Customer Contracts – what’s the point?

I had an Epiphany about sales contracts the other day when in negotiations with a new supplier that I want to use.  I won’t name the company – but let’s assume that I am dealing with your company as I am sure that most companies (including my own) do what this supplier did.

Here’s the scenario:

I want to use your company services and have made a verbal commitment to do so assuming that we agree on price (something that we have pretty much done). The sale is going well from both points of view. I am excited to be using you and you are excited to have me as a customer.

Good so far. In fact, you could say it is going great so far.

We have questions go back and forth, but they are getting answered well, at least from my point of view.

You then try and close the sale – and ask if I am prepared to sign the contract.

I say “Yes, send it over”.

So now, the sale is going really well from your point of view also.

Terms of the contract

Then I start to ask you about the terms of the contract, and that’s where things start to take a bit of a nose dive as I quickly see all the benefit of me signing this contract is for you, and none of it is for me.

Here’s how the rest of the scenario unfolds:

I am a few months away from needing your services. Consequently, whilst I am sure of what services I need now, there could be a few amendments later down the line – I might change exactly which service I use.

You inform me that once I sign the contract, I am obligated to pay 100% of the fee for each service that I sign up for. If I want to change, I still have to pay for the service that I don’t use.

Mmmm. No flexibility from my point of view. I can understand from your point of view why you have this in your contract, it does make sense for you. it just doesn’t make sense for me (yet).

So I start to question some more. Not only do I have to pay 100% for each service that I sign up for, but I have to start paying as soon as the contract is signed.

Mmmm. Not great for my cash flow. Great for yours though. This is another win for you, the supplier, but not a win for me.

The Key Question in the customer’s mind

So, I ask the key question in all of this: what is the benefit to me for signing this contract now?

It is the key question. Yes I want to work with you. I have my mind up on that. So the “what’s in it for me if I sign now” question now becomes my key question.

Your answers:

You get an account manager and technical help when you sign.

Great, but you know and I know that if I call you (the sales guy) and ask a question – you will answer it. And if you don’t know – your technical people will answer it. You still want me as a customer. You are not going to cut me off until I sign the contract. That would be suicide. So this is not a valid reason.

The time slot that you want is all booked in.

If I don’t book them now, will I loose my slot? Is that why I need to sign the contract? Again, no. I find out that if someone else comes along and wants my slot – you’ll call me first. If I don’t sign the contracts at that point, you’ll offer it to the new guys.

So again – no risk to me for not signing the contract.

You run out of answers for me.

The benefit for me?

In fact, the benefit for me is not to sign the contract: I still get the time slots I need (at least first refusal) at the price agreed. I have flexibility if I want to change services, I still get the service I need to go forward from you and cash flow is much better for me. So I don’t sign. At least not yet. I will sign when it suits me, not you (even though I like you).

In case you haven’t guessed already, this made up scenario happened to me a few weeks ago. I want to use the services of a company – but I didn’t want to sign the contract at that point.

The problem was – signing the contract was a win-lose scenario. Not signing the contract is also a win-lose scenario but the other way around. Our contracts should be win-win.

Takeaways

1. Ask yourself – what’s the point in my customer signing this contract now? What are the benefits for them?
2. What are the benefits for you are your company if they sign?
3. Is there at least some sort of balance between the answers to these two questions? If not, what can you do to change that?
4. Also look at the is terms and conditions (also know as serious constraints) on you and your customers. Is there balance here too?
5. Have you made it really clear what the benefits of signing now are?
6. Is it your contract so good that they will happily sign a second time and a third? Or does it put them off?

I know that I will be looking at ours now!

Extra Takeaway: Thinking differently

What I did here was challenge the norm. The norm in that industry is to sign the contract as asked. Everyone does it. It is what is expected. So my extra takeaway for you here is: challenge the boundaries that are in place. Just because that is the way everyone else does it – doesn’t mean that you should do it that way. There could be a better way if you challenge a little.

