One of my favourite marketing experts is Jeffrey J Fox. Jeffrey has written over 11 bestselling business books.
The one I like the most is called 'How to become a rainmaker' and was recently voted one of the top 100 best business books ever written.
I interviewed Jeffrey a few weeks ago and asked him to share his singe most valuable strategy for increasing sales.
You have to 'dollarise the value of what you sell,' Jeffrey said.
He told me that we have to understand that customers never buy products or services. They do not buy features or benefits. They do not buy technology.
What customers buy is what they get from a product or service.
Customers buy outcomes
Jeffrey explained that great companies price their products and services to the value the customer gets. This marketing and sales strategy is called 'dollarisation'.'
Jeffrey went on to say that people buy for one of two reasons:
To feel good or to solve a problem.
"Feel good" is measured in intangible values, such as the stylish fit of a sweater, the taste of a fine wine, or the tight cornering of a new sports car.
The solution to a problem represents either the avoidance of loss (e.g., reduced costs) or the chance for gain (e.g., improved sales).
Both the avoidance of loss and the chance for gain can be measured in dollars and cents, or "sollarised".
People buy value, an economic return.
So smart businesses don't sell products or services, they sell money.
Dollarisation calculates how much money
The first step in dollarising your service is to find out what your client wants.
Your client might say I want X.
You ask "What do you mean exactly by X?"
Let's say your client says "I want to speed up our buying cycle so clients buy faster."
You ask "What do you mean exactly by that?"
And you keep asking until you get specifics numbers, dates, names that kind of thing. Your client then says "right now it takes up to six months for clients to decide to buy and then start paying our business. I'd like to shorten that to three months."
You then ask 'Why do you want that?
If you keep asking questions you'll get to the real value.
Dollarisation Example 1:
One of Jeffrey's clients had a problem with a high turnover in their sales force.
So they would spend months and months and thousands of dollars training a number of salespeople and then they would lose a number of these salespeople.
Jeffrey asked his client "What is it costing you to lose these salespeople?"
His client wasn't sure so Jeffrey helped them by asking a few questions.
• How many sales people do you hire each year?
• How many do you lose?
• How much would you have invested in training just one sales person?
Jeffrey then summarised what his client had told him.
"So when you lose 10 sales people a year, it is costing you $20,000 to train each person, that's $200,000 it has cost you. Is that correct?"
Jeffrey could then offer a solution and show that the value of his solution is tiny compared to the value his client would receive.
So if we can reduce the 10 sales people you lose each year to say five sales people, you lose in a year then that will save you $100,000 a year?
Yes, that's right.
"Great, my fee to help you do this is only $25,000."
In this example the value of the outcome ($100,000 a year saving) is huge compared to the $25,000 fee being charged.
Here are some of the things it's helpful to find out when you interview a potential client to find the value of what you are offering them.
• What's it costing them today for a problem they have?
• What is the value to them if you can help them solve this problem?
• What's the potential upside?
• What can you help them with?
• What costs can you help them eliminate or cut?
• What revenue gross margin revenues can you help them gain?
• What potential negative problem (and the associated cost can you help them avoid?
You find out how your services can reduce cost, increase gross margins, or avoid preventable future events and the cost associated with it.
It's all about really asking the customer thoughtful pre-planned questions till you get to the point of what is it costing the customer or what is the opportunity cost for not doing something.
Dollarisation Example 2:
Jeffrey worked with an advertising agency.
They offered a $25,000 a month service that helped their clients to grow market share, increase customers, reduce acquisition costs and so on.
With Jeffery's help they were able to show potential clients that if they tried to do all this in-house it would actually cost them around $45,000 a month to do.
So by using the Advertising Agency they not only get all the value of new clients etc they also saved $20,000 a month in real costs.
I really like Jeffrey's strategy of dollarising the value of what you offer.
It's a powerful way to get clients to choose your business rather than a competitor.
"Price is what you pay. Value is what you get" - Warren Buffett
When you are talking with a potential new client take some time to ask intelligent questions.
Find out the cost of the problem they have, the value of not having this problem, the value of reaching a goal they want, the money they will save or gain, and so on.
Then show them that your solution is tremendous value compared to the investment they are making for your service.