If your customers keep asking you for a better price, I am going to show you how to get the price that you deserve and close more sales.
We now know there are 3 distinct parts of the brain and each one of them has a different function. However, only 1 of them is responsible for decision making and it fires up around 8 seconds before you are consciously aware that you have even made a decision. The research and information I am about to share with you hasn’t come from psychology, the personal development industry or even a marketing agency – these findings were made by neuroscientists studying brain wave activity with fMRI, EEG and retinal tracking devices. They were looking to find out which part of your brain lights up when it is presented with different stimuli and the findings have been documented and published in respected publications like the Wall Street Journal and the Harvard Medical Journal.
The biggest part of the brain is the neo cortex. We are the only species on the planet that has developed this part of the brain. It is the last thing that forms in the womb and it lights up when we listen to music, look at colours, speak, read and process numbers. If you ever hear people talking about right vs. left brain thinking, they are talking about the neo cortex. In a nutshell – IT THINKS.
Similarly, when your customer says “I need to think about it” or “is this the best price I can get?” this part of the brain is firing up and looking for data. This uses up tons of your brain energy and prolongs the decision making process. If you want to drag out the process of getting your customer to decide or compete on price, you want to make sure that your customer has to us this part of his brain. Make sure you give your customer lots of BIG words, numbers, graphs, lists of features and benefits, talk about your competitors and how you stack up next to them – and your customer will NOT decide BUT he will do a whole lot of thinking and take up more of your valuable time and energy in the process.
Let’s move on to the middle or mammalian brain – this is the part of the brain that we share will every warm blooded creature on the planet. This is where you process emotions and feel. But this is not where you make decisions.
At the top of your spinal cord, there is a collection of neurons – which are commonly referred to as the old or reptilian brain. This is the first part of your brain that is formed in the womb and it is the part that keeps you alive – all bodily functions that take place below the level of consciousness, are controlled by this part of your brain.
It is your fight or flight brain – and its sole responsibility is to ensure your safety and survival. It houses the amgydala – which is the chemical factory in your brain that regulates all bodily functions. And it is the part of the brain that lights up when you DECIDE.
It lights up even before you have conscious awareness that you have made a decision. Now, while it is very true that this is the most primitive part of your brain, the good news is that it is very predictable. By understanding how this part of your brain works, you will never again bore and overwhelm your customers AND you will never again be lured into the trap of competing based on price.
How will you do this? By understanding how this part of your customer’s brain works, you can help him to use the least amount of mental energy in processing your message which means that he will make quicker decisions. It is important to remember that unlike the neo-cortex up here (the thinking part of your brain), this part right of your brain is automatic – it does not think, it only DECIDES and ACTS. It is always at work scanning your environment looking for information of value to your survival.
So you might be wondering how does this apply to the price that you charge for your product/service?
Just for a moment, I want you to imagine that you are in the business of selling pizzas. Now, it doesn’t matter whether your business is called Pizza Hut, Dominos, Boston Pizza or Pizza World… you are basically selling an undifferentiated product and the market that you find yourself in looks price conscious, doesn’t it? The reason for that is simple – the consumer finds it hard to distinguish between your pizza and the next guy.
Now if you happen to BE the owners of a Chicago Deep dish pizza shop you might argue that your pizza is better because your crust is thicker and you provide more toppings and value. But in the eyes of the consumer, your pizza is still not really worth much more than the next guy’s pizza. You might be charging $20 and your competitor is charging $18.50. Why is that?
It’s because even though you think there is a difference, in the eyes of your customer, there isn’t. 95% of what you and the next guy offer are essentially the exact same thing. And as long as you keep operating in that zone with a marketing message that doesn’t stand out and stake a claim, you will continue to compete on prize because your customer is up in his neo-cortex trying to figure out which pizza is the best one to order.
So knowing this, what could you do differently? Well one company in 1973 identified a way to stand out and grab market share. It didn’t claim to have the best, the thickest or even the cheapest pizza, it just made you a promise that if you ordered from them, you would get it in 30 minutes or your pizza was free. It was the most successful campaign in the history of the industry – for good reason.
