Self Employed Success

Guest column by David Newman – Author of “Do It! Speaking: 77 Instant-Action Ideas to Market, Monetize, and Maximize Your Expertise.” 

For professional services providers, entrepreneurs and sales professionals… the #1 dreaded question is, “How much do you charge?” 

Especially when it’s asked too early, out of context, and before you’ve established any sort of relationship with the prospect or any sort of value for the project…

In short, if you blow the answer, your prospect is gone.

Here are three things NOT to do: 

1. Quote a random price out of thin air (unless you sell haircuts for $18 or oil changes for $34.95 or you do bookkeeping for $65/hr)
2. Act surprised or unprepared for the question (“Uhhh… what do you mean?”)
3. Get defensive or go on a rant about how “all people care about these days is price, price, price.”

Some of the answers you’re about to get are evergreen, some you can adapt to your own personality, and some you may want to keep in reserve until just the right moment with just the right prospect. Here we go…

“How Much Do You Charge?” 

The point is to not give a price until you really know what they want/need and what budget they have in mind:

1. A lot. Why do you ask?
2. I don’t think we’re there yet because I don’t know what you’re buying.
3. I’ll answer your question in a moment but to give you a more accurate answer, may I ask you three questions first? 
4. Well, the friends and family rate might apply but we’re not friends yet – do you mind if I ask you a few friendly questions that will help us answer your pricing question together?
5. It’s nine million dollars until I know what you’re buying. Can we spend a few minutes narrowing that down to help you lower the price?
6. I have good news and I have bad news. The good news is that you don’t have a $500,000 problem. The bad news is that you don’t have a $10,000 problem, either… if you can help me answer some key questions, we’ll both know a lot more about what your investment might look like.
7. If it works, it’s cheap. If it doesn’t, it’s expensive. 
8. Let’s talk about what you’re trying to accomplish first and then we’ll work out some pricing options based on that. 
9. Do you want the Ferrari version, the Lexus version, or the VW Bug?
10. A project like the one you’re asking about ranges from $X to $Y. Sometimes a little more. Not usually less. Is that what you were expecting to invest?
11. There’s no good answer to that question in a vacuum. Can we talk a little more about what you’re hoping we can do for you? Then I’ll give you some pricing options that make sense for your budget. 
12. A project of this scope only makes sense if it’s already in your budget. Nobody wakes up one day and suddenly finds the money to solve these kinds of problems. If you can share the budget range you have set aside for this, I can tell you if it makes sense for us to talk any further.
13. I have a feeling that if I quote a random number right now, I’ll be dead in the water. Do you mind if I ask you some questions to get a better idea of what your goals are? Then the numbers we talk about will be specific to you and your situation. 
14. Just like you need to make an educated decision about which partner or resource to hire, I need to give you an educated answer to your pricing question. And I’m feeling pretty dumb right now, since we just started talking. Mind if we have a 10-minute conversation about your situation? After that, I’ll have a much better idea of what you’re after and some different ways we can help. 
15. Sounds like price is the most important factor to you. In my experience, everything is expensive until you want it. Can we talk about what you want and then work our way to the pricing options based on that?
16. It’s more than a cab ride to [insert local landmark here, i.e. “the Empire State Building”] but less than [the landmark, i.e. “the building itself”]. If we can chat for 10 minutes about why you called, I can give you a much more specific answer. Do you have 10 minutes now or shall we look at our calendars?
17. Until I have a better idea of what you want – and whether or not we can even help – any number I give you is going to be too high. Would it be OK if we spend a few minutes discussing why you called? Then if we can help, I’ll get you the pricing options you need. And if we can’t, I’ll refer you to some other great resources that do things we don’t. Fair enough? 

David Newman is a marketing expert, professional speaker and founder of Do It! Marketing, a marketing strategy firm dedicated to making thought-leading entrepreneurs and executives more successful. 

If you buy David’s book, “Do It! Speaking: 77 Instant-Action Ideas to Market, Monetize, and Maximize Your Expertise.”  today, you’ll get a TON of marketing, leadership, and business-building bonuses at www.doitmarketing.com/speak. 

Wouldn’t you love it if you could close every sale with a new customer in 30 minutes or less?