What’s your experience with sales contracts (others and your own)?

Update: A New Definition of Marketing

Last week I wrote a post called A New Definition of Marketing (if you haven’t read it – it might be worth a quick glance). It has sparked some interest on the comments, facebook, twitter and email! It has definitely been the most engaging post of the week, taking most of the web traffic and social network interaction.

I mentioned on the blog that anyone could take the diagram that I put together in Omnigraffle (iPad version) and change it as they thought. John LeMasney did just that and came up with an adapted version:

Thanks to 365sketches.org

John’s idea of a circle connection intrigued me, and I have been playing around a lot this week with the diagram. A few emails back & forth with John and afew others, I eventually came up with this amendment – taking the original idea and adding the connections in.

As you can see, instead of the circle joining from the Ally back to the Beginnings section – I noticed with my customers a much tighter pattern emerging. Specifically, I saw two (general) things:

1. Engagement Cycle: People on their journey are more likely to have an engagement cycle with the previous phase of their journey.
2. Spread the Message: People pull in other people to their previous phase of their journey.

The Engagement Cycle

For example, let’s say that I have just released a new product to the market – Product Y. If an existing contact is at the Conversion phase with my company (with, say Product X), then they will end up at the Beginnings stage with Product Y. Our previous connection helps them speed through the Discovery phase, but because I don’t have much connection with them, they end up in the Conversion-Beginnings cycle.

Spreading the Message

People at the conversion phase tend to be good at gathering people into the beginnings stage. They don’t have a lot of connection with your company – but they have enough to at least recommend you to people. These people then join at beginnings.

The Engagement Cycle

The Existing customers are somewhat easier to get involved with our new Product Y. They have a stronger connection with us. They like our company and services, so end up back at the Conversion phase and take a little persuasion to get involved.

Spreading the Message

Customers have a much stronger connection with us, so when they refer people to our company – they do so as part of your sales team. They convince the people a little more than those at the conversion stage – so people that come to our company as a result of the Customer referral tend to enter at the Conversion stage and are easier to convert into sales.

A Business

This is the end point for most companies and indeed where I find our company at. We have customers that are connected to us. We don’t win them on every product or service we sell – but we are, at least asked and stand some chance.

We spend our time then, increasing the amount of people in the discovery phase (lead generation), and through our sales process – lead them to conversion. We also work on providing a great follow up service to our Customers (at least a portion of them) and we also get some great referrals from Customers.

A movement

I came across a quote by Ron Bruder: Bruder doesn’t run companies. He leads movements.

This quote gave me a great split on this diagram. Movements come as a result of deepening the connection with Customers and thereby creating Allies. This is where I want to take the companies that I am involved in – not being just a business but a movement, and I guess to do that I have work at getting the customers in to the Ally phase, because here is where the magic starts to happen.

The Engagement Cycle

Apple have done this well. That’s why they have people queuing for 8 hours to get the new iPhone, even though they have never used it. They buy just because you make it. That’s all the reason they need. There is no conversation or conversion – they are sold immediately.

Spreading the Message

Not only that – but Allies persuade other people to join your movement. They draw in people – and these people by-pass all of the other stages and quickly become customers – just because of the passion and evangelism of your Allies. How many people have decided to buy Apple stuff long before ever connecting with them simply because of the Apple Evangelist Friend?

Takeaways

Takeaways are actions that you can takeaway from reading this blog post that hopefully help:

1. Quick Check. Print the diagram out or quickly redraw it. Mark on the diagram where most of your current marketing effort goes (in terms of money and resource but also in terms of ROI). This should show strong and weak spots.
2. Strengthen. Now you understand where you weak spots are – write down a list of 20 things you can do in the next 3 months to strengthen each weak spot.
3. Implement. Take the top three items from your lists and work on those today.
4. Review. Schedule a time in your calendar to do this exercise again in 2-3 months.

A quick thanks…

So, there you go – this is my thinking so far of the Connection Journey Diagram. If you want a quick recap of the different phases of the journey – then please read my blog post: A New Definition of Marketing.