Think about it, when you order a pizza, what is the one question that you have in the back of your mind? I wonder when the pizza will get here?
Dominos answered that question for you. They stopped making you need to think about it and they triggered the part of your brain that decides and dials.
This is the power of Sales Seduction – understanding why your customer says YES and knowing what to say in order to close more sales. Can you see now how knowing this information can help you accelerate your sales process, close more sales, trigger decisions and allow you to charge a fair price for your product/service?
Great – so your homework today is to go back through one of your sales or marketing messages and identify all the ways that you are boring or overwhelming your prospects. The key to NOT competing on price ever again, lies in doing your homework to help you close more sales.
For those of you who are in the retail industry, you may have noticed a recent trend to clean up in-store environments – reduce shelf heights, remove dense ends and dump bins, widen aisles etc. – in order to increase comfort and make the shopping experience less stressful for customers.
The big question then becomes “does clean make customers keen”? According to Walmart, arguably the largest and most successful retailer in the world, clean stores mean fewer beans (on the bottom line).
As reported in the New York Times, Walmart conducted a massive in-store experiment to improve sight-lines, rationalize the overall number of items offered, remove warehouse-like merchandising in centre aisles, and increase the width of core aisles. According to Walmart’s CEO William S. Simon, “(Customers) loved the experience. They just bought less.”
As a result, Walmart reverted back to its original strategy of offering more products, with tighter aisles, more clutter and lots of bargain bins in the hopes that customers would spend more because of a perception “there were bargains to be had”.
If you do a quick search on the internet, there are dozens of experts who subscribe to the view that a larger selection, more bargain bins, and sales signage equates to “better value”. In essence, the more you look like a market stall, the better it is to generate buzz and sales. They argue that if your merchandise is neatly presented on the walls and in well organized aisles, with no point of sale impulse offers and dense ends full of 2-for-1 specials, customers will tend to think your store is expensive (i.e. overpriced) and they will not buy from you.
And if you think about it, you can probably name a whole list of retailers who subscribe to this “clutter is good for business” philosophy and they seem to be successful. But how can we be sure that clutter makes customers keen? Have we been too quick and prematurely jumped to a conclusion that clean is a traffic and transaction turn-off?
Recent empirical evidence from neuroscience and neuromarketing sheds new light on how we think, and more importantly, how we make decisions. In fact, the decision making part of your brain responds strongly to certain stimuli only.
Did you know that your brain consumes 25% of your body’s energy? As a result, you brain wants to conserve energy so you tend to pay attention and be attracted to things that have sharp contrast, high visual appeal, strong emotional cues and a clear beginning vs. end message.
Now what does this mean for you in the context of your shopping environment?
A chaotic, cluttered store is cumbersome for your brain to navigate – you have to work hard mentally to hunt down and search for bargains. It may create some emotional appeal but it is likely perceived as having low contrast, low visual appeal and no clear beginning vs. end. According to neuromarketing studies, shopping in this environment takes time and energy and it also forces your brain to go into “thinking” mode. This is a critical point because thinking is counter-productive to deciding. Thinking takes place in one part of your brain (the neo-cortex), while deciding happens much more quickly (and automatically) in your old or “reptilian” brain.
So what does this neuromarketing research mean for the strategy and conclusions reached by Walmart?
Based on neuroscience, the strongest buying cue that you can give your customers is this – if your store (or business) has incredible bargains, people will buy (and even sift through a maze of clutter) because something is in it for them. The “what’s in it for me” (WIFM) principle is one of the strongest influences on the part of your brain that decides.
However, there is no hard evidence to suggest that clutter makes your customers keen.
Walmart and many others have come to a conclusion based on what they THINK people are doing to reach a buying decision in-store. However, neuromarketing has produced empirical evidence to support the opposite conclusion is more probable. Clutter and chaos create an environment where your customers have to think too hard, which is exhausting for the brain. They will do it if they have to, as long as the perceived bargains and value are very high.
Wouldn’t it make more sense to find another way to communicate good value and service without exhausting your customers and causing them to waste their time?
