Entrepreneurs often set their prices too low, and it can take years to get them to the right level. So how do we increase our prices without losing customers?
By David Madié, founder and CEO of GrowthWheel International Inc.
When we as entrepreneurs are not making enough money it may be because we are not setting the right prices. Generally, we are good at producing and delivering products. However, it is just as important to be good at running a business and getting properly paid for our work. So to run a sustainable business and get the most from it, somewhere along the way we need to learn how to become a good salesman or saleswoman. How do we go about this?
Why are our prices too low?
There are various reasons why we set our prices too low. A frequent “beginners mistake” is that we think we make enough money. We often forget about all the less predictable expenses in the budget or we underestimate how much time we spend on each task. Perhaps we forget that it is not enough to get a decent salary. The company needs to make its “own” money to be able to invest in product development, marketing etc. To tell the company’s earnings from our personal income may be the first step towards setting the right prices.
Want to learn more? Register for our upcoming workshop on pricing and use the code “blog” to receive a $5 discount when registering. The rest of this article will be sent to you for reading when you register. Click here.
Written by Rhonda Abrams, featured on Costco Connection Magazine
Small businesses have long been the backbone of their communities. Small businesses support local charities, Little League, food drives, school fundraisers and more. Most small-business owners don’t have to be told to be charitable-they already are. But being charitable is just one part of the wave of interest and increasing demand for businesses to be socially responsible.
In addition to focusing on the bottom line, being socially responsible is a smart part of a company’s strategy for success.
Social Steps:
Create an inclusive workplace with fair pay.
Donate a portion of profits. Choose an organization and make it clear a small percentage of your pre- or post-profit sales will go to that cause.
Think and work sustainably. Look for ways your business can reduce waste, consume less energy and lower its carbon footprint.
Donate time. A good way to build team morale as well as contribute to your community is to have your employees volunteer-on paid company time-for a good cause.
Donate products or services to causes you believe in.
Written by Dora Cheatham, Program Manager, Emerging Enterprise Center
“It does not matter how slowly you go as long as you do not stop.” Confucius
When I first entered the world of business more years ago than I care to remember, it was a very different place. Word processors were just making an appearance and sending a fax was the ultimate in high speed communication, the internet barely existed, and Amazon wasn’t even a glimmer in Jeff Bezos’ eye.
Fast forward to 2018 and while the basic principles of business remain the same, the way we DO business is infinitely different. Technology has changed how we make decisions and embark on a strategic direction, how we execute on strategy, how we transact business, how we communicate. Equally, we have access to more informational and educational resources than ever before. For the small business owner today – more than ever – to ignore the need for continuous learning is to remain stagnant at best, fail at worst.
The Emerging Enterprise Center’s Business Growth Workshops hone in on business processes that every small business and entrepreneur needs while tying into the ever-evolving business environment. Among these:
Marketing & Communication: 30 years ago, sales and marketing were almost synonymous and advertising represented the main thrust of the marketing and sales effort. Today the world of sales and marketing couldn’t be more different, yet too often small business owners still believe that, as long as they market their product or business “customers will come”. This couldn’t be further from the truth, so it is critical that new entrepreneurs as well as small business owners are clear in their own minds of the differences between strategic marketing, marketing communications, advertising, and sales so that they can develop and implement a sustainable business growth plan.
Selling Value: Probably the toughest thing for first time – and sometimes serial – entrepreneurs to grasp, is the difference between selling a PRODUCT or SERVICE and selling VALUE. Entrepreneurs and innovators, rightly, are passionate about their product and their passion is reflected when they speak about it. What it can do, how it can do it, how it was developed, the features, the benefits. The more clearly those features and benefits can be articulated into end user value, the less important price becomes as a part of the sales equation. This translates into a more valuable business model that generates greater revenue. To quote Warren Buffet: “Price is what you pay, value is what you get.” Are you clear about the value that you are providing to your customers?
Innovation: “Innovate or die” has become a 21st century mantra and rightly so. Failure to innovate led to the slow demise of companies like Eastman Kodak, Blockbuster, Sears and, more recently, Toys ‘R’ Us. In today’s world of rapid technological development, changing tastes and increasing competition, product life cycles are becoming shorter and shorter. Businesses that fail to update are gradually squeezed out of the market. Innovation doesn’t have to be disruptive – it can be gradual and incremental. The key is to remain relevant!
Globalization: Globalization can be a hotly contested topic but has nevertheless had a profound impact on business with increased competition, expanded markets, increased resources, technology transfer. The increased ease with which business can be transacted internationally means that even the smallest of businesses can access customers and markets which in the past may have seemed unreachable, either directly or through strategic business alliances.