Thanks to all those that contributed so far with thoughts and ideas (through all the various forms of social media) and thanks again to John for doing a great job of re-drawing my initial model.

What do you all think of this model? How can we make it better?

Start With Why, Simon Sinek – Book Review

If you have read a few of my recent blog posts – you will have noticed that I have been reading the book – “Start With Why” by Simon Sinek. You will also know that I have made a few references to how it has helped me with a few things – so, the bottom line is, I like this book.

There is one caveat – it is way too long.  I found myself getting a little bored in sections, so I would skip over them. This is the only thing that I didn’t like about it mind you, and it was easy enough to skip the sections that I didn’t connect with.

Rating

It’s a definite read that is for sure, and it should be on your book list. If you have a few speed reading skills, it will help you through various sections – but don’t let that stop you from buying it.

What the book is about

Sinek spends a lot of the book looking at the above diagram – the Golden Circle.

WHAT: Every single company and organization on the planet knows WHAT they do.

HOW: Some companies and people know HOW they do WHAT they do. Whether you call them a “differentiating value proposition,” “proprietary process” or “unique selling proposition,” HOWs are often given to explain how something is different or better.

WHY: Very few people or companies can clearly articulate WHY they do WHAT they do. When I say WHY, I don’t mean to make money—that’s a result. By WHY I mean what is your purpose, cause or belief? WHY does your company exist? WHY do you get out of bed every morning? And WHY should anyone care?

If you watch this video that Sinek did at TED recently – you’ll get a good overview. This video as actually the reason that I purchased the book.

What I learned

I find that when I read books like this – I often enjoy them and, at that moment in time, have a moment of revelation and learning. The problem is – I often don’t do anything after that. There can be little action.

I have started to combat this by making notes on each book that I read (easy to do with the Kindle, as long as you don’t mark too much). On this book, I have three sides of typed notes, but I also have some actions from it.

So here are the key points:

• We have a good purpose (or WHY) with our company. I just need to make sure that we keep focusing on putting that message across.
• This book, along with a few others, caused me to think a lot about how we do marketing as a company. If you haven’t read my musings, have a look at the following post: a new definition of marketing.
• I want to look at our company values based on the following statements from the book:

Making it even more difficult for ourselves, we remind ourselves of our values by writing them on the wall . . . as nouns. Integrity. Honesty. Innovation. Communication, for example. But nouns are not actionable.

It’s nearly impossible to hold people accountable to nouns.

For values or guiding principles to be truly effective they have to be verbs. It’s not “integrity,” it’s “always do the right thing.” It’s not “innovation,” it’s “look at the problem from a different angle.” Articulating our values as verbs gives us a clear idea . . . we have a clear idea of how to act in any situation. We can hold each other accountable to them measure them or even build incentives around them.

• The simplicity of understanding WHY and making sure your HOW and WHAT connect with that has really helped me with communication in all the various ventures that I am involved in. I am asking the question “WHY” a lot. For example, I do some coaching with some community leaders in the church – and we started to look at a slightly adapted model of this – it was a great session that should hopefully make things clear.
• People have to connect with your “WHY”. A lot of companies have a purpose (WHY) that has come from the leader, which is how it should be – but, and this is a big but, people have to connect to that WHY. If your WHY is to build a large, profitable and successful company – people won’t connect with that. People aren’t interested in helping you to build a company and become more successful. WHY has to connect with their heart.
• Sinek validated my views on authentic selling! I love it when I am on the right path. According to Sinek, authenticity is proven in WHAT you do – which  is something that I totally agree with. This causes you to examine what you do through the lens of authenticity.
• My views on competition have changed due to one of the last paragraphs in the book.

Now think about how we do business. We’re always competing against someone else. We’re always trying to be better than someone else. Better quality. More features. Better service. We’re always comparing ourselves to others. And no one wants to help us. What if we showed up to work every day simply to be better than ourselves? What if the goal was to do better work this week than we did the week before? To make this month better than last month? For no other reason than because we want to leave the organization in a better state than we found it?

