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Author : Don Maher

The One Question Every Job Applicant Should Ask – And Every Hiring Manager Should Answer (Honestly)

Interviews can go by quickly, and there’s a lot of ground to cover. But no applicant should get up for the final handshake before asking some version of the following:

What kinds of decisions would I be able to make on my own, and when would I need to get someone else’s approval? 

Some companies, to put it bluntly, have a culture that values micromanaging. It’s hard to get things done when you work at a company like this and executing day-to-day tasks can range from frustrating to impossible.

You spend much of the day cajoling, justifying, and defending. Most people find that it’s just not worth it, and they leave in search of workplaces that are better at delegating authority.

I’ve worked for companies where I had the authority to spend up to $100,000, hire the people I wanted to hire, and pretty much do what needed to be done without having to “sell” my ideas to a higher authority or sit around waiting for their approval. Working in an environment like this is liberating. It leads to people giving the company their best efforts.

Long time Applied Materials Chairman Jim Morgan always encouraged us to make decisions, frequently adding that no matter what we did, we were unlikely to “sink the company.”

Unfortunately, other companies will saddle you with an array of rules and constraints that make your life only slightly better than if you were in a Supermax prison.

I had one client who wouldn’t let his salespeople spend more than $500 for travel without first getting his approval. These were salespeople who had to fly to visit their customers.

If you’re used to making and implementing your own decisions, as many top performers are, you’ll find it unbelievably frustrating to have to constantly run those decisions past others before you can get anything done.

If you’re a candidate, here are the sorts of questions you should ask during interviews:

  • How much money can I spend without getting your approval?
  • Can I hire the people I need to hire?
  • Can I assign work to the people in my organization the way I want to?
  • Can I travel when I the need arises?
  • Can I approve travel and spending for the people who work for me?

And if you’re a hiring manager, it’s important to be completely honest when you answer questions like these. If your company keeps employees on a short leash, it’s better for all concerned to get that information out upfront—before you spend time and money onboarding a promising new hire who is destined for a short, mutually unsatisfactory stint at your company.

A Uniquely Effective Positioning Tactic You May Not Have Considered

My last blog post, about positioning, was titled Stand for Something. This blog is about a potentially effective way to position your product or service that you might not have thought about.

A former client of mine was struggling with how to position their flagship product, a multi-hundred thousand-dollar system used in memory manufacturing.

For all intents and purposes, the client’s system was identical to the competitor’s system. Consequently, the client found themselves in a price war for every order because they couldn’t explain why their system was better—on paper, it seemed pretty comparable.

But during the analysis, we learned about one critical component of these systems: a (mostly) hand-made part that weighs more than a ton. No one keeps this part in stock because it a) is massive and b) rarely fails.

But when it does fail, production grinds to a halt. There is no workaround, and the lead time for replacement is approximately 90 days. All that downtime means a loss of hundreds of thousands of dollars, or even millions of dollars.

Unfortunately (for them), the competitor’s product had experienced two such failures over ten years. My client’s product, on the other hand, had never experienced this type of failure.

As you can imagine, this little bit of knowledge was worth a great deal to my client—and my client’s customers. Once we started incorporating this fact into the sales process, my client was able to raise prices by more than 15%, all of which went directly to the client’s bottom line.

When you’re figuring out your positioning, you can and should consider all the good things your product or service does. But it’s also important to consider all the bad things it can help your customers avoid. Sometimes, plain old “peace of mind” is worth a great deal in real dollars and cents.

Next time, I’ll provide some suggestions for effectively positioning various types of analytical equipment.

Stand for Something!

What comes to mind when you hear the word “branding”? A logo? A color? A catchphrase?

What should come to mind is a specific, unique position—something the product or service represents, or stands for.

Branding is the single best way to eliminate competition because, when it’s done well, you become a category of one. (There are lots of places to buy shoes, for example, but only one Zappos.)

A brand can be built around low prices, as Walmart and Ikea have done. But most high-tech companies would be better served to focus on something else…performance, yield improvement, durability, exceptional customer service. What do you do really well?