In the end, while ignorance – at times – can be bliss, when running a business, it can be fatal. As a business owner, I’m all too aware of the fact that the first step to growing a business is the ability to acknowledge that “I don’t know what I don’t know.” So I make sure I continue to learn.
For more information on the Emerging Enterprise Center’s Business Growth Workshops, contact Erica Crell at (302) 294-2063 or via email.
Written by Dora Cheatham, Program Manager, Emerging Enterprise Center
As we move closer and closer to 2016, everyone’s checking budget numbers and beginning to think about growth for the new year. Your boss just walked into your office and told you the company wants to take your top products into a new market. Somewhere along the line, someone had the idea that your heavy duty industrial cleaners can be sold into the retail consumer market; or your jan san disinfectants should be extended to the aviation industry (planes are dirty, right?) How hard can it be?
The truth is, preparing to enter a new market does not need to be a tough process, but it does need to be thorough, and expectations need to be set at realistic levels before even beginning to look at the 4Ps (or 5Ps depending on your approach).
Here are 4 key considerations you should take into account as you look to taking your products into a new market.
Size of the market vs market potential – in order to assess the size of the market you need to have a thorough understanding of the specific application of your product. A product that is used several times a day in one type of market, may only be used once a day in a different market, which radically changes the size of the market. In addition, if the market leader holds 20% market share in the new market, then your total potential in the early stages of commercialization is likely to be just a small portion of that 20% share. Be realistic in your expectations.
Product attributes – Attributes and benefits of a product that are valued by one market are not necessarily valued in a different market. Make sure you have a clear understanding of what your new target market values as well as their specific needs, and ensure that the products you are offering are designed – and positioned – to meet those specific needs. In many cases, relabeling or repackaging a product may not be enough. The product itself may need to be re-engineered to accommodate the needs of your new market.
Regulatory environment – Different markets have different regulatory requirements – for example, a product that can be used to clean your kitchen or bathroom cannot be used to clean surfaces in an aircraft without meeting stringent aviation material safety requirements. Make sure you are fully aware of any industry, state and federal requirements necessary to market your product in an alternative market. Use a consultant if you have to. It’s cheaper than the alternative.
Sales cycle – make sure you understand the sales cycle and method of the market or industry you intend to enter and not just the sales channels. In some cases, the sales cycle can be relatively brief and straightforward, in other cases, the sales cycle could be long and require a consultative approach. This will greatly impact your marketing plan and materials.
Once you have a clear understanding of the market size and potential you can then start thinking about potential strategies. Here are just some alternatives used by different companies:
Focus on targeting non-users of the product rather than trying to switch customers from using an existing competitive product.
Focus on offering additional attributes not offered by any competitive products
Focus on attacking competitive products by offering superior products OR lower pricing.
If marketing dollars are available, focus on outspending competition in advertising and promotion, although according to literature, this approach only makes sense if the market leader is in a seriously weaker position and you can outspend the leader at 3:1.
Target efforts in a specific geographic area or an area not currently served by current competitors.
Then and only then should you start putting together your Marketing Mix or 5Ps. These are the decisions that surround the Product (performance, features, design, presentations, name, etc), Pricing (direct, distributor, geographical, etc), Promotion (PR, marketing collateral, advertising), Place (distribution channels), and People (tasks, sales, support). In other words, you have gained an understanding of the new market and its customers, you now need to ensure that you have the right products, that they are correctly positioned for that market and that your communications correctly reflect that positioning.
General Eisenhower once said “Plans are nothing, planning is everything.”The purpose of planning is to ensure that all the right questions are asked. Too often we “make it up as we go along” which may yield short term benefits, but more often than not can be harmful in the longer term, often resulting in unintended consequences and incurring unexpected costs. While planning does not necessarily eliminate all of these, it does provide a sense of direction and empowerment that permits effectiveness at all levels of the organization and optimizes strategy execution. In brief, planning x strategy x execution = success.
Written by Dora Cheatham, Program Manager, Emerging Enterprise Center
How often has a new product been launched and the Sales Team been tasked with the “simple” directive to “go sell” it, armed with little more than a data sheet and price list? One year later, everyone wonders why the sales figures never quite match the numbers projected by Marketing.
An ideal product launch should not only focus on marketing the product to the customer, but also on “marketing” the product internally to assist the Sales Team optimize its sales efforts. Too often, focus is placed on selling to the customer, without effectively training the sales team in the nuances of a product that requires more than just the presentation of features and benefits.