But that rarely happens. A sales cycle can last up to six months, depending on how much research the potential customer has done before he or she comes to you.

Before customers are ready to sign on the dotted line, they first must go through a well-researched route to purchasing products and services, called the Buying Cycle. You need to nurture these potential clients and help them along this route to ultimately choosing the solution you’re offering them.

Studies show that 79% of website visitors aren’t ready to buy. They’re somewhere else within the buying cycle. They may not be aware of the scope of their problem, and may simply be in the early stages of researching a possible solution.

Even if they’re not ready to buy, it doesn’t mean there isn’t an opportunity for you as a business owner. If you continue to educate them and nurture those leads – wherever they are in the buying cycle – you’ll be at the top of their minds when they’re ready to buy.

The Buying Cycle

The typical buying cycle goes from having an awareness that there is a problem, to evaluating the possible solutions, choosing one solution, and then implementing it. It ends with a long-term, meaningful relationship with a customer.

Here’s a detailed explanation of the buying cycle — what actually is happening in your prospective customer’s world:

1. Acknowledge there’s a problem they need to solve. Something is broken – either a physical product, like their washing machine, or a process in their business – and they need to fix it.
2. Make a decision to fix this problem. They have to decide if they want to tackle this problem now or wait.
3. Determine exactly what results they want. What’s their end goal? What outcome or results do they want after purchasing and implementing a solution?
4. Gather basic information. They’re searching for companies that can help them, and often doing this research online. Perhaps they’re asking friends or other business owners who’ve had similar problems about their chosen solution.
5. Identify possible solutions or vendors that will give the result or results that they want.
6. Compare those solutions or vendors.
7. Select a vendor/product.
8. Negotiate the deal.
9. Make a purchase decision. This can mean either signing a contract or making a direct purchase.
10. Implement the solution. Your relationship doesn’t end with the purchase. Now you have to help them use your product or service wisely to get full results.
11. Forge an ongoing relationship. This allows for repeat business from the same customer and ensures ongoing customer satisfaction and word-of-mouth referrals.

Recognizing where your customer is in this buying cycle is key.

When a customer first makes contact with you, have a set of questions ready which determine where he or she is.

• “Tell me about your situation?”
• “Have you looked at other solutions?”

Their answers to these questions can show you whether they’re still early in the buying cycle, or if they’re close to making a decision.

Pick Marketing Techniques Based on Buying Cycle

Choose different marketing techniques for each phase of the buying cycle.

For instance:

• A well-designed website can help customers early on in the buying cycle by allowing them to gather information.
• A free whitepaper outlining possible solutions and comparing them helps mid-way through the buying cycle.
• An email campaign helps prospective customers through the pre-purchase process, and later forges an ongoing, repeat-buying relationship near the end of the buying cycle.

Supplying content for each stage tells your customer, “We’re ready when you are.”

If they’re early in the buying cycle, back off and let them explore, but be available to answer questions. If they want to discuss possibly buying from you, be available for a phone or in-person meeting, and have marketing material ready to help them make a choice from among your offerings.

By being aware of the different stages in the buying process, and thinking about what questions your customer are asking at each stage of the cycle, you can provide a prospective customer with the appropriate marketing technique at the right time.

One of my mastermind group members is working on her business goals for next year and she brought up a good question: How, exactly, do you set goals for your business?

The first step is to realize there are categories of goals. This helps you to focus on goal-setting in a more structured way.

Here are the categories I use, and some of the items within each category:

Financial goals: revenue, expenses, profitability, investment, tax strategies.

Infrastructure goals: systems, processes, software, hardware, etc. that help you run the administrative side of your business. What tangible items do you need to acquire? What processes do you need to add or modify to run your business more efficiently and effectively?

Overall marketing, PR and sales goals: number of clients, number of new clients, number of renewing clients; increased media exposure. Number of prospects, number of proposals going out the door.

Internet marketing goals: website visitors, social media connections/likes/followers, email marketing open and clickthrough rates, online ad statistics.

Product/services goals: Are there any new products or services you’ll be offering next year? When would you like to launch them? What market share would you like to have among your competitors? Are there any products or services you’ll be modifying or removing next year?

Customer service goals: Is there anything you’d like to add or modify that will enhance the customer’s experience of working with you?

