How to Choose Your Customers

joh11a_conversionrateWhen I just started out in marketing, someone told me:

“Your prospects need to earn the privilege to be your clients”

At the time, I thought this is a nice psychological trick to increase the perceived value of my service.

Years later I found out, how dead wrong I was. Choosing the right customers is not a sales trick. It is a profound requirement for any business, and if you fail in that your business will not be fun – and by far not as profitable as it could be.

Here is a presentation explaining the concept:

Success by Selling with Integrity

Why is Porsche’s Return on Sales rate for 2014 15,8%, while Volkswagen Passenger Cars posts only 2,5% Return on Sales? What is the secret behind Amazon’s seemingly unstoppable growth?

 

 

Video length: 21 minutes


This video discusses the impact good or weak customer relationships on growth and profitability of a business, using Amazon, Volkswagen and Porsche as examples.

What do you think, why can Porsche charge almost 20% more for a car, which is sold only with little modifications as Volkswagen for a much lower price? Is it indeed customer relationship, or is there another reason?

Please share your thoughts in the comment section.

Selling with Integrity – Part 1

This video discusses an Amazon product page offering a book for sales to find out how they are selling.

Is Selling with Integrity a pipe dream? Or is it the way of the fastest growing and most successful businesses? Leave a comment with your thoughts:

The Sales Process – Building Trust and Relationships

I hear scores of people calling themselves “internet marketer”. But an online sales person? This must be a very rare species!

Selling –  Not Marketing Generates Cash

It is true: marketing activities support sales by researching markets, helping to design products which people want, helping to know  here to look for prospects and how to talk to them.

Although marketing activities are useful and important, they incur expenses. On the other hand, sales generate cash. And without cash, ergo without sales, your business will die rather quickly.

It seems to me that many “marketers” don’t like to think of themselves as a salesperson because they feel shameful of selling. Many seem to think that selling is the same as playing with the minds of their prospects, misleading them and pushing them to buy things they do not need. They think of selling as just another way of picking money from people’s pockets.

This is unfortunate, because businesses need to sell their products and services to customers. They need to convince them that they are better off with the product, even if they have to pay hard cold cash for it. Unlike government and organized crime, as a businessman you cannot rely on force to peddleyour product or service.

Negative Emotions Kill Relationships and Trust

But if you think that selling involves misleading  prospects, you probably will…

  • just try to use deceptive practices when selling.
  • and – if you are a decent person -you will feel shameful for that.

The bad news is: If you try to deceive somebody and feel shameful about it, your prospect will notice. He will dislike you, even to the point where he avoids to talk to you. If that happens in the context of sales, your closing rate – or in direct marketing terms you conbversion rate – will tend to be zero, and you will have a very hard time to generate the cash you need. Success will be elusive.

This suggests the conclusion that you have to be a hard nosed and cynical guy to be successful in sales. But this is not true. Although you will sell more if you are deceptive and cynical than somebody else who feels shameful about his actions, t the deceptive and cynical guy will be only mediocre sales man.”

“Know Your Trade” Applies  to Sales, Too

The masters of sales use a step-by-step approach to selling. Here are the four most generic steps in a sales process. Obviously every step can be divided up into more sub-steps.

  1. Prospecting (Lead Generation): You look for people who migh be interested in your product, and for whom your solution makes sense.
  2. Qualifying: You seperate those leads who are likely to buy from those, who will probably not buy. Reasons could be that they have already a similar solution, they do not have money, they would not profit from your solution etc.
  3. Presenting: You open a two-way conversation with those who survived the qualification process. You discuss the problem at hand, and how your solution can help them to be much better off.
  4. Closing: After you presented to the prospects all relevant information and helped them to imagine how much better off they were with your solution, you ask them to make a decision. If they cannot make a decision immediately, you set a deadline.

Selling does not involve pushing people, or telling them what they should do. Instead you give them all the information and tools (like samples) to come to an informed decision and ask them to decide. You gear the prospecting process in a way that you get those leads who might be interested in your solution, and you use a sharp qualifying process to weed those leads out of the sales process who would not buy anyway, or who would create a lot of headache for you after the purchase, because your solution would be not very helpful for them.

Careful targeting of the prospecting process, and a sharp qualifying process are as essential as a professional presentation and a strong call for action. Without the first two steps you will waste your money and energy with people who will never buy, or worse, with those who will have no real use for your solution and then spread everywhere that your product is not worth the price.

Selling to the wrong prospects leads to low sales conversion rates and small profits. Such lack of earnings lets some sales people conclude that they have to deceive people and try to trick and bully them into purchasing their product or service.

But deceiving and bullying prospects sets them on a slippery slope. Over a short time conversion rates will further erode.   Trust and respect for such a salesman in his audience will suffer badly. If he does not reverse his behavior quickly, he will end up pushing cheap but useless merchandise  onto stupid people, living a life of scarcity, but with an abundance of hassles.

Trust and Relationships Are a Salesman’s Main Asset

This approach will grow trust and relationships even with those people who do not buy this time, because you provided through the sales process itself a very valuable service to them: You showed them a problem possibly from a fresh perspective, presented a possible way to tackle that problem and left them either with a potential solution, or the knowledge why that solution is not for them and for what they have to watch out if they want to solve the problem at hand.

Related books:

EU VAT Rules and Affiliate Marketing

Affiliate Marketing Expert Johannes Stockburger

The MOSS System

Since the beginning of this year new rules for sales to customers in another EU country are in force: if you are an EU business person and sell to a customer in another EU country you have to apply the tax rate of the customer’s country and to pay the tax to the customer’s country. With the MOSS system this is doable. And the change deserves some credit because some funny regulations to determine the tax regime have expired. If your customer is outside the EU there is no longer a need to determine whether you have sold to a business or a private person.

Determine Your Customer’s Location

In fact the need to determine the customer’s location is helpful to us. Now that we have to prove the customers location it should be allowed to acquire this information and keep it on file. Earlier filing such information was a kind of privacy problem.

Who Is a Customer?

But if you think about it: these new Value Added Tax rules do not apply only to transactions with end customers. If you do affiliate marketing and promote other peoples products or services you get a commission for it. The marketer who pays you a commission is also your customer. And if this marketer is an EU person, you may have to apply the VAT rules on these commissions.
You have to determine the location of every marketer who pays you a commission. If it turns out that this marketer is a EU person, you have to either pay the VAT rate for your commission to the government of your customer’s country, or you have to collect and file his VAT number as proof that he is a business person.

The Solution for Affiliate Marketing

An easy workaround could be to promoting only products which are handled by services like Clickbank. With Clickbank the marketer sells the product to Clickbank. They in turn sells to the final customer and pay commission to affiliates. As they are a US business, VAT does not apply if you sell to them. But this could be quite limiting your choices as an affiliate marketer. You will be able to promote only a fraction of the products on the market.
A better solution is to collect and file the address and phone number of every business whose products you promote. In case you find yourself promoting stuff for an EU business, you need to determine and file also his VAT number.

Show Your Affiliates that You Care

If you sell your product through affiliate marketing receiving payments directly from the customers and paying your affiliates directly: provide your address and VAT number (if applicable) on your affiliate site. This gives you a distinct advantage to find good affiliates. You make it easy for your affiliates to follow the rules and avoid a tax bill eating – depending on your location – 20% or more of the commissions you pay. And, by the way you save a lot of work answering support tickets.

Disclaimer

I want to emphasize that I am not a lawyer, nor a professional accountant or tax advisor. This article is strictly for educational purposes and is in no way professional advise. But I strongly suggest that you ask your tax advisor these questions if you are an EU person.