As technologies develop and products become more complex, the more information the Sales Team has on the product, the better they will be able to answer questions knowledgeably and overcome obstacles when working with their customers. Similarly, data gathered by the Sales Team should be cycled back to Marketing to ensure that product is being received and is performing as expected, and any potential issues or improvements can immediately be fed back to the Product Development Team.
Remember that the sales team is on the front line, so a Marketing Plan or Commercialization Plan should include an element that arms the sales team with as many preemptive answers as possible so that he or she can present the company’s expertise effectively and deliver a consistent product message. So what should be included in this Plan?
Product Positioning
Make sure your sales team understands how and why your product is positioned the way it is. If the product was developed as the result of a recurring problem expressed by several customers, make sure the whole team is aware of it. Just because a customer hasn’t expressed the particular problem, doesn’t mean they haven’t experienced it! If it was developed as the result of a new technology that makes the customer’s job easier, make sure they know it.
If you want your sales team to sell on value rather than price, then you need to make sure they understand the intrinsic value of the product and its benefit to the customer, not just its features and price. What problem does it solve? Will it make the customer more effective? Will it save time or labor?
Target Market
Make sure everyone is on board with precisely which customer segment(s) constitutes the target market, and that the sales team understands the criteria on which the potential market size was developed. If the numbers were developed based on a specific application, and a particular customer ends up using the product differently (it has been known to happen), this is critical information that should be fed back to Marketing and Product Development for further evaluation. Was the original data based on a false premise (hopefully this is never the case), or is this a viable alternative application? If so, can this application be extended across the entire market in which case the potential market has just increased and the information should be distributed to the entire sales team!
Competitive Landscape
What competitive products is your sales team likely to come up against? How does the product perform against these products? How are competitive products used versus pricing? Having spent many years in the chemical industry, I have learned that one of the first things to check for is the dilution rates of chemicals: if a product costs $10.00/litre and needs to be diluted at 1:2, it is NOT cheaper than a $50.00/litre product that can be diluted at 1:12 and offers comparable performance!
Sales Tools
Don’t just send the sales team off with a data sheet and price list. Testimonials, value calculators, editable presentations, how-to’s and trial protocols (if applicable) all help the sales team present a professional, polished image of a company that understands its market and is working with their customer to help them make an informed purchase.
Product Availability
If the product or service you are offering has customization options, make sure your sales team is fully aware of the criteria for customization: options, minimums, lead times and other requirements. As Carla O’Dell once said, “If you don’t give people information, they’ll make something up to fill the void”, and too often it’s something along the lines of “Of course you can have that in 2 weeks!” This not only creates chaos for the Product Development and Operations teams but can set unrealistic expectations as far as the customer is concerned. Most customers would rather have a realistic 6 week lead time, than constantly be given reasons why an unrealistic 2 week lead time could not be met!
As a final note, while many companies focus on training upon recruitment, they fail to continue this training as products and markets evolve, yet studies have shown that proper training can boost a salesperson’s productivity by 20% and profit margins by much more!
written by Kristin Drake, LinkedIn Careers Team. Grow your small business with LinkedIn by using these seven proven tactics.
There are nearly 30 million small businesses in the United States, but only half of them will make it past five years. To ensure your small business is in the successful half, we encourage you to capitalize on the various ways LinkedIn can evolve your business.
With LinkedIn, the world’s largest professional network, you can generate leads, produce sales, and hire top professionals to fuel your growth. Here are seven ways to grow your business using LinkedIn:
Create a LinkedIn Company Page
We’ve found that LinkedIn members are 50% more likely to buy once they’ve engaged with your business on LinkedIn. But they can’t connect with you if you don’t have a LinkedIn Company Page. According to Forbes, only 57% of companies have pages. The remaining 43% are missing out on a free opportunity to generate leads, talent, and, ultimately, revenue.
If you don’t already have one, create a LinkedIn Company Page. Personal profiles don’t have the same marketing, advertising, and recruiting features as Company Pages, making them less effective at promoting your business. As you create your page, think about the kind of impression you want to create among potential customers and employees. This will help you select the right photos and messages to use on your page.
Once you have a Company Page, announce it to your clients, employees, and personal network. This will help you gain your first followers, who in turn will help to promote your Company Page on the content you post to it.
Promoting your page on other platforms or via email is also a great way to grow your audience. Here are some simple ways to get the word out:
Announce the launch of the Company Page on your personal LinkedIn profile
Encourage employees to follow the Company Page by making it a part of your onboarding process—Social Media Today reports that content shared by employees receives eight times the engagement as brand shared content
Link to your Company Page in the footer of your marketing emails or newsletters
Embed a Company Follow button onto your website so visitors can easily follow your LinkedIn Company Page
Share Content Regularly
The more you post, the more people you can potentially reach and convert. Best-in-class LinkedIn Company Pages are consistently updated to ensure that visitors have plenty of new content to consume and share.