Team/staffing/leadership goals: Which new team members would you like to add, as employees or subcontractors? Anyone you need to let go of? Do you need to make changes to the way your team does their work or reports back to you? How is team culture and morale? Are there any team members who merit some additional mentoring?

Personal goals related to your business: How many hours of work a week? How do you want to feel about your business? Which personal values are brought forward through your business? What would you like more of? Less of? And the big question: WHY are you in this business? What’s your personal goal?

It’s never too early to begin thinking about what would make next year amazing for you and your biz! This is a great list to share with your mastermind group members if you work with small business owners.

In 2008, Pizza Hut saw its sales drop because of the Great Recession. Competitors were lowering their prices and offering discounts — and Pizza Hut figured they had better offer a discount if they wanted to compete with Dominoes Pizza and Papa John’s Pizza for a dwindling market.

So in 2009, Pizza Hut began to offer a large cheese pizza with three toppings for $10 (the normal price was $15). Then they sweetened the deal by offering unlimited toppings for the same $10 price.

And sales rose.

That’s a good thing, right?

Fast forward to 2011. The economy was easing and Pizza Hut (and the other pizza competitors) now wanted to reinstate their normal pizza price of $15.

And customers resisted.

Why? Because of two psychological triggers:

1. People had gotten used to paying only $10 for a pizza with unlimited toppings. When you increase the price back to the “normal” $15, people see that as a raise in price of 50 percent, conveniently forgetting the pre-2009 pricing.
2. When you lower your prices, you devalue your product or service. You’re basically telling people, “It’s not worth $15, it’s only worth $10. We’ve been overcharging you all along.”

What do you do when sales are sluggish and you want to offer a discount, but you don’t want to imply that your products and services are worth less by lowering the price?

Enter the Concept of Adaptive Pricing

Here’s the psychology behind the concept: Customers have different needs, and place different values on the various aspects of your products and services — price being just one aspect they consider.

For example:

• Many customers value access to a live instructor above learning on their own, so if they have questions they can get help immediately from the instructor. Therefore, they’re willing to pay more for a live class than a self-study program.
• Some customers place value on group brainstorming and sharing of best practices to shorten the learning curve, and are willing to pay to be a member of a mastermind group.
• Other customers value private one-on-one services and are willing to pay a premium price to get your total attention to find solutions to their problems and think strategically.

By knowing what your customers value — and creating pricing and discounts based on those values — you can increase customer satisfaction and sales at the same time.

But My Customers Want Low Prices!

Be careful of your own psychology: you might be a budget shopper yourself, but not all your customers are. If you constantly offer things for a discount (or for free!), it’s more about your own feelings about money and pricing than the needs of your customers.

For every customer who wants things as cheaply as possible, there are customers who demand extraordinary quality and are willing to pay for it. Just look at the different price/value levels of department stores (from Wal-Mart to Neiman Marcus) and you’ll see that there are huge ranges of quality, service, experience and price needs among customers.

Don’t assume your customers want cheap prices and are willing to take a lower quality service or product in order to get the lowest prices. Price based on the value of what you’re offering, and on your branding strategy. Are you the Wal-Mart of your industry or the Neiman Marcus? (Or somewhere in between?)

So, You Want to Offer a Discount

Great! Offering a discount has a lot of benefits for your business. Pay attention to your strategic purpose behind the discount — to increase sales, to increase demand, to test a pricing strategy, or to get the word out about a new product/service — and price accordingly.

When you offer your discount, test to see if your goals have been met. You may be assuming a discount will produce a certain results, and you could be wrong. Tracking your results is the only way to know for sure. (The numbers don’t lie!)

Three Adaptive Pricing Techniques to Use in Your Business

Versioning

For customers who are concerned about price above all else, offering them your product or service in a different version at a lower price-point will serve them while still keeping your sales up. Here’s an example:

• You teach a 5-week class where students submit their homework assignments to you for review and analysis, and have access to you during class to ask questions. That class is priced at $599.
• For the budget-conscious student, you offer similar material in a self-study version $399, (and they don’t have access to you at all if they purchase the self-study version).
• For customers who want more private access to you to learn the topic and apply it specifically to their own business, they join an ongoing mastermind group that includes both the class and the mastermind group access for several weeks after the class.

