21 November 2007 20CC Ltd Independent Management Consultants Marketing, Selling & Pricing...
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Transcript of 21 November 2007 20CC Ltd Independent Management Consultants Marketing, Selling & Pricing...
21 November 2007 20CC LtdIndependent Management Consultants
Marketing, Selling & Pricing
Presentation at IMechE
21 November 2007 20CC LtdIndependent Management Consultants
About me
• I am a “one man” company• But, I can be a “Group of Associates”• Have purchased consultancy• Have sold consultancy• Marketing Manager for 2 US CAD companies• I earn most of my money:
– Optimising business processes– Defining asset management strategies– And giving strategic advice to small companies
21 November 2007 20CC LtdIndependent Management Consultants
A Continuum
21 November 2007 20CC LtdIndependent Management Consultants
A Continuum
Pricing
21 November 2007 20CC LtdIndependent Management Consultants
A Continuum
Marketing Pricing
21 November 2007 20CC LtdIndependent Management Consultants
A Continuum
Marketing Selling Pricing
21 November 2007 20CC LtdIndependent Management Consultants
The Desired Outcome
Marketing Selling Pricing
Maximised Profit!=
21 November 2007 20CC LtdIndependent Management Consultants
Marketing is….
1. Knowing what you have to sell
2. Knowing who to sell it to = suspects
3. Selling profitably
Marketing Selling Pricing
21 November 2007 20CC LtdIndependent Management Consultants
Marketing
• What have you got that is saleable?– Define it in terms of features – easy– Define in terms of benefits to buyers - harder– Are there different types of buyers
• Responsive to differing benefits
• What markets are they in?
• Where are they located?– How do I reach them?
21 November 2007 20CC LtdIndependent Management Consultants
How do I develop my plan?
• You know the features of your offering– “I can solve your problem” – is a hard sell
• For benefits - get into other(s) shoes
• List them – quantify them – value them
• Know the business problems the features solve
21 November 2007 20CC LtdIndependent Management Consultants
Who has the relevant problems?
• All this work is desk research
• Estimate sector size
• Is it easy to sell to?– What are the economic conditions?– What is the buying cycle– Private vs. public sectors
• Some trial marketing?
21 November 2007 20CC LtdIndependent Management Consultants
Getting the market size
• Hopefully more than one type of company
• So focus on key players in several sectors
• Where are they located?– Close as possible, reduces cost of sales
21 November 2007 20CC LtdIndependent Management Consultants
How to reach prospects
• Word of mouth, good, but can restrict price freedom
• Yellow pages, local & lots of competition
• Adverts, watch the cost per lead/sale
• Cold selling, by mail, phone or visit
• Website
21 November 2007 20CC LtdIndependent Management Consultants
Marketing is selling profitably
• Not chasing your tail
• Having a high hit rate– Visit to Quote (near 1) to Order (3 or 4 to 1)
• If you are selling you are not doing– Doing = income
• Do not deceive yourself– Know the buying attitude of prospects
21 November 2007 20CC LtdIndependent Management Consultants
Company market surveyRemedial marketing checklist – shorter version• What are the company’s marketing strengths?• What are the company’s marketing weaknesses?• What marketing problems does the company have?• What share of turnover is taken by the largest 10 customers?• What are the ratios of numbers of enquiries to numbers of quotations made to numbers of
sales made?• When did it last win a new customer?• How far ahead does the company plan its marketing operations?• What are the responsibilities of the head of marketing or sales in the company?• What use is made of market research techniques?• What regular analyses are made of historical sales information and records?• How are these analyses used in the control and evaluation of marketing effort?• Does the company employ its own sales representatives and/or agents, whether in the UK
or elsewhere?• What does the company know about the end markets for its products, or those which its
products help to serve?• Where does the company plan to be in five years time on an overall turnover and
profitability basis?
21 November 2007 20CC LtdIndependent Management Consultants
Selling is….
