One company that provided a great deal of price information on its website for car shoppers found that people got the information, then went to a local car dealer instead of clicking through in their site to order the car. The company was losing money on the site even though it was providing value. They concluded that they needed to get something of value before they gave it, so they did something simple: they reversed the screens. They asked people for information (in a way, qualified them) prior to getting the price quote. As a result, the company is now earning money on the site. The adage that people value less that which they receive for free may have been at work. When customers had to give some information, the perceived value of what they got increased. The company may not have had as many site visitors, but those who stayed bought.
Do customers perceive you as someone who is eager to sell to anyone, or as someone who provides products and services matched to their needs? Appearing too eager to make a sale makes people resistant to buying. Having some degree of exclusivity makes customers more eager to purchase. When you call for an appointment with a service professional and you can immediately get an appointment, don't you wonder why? If this person were good, wouldn't you have to wait?
Buy.com was faced with a similar situation. Buy.com was selling products at prices that were unprofitable, hoping to make up for those losses with advertising sales. That business model, as many dot-coms found out, doesn't work as well as it sounds. Buy.com decided it needed to raise prices, but at the same time keep customers raving about the value they received.
"To remain viable, we needed to create raving-fan clients who'd stay loyal as prices climbed," said Tom Silvell, vice president of customer support, as reported by Ginger Cooper in the November 2001 issue of CRM Magazine (p. 34). Silvell reviewed every part of the customer experience. Using customer relationship management tools, they were able to cut order time, return time, and costs. The quality of the customer experience improved. And service ratings went up dramatically. Silvell said, "We built our programs and technologies around what customers wanted and needed instead of letting our programs and technologies drive their behavior. This tactic helped transition us from a price-sensitive shop to one focused on the customer experience, on offering value to clients, and on providing quality merchandise at reasonable prices."
A study conducted by the Gartner Group, also reported in the same issue of CRM Magazine, found that less than 5 percent of companies worldwide have successfully implemented what they call a "customer-centric" approach. A company may think it focuses on the customer, but likely still has much room for improvement.
What is your perspective as a sales professional? What is the customer's buying experience when buying from you? Is it convenient and efficient? How do you know? If you don't, now would be a good time to find out.
What is your business model? How well does it work? How do you find and serve customers? A business model is simply a way of describing what your business does and how it does it. An aspect of recent business models, for example, is the channel for reaching customers. Do you sell directly or through others? Do you use fixed pricing, contracts, or negotiated pricing?
There has been much discussion lately about business models, prompted by the application of the Internet to new ways of reaching and selling to customers. The unfortunate downside to some Internet businesses is that their models overlooked the need to produce profits. The assumption was that investors would tolerate long-term losses almost indefinitely, as long as the promise of future profits fueled an increasing stock price. But the bubble burst when the underlying demand evaporated and investors sought companies that were producing or had demonstrated that they would produce profits in the future.
Even having a compelling vision for a business model and deep-pocketed investors is no guarantee of success, as Global Crossings proved in early 2002. Their vision was to create a global fiber optic network, but they had trouble signing up enough customers to fund the huge investment. The importance of the business model in this case, and with so many dot-com businesses, was that the model has to factor in profitable sales. Unrestrained growth leads to unrealistic sales requirements that place salespeople in untenable positions.
One company I worked with refused to compete with their customers; it was an important component of their business model. This particular client of mine sold products to other businesses, which then sold the products to end users. The client could have tried to sell directly to the end users, a practice that would essentially have amounted to competing with their own customers. Some of the client's competitors did, but this business chose not to. This proposition gave the company a beneficial selling advantage that could position them uniquely with customers.
Individual salespeople operate with sales models that may be effective or ineffective. To maximize effectiveness, they need to think about how they will reach their potential customers. For example, you might try something as simple as sales materials that describe your qualifications, experience, present customers, results you've achieved for your customers, testimonials, and contact information.
" Our site followed many of the existing conventions. It had a lot of information and had lots of buy now buttons. What it did not do was follow our sales model. We got bogged down in features and functions, instead of outcomes and emotions."
—Mike Manning, director of e-commerce, Hooked on Phonics