Trying to be all things to all people—“We offer the best quality at the lowest prices!”—is foolhardy. Frankly, it defies belief. How could you legitimately be great at everything? It’s a claim that invites well-deserved skepticism.

To build a strong brand, you need to thoroughly understand—and communicate—your unique strengths. Now, I’m not going to pretend that this is easy. It’s much easier to hire someone to design a snazzy logo or write a witty catchphrase. But a meaningful, resonant brand is worth its weight in gold. And it pays dividends for as long as you’re in business.

Over the next few weeks, we’ll delve deeper into branding and positioning, so stay tuned.

The Medium Is Not the Message

Marshall McLuhan coined the term “the medium is the message” in his 1964 book, Understanding Media: The Extensions of Man.

While McLuhan was being somewhat tongue-in-cheek, too many high-tech marketers seem to have taken his statement as gospel.

There is a widespread focus on how many Tweets, Facebook posts, LinkedIn messages, and so forth are being generated, and how many “hits” or “likes” these dispatches get.

While there is nothing inherently wrong with using these media to get your message out, there is a whole lot wrong with spending valuable time generating busywork and noise rather than actual sales.

If you don’t know your actual social media ROI—how many dollars you’re earning per dollar of spend—you’re just spinning your wheels.

Rather than being just another commoditized voice trying to scream over the roar of everyone else on social media, spend some time crafting a better message:

  • Why should customers buy from you?
  • What problems (preferably big, expensive problems) do you solve?
  • What results will customers get from you that they can’t get from your competitors?
  • What proof do you offer in support of your claims?
  • How do you reduce—or eliminate—customers’ risk when they buy from you?
  • What kind of ROI can your customers expect?

Having a clear, compelling message is especially important given that the high-tech audience you’re trying to reach is well-educated, sophisticated, and skeptical. They don’t want hype. They want results.

Whether you’re speaking with a customer technologist who will use your product, or a customer executive who will sign the purchase order for it, you need a clear, differentiated message that gets attention, creates curiosity, and starts a conversation that leads to a sale.

The bottom line? Spend more time and energy on figuring out why customers should buy your products and pay your prices. If you run that message consistently through your marketing and social media posts, your voice will carry above the crowd—regardless of the medium.

Selling High Tech

Most sales training courses focus on two things:

  • Finding the Customer’s Problems
  • Providing a Solution to those Problems

That approach is fine when customers have problems.

But what about the customers who don’t have problems?

This group—and it is a vast one—doesn’t feel any need to meet with, or educate, your salespeople. They are not inclined to disclose highly confidential information to a stranger in an effort to “find solutions” to problems they don’t believe they have.

Here’s the thing: Your products and services could provide a better future for these people—a much more profitable and successful future—but they simply don’t know it. It’s your job to educate them on the results you can help them achieve.

You’re actually doing them a disservice if you don’t do this. After all, you have the ability to improve their business results…if only they knew.

If you can successfully show them the better future that awaits, you can help them out and tap into a brand-new source of profitable business.

My new course, Selling High Tech, explains how to do just this.

I’ll explain everything your high-tech salespeople need to know about selling value, to the right people, at prices that are profitable to you and worth the investment to them.

