New business in your own backyardSelling to your existing accounts can grow into a substantial amount of income.
Jan 20, 1997 12:00 PM,
By Ted TateTate is author of Just Sell It!, Wiley Publishing, NY. He teaches at Cleveland State Uni
For those of you who don’t know me, until 1990, I was the president of a large burglar and fire alarm company. I did it for more than 17 years, starting as a salesperson. The alarm industry, as with systems contracting, is sales intensive. If you had no orders waiting for installation, the bank account started to cry. From day one we always focused on new sales.
Back when I began, all we sold were burglar alarms. As you know, once someone has purchased a burglar alarm system for their premises, it’s over. No matter how enthused the customer was about our company, its service and products, we had no place to go, nothing more to sell.
As you may also know from hard experience, the toughest part of selling is the prospecting stage, finding qualified buyers. We had times in those early days when it seemed no more prospects existed in the whole world; we had exhausted the supply. I can look back now with a smile, but in those days, with all those bills to pay, it was serious, even a little scary.
We’d hold brainstorming sessions at the office, looking for new ideas to develop business. I credit my brother Bob with the initial idea. At one meeting he said, “I wonder what else we can sell our existing accounts.”
I know it sounds simple; it really is. But as you will see, it grew over a period of years into a substantial amount of our annual income.
I believe the idea was successful because of its simplicity. Let’s face it, your present customers, if you are doing any kind of job at all, are the easiest to approach. And it sure beats making a cold call. Your customers know you and therefore will tend to accept what you recommend. If you have not lied to or cheated them, if you have given reasonably good service when asked, these people generally will respond favorably to attempts at additional sales. This does not mean they will all buy; some will not. But I must tell you it doesn’t matter because a lot will.
Selling to your existing customer base begins with two simple strategies. First of all, take a customer head count. How many existing customers do you presently have? Anyone to whom you’ve sold a system or even just products since you opened the doors needs to be counted. Create a written list that includes the business name, address, phone number and buyer’s name. Also include what they purchased and what date it was purchased
Your second step is to brainstorm. This is a critical stage. If you have business associates, sit down and have a brainstorming session or two. If you work alone, spend some quiet time thinking about your customers.
Forget what you want as a contractor, think as if you were one of your customers. What would you want, what would you expect from a contractor? I teach sales and small business courses at a university. One cardinal rule of selling I teach is this: “People don’t buy for your reasons; they buy for theirs.” Someone once defined successful selling as, “…finding out what people want, then giving it to them.”
I’ve seen some pretty poor salespeople make tons of money in selling. Bad as they were, they had the smarts to figure out what people wanted. Remember, it’s much easier to sell someone who wants what you sell in the first place.
The trick to being able to figure out what people want is to think like they do. Sometimes this is easier said than done, but learning how to do it is critical to success. It takes practice to get good and should be the way you think from now on. Work hard at putting yourself in the prospect’s shoes.
Success strategy one – new productsWe live in an exciting world of constant change. New products and new ways of doing things come to our attention daily. What was new yesterday is old fashioned today. It used to be that once you bought something, you used it until it was worn out. You’ll find many people still think that way.
That, my friend, is where you come in with a little salesmanship. As you look over your list of existing clients, especially those who purchased a while back, study what they actually purchased. How has the technology changed since then?
Before I’d call, I’d decide just what more I could offer, both in features and services. Next I’d call on the decision maker. None of this does any good if you waste time with people with no authority to make a buying decision.
I’d tell the person it had been a long time since the product had purchased, and according to our company policy, I’d like to make a courtesy call at no charge to see if everything is working properly. Most people are flattered and happy to have you do an inspection, especially if they know it costs money for a service call under normal circumstances.
You’ll often be amazed at what you see on some of these calls, especially the ones no one has made a service call to for a while. You’ll find parts of systems not operational because wires were cut or equipment was removed during repairs or renovations. You may see additions to the property made after the system was installed that are not covered. I once went in where the entire system was missing, and management didn’t know or have a clue how or when it happened.
As you walk the premises, always smile and speak to employees. You’ll often get complaints about the operation of the system. Make detailed notes about everything that’s wrong. If the system is perfectly OK and doing the job, note that also.
Once your little inspection is complete, return to the decision maker and give an honest report of your findings. You have two opportunities to make money right on the spot.
Be prepared to quote a price. Don’t play the game of getting back with a quote, spending time and effort typing one up, mailing it and then chasing them for a decision. The best time to get a positive decision is on the spot, when they first find out they have a reason to make a move. Remember, the more time you give them to think it over, the more they may be inclined to call in another bidder.
In your meeting, if repairs or alterations are necessary, deal with that up front. Explain what needs to be done. Be sure you tally how this affects them unless corrections are made.
