Selling online: Maximum profit, minimum time invested. Here’s how we do this.
You know when you enter a Porsche dealership and a salesman seizes you the moment you put the foot in the door? Even though he can make some mistakes, he usually gets it right. He knows pretty quickly and with a great deal of confidence whether or not you are a serious buyer.
Not because he saw the wads of dough in your wallet, but because he knows his typical client very well. He could spot them in a crowd of wannabes.
Here at DashThis, we have been tweaking this skill for years now and we are getting pretty good at it.
How do we know if someone, any random Joe, is going to be a client at the top of the food chain or if he’s going to be a real pain and waste of time?
It’s all about someone’s pain
Well, that starts by knowing what our product can accomplish in the minutest of details. And by that, I mean knowing what problem it solves and for whom it works best in what situation, how and at what cost.
But above all, there’s something incredibly fascinating about customers: The best customers are the ones that are looking exactly for what we are offering.
That might sound pretty dumb, but most of top clients (the 20% that brings in 80% revenue) are usually those who request less support AND ask less pre-sale questions. As if our tool was naturally meant to be in their hands.
You know, when you desperately need THAT thing and the guy across the street happen to sell it? I bet you don’t even look at the price before buying it.
We all do this. And when we do, we are basically any business’ dream client.
On the opposite side, sadly, those with the most pre-sale questions are usually a dead-end conversation with a revenue / cost ratio that tends toward zero. In other words, not profitable at all.
Rarely will they become client and if they do, they sign up for the the smallest plan possible. That means all that effort to acquire a customer for mere pennies. That’s terrible for a small company like ours because we want to give top service to anyone requesting information.
Even a non-profit organization needs to get the most bang for the buck
We can’t invest hours in someone that will bring in $400 a year. It’s unsustainable, even if we were a non-profit organization. That doesn’t even cover the time our support team invested.
On the other hand, that client who is an exact match will generate thousands in revenue while keeping our costs to the minimum.
Obviously, as a company, we tend to want more of the latter and less of the former.
So how do we do that? As Perry Mashall likes to say, we have to be better at disqualifying prospects. Not qualifying, disqualifying. Qualification is letting in anyone who has a potential of revenue. Disqualification is letting in only those who have a high potential of revenue.
In other words, you want more of the 20% that bring in 80% of your revenue. You want more of those clients who are subscribing to your premium monthly plan after only few questions. You don’t want those who will take hours of your valuable time for a $10/month plan.
We need to devote ourselves to the top 20%. Even more…to the top 5% or 1%.
20% clients bring 80% of the revenue. That’s were we must focus.
To give you a hint of our situation, 33% of our clients generate 7% of our revenue while 7% of our clients generate… 33% of our revenue! Same amount of work, 10 times the revenue.
One good way of identifying a top prospect is to check their neck. Are they bleeding to death? Yes? That’s a real good prospect. They are eager to get their pain fixed at almost any cost.
They haven’t signed up for the trial before contacting you? They don’t currently use a reporting tool? Even worse: they don’t have a reporting process standardized among all their clients? That’s a waste of valuable resources 9 times out of 10.
On the winning side, a top prospect will have created many reports in her trial period. She will have asked very specific questions. We will see, right off the bat, that she has a streamlined process in place and is looking for the right tool to make things even smoother.
Bingo. That’s our goal. We’ll move mountains to help her make reporting magic. At this point, we don’t see this person as a “client” but as a long-term partner. She is as useful to us as we are to her.
Here’s five criteria I get from Perry Marshall 80/20 Sales and Marketing to help you disqualify more effectively.
1. Do they have the money?
As I like to say: the most you can make from someone who has $10 is… $10. That’s not much when you have a bunch of employees to pay. So look for those for whom “money is no object” (ideally!).
2. Do they have a bleeding neck?
A customer with a bleeding neck has an urgent problem that demands to be solved. No waste of time. Usually no problem with the budget either. Those are the take-my-cash-and-fix-my-problem-now people.
3. Do they buy into your unique selling proposition?
That will tell you if they are going to dump you after just a moment or they’ll stick with you for the long run.
4. Do they have the ability to say yes?
We like interns. We employ some from time to time. But that intern, when he is checking for a tool, is not the buyer. The boss is. Talk to the person who can say yes; otherwise, it’s a waste of time.
5. Does what you sell fit with their overall plans?
Our clients usually hate reporting. It’s a necessary evil for most of them. They are looking for a long-time partner that they can rely on. They are buying the 5-star-peace-of-mind package. Offering less than that will result in a no-go.
So, how can we optimize our sales, improve our revenue and keep the total cost of acquisition as low as possible? To borrow one iconic phrase in real estate, I’d say the trick is disqualify, disqualify and disqualify. Not all clients are created equal. Those who are a “cow” need all your focus while those who are only time-suckers need to be, politely, ditched.
Final words: it’s not about profit as such, but about trying to generate the most value for your clients so that, in turn, they’ll be profitable to your company. And to do so, we have to pick our clients very carefully.