Course Content

  1. Define Value
    • Why value is not “our people” or “our quality,” but about helping customers improve their revenue and profit
    • Ways to translate product and service attributes into business results for customers, like earning and saving money
    • How to talk to customers and describe how they benefit from your products in brief, clear, and specific terms
    • How to quantify the value of what you’re offering, so that you can set prices appropriately
    • Strategies for helping a potential customer envision the “better future” your company can help them achieve
  1. Create Versions
    • Why multiple price/performance versions are so widely used and successful in a variety of industries—and why high tech is no exception
    • How to version your products and services properly, so that each version provides a fair exchange of value for price
    • Why effective versioning serves to create demand
    • How to price your versions in a way that paves the path for faster and less confrontational negotiations
  1. Write the Pitch
    • How to get and keep the attention of busy customers, especially executives
    • How to effectively explain to different groups (purchasing, end users, etc.) the results you deliver
    • Keys to building trust and reducing perceived risk so that the prospect naturally moves toward the sale
    • Why you need to explain the downside to the customer of staying with the status quo
    • How to talk about money and price early in the sales process, so that you naturally wind up in a similar place regarding price (which is especially important following a long sales process)
  1. Compete Where You Can Win
    • Why high-tech companies spend too much time chasing business that they either can’t win or can’t win at a profit
    • How to define a true win for your company
    • How to qualify the right opportunities and prospects for your business and products
    • How to find out what kind of relationship the customer ideally wants with your company and make that relationship work for you
    • How to identify price buyers, value buyers, and “poker players”
    • How to determine the customer’s willingness and ability to pay before investing time and money in a sales opportunity
    • How to move qualified opportunities along, or exit gracefully when you determine you can’t win
  1. Negotiate Better Agreements with Professional Buyers
    • The importance of using soft skills for hard conversations and negotiations
    • How professional buyers are trained, how they think, and what to expect from them during negotiations
    • Key strategies to getting customers to accept tradeoffs between price and performance
    • How to get valuable testimonials from customers who typically don’t give them
    • How to respond to difficult questions and demands, including:
      • “Don’t you want to save the relationship?”
      • “All of your competitors are cooperating!”
      • “It’s so hard to do business with your company.”
      • “We just found out we need another 25% discount right away.”
      • “If you can’t give us what we want, I’m going to call your president and complain.”
      • “This is your last chance. If you don’t give us what we want, we’ll never buy from you again and put you on our blacklist.”

Location: On-site or Virtual
Length: Half-day
Audience: Sales Reps and Managers, Marketing, Product Management
Price: $395 to $595 per person

Learn More

If this training might be right for you, or if you have any questions I can answer, please contact me at 650-862-0688 or don@redchasm.com. I look forward to helping you improve your high-tech sales process and profitability.

 

How to Become an Employer of Choice

Talented high-tech salespeople are, quite literally, worth their weight in gold.

However, you will not be able to hire the best and brightest if you are not already considered a top employer by the people you’re looking to attract. After all, they have their pick of employers—so why should they pick you?

It’s a question worth devoting some serious time and thought to, long before you start your recruiting and hiring process. You need to have compelling, well-supported answers to the following questions:

  • Why would a top salesperson want to work for your company?
  • How are you different, and better, than other employers competing for the same talent?
  • What makes your workplace truly unique?
  • How does your total compensation package stack up?
  • Do you offer real opportunities for responsibility, growth, and advancement?

Companies like Apple and Google can “buy” just about anyone they want and retain them over time—and even when an employee leaves, there are thousands (if not millions) of other folks clamoring for that spot. But the rest of us need to get a little more creative with our branding.

Here are a few non-monetary ideas for you to think about:

  • Authority/Autonomy/Decision Making: One of the most frustrating things smart, goal-oriented people encounter in companies is the constant need for management approval to get anything done—whether it’s launching a new initiative, spending money, or hiring. If your company gives people the authority to make decisions without requiring them to run everything up the ladder and collect a dozen signatures, this is worth more than you think to top candidates.
  • Benefits: Tuition reimbursement, paid time off, annual company retreats, etc. What do you offer that others don’t? Always remember that total compensation encompasses a lot more than salary + bonus.
  • Coaching: True coaching and mentoring programs are rare—and very valuable.
  • Colleagues: Does your company have well-known and/or highly skilled people to learn from?
  • Expertise: Your company may possess a unique area of expertise that new hires can learn about and benefit from.
  • Exposure: Small companies in particular may offer a lot of exposure to customer executives, corporate strategy and direction, and so forth.
  • Leadership: Ideally, your company has strong sales leaders in positions of authority, with successful backgrounds, who can and do pass their knowledge on to the people who work for them.
  • Movement: New hires like to know that they can and will be offered other positions in the company, maybe even in different departments, so that they don’t fear being stuck in the same job for years.
  • Promotion from within: Does your company have a strong track record (that can be proven with hard numbers) of promoting people from within? If so, this is a big deal—shout it from the rooftops.
  • Training: Many companies have pared back training to the absolute minimum. A robust training program can be a valuable perk; it also sends the message that you make it a priority to invest in your people.
  • Work environment: Maybe your company is known for its civility and genuinely nice people. If you’ve found a way to get things done that doesn’t include a lot of yelling, table-pounding, and childish antics, this in itself is a rare and valuable perk.