Second, now is the time to point out what advancements and benefits are available if they upgrade their system to more modern equipment. Forget the technical jargon, and just talk about how they will benefit. Again, be prepared to quote a price, and close an order on the spot. Many decision makers will give you an OK right then because it is the easiest route to take, but you have to be ready to ask for one.
Success strategy two – warranties and service agreementsI bought a CD player for my daughter at Sears. The minute I told the salesperson I wanted to buy that particular model, the next words from his mouth were, “I can give you a two year extended warranty that protects your new purchase for only $XX.XX.”
Not even a thank you or a “how will you be paying for that?” He simply went immediately to the highest profit item the store, or any store sells: the warranty. You can also enjoy substantial profits and provide your customers with a nice safe feeling about doing business with you.
People who sell for a living think most purchases are made on price alone because they hear it so much. Not so. Most purchases are made for emotional reasons, to fill a need the prospect has. A lot of people will then justify their decision by saying they got a good price.
Why did I buy that CD player from Sears when many discount stores are advertising their unbelievable low prices? It was her Christmas gift. She doesn’t live with me, and the last thing on earth I want is to hand her a gift that is defective and gives her a problem. I know Sears. I know if she has a problem and takes it to a Sears store they will make it right. I don’t know about other retailers, but I know Sears and I trust the company to do the right thing.
Every customer you have ever sold is a prospect for a service contract. You can offer them every time you make a service call, every time you make a sale, every time you upgrade someone’s system.
We developed a substantial reoccurring revenue from monthly and quarterly service contract payments coming in. We’d quote them like this, “You can get a full service protection warranty for only $300 per year. If you pay for it quarterly, it’s $80 for the quarter or monthly for only $30.”
We added $5 to every break in payment prices to cover the additional paperwork. Many people would pay by the year to save the difference, but small companies with tight cash flow problems appreciated the chance to pay quarterly or monthly and were willing to pay the slightly higher price for the privilege.
When you offer to write a service agreement, you are also sending the customers a powerful message. You are telling them you believe so much in what you do you are willing to back it up with a service agreement. This is powerful stuff.
If you decide to go with extended warranties or service contracts, you must follow two critical steps. First, shop around any competition you have to see what they offer and for how much. Then sit down and decide what you will charge based upon past industry experience. You should know service agreements are for normal wear and tear only. They should be written to exclude vandalism or abuse.
Second, consult an attorney. You need someone who has written these and understands their nature. Any contracts you sell should be in writing, with a copy for the customer to prevent any misunderstandings.
Success strategy three – selling service callsWe had a lady who came in half days to telemarket. You can also. She simply called businesses from the yellow pages. We knew certain kinds of businesses would tend to have alarms simply by the nature of what they did. The yellow pages were by far the easiest and cheapest source of these telemarketing leads.
All she did was call firms and speak to whomever answered. “This is Ms. Jones of Security Systems. We are calling to see if your security system is functioning well.” If the answer was that it was OK or that the system was broken she’d then say, “Who’s the person responsible for the system?” When they came to the phone she’d then either offer to sell them a service call if it didn’t work or she’d offer to sell them a service contract if it did. We paid her hourly plus a bonus for every service call she sold. She also got a bonus on every service contract that was sold.
If the prospect wanted a service contract, we would go out to inspect the system first. If the system needed repairs, the customer would have to pay for them to be done before we would write the service contract. We would not allow contracts written on broken systems or ones that we had not inspected first.
Success strategy four – competitors’ customersAs you work these strategies, you’ll run across customers or former customers of your competitors. You’ll find by talking to them that some of your competitors are really bad about taking care of customers. You should not have any hesitation about taking the business. I promise you, if it were your competitor, talking to one of your customers, they wouldn’t.
Success strategy five – dead accountsIf I suddenly were placed in a position of having to find a job, I’d take a job as a salesperson; instead of asking my new boss for leads to call on, I’d ask for a complete list of every account they had that had been lost by the other salespeople. I wanted all the dead accounts, the ones no one even looks at anymore.
Inexperienced salespeople go nuts if you ask them to do this. They would be scared to even call someone like that on the phone, let alone go see them.
Let me give you a reality check on what really happens when you do something like this. First, the older the account, the less chance the person who was mad at your company is even working there anymore. Even if they are, rarely do people hold a grudge very long.
Second, if they yell, so what? Will I survive? Will I melt? Have a nervous breakdown? Hardly. I’m expecting a few people to do some venting. I know from experience if I let them blow off a few minutes of steam without arguing, I can then hold a legitimate conversation with them.
Almost no one will even do that. Whatever happened, it’s in the past. Most people will grumble a little at best. At the next stage, I apologize for whatever happened and tell them we miss them. I then tell them I have a special offer if they’d be willing to give us a second chance. Some will say no, some will say yes. It’s that simple. What that special offer is, you’ll have to decide. You may just want to offer them that free service call. Or at least send them a punching bag with your predecessor’s picture on it.
Good luck and good selling!