Each customer has a different need — and by creating three versions of the service, you meet the needs of each type of customer.

Additions for Free

Another adaptive pricing technique is to offer an “extra” or “bonus” for free, but keep the base price of your product and service the same.

For example, you could offer your mastermind group to your customer at full price, but then offer them a free additional hour of your time. Walt Disney World theme park had a great success with offering their Buy Four Entry Tickets and Get Three Free package.

But don’t offer pseudo free bonuses unrelated to the product or service that customers are buying. Customers are now savvy to the free bonuses that many internet marketers offer (like: “Buy Our Ebook and Get $40,000 Worth of Bonuses Free”), and it just makes people think you’re trying to fool them, lowering trust and harming the relationship.

Unbundle

Everyone is telling you to combine a whole bunch of your offerings together, then give the customer a special price. But what if your customer doesn’t want everything in the bundle?

Consider offering your main product or service at full price, and then offering upgrades at a reduced price.

• You could offer your live event for $1,200, then offer an hour of private consulting time for an additional (discounted) fee to those who are attending the live event. Or you could offer them an ongoing mastermind group for an additional fee.
• Or you could offer them recordings of the live event for an additional fee. That way, customers can choose which upgrades are valuable to them and you can clearly see which upgrades are the winners in the eyes of your customer.

Final thoughts…

The key here is to know your customers, and know what they value when it comes to purchasing services and products. If you’re not sure, test out several pricing strategies and see which one pulls in the most revenue.

It’s also important to stop offering discounts when they are no longer needed to boost sales.

Be strategic and think through your pricing ideas before implementing them so they don’t come back to bite you later!

Time-management pundits are always harping on how we waste time reading emails first thing in the morning. I think they’re full of manure.

First of all, a Marketo study found that 58% of people read email first thing in the morning, many reading email before they even eat breakfast. Is it just addiction — or is there a good reason for it?

As a small business owner, I have a HUGE reason for reading email first thing in the morning: my customers matter to me more than anything. Most of my clients, students and mentoring group members communicate with me via email, so taking care of their needs first thing in the morning is simply good customer service.

Why do the time management folks act like email is evil? Because we don’t segregate “important” email from “read this when you get a chance” email.

There’s nothing inherently wrong with reading email first, just like there’s nothing wrong with writing your blog post first each morning or doing yoga first thing or working on a major project first thing. You have to pick your priorities and you have to focus on the task at hand. It’s all about goal setting and self-discipline.

• For instance, I do not use my personal email address when signing up for ezines and email newsletters. That way, my personal Inbox doesn’t get crowded with non-essentials and stops a lot of spam from ever reaching me. If something is in my personal Inbox, it’s because it’s important, like an email from a client, student or my business partner. (A colleague told me that she has 2,500 new emails each morning. My question to her is: WHY do you allow so many emails get into your personal Inbox? They can’t possibly all be of the same importance level.)
• Another reason I read email first is that it’s the only real quiet time I have during my working hours. Typically the phone doesn’t start ringing until 9AM and using the pre-phone time to read email allows me to focus.
• I’ve delegated much of my email reading to my business partner who handles any routine customer service questions from people who have bought my ebooks or audio programs, or students who have lost their login ID.
• I quickly scan my new emails and only answer those ones that are most urgent. I leave the rest of them for later in the day, after I’ve done my other daily prep work.
• Finally, I read email first because it’s when I’m the freshest and smartest. Do you really want to be writing emails when your brain is fuzzy?

If email is an important part of communicating with your customers then go ahead and read it first thing. Just pay strict attention to whether you’re keeping focused on the Communicating With Customers task or veering off to read articles, news, jokes, quotations, or watching YouTube videos of Surprised Kitty instead of doing your work. Set a time limit, say 30 minutes, and get through the most important emails first.

Who are those people who attend your mastermind group or class but never talk (or who friend you on Facebook or Twitter, but never respond)? And how do you get them talking?

Back in the mid-90s when I first went online via CompuServe (remember those days??), we noticed that for every 10 people looking at the message forum, one person was interacting and the other 9 were logging on and reading the message threads, but never interacting. Back then, we called them “lurkers” — people who didn’t participate actively in discussions, and this 10:1 lurker ratio was commonplace back then.