Wouldn’t you be more likely to get more sales and word of mouth referrals from your delighted customers?
In the end, Walmart may be correct about the fact people buy more in certain circumstances but they are wrong about WHY that is. The best way to create more excitement and sales is to make it easier for your customers to decide. You need to show them what’s in it for them, increase the contrast between your solution and your competitors and communicate a strong, clean visual message that compels them to say “YES”.
If you had to pick 1 thing – 1 strategy or change that you could implement in your business that would allow you thrive despite tough economic times, what would it be?
Let’s make a list of the top 5 things that I hear most business owners (like you) say when I ask them the same question…
- Spend money on marketing – attract new customers
- Have a sale
- Ask for referrals or help
- Tighten your belt – cut costs
- Do more networking
Now what do all of these have in common?
They all involve you doing more of the same thing that you have always done. None of these involve a radical shift in the way that you do business, do they? None of these involve you taking a step back and re-examining what you do and whether it’s actually working. And none of these involve you changing the way that you communicate what you do to your customers.
And that is precisely why none of them will work to recession proof your business.
So why is that important?
Because consumer sentiment and spending has changed dramatically in the past few years and those changes are being felt across every industry and by both big and small businesses. Everything you thought you knew about your customer and why she was buying from you has probably changed. And if you don’t take the time now to re-discover your prospect’s main source of pain – the reason why she needs your product or service – you risk losing more sales and more ground to your competition.
Now some of you are probably sitting there thinking “but MY industry is different. You may think that you’ve been hit especially hard and that everyone in your niche has lost sales. But that’s not the case for 99% of you. Even some of the most competitive and vulnerable industries have companies who have continued to perform well and who have even stole market share.
Just for a moment, I want you to cast your mind back to the first few months after the GFC. A lot of people lost their life savings during the stock market crash and many lost their jobs immediately after that. It was a horrific few months and few industries felt the wrath of the crash more so than the automotive sector. If you remember, new car sales dropped by almost 20% in a short period of time and stayed that way for almost a year. That’s a huge drop in an industry that is vital to the health of the national economy.
Now sales of new cars were down 20% for the industry. Despite the massive drop in sales, 1 manufacturer actually managed to gain market share and outperform all other companies in sales growth. Do you remember who that was and why?
Only 1 company stopped and took a good hard look at the pain their customers were in at the time. They didn’t do what all the others did – which was spend more money on newspaper ads, lay off salespeople and slash new car prices.
Only 1 company examined the change in the market, correctly diagnosed the pain of their prospects and came up with a solution. “If you lose your job and can’t make the payments, no problem – we will take it back free of charge”.
Do you remember who that was? That’s right Hyundai.
With one simple change to their focus and strategy they stole market share from every other manufacturer because they correctly identified the shift in their customer’s pain. They didn’t keep going on with the same old strategy and approach that clearly wasn’t working. Yes, there had been a major downturn and the whole industry was hit hard, but there were still lots of customers who wanted to buy a new car but were afraid to do so because they might lose their jobs.
So how can you apply this to your market right now? First and foremost, your customers are not thinking about you, your brand and your features and benefits – they are thinking about their own survival and whether or not you can cure their pain. If you are able to correctly diagnose the pain, you will trigger the part of their brain that makes decisions and you will stand apart from your competition. That’s the power of Sales Seduction.
Think about one of your customers right now and her pain? What do you need to do in order to get more clarity around that? What questions do you need to ask her about how it is affecting her financially, personally and strategically? To the extent you can diagnose her pain, get her to acknowledge it and put forward the solution that cures it, she will listen to anything that you have to say.
Take a look around you… businesses are closing their doors everyday – which means more potential customers for the businesses like you that DO survive. And in times like these, it’s going to take more than just doing more of what you have always done to recession proof your business. Uncertain times call for deliberate decisions and proven practices. In order to recession proof your business you need to shift your thinking around the way you do business and start providing THE solution to the #1 pain or challenge that your customers have. And if you need some diagnoistic questions and a step-by-step framework to help you do this…I highly recommend that you check out Chapter 8 of Sales Seduction.