Have you read the book – what did you think?

Dan Pink on Motivation – but much better!

Came across this video today (courtesy of inspirisimo.com). I love Dan Pink’s TED talk on motivation – but these guys add a whole different level to message with an extraordinary presentation that both captivates you and strengthens the message. Just brilliant and well worth 10 minutes of your time!

A remarkable business model that I stumbled upon.

A few months ago, I wrote about the death of trade shows because the shows that I went to were very disappointing for me. Yet, in the middle of one of one particular trade show stood a company that absolutely caught my attention.

How it Worked

I walked around the show with my heavy back pack (why I insist on taking this bag I’ll never know, but I did) and stumbled upon a small, out-of-the-way stand that offered massages. I looked at the signage and there was no indication of price. In fact, the sign didn’t tell me anything other than the company name: Mobile Massage UK. One of the masseurs saw me and she asked me to sit and one of the (7) therapists would be with me soon.

She then proceeded to tell me that for the pleasure of a massage “you pay what you think it is worth”. This is what surprised me. She offered the service, but no price – that was my choice based on what I thought about the service they offered. I, of course, accepted her offer as I had nothing to loose. If it was bad – no money. If it was good, then I would pay something. I didn’t have a clue what I would pay – but I knew it would be something.

As I sat there contemplating this and as the lady continued to massage her client – my masseuse became available. He explained to me again that he would give me a 10 minute head and back massage. At the end of the ten minutes I could pay what I thought was a fair price for the massage. He also told me that “people usually give between £5 and £20″ and that “10% of the money I give will go to a Children’s charity”. I still, of course, wanted my massage (which was very good and too be honest, I could do with another one now).

I sat there thinking about this model and how it worked. At the end, I paid £10, which equates to £1 per minute. I did think about 60p per minute, but that would mean asking for change. It seemed fair and neat to pay the £10. It was easy.

The lady that initially spoke to me owns this business and I was keen to talk to her about her company and especially the business model that she had chosen. She kindly spoke to me and answered every question that I had.

The Business Model

They had tried the fixed price for a massage – but she made more money this way (although she didn’t know how much more). She put on the signs once “pay what you think it’s worth” and business dropped dramatically. So all she had on the signs now was the name of the company (Mobile Massage UK).

People would walk by and stop and ask if the service was free (put on by the event organisers). This was, of course, planned. That initial question was the opener for the staff to give their story. They must get asked this question hundreds of time every day, and each time the patter is the same. Some people didn’t like this – but more often than not people sat down.

She (the owner) told me that a few times people didn’t pay and occasionally you get teenagers paying £2, but more often than not people did what I did – and paid £10 (which is actually expensive for a 10 minute quick back rub). So not only did she get more business, but the people seemed happy to be paying more for the service. She takes a risk on the price, but reaps the rewards of doing so.

The charity thing is because it is what people expect rather than out of a desire to change the world, “people in this country don’t like the idea of you making money – so the charity statement helps with that” she told me. She is obviously listening to her customers.

View more info at: http://www.mobilemassageuk.com/

What do you think to this idea? Have you experienced this yourself (I know there is a restaurant in London that does this for example)? Have you done this yourself?

Top tip for new entrepreneurs, start ups and those struggling in business

I’ve spent quite a lot of time talking with new entrepreneurs, working with guys struggling with their business as well as putting some ideas and teams together for a few new business ventures of my own.

In all the many hours of discussion that I have had recently – there seems to be a reoccurring theme: do it different.

I am aware of how easy it is to fall into the default of “doing it this way because that’s the way everyone does it”. The trouble is – that doesn’t make for a very interesting business model, and it makes it hard to differentiate. It can be quite boring.

Finding the magic

When I am talking about doing things differently – I am talking about doing it radically different. Is there a way to re-write the rules for the business that you want to start? I encourage people to start with a blank piece of paper and try and think without restraint and the “benefit” of experience.