If you really can’t think of anything that makes your company special and unique, think harder, and maybe talk to some current employees for ideas. The things they enjoy most about working for you may be things you’ve never even considered.

The Point? Get your own house in order before trying to bring top talent aboard.

What To Do About Requests for Most-Favored Customer Clauses?

More and more customer purchase agreements include Most-Favored Customer (MFC) clauses. The customer’s goal here is to ensure that they get the very best price—as low as, or lower than, you offer to any other customer under any circumstances.

These MFC clauses are typically accompanied by additional clauses that give the customer the right to look at your costs in detail, including receipts for material purchases and labor costs.

Unfortunately, the customers who insist upon these clauses are usually the large, must-have customers that can make or break your business (because you wouldn’t agree to the MFC clause otherwise, right?). You have to find a way to give them what they want while also protecting your interests.

You might be tempted to push back on the MFC clause and refuse to include it, but I think there’s a better way to handle the situation:

  1. Let them know that you define “equipment” as hardware only
  2. Let them know that you define “products” as hardware plus the benefits and results the customer receives, which include:
  • Performance specifications (what the product is intended to do right away)
  • Payment terms
  • Delivery timing
  • Warranty
  • Field support
  • Problem solving
  • Performance improvement (what the product could do in the future)
  1. Let them know that the product they’re buying from you is unlike any other product you sell to other customers. Therefore, there is no real basis of comparison.
  2. Let them know you’ll agree to their clause as it relates to products. In other words, you agree that you won’t sell the same product—including all of the associated benefits and results, as explained above—to any other customer for less money.
  3. If the customer insists on auditing your costs, tell them you agree, but that you won’t be able to share any confidential information regarding other customers—such as costs, specs, delivery, terms, hardware, or anything else. This assures the customer that you’ll protect their confidential information as well.

That should do it.

The Value of Versioning

Customers like having choices. That’s why manufacturers of cars, computers, phones, and just about everything else offer multiple versions of products, at different prices, with different levels of value. This works because not all customers perceive value the same way, nor are they willing to pay the same price.

There are three basic kinds of buyers:

  1. Price buyers: Price is always their #1 decision criteria.
  2. Value buyers: They are openly willing to pay more for more value.
  3. Poker players: They are willing to pay for value but won’t admit it. (Most customers are poker players.)

To attract all three types of buyers, many businesses offer three well-defined and profitable versions of a product at different prices, with more bells and whistles added at each price point. This ensures that customers get what they’re willing to pay for, but not too much more. If they want more, they can move up to the next version.

The beauty of versions is that they guide the customer toward the product he or she is willing to pay for. This makes everything that follows easier because you’ve addressed price and specs up front, at the beginning of the sales process. (By the end of the sales process, you’ve invested too much time, money, and emotion to walk away, even if it’s in your best interest to do so.)

It’s human nature to want the best version at the lowest price, so it’s the salesperson’s job to figure out what is most important to the customer and steer the customer toward the best fit. Price, performance, payment terms, credit, warranty, field support, product and process improvement, and delivery can all be versioned.

You might be thinking, “Versions wouldn’t work for us because our customers give us the spec they want us to meet, and we respond to that spec.” While that may be true to some extent, remember that a spec is usually a wish list, not a list of must-haves. Again, it’s up to the salesperson to figure out which specs matter and which don’t, and to negotiate and quote the appropriate price.

I’ve used versions to ensure that customers like Intel, Micron, Texas Instruments, and TSMC get what they’re willing to pay for, so I know it can be done. I once used versions to negotiate a $50M service contract with Intel that included a 20% price increase over the previous year.