It’s an unlikely source for great business advice for entrepreneurs. A story about Billy Beane, the general manager of a major league baseball team at the bottom of the ladder – the Oakland A’s. Crushed by the big budgets and big name players of teams like the New York Yankees and the Cleveland Indians, Beane is forced to take a risk and do something no team has done before – abandon traditional recruiting methods and employ computer-generated analysis to acquire and trade players. And in doing so, he changed the face and landscape of the game forever.
The following quotes from the movie were never really meant for you and your business and yet, they reveal some fantastic truths about life and success that will make you a better owner and leader.
1. You’re not solving the problem. You’re not even looking at the problem.
It is very easy for you to be distracted by all the issues and rhetoric swirling around the actual problem. The more you (or others) have personally invested in the status quo, the more you will be prevented from seeing the real problem for what it is. Seek advice and perspective from people outside your industry — those inside will be emotionally attached to the way things have always been done and thus, they have become part of the problem.
Your number one objective is to determine what the actual issue is, and solve it. You don’t have time to get caught up in meetings talking about why it is a problem or re-engineering band-aid fixes that have not cured it in the past.
2. We’ve got to think differently.
Your business really isn’t that different from the Oakland A’s baseball team. If you’re a start up or a small-mid size business, you’re likely working under some tight (and possibly unfair) resource constraints. If you want to grow and to challenge competitors that have much deeper pockets, you need to level the playing field or you need to change it completely. It is impossible to beat anyone if you insist on letting others dictate the terms. You must start by thinking differently. What would need to change in order for you to have the advantage? What can you do differently right now to achieve your objective? How can you adapt or modify your approach to get what you want?
Playing the game on your competitor’s terms is no longer a viable option. It can only lead to frustration and failure.
3. He passes the eye candy test. He’s got the looks – he’s great at playing the part.
Success often depends on good scouting and recruiting. A common mistake that most of you will make is to recruit team members that you like (and have something in common with during the interview) or who look the part. In order to ensure the survival of your business, need team members that can actually do the job that you need them to do. It doesn’t matter whether the candidate has 15 years of experience at a multi-national or comes highly recommended from so-and-so. None of that amounts to a hill of beans if they cannot do the job. If you want to boost your success this year, get the right people on your bus. If you need a good hitter (someone who can close business) don’t hire a semi-retired catcher who is charming in the interview.
4. Your goal shouldn’t be to buy players, your goal should be to buy wins.
It is important to get the right people on your bus. However, in order to do that, you need to figure out exactly what needs to get done and hire people who can do it. Don’t get caught up in fancy titles, big salaries, stock options and what looks good to the outside world. If you want to be successful you must be in the business of plugging gaping holes and buying outcomes.
If you need more customers and sales, hire someone that you know can and is incentivized to close business. It doesn’t matter what you call him, what matters is that he can produce the result that you need to survive and thrive in your business.
5. Why do you like him? Because he gets on base.
Step 1 – figure out what success looks like for the role you need to fill. Step 2 – don’t hire anyone without a proven track record of achieving that outcome. Step 3 – Get rid of (or trade) anyone who can’t fulfil their role or who is polluting the office environment.
6. Where on the field is the dollar I’m paying for soda?
It is good to be frugal and smart with your money but it never pays to be penny wise and a pound foolish. If you want to grow your business profitably, focus on the items that will have the biggest impact on your bottom line and cash flow first. There’s no point focusing on shaving one or two thousand dollars off your fixed expenses if you’ve got $25,000 tied up in dead or slow moving inventory. To make good decisions and take action that boosts your bottom line, you need to measure and track your financial KPIs regularly.
7. I’m not paying you for the player you used to be, I’m paying you for the player you are right now.
While you might get away with recruiting based on potential, in the end, you can only reward based on results. Time and time again I have seen business owners struggle with the decision to let salespeople, who are not meeting their targets, go. The decision is really a very easy one. Someone has to go. It’s either them or you. You can’t win a baseball game without putting runs on the board and you can’t build a successful enterprise without hitting sales targets consistently.
