Paul explains why tough times provide your greatest leveraging opportunities.
During moments of uncertainty and when they’re fearful, people tighten their grip on the status quo. This is good for you when selling to existing customers.
In tough times, your customers are going to experience new problems. You might as well be the one to solve them.
During tough times, you need to protect your profitability. Leverage a price increase to shed those “profit piranhas” in your customer base.
Connect your high-level decision makers (HLDMs) with your customer’s HLDMs. “When your companies connect at that level, good things happen.”
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Why and how do I leverage customer relationships in tough times?
(Transcribed from podcast)
On today’s episode, we’re going to talk about tough times and why tough times are our greatest leveraging opportunities. And I’ll briefly explain what I mean by that, but tough times represent opportunities in several ways, especially ways in which you can leverage your existing customers. So, we’re going to talk about that today.
Before we do that, a quick shout-out to our sponsor. We’ve talked about Andrea and The Creative Impostor Studios several times on this show. Every time, we mentioned she’s our sponsor, but I got to say she does a great job. And her team is there to support you, to keep you on track, to keep you aware of what’s changing in the podcast world. So if you’re thinking of starting a podcast or you have one already, reach out to Andrea and her team. We’re going to have a link over to her website on this episode’s webpage.
Also, speaking of the internet—while you’re on the internet, go over to Amazon.com. Check out Selling Through Tough Times. It is now available. It’s available for purchase. Pick it up. It is going to be your go-to guide for building mental resilience and growing your profits during any downturn. In fact, in today’s episode, we’re going to talk about leveraging, which is one of the Critical Selling Activities in Selling Through Tough Times. So it is available. Go check it out.
So back to that question: Why are tough times our greatest leveraging opportunity and how do we do so. Think about this. During tough times, people are uncertain. During moments of uncertainty, and when they are fearful of the unknown and what the future is going to look like, people like to tighten their grip on the status quo. This is a good thing when you’re selling to existing customers. It can be more challenging when you’re trying to break into a new prospect.
But today, we’re talking about leveraging, and leveraging is about growing and protecting the business that you have already. And during tough and uncertain times, it creates a leveraging opportunity because your customers—your existing customers—want to continue to work with you. They want to continue to partner with you because you are familiar to them. And so, here’s how we can leverage that.
Number one, identify some leveraging targets. Identify some leveraging targets—and these are going to be customers where you’ve created immense value—and go back and talk to them and just ask some questions. Identify some opportunities. Ask them specifically, “Hey, during these tough and uncertain times, what are some additional services that we can offer?” “How can we better support you during these tough times?” Or “What additional products and services are you needing that maybe we could talk about, that we can help with?” That’s a way that we can leverage. We identify those leveraging targets and we just ask them questions to reveal new opportunities. That’s one way to do it. That’s kind of a basic way.
Now, a more advanced way to leverage your relationships during tough times is to identify new problems that you can solve. During tough times, your customers are going to experience more problems than ever before. They’re going to experience unique problems that are germane to that tough time. Your job is to identify those new problems that they’re going to experience and leverage that into an opportunity. And again, that may sound opportunistic, well I guess it is. And as we make that point in the book, being opportunistic is not a bad thing—it’s a good thing. When your customers have problems, somebody needs to solve it. [It] might as well be you.
So, in the book, we have a chapter in the book called Leveraging. It’s one of the Critical Selling Activities. And we talk about leveraging customer problems, and we have what’s called a PSA. It’s not a public service announcement. It is a problem solving analysis. This is a series of questions that can help you identify opportunities. For example, questions like this:
- What are the three most common problems your customer is experiencing on a weekly and daily basis?
- What common problems have your customers deemed as unsolvable?
- How have you attempted to solve some of these common problems in the past?
When you’re talking to customers, ask them, “Hey, what are some of the common complaints you hear from your management team or your employees? What common complaints do you hear from your customers?” These will create opportunities for you to create more value and more opportunity because every time there is a problem, there is opportunity. Every time there’s a problem, there is profit to be made, both for you and for your customer.
Now, another reason tough times are great leveraging opportunities is because you can now leverage price increases. During tough times, you need to look at your business and you need to ask yourself, ‘Okay, what percentage of our customer base is unprofitable to serve?’ You know, I don’t care how great of a company you are, I guarantee you, there is a certain percentage of your customer base that you want to get rid of, that is just not profitable to serve. During tough times, you cannot afford to waste your resources on taking care of these profit-piranha type customers. So, leverage price increases. I would go talk to your accountant; talk to your CFO. Have them run an analysis. Do some simple math and ask yourself, ‘Okay, looking at our customer base, who do we need to get rid of? Who do we need to shed?’
And here is how you do it. You schedule a meeting with this profit-piranha customer, and you explain to them, “Look, right now, resources are hard to come by. Right now, it is a tough time. We need to make sure that we are protecting our profitability. And, Mr. Customer, we would love to continue working with you, but based upon the level of value that we’re providing and the margins that we’re making, it’s just not good business for us right now. So, we would be happy to continue working with you at this price level.’ You’re basically telling the customer, “Look, if you want us to keep working with you, if you want us to keep adding value, we’ll do it, but we’re going to do it at this price.” And by doing it at that higher price, the business becomes worth it.
Now I wouldn’t have this conversation unless you are prepared for your customer to say, “Well, we’re not paying that price,” and then they leave. If they do, that’s fine. Let them be somebody else’s profit problem. But right now, you need to protect your company. You need to make sure that you’re protecting profit. It truly is that simple.
So, one other leveraging a tip here. During tough times, this is an opportune time to go higher within your customer base. During tough times, your decision makers are going to be more open—[their] high-level decision makers I should say—are going to be more open to meeting with your high-level decision makers. And here is why. During tough times, there is strength in numbers. Looking at your customers’ high-level decision makers, these business leaders want to meet with other business leaders because they want to pick their brain. They want to have a conversation about what they’re doing, where they see the market heading. They want to get some tips, ideas, and insights.
So, we call this the high-level schmooze. And the high-level schmooze is where you take your high-level decision makers within your company, and you match them up to your customers’ high-level decision makers. You arrange that meeting; get them together. When your two companies connect at that level, good things happen. And we want to offer this during tough times, because during tough times, your customers are going to be more open to these types of meetings.
All right guys. Well, that’s just a little bit about leveraging and why it is so important during tough times. Again, hey, the new book, Selling Through Tough Times, is available. Check it out, go to Amazon, Barnes & Noble, Chapters—wherever you buy your books, it should be there. Man, I can’t wait to see you guys on our next episode.
Make it a big day.