It’s on that piece of paper that I find that the true magic starts to appear. It is often on there that the real reason you want to do your business comes out.

If you want to set up a business just to make money – you’ll find this exercise hard, which probably means that you should look at another business market. There has to be a passion and a drive in you to change the market place for the better. So how do you do that? Don’t just change one or two things – change everything and see what comes out of it.

Change your industry

If everyone else in your industry opens at certain times, what happens  if you change those? If everyone charges by the hour, what happens if you charge by the session? If there is a lot of competition in your industry, what specific areas are missing that you could exploit? If prices are all around £35 a session – what would happen if you charged £45? Why is it people really use this product or service – and how can I connect with that?

Sure, there maybe reasons why things are done in a certain way – but you’ll be amazed at the cool things that happen when you really test those reasons and assumptions. Most people don’t – which is why everyone else is probably doing it that way, they are just following along. Dyson made a fortune by redefining the vacuum cleaner. Apple changed how we listen to music like Sony did a few decades earlier by challenging the assumptions. Starbucks changed how we drink coffee by challenging assumptions.

Change your price

The great thing is – when you do something different, something that people really want and can connect with – you no longer have to be too concerned about the price. The Dyson, Apple iPod and Starbucks coffee we massively more expensive when they came out. People still paid it because they connected with it, it was different and not the same old. That means I don’t have to try and be the cheapest. I can’t be reckless with the price but chances are you can charge higher prices because you are offering something of more value.

Simple Exercise to rock your world

So – do this simple exercise. Take a blank piece of paper and redraw your industry, product or service by challenging the reasons and assumptions that currently exist. Think without restraint. Don’t spend too much time on the detail for now, or thinking about how to do it just yet. Let God deal with the impossible. Just write everything down as it comes to you. As I said, the chances are – you’ll find something magical as a result.

Let me know how this goes for you! And if you have any top tips for a start-up – then please share them.

A new definition of marketing

I have been thinking a lot recently about how my company does marketing.

We used to have a great girl who worked for us (Naomi) who left a few months ago to set up her own company. Her remit was to handle marketing. It didn’t have any specific definition but Naomi did well because people really warmed to her. She made people feel important and cared for — and that was great!

So, it now comes back to me, so I have taken this opportunity to examine what we do, and perhaps start with a clean piece of paper with the word WHY? in large letters at the top (rather than just take what we do and add to it).

So – why do marketing? What is the purpose of it? What does it mean for our company?

Marketing is simply to build connections

I like this kind of question, rather than taking the one-size-fits-all approach. It’s good to think. So I took my journal and began to write. I came to the following conclusion: marketing is simply to build connections. That’s it. I appreciate that I might be taking old ideas and adding new language to it, but it has helped me.

Read More

“You’re hired!” I’m thinking of running my own apprentice-style competition

I am sat in Starbucks at the moment, taking some time-out from the office to catch up with myself. In the back of my mind is the thought that I am going to meet Tim Campbell in a few weeks. He won the first series of the apprentice in the UK, and if all works out – Tim will speaking at the up coming en-thuse.com conference.

This “apprentice” theme is something that has been on my mind for a few months – I have been seriously thinking about the idea of an entrepreneurial apprentice.

The idea, in brief, I take an apprentice and set up a business with them. We’ll then spend 12 months building it. If it works out, at the end of that time – we should have a business that the apprentice could run or sell. Either way – they’ll be a lot of learning along the way, and a chance to own part of a great company.

So, I have started to write down the pro’s and con’s:

PROs

1. Impact: Be great to have an impact on someone’s life. It also keeps business going.
2. More Magic Happens: I have a some great ideas that just need some drive and energy to bring to pass.
3. Already set-up: Already have an place of work setup.
4. Creative: It’s a creative solution to a problem (ie. lack of time on my part and a desire to do everything great).
5. Fun: I think it could be a great thing to do for 12 months, it would be fun and they’d be something amazing at the end of it.
6. Challenge: it would be a challenge to both of us that is for sure. But I love challenge!
7. Publicity: we would, no doubt, get some. We could follow the apprentice with cameras for the year and turn it into a vlog style documentary.