1. Is a communication skill
2. If you get it right – the price matters less!
3. Getting qualified prospects
Marketing Selling Pricing
21 November 2007 20CC LtdIndependent Management Consultants
Defining customer states
• Suspect, just job title, industry
• Prospect, a name who should have a need
• Qualified prospect, a known need and budget
• Customer, has/is buying
21 November 2007 20CC LtdIndependent Management Consultants
The Sales Process
• Suspects, anyone out there who fits your prospect profile, the role of marketing
• Prospects, have come to your attention, somehow, sales to convert them into qualified prospects (leads)
• Qualified prospects, you know what they need and when
• Customers when they are convinced on the price
21 November 2007 20CC LtdIndependent Management Consultants
Client Profile
• This is fundamental to successful selling
• Public or Private– Beware of stereotypes
• Greater or lesser formality
• Delegated authority of your contact
21 November 2007 20CC LtdIndependent Management Consultants
That first face-to-face
• Listen more than you speak
• Evaluate their needs
• Discuss – convince them of your competence
• Evaluate your worth to them
• Assess how serious they are
• Develop a rapport
21 November 2007 20CC LtdIndependent Management Consultants
Your Selling Process
• Get clarity on scope & acceptable delivery– What are the “hot buttons”– Establish your outstanding competence
• Do WE Possess Good Solution– Challenge the clients perception
• Can WE be the Supplier (approved lists)• Must determine T&Cs and RISKS• Understand Decision Process & Timescale• Know who are the competition
21 November 2007 20CC LtdIndependent Management Consultants
Prospects Processes
• Buying Process– Formal ITT or not– Usually firmer on price than the delivery spec.– Decision makers
• Budget Process– Annual cycle– Money available– Delegated authority
• Together often known as the Sales Cycle
21 November 2007 20CC LtdIndependent Management Consultants
Closing
• This is not a sales course
• Quote the benefits, agree their value and ask for the order
• Have clear minimum price
• Try to deduce what the market will bear
• Ask for more, be prepared to walk away
• Once a day-rate is set with a client it is hard to put it up
21 November 2007 20CC LtdIndependent Management Consultants
Prospect’s Paying Process
• Large organisations can be slow– Often just carelessness, your survival– Keep on top of debts
• Are they good for the fees?
• How quickly will they pay?
• Allow for retentions in the cost estimate
21 November 2007 20CC LtdIndependent Management Consultants
Selling Summary
1. Establish your worth to the clientDiminishes price sensitivity
2. Evaluate “value” to the clientDiminishes price sensitivity
3. Your market price comes from experienceTopic
Location
Your own perception of YOU
There must be satisfaction & reward
21 November 2007 20CC LtdIndependent Management Consultants
Pricing is….
1. Winning customers
2. And the price is a measure of one or a combination of:1. Value to the purchaser
2. Cost
3. The state of the market
4. Your desperation for work
Marketing Selling Pricing
21 November 2007 20CC LtdIndependent Management Consultants
Pricing - not a simple balance
Price of greatest perceived
importance
Price is NOT the easiestvalue to answer
Two extremes? – one side wants near to zero, the other wants every penny?
21 November 2007 20CC LtdIndependent Management Consultants
Next time
• Add in new slide splitting this part into sections
• Your costs
• Your rate
• Pricing
• Selling on Quality & Value
21 November 2007 20CC LtdIndependent Management Consultants
Types of pricing
• Opportunity pricing
• Cost plus
• Cost plus with no contribution
• Rate card
• There will be an element of negotiation in all of these
• Emulate your “open market” salary
21 November 2007 20CC LtdIndependent Management Consultants
Share of the profits
• New slide to be developed to respond to questions and being paid a proportion of the actual savings
• Notes• Needs “audit” and trust and may take time, also
component concerned may get scrapped for other reasons (in MoD)
• Recommend you go for fixed prices based on high (very high) day rate say £1000 – 1500
• Later with strong established you can try if it still looks worthwhile
21 November 2007 20CC LtdIndependent Management Consultants
Your Cost Base - Overheads
– Office Accommodation £ 2,000– Secretarial services £ 5,000 – Professional indemnity £ 1,000– Computer hardware/software £ 1,000– Stationery, postage, phones £ 2,000– Special equipment £ 500– Car expenses (depn, running costs) £ 6,000– Seminars, professional fees etc £ 500– Marketing costs £ 500– Accountancy fees £ 1,500– Healthcare £1,000
TOTAL £ 21,000A Pension at some point
21 November 2007 20CC LtdIndependent Management Consultants
Your Functions
• Managing director - plan the business
• Sales director - sell your experience
• Marketing director - promote your business
• Administrator - pay bills - issue invoices
• Book keeper - records for tax, vat, etc
• Technical expert - fee earning aspect
21 November 2007 20CC LtdIndependent Management Consultants
The hours in a year
• The sum needs to be borne in mind
• 35x52 = 1,820 for ONE year, under 30!
