What a $110 lightbulb can teach about sales and customer satisfaction

A few years ago, I bought a brand new furnace/air conditioning system from One Hour Heating and Air Conditioning. I’ve been very happy with the furnace and air conditioning system itself, although the company has struggled with delivering good service. If it wasn’t a requirement of the warranty, I would have dropped them years ago.

As part of the annual maintenance, a technician came out earlier this year to inspect the furnace and (because it was too cold at the time) another technician came out to inspect the air conditioner this week. During his inspection, the air conditioning tech observed that the pilot light was out. “I can order another one for you. It will cost $110.”

Yes, $110. For a lightbulb.

I haven’t decided if I want to order the lightbulb yet. I get that things cost money and there are many industries where prices are more than the consumer wants to pay. But I think I’m galled by the high price from this company in particular, since I have had more than my fair share of frustrations from them.

But it was also a lesson in sales skills… or lack thereof. The technician was very nice and did their job quickly and professionally. But when it came to presenting me with the lightbulb, their sales skills fell far short. As a result, I am even more annoyed by this company than I was before.

When the technician want to hear. “Your lightbulb is out” and “It will cost $110 to replace“. Although these are both factual statements, they fail to point out why this is important. So instead of forcing me to consider the function of my furnace or the safety of my family (or whatever the purpose of the lightbulb is), all that is left out hanging in the air between the technician and I is the idea of a $110 lightbulb. I think about the other lightbulbs in my house — which might cost between a few cents and a couple of bucks, depending on the type of bulb — and all of them do a fine job. This furnace one is smaller and is some kind of indicator bulb… but I don’t even know what it indicates. And so I’m left with what seems to be an overpriced lightbulb of unclear purpose, and that just compounds the negative feelings I already have for the company.

How should the technician have handled the situation? This is where some sales skills come into play. It’s not that complicated, and the technician shouldn’t have to feel like they are forcing me to buy anything.

  1. The very first thing they should have done is highlight the importance of the indicator. (I’m not sure what this lightbulb indicates so I’m just making up the following example…) “Aaron, part of your furnace has an indicator mechanism that watches for poisonous carbon monoxide and alerts you to when those levels become too dangerous”.
  2. The second thing they should have done is highlight the consequences: “When carbon monoxide levels are too high, your family is in danger.”
  3. Then they can talk about the lightbulb: “The lightbulb lets us know that this carbon monoxide detector is working. When the light isn’t on, we’re not sure if it’s working or not.”
  4. And THEN they should talk about price, but they can soften the blow by forcing me to consider the cost of not fixing the light. And they should also soften the blog by making it seem like a pretty special lightbulb: “We have special long-life indicator lightbulbs that are installed in these, and your lightbulb has lasted 4 years — far longer than most household lightbulbs. But now it’s burnt out and it’s pretty important that you are aware that this unit is functioning. So I recommend that we order in a special bulb. The cost is $110, which some of our customers find a little steep but there isn’t a better bulb out there to do the important work that this bulb does.”

The tech doesn’t have to go into a hard sell on this. But with a $110 lightbulb, to a customer who is already on the edge about liking the company, they could do a better job of selling me on the bulb.

When lead generation turns into lead DE-generation

One of the tasks of a business is to fill its sales funnel with leads. The more leads (and the more targeted those leads are) the better. But not all of those leads will buy from you.

Although most businesses will have some leads fall out of their sales funnel, it pays to spend some time investigating the causes of lead degeneration.

To find out how much a lead is worth to your business, determine is what the average spend on each sale, then determine your prospect-to-customer (conversion) rate, then determine your lead-to-prospect (qualification) rate. So, if your average customer spends $100.00 per sale, and if you convert 1 customer out of every 10 prospects, and if you convert 1 prospect out of every 10 leads, then each lead is worth $1.00. ($100/10 prospects = $10; then $10/10 leads = $1).

In the scenario above, if you can plug the holes in the lead stage of your sales funnel and save even one lead, you’ve saved $1.00.

So how do you plug the holes in your lead stage? First, you need to identify why leads leave.
Although each business’ leads will have their own unique reasons for leaving, here are some general observations:

  • The lead discovers that your product or service doesn’t solve their problem in the way they initially thought it might when they were in the audience stage.
  • You don’t qualify the lead at the right time (either too fast or too slow).

Although there might be other reasons, many of the reasons I’ve encountered are subsets of these reasons for lead fall-out. Here are a few practical scenarios of how leads fall out of the lead stage:

  • The prospective buyer realizes they have a problem and they start to investigate the solution. They sign up for your email newsletter to get more information but as the information starts to come in, they realize that they don’t have the problem they once thought they did.
  • The prospective buyer is price shopping and although your product or service seems equivalent or provides even better value than a competitor’s product, the lead discovers the price and heads away from your business to the cheaper price.
  • The prospective buyer asks to find out more about your product or service and although they want information to make an informed decision, they instead get a sales pitch that tries to push them to a sale faster than they are ready.
  • As the prospective buyer moves through lead the stage, they start to uncover objections about your product or service. However, your sales process doesn’t address objections until the prospect stage.
  • The prospective buyer learns more about your product or service, and seems very interested, but they discover other solutions (including alternates and replacements that they had not considered previously), which seem superior at the time.