8. It’s day one of the first week. You can’t judge just yet.
Patience is a virtue. Don’t pass judgment judge too soon. If someone’s not performing or the team is not quite gelling, take some time to investigate, ask questions and make adjustments. All changes to the team will have a natural breaking-in period.
Too much tolerance can become a vice. Good performers tend to contribute value very quickly – both in terms of their attitude and work ethic. The typical 3 month probation period is more than enough time to make a fair evaluation. When the writing is on the wall, have the confidence to cut your losses and move on.
Despite the Oakland A’s disadvantaged revenue situation, Billy Beane took his team from bottom of the ladder to World Series contender in just a few months. By re-evaluating the strategies that produced wins on the field, they built a winning team with only one-third of the salary budget of the New York Yankees. To do this, they had to do more than just play better a better game of ball. They had to transform the playing field completely.
Discipline and attention to details is more important than ever if you want to succeed in challenging economic times. Take a look around… competitors are closing their doors – which means more potential customers for the businesses that DO survive. And in times like these, it’s going to take more than “thinking outside the box” and goodwill with existing customers to secure the survival of your business.
You may have been lucky over the past few years – you may have found it possible to operate without a detailed, written plan and systems/processes. But the global economic crisis has changed all of that. If you want to thrive, there is only one thing that is for sure – uncertain times call for deliberate decisions and proven practices. So here are my top tactics to recession-proof your business.
1. Begin with the end in mind
If you don’t know exactly where you are going, how will you know when you get there? Now is the second best time to decide on your strategy, set your goals and document tactics and timelines. Keep it simple – write a 2-3 page summary of what you intend to accomplish in 3 months, 6 months and 12 months.
2. Focus on cash flow not profit
You cannot buy a house or a new car with “profit” from your business. Make it your mission this year to develop and maintain a weekly/monthly cash flow forecast for your business. This is not hard to do but it does require discipline and a simple excel spreadsheet. If you need help, I recommend that you consider signing up for Imagineering Profit. With just a few numbers from your Balance Sheet and Profit and Loss statement, Imagineering Profit can calculate your cashflow for you and give you the insight that you need to get your company operating in the black!
3. Collect your debt NOW!
How many days does it take to collect your debts on average? Whatever it is, make it your goals to reduce this by at least 10 days. You may be surprised to know that if your annual revenue is around $500,000, you could save yourself up to $2,500 in interest carrying charges simply by collecting your debts 10 days quicker on average. Pay attention to customers who are taking longer than usual to pay. Now is not the time to be extending too much credit if you are concerned about their ability to pay.
4. Rank your customers
Do you know who your best and worse customers are? Have you ever tried to calculate how much profit you are making from each customer or group of customers? If you don’t know the answers to these questions, today is the best time to start tracking and measuring this.
5. Fire your worst customers
Everyone knows that is cheaper and easier to garner incremental business from existing customers. Some even argue that it is 6 times cheaper and 75% easier to convert a sale from someone who already knows and trusts you. If you have unprofitable customers, get rid of them and focus your attention on your best customers.
6. Trim your product range
Contrary to popular belief, it is better to have money in your back pocket than tied up in stock sitting on your shelves for months on end. The longer it sits and does not turn over, the more it actually costs you in lost opportunities. Spend 2 hours today calculating which of your SKUs or stock lines are your worst performers; make it a priority to sell those quickly to release some much needed cash. Consider reducing your overall investment in stock. Compile a spreadsheet of all the SKUs you carry and then run two separate columns – one for how many units you sell on average of each per month and the other being the total units on hand. If your stock gets delivered quickly, you should never be carrying more than one month’s worth of sales at any given time.
7. Monitor your breakeven and key numbers
The most important day of the month is the day that you break even and start making a profit. If you don’t know which day of the month that is, you need to find out today. Knowing this number allows you to monitor your performance and take measures to correct issues right now. Waiting until the end of the year for your accountant to produce financial statements is not a good idea – if you are behind, you need to know now so that you can correct the situation.