To get started, try posting at least once per week. It’s not uncommon for companies to post three or more times per day. Post whenever you have something worth saying. Posting consistently shows Company Page visitors that your company is active on LinkedIn. Use LinkedIn’s Company Page analytics to see your top performing updates, your best times to post, and which members of your audience are the most engaged. With this information, it’s easy to make data-driven decisions to optimize your Company Page content.
In addition to posting often, here are a few more stats to help you boost engagement:
Posts with links receive up to 45% more engagement
Images see an incredible 98% increase in engagement
Posts that have relevant “best-of” lists get almost 40% more amplification
When a post gets good engagement, consider promoting it to a wider audience with LinkedIn Sponsored Content. Take the Sponsored Content Tour and discover how Sponsored Content amplifies your best content.
Showcase Thought Leadership
Seventy nine percent of buyers say thought leadership is critical for determining which companies they want to learn more about. To get started with thought leadership content, try to provide a unique perspective on your industry, product, or organization. Sharing your opinion on the future of your industry or creating a definitive guide on your product are just two ways to demonstrate your expertise and position your company as a credible partner.
LinkedIn has over 500 million users to date. That may seem like a lot to sort through, but LinkedIn also provides you with tools to identify and target your ideal audience.
LinkedIn members are more likely than other social media users to keep their profiles up-to-date, making it easier for you to find the right people. Use LinkedIn profile data to search for LinkedIn members based on geographic location, education, experience, and even connections. Once you’ve found prospects using the search feature, visit their profiles. Their endorsements or recent profile views might surface additional qualified prospects, too.
LinkedIn has helped 75% of job switchers make informed career decisions, making LinkedIn a top recruiting network. What are candidates looking for when making those decisions? Our research shows that 66% of candidates want to see company culture over everything else. To take advantage of this preference, consider enhancing your Company Page with a LinkedIn Career Page.
Career Pages allow you to target audiences with a personalized look into your company, culture, and jobs. They give you dedicated Life and Jobs Tabs on your Company Page that attract and engage relevant professionals.
In addition to creating Career Pages, encourage employees to share job postings and “day in the life” content as well. This gives visitors a genuine idea of what it’s like to work for you and adds to your authenticity. If you have a few employees who lead the pack in sharing content, consider linking them to your Company Page’s Life Tab. Their shared articles and recent updates will automatically populate, providing visitors with up-to-date information. Watch our video below on how to use the Life Tab to attract the right talent for your company.
Hire Freelancers
You’ve probably had an employee who took on a task outside of their domain. You might have even done it yourself a few times. While the effort is commendable, learning on the fly can also be detrimental.
Fortunately, finding the right talent for the task at hand isn’t as tricky as it once was, even if you can’t afford the salary of a full time employee.
LinkedIn ProFinder enables you to post your projects, receive free proposals, and hire trustworthy professionals all in one place. ProFinder will even pair you with local professionals to ensure you have the best freelance experience possible. With 172 professional services available on ProFinder, it’s easy to find the perfect professional for any task.
LinkedIn vets all the professionals on the platform to ensure they are qualified and leverages your network to find freelancers your connections have used, so you’re never in the dark about who you’re hiring.
By using freelancers, you’ll get access to outside perspectives & broad experience of professionals of all kinds, from creating websites and designing logos to managing your books or crafting your marketing strategy. Plus, with none of the management overhead of a full-time employee, you can focus solely on the job at hand.
Going from supplying a product that meets basic customer expectations to contributing to a client’s organization can be hard to establish and even harder to maintain, but is an invaluable strategy for long term profitability. Keeping a customer requires the creation of a relationship of mutual trust and partnership that goes beyond supplying a quality product.
Seeking to create value and a sustainable competitive advantage is increasingly difficult in today’s data-filled environment. Buyers today are educated and savvy. In the B2B world, the buyer can be 60-65% through the purchase process before he or she even makes contact with an incumbent or potential vendor. They know what’s out there and what it costs so if all you have to offer is a product that meets specifications, then you have effectively created a situation where your only option is to sell on price—and the lowest price invariably wins. That also means that as soon as a competitor emerges with the same option at a lower price, then chances are that customer is lost to the newcomer. So how can you ensure that your customer remains loyal to your product and business?
