always a good payoff for a winning marketing strategy.

How can separate companies market themselves to the same customer.  Here are a few ways:

  • Share the cost of direct mail or brochures where each business’s product or service is featured.
  • Hold events or shows together and invite the same targeted customer.  An example is a Bridal Fair.
  • Pass out coupon books with each company featured.
  • Display an ad , sign or presentation in each others business location.
  • Offer a bundled package of services or products for one price.
  • Write testimonials for each other.
  • Mention the other company on Twitter, Facebook, or in a blog post.

Those are just a few ideas.  The key is to think outside the box.  Not sure this approach is right for you?  Here are some other examples of companies that could benefit from crossmarketing services:

  1. Web designer, SEO agency, email service, copywriter, video production company.
  2. Painter, plumber, electrician, handyman, home cleaning service.
  3. Attorney, CPA, insurance agent.
  4. Veterinary, kennel, pet grooming, pet store
  5. Landscaper, lawncare company, deck company, tree service, fence company
  6. Auto repair, wrecker service, car rental, car wash.
  7. Dry cleaner, seamstress, shoe repair, fire & water restoration.   

I suggest you have your mangers brainstorm this topic at the end of your next management meeting. You may be surprised at some of the workable combinations they will discover.

Remember, the next time you want to save some marketing dollars and increase cash flow try using a crossmarketing alliance.

Use The Lifetime Value Of A Customer To Increase Cash Flow And Profit

May 19, 2010

by Doug Smith, President, The Woodhaven Group  

To grow your business you need to retain your most profitable customers.  By keeping a customer who is profitable for the company it adds stability to the organization while increasing all important cash flow.

Lose customers and your business will find itself spending expensive upfront marketing dollars always acquiring new customers to replace ones that went to the competition.  Marketshare does not increase, profit becomes stagnant at best and cash flow suffers.  Consider it lost opportunity.

Some owners and CEOs say that they are satisfied to always be prospecting for the next new customer.  Losing customers, in their opinion, is just a cost of doing business.

These owners would not think this way if they took the time to calculate the lifetime value of a customer.  What is a customer worth?  Knowing this number gives the owner information that helps in developing and executing sales, marketing and operational strategies.  This knowledge becomes a competitive weapon allowing your company to utilize unique promotions or incentives since it becomes easier to identify your true return on investment per customer.

The lifetime value of a customer is really the profit generated from the sales of a customer over the liftime of buying from your company.  It is best to calculate using  group averages broken down by product category.  This allows you to then decide where to spend the most dollars to retain a specific group of existing customers.  Also, based upon the lifetime value of certain groups it shows marketing and sales where to invest the most dollars to acquire new customers.

The best example of explaining  the lifetime value of a customer calculation was in a Harvard study years ago. Read the Harvard customer study here.

As a CEO of a department store I not only knew the lifetime value of the lady shopping but also the lifetime value of her husband and 3 children as a family group.  I knew that if I satisfied the 3 children growing up shopping in the store I would have their 3 families as lifetime customers when each of them got married and had kids.  You can imagine how I calculated the lifetime value of a multigenerational family.  In some cases I had 3 generations of the same family as loyal customers.  It made an easy decision to happily accept that returned gift after Christmas.

The takeaway:  Know the lifetime value of your customer and never take that customer for granted. Now when you lose an upset customer because of poor customer service you know exactly how many dollars just walked out the door.