Fast forward 25 years, and we find that Lurker Ratio of 10:1 still exists – in online message forums, in my classes and webinars, in mastermind groups, and any other place where groups of people congregate offline and online.

In some places, especially Facebook, LinkedIn, Twitter, and other online social media forums, the lurker ratio is closer to 100:1 — for every 1 person who participates, there are 100 people just reading and absorbing the conversation.

Why?

There are a number of reasons why people don’t comment on Facebook or blogs:

• too busy
• nothing to add
• feeling shy
• hard to use your technology

That’s why they use the “Like” button on social media: if they don’t want to leave a comment but want to let you know that they’re interested, they click it.

Jakob Nielsen calls it Participation Inequality. I see it most often with “virtual” groups of people who meet online or through video conference meetings.

Want to learn how to start a mastermind group? Click here to get my free video tutorial on how to start a mastermind group of your own.

But here is what I think is most important:

We all have something to add to a conversation — our feelings, our experiences, our knowledge, our questions. What comes from within counts for a lot with me. I love when people leave comments on my blog, interact in my classes, or join the discussion in a mastermind group meeting.

And let’s face it: the whole point of a mastermind group is to brainstorm together, right? Conversation brings immense value.

In your business, you want to build connections and relationships with your customers and your entire audience. Being aware of the lurker ratio when you’re using social media for marketing — as well as in your classes, groups and online message forums — will help you gauge the quality of your connections and relationships.

For all types of classes and mastermind groups, here are some guidelines:

1. In live, in-person classes and mastermind groups, the lurker ratio is much better. There’s something about being face-to-face in a sharing environment (especially with a good teacher or mastermind group Facilitator) that brings people out of their shells and encourages them to participate. In my live classes and groups, I’d say that for every 100 people who attend, 30 will be lurkers. 10:7 isn’t a bad ratio!
2. The larger the group, the larger the lurker ratio. Social psychologists call this the social loafing phenomenon.
3. The longer the event, class or program, the lower the lurker ratio. Sometimes it takes while to get people warmed up. They might not begin to participate actively in the discussions until they get a feel for the others in the meeting.
4. If you want high participation in your classes and mastermind groups, you have to build in interaction into your plan. Don’t wing it: plan it. Design discussion-starter questions that get the group talking within the first five minutes of every meeting.
5. Pay attention to those who don’t ask questions or make comments. Call on them by name, or say, “Let’s hear from someone who hasn’t commented yet.”
6. If your class or mastermind group includes an online message forum, set some rules. For instance, in some of my classes I’ve set this rule: each week all students must post one new message and reply to two messages that someone else has posted.

For social media engagement:

1. Studies show that you get 65% more engagement if you post before noon, as compared to afternoons and evenings. My experience confirms this with my audience: they’re much more active in the morning on social media. Test it to see if it’s true with your audience, too.
2. Don’t just post thoughts, ask questions, too. Instead of simply saying, “Hard work yields results,” consider adding a question to that statement, like, “Do you find this to be true for yourself?” Invite responses and comments.
3. Comment on other people’s posts. It’s a two-way street. If all you do is post your own articles and thoughts, but never respond to someone else’s blog posts and Facebook posts, why should they communicate with you? It’s all about building relationships.
4. Engagement isn’t just commenting. Make sure you put links in your blog posts to other posts that are related. When someone reads a blog post and clicks on a link, that’s engagement, too.
5. Respond back. When someone responds to your blog post or social media post, respond back and acknowledge it. They need to know you heard them.
6. Let them see you. Too many small business owners hide behind their content. They post links to articles on Facebook and Twitter, but they never share any of their own story. I don’t mean those “I used to live in a box but now I live in a mansion” stories…I mean everyday stories about what you’re doing, what you’re thinking, what you’re reading or watching, and even what you’re eating. Give them a window into your personal life. Yes, you can keep most of your personal life as private as you like — but telling them you made Chickpea Burgers for lunch isn’t an invasion of privacy, it just plain fun! 🙂

If your lurker ratio is still 100:1, take heart — it means that for every one person who responds to your post, 100 are reading what you write!

These are just a few of the tips to get people to join the discussion. I’m sure you have your favorite ways of getting your audience involved, yes? I’d love to hear your stories and thoughts!