Smart Buyers Seek Value
A truly smart buyer understands the value of a vendor that contributes to the smooth running of his or her business. If you can deliver a flawless product, on-time, every time, with excellent customer service, then it behoves him to use your product—because spending time dealing with vendor-related problems and quality issues costs money and impacts his own customer service and bottom line (think about the UPS “I’m happy” ads where department managers and customers are happy thanks to UPS Logistics).
By supplying a quality product with excellent customer service you have already established some level of competitive advantage. And many companies today provide good products with good service – it is a prerequisite to staying in business. To sustain that advantage however you need to continually climb the value pyramid and add to your product in terms of additional service and knowledge, eventually making a quantum leap to the peak of the value pyramid to establish yourself as more than a vendor, but a trusted strategic partner.
Can you help lower your customers’ costs or improve their productivity? Can you help them identify new products or markets? At an even broader level, can your customers call on you for advice on operational systems and processes or strategic direction? In other words, does your customer consider you a supplier or a partner?
Schematic adapted from Doyle P. and Stern P., Marketing Management & Strategy, 4th ed., Prentice Hall
As you climb the value pyramid, commoditization decreases and company and product value increases, with fewer competitors able to compete at the same level. The fundamental difference between the lower and upper levels of the pyramid is distinct: to be good at the former, the salesperson and business needs to have a top quality product to sell and needs to understand his product and his own business well.
To be good at the latter, the salesperson and business needs to have an understanding not only of his own product and business, but of his customer’s business as well. He needs to understand his customer’s individual and industry needs and must excel at consultative selling, offering solutions that are of mutual benefit to both organizations. Only then can you hope to ensure an enduring partnership and long term rewards.
You don’t close a sale; you open a relationship if you want to build a long-term, successful enterprise. Patricia Fripp.
Written by Frank DeSantis, Certified Growth Wheel Trainer, Former Emerging Enterprise Center Program Director
The link below is to a great article in HBR on Passion vs. Preparedness, and reflects what I believe is the approach the Emerging Enterprise Center tries to take with their Incubator companies.
An entrepreneur has to have passion. It’s entirely too hard to start and run a business if you don’t absolutely love what you are doing! Apparently, according to this research, passion is a key ingredient to attracting attention of investors, especially novice investors, those typically found on crowdfunding sites.
Long term success, however, depends upon your ability to be prepared to scale the business. For that you need to have a vision (what do you want to be when you grow up), a game plan (strategy or business plan), and the processes and procedures to replicate what you do and how you sell. For more experienced investors, the passion and the concept may attract them initially, but they move quickly to determining how prepared they are for success; what is the experience of the management team; have they started a business before; is there a market; have they proved the concept?
At the Emerging Enterprise Center, they try to help you focus first on DRIVING YOUR BUSINESS (sales), while in parallel, developing the business skills and the policies/procedures to enable you to take advantage of opportunities that help you achieve your vision.
I believe you can have and, in fact, need both: PASSION AND PREPAREDNESS!
The Emerging Enterprise Center is proud to announce Dora Cheatham as the new Program Director. Dora has had a long career focused on sales, marketing and product development in a corporate setting. For the past several years, she has run her own consulting shop focused on assisting small businesses here in Delaware and throughout the region. She has also been a key player in organizational and promotional work for the Delaware Sustainable Chemistry Alliance.
Dora Cheatham was born in the UK and grew up in Europe, studying and/or working in the UK, France, Spain and Cyprus regions. She holds degrees in foreign languages and business from Thames Valley University and the University of London and speaks fluent Spanish, French and Greek.
She relocated to Delaware 25 years ago and has since held several positions in International Business Development and Marketing, most recently as International Business Development Manager with Celeste Industries Corp-a subsidiary of ITW, Inc. Where she implemented and managed New Product Development & Marketing procedures to create and commercialize new products on the global stage, generating over $5 million in new business and helping to establish Celeste Industries as a leader in aviation industry cleaning chemicals. On a local level, she has also worked as Director of Development at Kent-Sussex Industries, Milford, Delaware, where she coordinated a $2.2 million capital campaign and successfully increased non-campaign donations.
She has published several editorials for the aviation industry including:
“How Safe Is Your Water?”
“Complete Hygiene-Cleaning & the Disinfection Myth”
“How Green Is My Cleaner?”
Thanks to all of you for your patience and understanding during the time we have taken to search for a person to fill the role of EEC Program Director. We are very excited to have Dora join the team at the EEC to continue to provide support, access to resources, and advice to our members.
Dora will begin work with us on Monday, June 26th. Join us in congratulating her.