It’s important to remember that no sales strategy or tactic works in all circumstances all the time. What I’m suggesting is that you try versioning a few times and see what happens. If you do it right and stick with it, your profit will improve. And isn’t that why we’re all in business in the first place?

A Formula for Value-Based Pricing

I define value as the amount of money a customer earns or saves by buying your product vs. buying your competitor’s product, or continuing with the status quo.

To price on the basis of value, first calculate the total amount of money a customer will earn or save over one or two years—think logically but broadly; you must be able to explain this amount, but don’t unduly limit yourself.

Value comes in too many forms to list here, but improvements in yield, throughput, system availability, durability and longevity, and risk reduction are good places to start. Whenever possible, assign a dollar figure to these improvements.

Once you have your overall value figure, price your product at 15% to 30% of that amount.

As you can see, if you do this correctly, you will be able to position your product as a must-have bargain. Your salespeople can talk about price in the context of the return customers will receive, bypassing tedious questions about why your costs are so high.

One of my clients designed and built a system upgrade that would save a customer about $1M every two years. The cost to my client of providing this upgrade was about $40,000. Typically, the client would have multiplied the $40,000 by two to arrive at a price of $80,000.

I recommended that the client price the upgrade at $200,000—20% of the value customers would receive within two years.

The client’s account manager claimed that charging $200,000 was “gouging” the customer, to which I responded, “In what world is a 5X return not a good deal?”

“But our cost is only $40,000! How will I explain the price given the cost?”

“Don’t talk about cost,” I said. “It’s none of the customer’s business. Talk only about the $1M return in exchange for the $200,000 investment.”

In the end, my client reduced the price to $120,000—50% more than the $80,000 they wanted to charge, but far less than they could have asked for and reasonably expected to get. And their customers were delighted to pay it.

As I discussed in my last blog post, you are often your own worst enemy when it comes to profitable pricing. If you keep your focus on value, you will be able to make a lot of money and still keep your customers very happy—because they are paying you far less than what they’re getting in return.

Additionally, value-based pricing enables you to invest more resources into your business, leading to even better solutions for your customers down the line. No one wins when you undercharge for your products and services.

Once you get comfortable with this idea of value-based pricing, you’ll understand that it’s not “gouging” by any stretch—just a smart business practice that benefits both you and your customers.

Who’s in charge of your pricing? You are!

Contrary to popular belief, the market does not set the price when it comes to highly differentiated, high-technology capital equipment. And a handful of professional buyers does not constitute a “market” in any event—especially when those buyers are trained to mislead and even lie to you.

Despite what these buyers tell you, your products are almost certainly different from your competitors’ products. And those differences make your products more valuable to a certain subset of customers.

If basic consumer products like soap, toothpaste, and cereal can be differentiated, high-tech products can be, too. You might argue that these consumers are not as sophisticated as professional buyers, which is true, but neither are these consumer products. The principle works the same way.

Higher prices are the fastest route to higher profits. A 1% increase in average prices can equal a 10% increase in net profit for a company that typically earns 10% net profit. In addition, higher prices can be implemented right away, with your very next quote.

The key to capturing higher prices is being able to explain and justify them based on what the customer gets in return. In other words, you need to be able to say something to the customer like, “For every dollar you spend with me, you’ll earn [or save] X additional dollars.” If you do this effectively, the decision to do business with you becomes easier and less risky.

Over the coming weeks, I’ll address the following pricing topics:

  1. How to talk to customers, senior executives, and supply-chain people about prices
  2. What to say when customers raise objections or challenge your prices
  3. When and how often to talk about price during the sales cycle
  4. How to price on the basis of value instead of cost
  5. How to create versions that allow customers to choose tradeoffs between price and value, long before negotiations take place
  6. How to price services
  7. How to determine what customers will pay before you invest time and money in product development and demos
  8. How to develop an effective pricing strategy
  9. How to successfully raise prices

We have a lot of important ground to cover, so stick with me—I think you’ll find it’s well worth it.

In the meantime, if you take nothing else away from today’s post, remember this one key point: You are not a passive victim when it comes to pricing. The power to set highly profitable prices is in your hands.

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