Over the years, we’ve recognised something very important. We’ve recognised that when a business owner tells us about their challenge, we must work with them to translate that challenge into what it really means. Some business challenges are described in terms that are too broad to be useful. In some cases the business owner is completely focussed on the wrong task. Consider these common challenges:
- I have a staff issue.
- We’re constantly competing on price.
Let’s translate these issues into what they really mean. After some questioning ‘I have a staff issue’ becomes:
We hire great staff and we get really busy working to complete the jobs we have on. A few months later the work dries up and we just don’t have enough work to keep the staff on so we end up having to put them off. A few months after that the work comes in and we have to go and find new staff. We’re always training new staff when we’re already very busy.
So is this a staff issue? Not really. The business is able to get good staff and train them but they lose them because when they get busy their marketing suffers. If this business worked on a marketing approach that worked well and was consistent, the so called staff problem wouldn’t exist!
‘We’re constantly competing on price’ becomes:
We do get enquiries but generally by the time we get an enquiry the customer has already had three quotes. We don’t spend a lot on marketing so when we get an enquiry it’s like gold and we have to have a very high conversion rate. In order to keep our conversion rate high we have to keep the prices low.
So again, it’s not necessarily a competitor problem. It’s important for business owners to control what they can control rather than worry about external factors. In this case the enquiry rate needs to be increased so that they can afford to lose some quotes and preserve their profit margin. Their sales tactics needs to be addressed too. Being proactive about sales means that you bring people into a buying cycle before they start shopping around. While they will probably still shop around, you will get the opportunity to build a relationship with them and sell them on other things besides the price.
Talking through challenges makes a huge difference and while you should never expect a miraculous turn around on any issue, getting a different perspective on it and understanding the root cause of any problem is the first step in being successful.
This post resonates with me given my business operates in a competitive area of beauty, but I decided that I was not going to concentrate on what my competitors were doing but what I was doing to build a relationship with my client by adding value when they visit my site or receive my newsletter. When I started being proactive with my business I felt less stress about competing!
I agree with this concept as a builder the conversion rate on inquiriey,s at the moment is 1:16 as aposed to 2 years ago being 8:10, possibly my proactivity in the initial sale on a $200k project would be worth spending a considerable chunk of money wooing the customer as aposed to a $500 door hanging where the time to quote almost out costs the profits made.
possibly meeting the clients over a light lunch or coffee to discuss the final quotation as apposed to just Emailing and posting my well prepared offer would be more effective?
(in reading this back its damn obvious isn’t it)
We were “first to market” with our product. Over the course of the next 6 years, we never had to canvas sales as they all come directly to us. 100% strike rate! Fantastic as it sounds, in reality it’s not, it became a trap.
What we didn’t realise was that competitors soon started appearing on the market riding on our coat tails.
We hit the 5 year business itch at the 6 year point when we failed to heed to the warning signs. Sales dropped off dramatically, and we started market research into revamping the look of the packaging, adding video instructions, revamped advertising material, but……. a lot to late.
We got far to busy working in the business rather than on the business from just after the start up when we achieved success.
Our wholesale pricing is very competitive, our retail price is lower than most competitors, our product is still fantastic but we are no longer the “flavour of the month” because we let our sales and marketing go because the hunger of achieving success was no longer there. We became invisible to our wholesale clients when our competitors walked in the door, greeting our clients face to face.
Walking in now with revamped packaging and the added incentives, such as the included tutorial DVD’s, we are met with “The product used to sell fantastically well, but now that “xxx” has come on the market, even though yours is a much better product, it has dropped off”.
We failed to maintain the proactive sales approach from the onset, whilst our competitors used “guerilla marketing” tactics to gain market share, backing that up with incentives to our wholesale clients such as free holidays if they achieved a sales quota. Ingenious indeed.
Our saving grace is that this competitor is now getting poor reviews in the forums from consumers, whilst we have never really had that.
So we now have the opportunity to resell to our older clients that have dropped off