The lead stage can be quite tenuous – you don’t want to come across as too pushy but you also need to take charge and help the prospective buyer understand what you have to offer and what value it provides.

You can keep leads from falling out of the lead stage by doing some of the following:

  • Take a poll of your leads and of your prospects and compare the two. Are there responses present among your leads that simply do not appear among your prospects? Chances are, something in your sales funnel is driving those specific leads away (or outside of your sales funnel is attracting those specific leads away).
  • If you have captured some contact information from your leads, follow-up when it becomes apparent that they are no longer responsive leads. Ask them what they chose instead, and why.
  • Examine the marketing you do at the lead stage. Test new methods or new ways of communicating.
  • Time your leads through the lead stage. Test a slightly faster and slightly slower rate and see what happens.
  • Look at where you handle objections in your sales funnel and try spreading them out a little so that some objections are handled earlier in the funnel.
  • If your qualification (lead-to-prospect) rate suddenly drops off, scour the news to pinpoint a possible cause. Did a news story related to your industry suddenly sour your leads?

Lead generation is vital to ensuring that your business sells its products or services and generates cash flow. But if you don’t pay attention, lead generation can easily turn to lead degeneration.

What I’m working on this week (Aug 27 – 31)

This is the last week of summer already? Yikes!

Well here’s what I’ve been working on lately:

  • I’ve got a busy week planned this week. It starts today with my 10,000 word-count day (which is something I try to do Monday, Wednesday, and Friday).
  • I also hammered out my table of contents for my book last week so I started in on the actual book content today. (Confession: This is the third attempt at a table of contents. The first attempt approached the work in a different way and just wasn’t as helpful. The second attempt was closer to how I wanted to handle the material but was too pedantic. With this third attempt, I think I’ve found a nice balance between being thorough and user-friendly. So I just wrote the first chapter today (before writing this blog). I’m happy with it.
  • I should be starting a new project for a new client this week. Yes, I said I was only going to keep 2-3 clients at a time, and I’ve been pretty good at doing that, but one of my clients referred another client to me… how can I say no to that?!? It’s a copywriting project in the real estate investing space. Looking forward to it very much.
  • I’ve also been in talks with a company to do some speaking/training/teaching for them. I can’t give a lot more details than that right now but it’s moving along (although a little slower than I’d like) and if I can get it going, I’ll have achieved another goal for my year.
  • Did you know that there are over 67,000 homeless veterans living in the US? That is a shocking number. So one of my clients has started up an organization that gives away homes to homeless veterans. I’ve become pretty involved in the process by doing some of the writing for the organization and for their first event. The first house giveaway is this coming Saturday (September 1st) at 2PM Eastern. It’s being broadcast live at HouseGiveaway.org. I had the chance to be there in person but my schedule wouldn’t allow the travel so I’ll be logged in online to watch. I hope you watch and support this cause as well.
  • I have a couple of other brands that I own or am partnered on that I have reluctantly neglected and am getting some traction on the content for them. I’ll talk more about them soon.

Good luck! Have a productive week. If there’s anything I can help you with, please get in touch.

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Small business strategy question: Who is your perfect customer?

This is part of an ongoing series about 100 strategy questions that small businesses can ask themselves.

When entrepreneurs first consider this question, they might quickly answer by describing their target market. But that is not necessarily the correct answer.

Your target market is not your perfect customer.

Rather, your perfect customer is a responsive and profitable subset of your target market.

That’s how I ended up writing exclusively for the financial and real estate industry for a long time: I thought my target market was entrepreneur website owners who wanted articles and blogs and ebooks. I was only partially correct. I had many entrepreneur website owner customers but my most responsive and profitable ones were the financial and real estate professionals who needed ongoing work. So I transitioned the freelance writing side of my business to help them.

You find out your perfect customer by re-engineering your past sales to discover who really bought from you. Then you figure out who was the most responsive and profitable and you adjust your sales and marketing to reach them. That perfect customer might eventually become your newly refined target market (or they might not) but knowing the information will help you to shape your business.

To figure out who your perfect customer is, take a look at your previous sales. If you’ve been in business for a while and if you have a lot of customers to choose from, select a cross section of customers from the last quarter or the last six months. Try to get a small enough list to make it manageable but a big enough list to get a good representation. (As a freelancer, I had the advantage of looking at everyone I had worked with in the past year for the clearest picture).

List out the characteristics that are common among each of them. Then, list the characteristics that are common and different compared to your target market. Consider some of the following things:

  • Among your customers, what characteristics are common among those who were the most profitable (that are not shared among those who weren’t as profitable)?
  • Among your customers, what characteristics are common among those who spent the most (that are not shared among those who didn’t spend as much)?
  • Among your customers, what characteristics are common among those who went through your sales funnel the fastest (that are not shared among those who went through your sales funnel more slowly)?
  • Among your customers, what characteristics are common among those who bought more than once (that are not shared among those who didn’t)?
  • Among your customers, what characteristics are common among those who referred the most (that are not shared among those who didn’t refer as much)?

By doing this, you’ll start to get a picture of what your best customers are like because you are comparing their common characteristics against those who didn’t make it all the way through your sales funnel or those who aren’t as profitable.

Once you know this information, you can target a more narrowly defined market and you can refine your marketing and sales language further and you can create products and services that more accurately serve the needs of your perfect customer.