What would happen to your sales if you raised your prices by 1 percent? What if you dropped them by 5 percent? What would be the impact on your bottom line if you had three different pricing tiers?
Being able to answer these questions is crucial to setting an optimal pricing strategy for your product or service. It is important to remember that efficient pricing maximizes profitability. The goal of a pricing strategy is to increase the value to the customer as well as the customer’s willingness to pay the price you have set.
There are two basic pricing methodologies: traditional pricing and strategic pricing. Traditional pricing relies on two approaches.
First: You can price your product by figuring out your cost of production and adding a profit margin.
Second: You can simply match your competitor’s prices.
While there is nothing inherently wrong with either approach, traditional pricing is not always the most efficient, mostly because it leaves the customer out of the equation.
What is most valuable to the client may or may not be the most expensive to produce. Similarly, matching your competitor’s prices may not be useful if those prices are not set correctly in the first place. Most importantly, traditional pricing often results in price wars, which is an expensive proposition for a small business, especially over the long term.
A better alternative is to use a strategic approach. This means rather than focusing solely on cost or the competition, you take into account the value a customer is receiving from your product.
For more information, visit dev.divistack.com, June 2013, Ileana Tudor
Calling for better calls to action
Imagine if you introduced yourself at a party in this way: “Hi, how are you? I’m Kim. Could I have your full name, phone number, e-mail address, the company you work for and your position?”
No one does this. It’s rude or socially awkward at best. Typically you would ask for a person’s name and then start to talk about things that you have in common before asking for personal details. If you wouldn’t interrogate a person at a party, then don’t do it on your website.
“Call us today!” is a common call to action on many company websites. Most people ignore those words because they are not ready to talk to a live person about the company’s product or service.
Companies that exclusively use “high hurdle” calls to action will only capture the few people who are already prepared to become customers. Using a variety of calls to action can greatly increase your sales by qualifying potential customers based on interest levels.
For more information, see dev.divistack.com, March 2013, Kim Albee
How to launch effective e-mail campaigns
As a small-business owner, you might hear a lot of buzz about search engine optimization and social networks, and they are important tools. But a good, solid e-mail campaign to your clients and prospects remains one of the most effective tools you have. Here are two steps to create effective campaigns.
Know your customer:
The top two reasons people sign up to read more e-mails from you are that it will help them in their jobs, and that the e-mail will offer fresh insights and ideas. The third reason identified in a MarketingSherpa study was that the e-mails represent an area they want to learn about.
Software that allows you to send e-mails and track lead activities is getting smarter all the time. Consider using marketing software that lets you segment your e-mail lists by interest, or trigger communications based upon a leads activity.
The flip side of knowing your customer is to let your customer know you. Personal “from” lines get much better open rates. If you can, set up your e-mails to display a person’s name in the “from” line. Don’t use a noreply@yourcompany.com address.
Make sure someone is getting the replies, responding, routing them. Make your e-mail marketing efforts a conversation between two human beings.
Create emotional content:
E-mail is so full of spam that people are naturally suspicious. Take the time to create content that treats them like a person. In the excellent book “Made to Stick,” the authors cite “emotional” as one of the seven factors that makes an idea stick.
They don’t mean melodramatic emotional, but attentive to the stresses, pressures and concerns that people deal with every day. In other words, they mean “human.”
Pure information doesn’t create action the way emotions do. Every e-mail you send should have a purpose or you shouldn’t send it. I see too many business owners sending out e-mails because they think they should or they have a schedule for it.
For more information, visit dev.divistack.com, June 2010, Kim Albee
How to hone your core messages
Not long ago I met with the CEO of a local health-care software company. I asked him what kind of message he wanted to deliver to his primary target audience. Without hesitation, he responded: “We’re going to revolutionize the consumer-driven health-care industry.”
Unfortunately I don’t always get such an immediate response from small-business owners. Growing organizations often have a tough time defining and articulating their core messages.
It’s not because these companies don’t know what they’re doing. On the contrary: Most of them are profitable, rapidly growing businesses. But they tend to put the cart before the horse, so to speak, where messaging is concerned.
Years ago, Avis took the idea of being second, but not second best, and turned it into, “We’re No. 2 so we try harder.” It was one of the most successful campaigns in the history of advertising because it was created from a core message.
Many firms spend thousands of dollars figuring out a catchy tagline. Yet most of them haven’t determined the underlying messages. To begin writing a brochure, developing an ad or engaging in a public relations campaign, as a business leader or owner you have to determine your firm’s core messages.
What are the messages that will drive home the desired brand perception to key customers and influencers of that brand? What differentiates your company in its category? What are the real selling points of your service or product?
For more information, see dev.divistack.com, May 2007, Bonnie Harris
How to make small mighty
In my 25 years as a sales person, national sales manager and sales management consultant, I’ve seen firsthand that larger sales forces don’t always generate more revenue, let alone enhance margins. I’ve helped many local companies re-size their sales force while increasing revenue, reducing sales expenses and enhancing margins.
So think quality, not quantity. Like my colleague and author of “The Rockefeller Habits,” Vern Harnish, says, “One great employee can outperform three good employees.”
Top-line results may or may not be an accurate indicator that you should rethink your sales organization. The outright failure to meet revenue goals is obvious, but other red flags are rising cost of sales, eroding margins, increasing competitive pressure, excessive turnover, and blaming other parts of the company such as marketing and product development.
Step 1: Identify.
In order to determine what it takes to be successful in selling your products or services to your buyer, you need to break down the components of your selling environment. When I helped a client that manufactures and sells inks internationally detail their sale so they could grow margins, they recognized the need to shift from a transactional sale to department heads to a solution-based approach to C-level executives.
This strategic shift required salespeople who were confident interacting with presidents and CEOs about financial concepts.
For more information, visit dev.divistack.com, June 2007, Danita Bye