• Statutory holiday 2 weeks
• Personal holiday 3 weeks
• Keeping up to date 2 week
• Marketing (most variable) 6 weeks = 13
• So 35x39 = 1,365 = 75% for the fit & lucky
21 November 2007 20CC LtdIndependent Management Consultants
The 65% sum
• General management 5%
• Administration/records 5%
• Sales/marketing 20%
• Keeping up to date 5%
• Fee earning 65%
21 November 2007 20CC LtdIndependent Management Consultants
Your Fee Rate Structure
• Depends on number of employees
• In small companies if you are selling– You are not doing– So you are all roles
• Ratio of fee earners to non-fee earners
• Use of contractors or associates
21 November 2007 20CC LtdIndependent Management Consultants
Rate CardProject
Director
Not applicable
Project Manager
700
Management or Technical
Consultant
600
Technician 400
Keep it simple – E.G. no expenses within M25“Professional Day” – hourly, usually lower, if you have to
21 November 2007 20CC LtdIndependent Management Consultants
Rate CardProject
Director
1500
1200
Partner/
Project Director
Project Manager
700 1000
900
Sen PM
Project Manager
Management or Technical
Consultant
600 900
850
800
Sen. Consultant
Tech. Consultant
Consultant
Technician 400 600
500
Sen. Technician
Technician
If the competition is the Big 5 – YIPPEE!
21 November 2007 20CC LtdIndependent Management Consultants
Your Budgeting Process
• Days available for sale
• Budget achievement often set at 65%– Not in larger scale (engineering) contracting
• If you operate alone, you need a fair salary
• If you employ people you have to cover overheads
• You must control overheads
21 November 2007 20CC LtdIndependent Management Consultants
A detailed estimate/work planMobilisation 5 80 400
Travel to see them 310 0.5 155
Interviews at site 1 7 80 560
Interviews at site 2 7 80 560
Travel 340 0.5 170
Overnight 1 80 80
Study documents 5 80 400
1 Produce numbering statement 5 80 400
2 Produce training needs analysis 1 80 80
3 Data acquisition recommendations 0.5 80 40
4 Statement of documentation gaps 5 80 400
5 User support statement 0.5 80 40
6 MAXIMO Configuration 5 80 400
7 IT needs 1 80 80
8 Back up needs 1 80 80
9 Interface needs 1 80 80
10 Managing Contractors 1 80 80
11 Project Plan 4 80 320
12 Business Benefits statement 2 80 160
Prepare presentation 5 80 400
Visit to make presentation 7 80 560
Travel 340 0.5 170
21 November 2007 20CC LtdIndependent Management Consultants
Your Estimating Process
• Detailed costing – include everything!– Variable rates, try some for size– Realistic contingencies
• The real effort, how fixed are the costs?
• Cut the rates, as allowed, but NOT the effort involved
• A job that loses money is in no-one’s interest
21 November 2007 20CC LtdIndependent Management Consultants
Your Estimating Process
• Contingencies cover normal operational risk
• Abnormal risk has to be assessed
• Resulting in negotiation to remove it, insurance to cover it, or declining to bid
21 November 2007 20CC LtdIndependent Management Consultants
Discounting Policies
• Most of my work is fixed price against a defined scope
• Time & rate based are often discounted
• Duration and volume of work based
• Avoid compromising the 65% for too long
• Lower rated staff are often contracted
21 November 2007 20CC LtdIndependent Management Consultants
Difficult Balancing Act
•Real costs
•Nice to have extra cash
•How keen are you for the work
•What is the competition charging
•Your “priceless” experience
•Real Skill
•Actual value
•How much is it worth
•Big 5 Prestige
21 November 2007 20CC LtdIndependent Management Consultants
What is the job worth?
• To you– What is the cost– Depends on size of company– Recovery of marketing costs
• Annual budget & Cost of Sale
– When compared with “big 5”
21 November 2007 20CC LtdIndependent Management Consultants
What are you worth?
• To the potential client– Cost of not having your service or product
• Is there a regulatory issue – fear factor
– Price they are comfortable with• Individually
– Their level in the organisation
• As a business unit
21 November 2007 20CC LtdIndependent Management Consultants
Your Selling Value
• What are you worth to a client?• Can they use someone else of comparable
benefit at lower cost?• Can they use a less experienced but less
expensive consultant?• How can you prove your worth?• What is your minimum fee rate?• What is a reasonable fee rate?
21 November 2007 20CC LtdIndependent Management Consultants
Further key points
• Cannot work around the clock for ever
• Do not undervalue yourself – for too long
• Do not be afraid to “walk away”
• Even from a poor job – contract permitting
• Long term projects must also “grow” you
• There must be satisfaction & reward
21 November 2007 20CC LtdIndependent Management Consultants
The Myriad of Issues
Size of prospect
Your Company
Purchase authority
Need for workT&Cs
Risk
Discounts
Public or Private Formal ITT
Perceived value
An acceptable deliveryWork breakdown
Quoted price
Packaging the proposal
Negotiating skills
Sales skills
Charging rate
Compliance
Available resources
Budget holder
Payment terms
Professional competence
21 November 2007 20CC LtdIndependent Management Consultants
Your Desired Result
Win!Win!
21 November 2007 20CC LtdIndependent Management Consultants
Any Questions?
Now or later to
020 8680 3511 or 0788 799 2427