I met with the vice-president of a major corporation recently regarding my sales consulting services. After discussing his selling situation for almost an hour, he looked me in the eye and said, "Michelle, we have a unique problem. Can you tell me how to sell more -- preferably at higher profit margins?"
I had to laugh. How could this guy think his situation was unique? Did he believe everyone else lined up to ask me how to sell less at lower margins? What he wanted was the Sales Holy Grail. And this guy thought I could solve that riddle for free -- and on the spot!
WINNING FORMULA. Later, I realized there actually is a basic formula to achieve Sales Holy Grail, that universal quest. Like most formulas, it requires work and, not surprisingly, the quality of the result reflects the quality of the work. To benefit, you will have to spend some time thinking, questioning, and researching. But the payoff can be enormous.
Here's the magic formula: SHG = same/same or different/same or same/different.
Let me explain. Basically, there are three paths to this sales nirvana. No matter what you sell, I encourage you to seriously consider all three paths. To keep it simple, let's call your products or services "widgets."
Path 1: Same/Same. Sell more of the same widgets to the same customers. This is the easiest ramp to increased revenue, because you already know your customers and your widgets. It's hard to increase your margins, however. Established customers will probably ask you for quantity discounts instead, so be prepared. This strategy will deepen your relationship with your customers.
To sell more using this path, brainstorm about ways to make clients need more of your products. If you're a distributor, help your customers increase sales so they'll need to buy more from you. This applies to products like retail goods or automotive parts.
REPEAT BUSINESS. If you're selling to only part of a company, perhaps your customers can introduce you to other buyers within the business. This offers administrative savings to you: They're already set up to buy from you, and you have everything in place to sell to them. You might use this approach if, for example, you're selling cleaning services or office supplies.
Another method is to get your customers to order the same amount, but more frequently. This might work with catering or professional services.
A fourth way to use this idea is to up-sell. For instance, if you sell life insurance, at renewal time, ask your clients to buy bigger policies.
And finally, you can try proposing different terms to clients. Offering lower initial quantities or different shipping or payment terms might ultimately compel them to buy more from you.
Path 2: Different/Same. Sell different widgets to the same customers. This is a great path because your customers already trust you, you have a relationship with the decision makers, and you know how they like to buy. This strategy widens your relationship with customers. It also provides an opportunity for higher margins on the different widgets, giving you overall higher profitability.
To sell more along this path, determine what else your clients, or others in their company, buy. Also, find out if there are critical widgets they need but are having trouble finding or receiving. No matter what the different widgets are, it's best if they have some relation to those you already offer.
Another way to accomplish this is to ask your reliable vendors what else they sell that your customers might buy. Then inquire if your customers would like to buy them from you at profit margins at least as high as those of your current widgets.
Path 3: Same/Different. Sell more of the same widgets to different customers. This is the world of new account sales, the lifeblood of any growing company. You need new customers because some percentage of your clients will stop buying from you every year due to reasons totally unrelated to your great service and widgets -- bankruptcy, mergers, relocations, and changes in business focus.
This strategy builds new relationships with your most-recent customers and ultimately lowers your reliance on any one client. Within the constrictions of the fair-trade laws, try to package your services and products to produce higher value for your new clients, so you can earn corresponding increased margins, too.
ONE MORE AVENUE. To sell more along this path, ask who else would benefit from buying your widgets. It's worth considering your customers' competitors or associated vendors, but be very careful. In Texas, we always recommend, "Dance with who brung you" -- that is, don't lose an old customer to get a new one.
Get creative. For instance, ATMs used to reside only in banks, but now you can find them in almost every store or mall. In the fashion world, look at all the young people wearing ski caps in the summer. Someone turned a cold-weather item into a year-round accessory.
Notice that I didn't include a Path 4 -- different/different. That is, selling different widgets to different customers, because that equates with starting a completely different business. For instance, if you own a restaurant and decide to start selling cars, too.
TOWARD NIRVANA. Different/different is a bad strategy because you don't have any trust to leverage either with your customers or your offerings. I only mention this to help you stay focused. Unless you want to run a conglomerate, concentrate on the first three paths.
To really benefit from this formula, set aside some time, work through all three paths, and you'll probably discover several powerful ideas to get closer to the SHG for your sales situation. Then go put your ideas into action -- and sell more at better margins. Happy selling!