CONs

1. Hassle: More work in the short run.
2. Cost: Is it worth is both in terms of time and salary?
3. …can’t think of any more…

You know what though, I can sit here and think about the pros and cons – but it is not something that I normally do. I simply do things because they just “feel right” – which is not always the best approach to life, but usually works for me (thank God). This somehow feels right as an idea – but the outworking of it is something else.

Which means that I am likely to do it.

What do you think? Any advice or input on this??

Chris Evans – It’s not what you think review

Like many folks, I grew up with Chris Evans on the Tele. A northern lad done good-done really stupid-done good again. “It’s Not What You Think” is a great biography – very honest (and funny!) and almost inspiring (not something that I thought I’d say about Chris Evans in the early days). The audiobook is brilliant as Chris himself tells you his story. It is incredibly captivating (so glad he didn’t get someone else to read it!)

This book is exactly what it says on the tin: it’s not what you think. It really isn’t.

Rating

This definately gets a major thumbs up as one of the best books this year! Highly recommend you order from Amazon (or your local bookstore) right now.

Top Tens

Throughout the book – Chris, in true DJ style, gives you his top tens. You can listen to his top ten school boy errors from his audiobook version. So, I’ll follow his example!

Top 10 things I like about Chris Evan’s biography: It’s not what you think

10. Chris’ admittance of his own failings “so far up my own back passage”
9. Setting fire to the radio stage
8. Stalking Timmy Mallet.
7. His top tens in DJ style
6. The balls required to buy Virgin Radio
5. His unbelievable work ethic
4. his views on reality TV
3. the Can Do attitude
2. Kim Wilde in the big breakfast tent
1. Smacking his science teacher over the head with a chair.

What are your top-ten school boy errors?

Authentic Selling: Building trust

This is the final post in a series looking at authentic selling (Post 1: general overview, Post 2: Being Genuine, Post 3: Authoritative, Post 4: Truth, Post 5: Create win-win, Post 6: Credibility)

If you remember, the dictionary defines authentic as:

1. Genuine
2. Authoritative
3. True
4. Entitled to acceptance
5. Established credibility
6. Trustworthy

Trustworthy

I wonder whether this should be first on the list rather than last? There is a lot of buzz around the word “trust” at the moment. There is a lot of talk about whether or not people trust you, or your business because without trust – you really are going no where. Especially in the long term.

As you may know, I am reading Simon Sinek’s book Start With Why at the moment, and he writes:

Trust does not emerge simply because a seller makes a rational case why the customer should buy a product or service, or because an executive promises change. Trust is not a check-list. Fulfilling your responsibilities does not create trust. Trust is a feeling, not a rational experience. We trust some people and companies even when things go wrong, and we don’t trust others even though everything might have gone exactly as it should have.

How true this is. Early in my sales career, I made a point of telling customers about all the great things that we did and all the great projects that have been done. I showed them the best designs and most creative solutions. But there came a point when I realised, actually – it works just as well to tell the clients about the ones that didn’t go right and what we did when we landed in that mess.

I started to trust my clients and my clients started to trust me (trust is a two-way thing after all!).

It was hard to trust my clients with information that I thought might be damaging to my business – but by extending trust, I became trustworthy. My best clients are the ones that I trust the most, without a doubt.

Trust is an irrational feeling that can be jeopardised in a second. When clients do start to trust us, protect it at all costs. The simplest way that I have found to do this is to keep them informed, even when it is going wrong. Tell them what you are doing about it. Reassure them. Even if the calls are hard at times, it is worth doing.

Communication breads trust. It is that simple. And don’t just give your customers half-facts. Trust them.

Are you trustworthy? Do you have trustworthy clients?