Increase Profit and Revenues in Tough Times - Part 2

Yesterday sales trainer Ron Karr gave us some excellent ways to increase profits by avoiding lowering prices in this economy. Today he's back with a unique way to increase profit - raising your prices!

"You may be asking yourself how you can possibly do this in a down economy," says Karr. "The answer is simple. Just ask for it! You need to remember a few points of power you have, especially when dealing with existing customers."

--You are the devil they know vs. the devil they don't know. Things are going well. Why take the chance of screwing things up? There is a value for an insurance policy.

--Link your value proposition to how you can help them weather this storm and be ahead of their competition.

--Nobody will protect your value except for you. That is your job!

CASE IN POINT: Michele Litzky, Principle of a Hoboken-based PR firm was attending a meeting with a current client to discuss 2009 strategies. While waiting in the conference room, she noticed a piece of paper on the floor that had two lines: "Cancel firm Litzky", and second line said "reduce fee".

When the client walked in the room, Michele asked if this note was left on purpose. The President said no, it was left unintentionally from an internal meeting. Michele immediately changed the direction of the meeting and revisited the significant positive outcomes they had provided the firm with a recent publicity campaign. After restating her value proposition, the client, which wanted to either cancel her services or reduce her fee, wound up giving her two additional projects and agreed to a fee increase after 90 days.

This is a classic example of how one needs to operate in today's environment!

"Whatever you do, please do not act with a bunker mentality," continues Karr. "There are opportunities out there and there are people who are actually raising prices. If you don't believe me, look at the new sports stadiums going up. Seats in those stadiums are much more expensive than in the old stadiums. And they are selling them. Maybe not as fast as they would like, but they are selling!"

"People want to save money. People need to reduce costs. But more importantly, people need to succeed. Is your conversation centered on reducing prices? Or it is centered on how you are going to help others succeed?"

"Again, you may need to reduce your prices," says Karr. "However, make sure you do not do it until you have tried everything else first. If you do reduce your prices, remember to get something in return. And then be accountable for making up the lost profitability with increased volume somewhere else. Every action creates a reaction. At the end of the day, you still need to meet or exceed your quota."

Ron Karr is a professional speaker, consultant, trainer and author who specializes in helping organizations build and maintain high performing sales cultures. Visit him at www.RonKarr.com and sign up for his free Titan Sales E-Report.

Selling a Price Increase

When you get the news from the company big-wigs that your products are increasing in price, it's never a good feeling because now you have to tell your clients about that price increase. Will they go for it? Will they understand? Will they take their business elsewhere?

Mark Hunter a.k.a. The Sales Hunter recently wrote in his blog about this situation, and had an interesting point to share:

"A price increase must always be sold to two people," says Hunter. "Not only does the person buying the product / service need to be convinced, but also (and more importantly) the salesperson doing the selling."

"I strongly believe the biggest obstacle in selling a price increase is found in the salesperson," continues Hunter. "Far too often, the person trying to make the sale doesn't believe in it and, as such, doesn't have the ability to communicate with the sense of commitment and focus needed when dealing with this issue. Before attempting to sell a price increase, I would advise any salesperson to take the time to research both the background and the driving issues behind it. Then (and more importantly), determine the real value the customer will receive. Keep in mind that it's not really about the price. It's the value that is really being sold or bought."

Read The Sales Hunter's latest thoughts and comments about consultative selling, sales development, and sales motivation techniques at www.thesaleshunter.com/blog

Solutions for a Sticky Situation

Buying gas in San Diego is always an interesting experience. Not only is this a commuter city with limited public transportation, it's also an expensive city - the gas prices reflect that, and you never know what you're going to get at the pump.

Lucky for the gas companies, they don't have to speak directly to their customers when they raise prices. Unfortunately, at some time, you as a salesperson may have to do so.

Dave Kahle is a veteran of communicating price increases. Here's some of Dave's advice to help you make the transition with ease.

How do you manage to pass on a price increase without losing business or giving away margin dollars? Anxiety abounds: "Will the customer refuse to accept it? Or solicit prices from a competitor? Will I have to give away gross margin and absorb the price increase in order to keep the business?" These kinds of doubts lead to anxious and intimidated salespeople, declining sales and shrinking margins.

Here's a series of seven specific ideas to help you effectively manage price increases.

1. Set up the situation.

The announcement of an 8% price increase on a major product line shouldn't come unexpectedly out of the blue. Of course the customer is going to react strongly to the suddenness of the information. Nobody likes to receive price increases, and even worse, nobody likes to receive them without any indication that they are coming.

It's like the day I received a bill for health insurance which was 60% higher than the previous month was. No prior notice, no hint of the increase, no letter explaining it was on the way, no preparation - just a much higher premium. I reacted conventionally, and immediately picked up the phone to complain and solicit other sources. The sudden nature of the bad news fueled my negative reaction just as much as the details of the increase.

Don't let that happen to your customers. Don't wait until the price increase is a fait accompli to inform the customer. Weeks before, have a conversation with that customer about the trends in the economy toward more price increases. Share the big picture with him. Then mention other price increases that you have received in the past few months. Be specific with names of manufacturers and products to which he can relate. Mention the soaring price of oil and the inevitable downstream effect that has on all kinds of products. Mention that you are expecting an increase from XYZ component or manufacturer.

Build into your customer the general expectation that prices are going to go up, so that when the deal happens, he isn't blind sided by the information.

For the rest of Dave Kahle's tips for communicating price increases, click here.

Dave Kahle is a consultant and trainer who helps his clients increase their sales and improve their sales productivity. He speaks from real world experience, having been the number one salesperson in the country for two companies in two distinct industries. Dave has trained thousands of salespeople to be more successful in the Information Age economy. He's the author of over 1,000 articles, a monthly ezine, and six books including: 10 Secrets of Time Management for Salespeople and Transforming Your Sales Force for the 21st Century. He has a gift for creating powerful training events that get audiences thinking differently about sales.

His "Thinking About Sales" Ezine features content-filled motivating articles, practical tips for immediate improvements, useful resources and helpful tips to help increase sales. Join for NOTHING on-line at www.davekahle.com/mailinglist.htm.

You can reach Dave by e-mail at info@davekahle.com or by phone at 800-331-1287. Check out his website at www.davekahle.com