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Month: March 2017

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I’ve just started reading for the second or third time Robert Cialdini’s famous book “Influence, Science and Practice”.

He opens by talking about a friend who had an Indian jewellery store.  She was having trouble selling some turquoise jewellery despite it being good quality and there being plenty of customers in the store. She had even moved the jewellery to a prime location in the store.

Finally, before leaving on an out-of –town trip, she left written instructions to her staff to sell it all at “price X ½ “. In other words, “half-price”.

When she returned after a business trip she was therefore not surprised to see that all the items of jewellery had been sold.  She was surprised though, to discover that because the employee had read the ½ as a 2, the entire allotment had been sold at twice the original price!

At first it seems incredible that INCREASING the price actually increased sales.  It seems to run counter to basic economics. However if you look at the psychology behind it, it follows our natural inclination to believe that “you get what you pay for”.  In this case her customers, mostly affluent holiday makers with little knowledge of turquoise, were using a standard principle to guide their buying decision, i.e. “expensive = good quality”.

Thus the holiday makers, who wanted “good quality” jewellery, saw the turquoise pieces as more valuable and desirable when they were twice the price.  The price alone indicated quality, and a dramatic increase in price led to a dramatic increase in sales.

We usually believe that lower prices will mean more sales.  A few years ago, one of my former employees started his own carpet cleaning business. I’ll never forget what a common friend told me when we met – “Now you’ll have to lower your prices”. Yet as far as I know, he’s still cleaning carpets..and we’re still at least double his prices!

Of course, people don’t buy on price alone (usually)…they buy value. Otherwise there would be no Mercedes, BMW’s and Audis on the road. And we’d all be wearing the cheapest clothes. Certainly NOT designer label.

However, getting a Ford or Vauxhall and slapping a premium price on it is not enough. You can put lipstick on a pig…it’s still a pig!

So if you want to get higher prices…give greater value! And that can include PERCEIVED greater value. Provide exceptional customer service, send a newsletter that positions, informs and educates, send thank you cards. Even send gifts occasionally. Ask yourself…  “Do I look like a Mercedes business or just a Vauxhall business”

I have a friend who many years ago had written on his business card: “I have no quibble with those who charge less. They obviously know what their work is worth.”

Indeed if you are not losing at least SOME of your business based on price – you are too cheap!

Better to seek out high-quality seekers, charge a higher price and use the extra profit to deliver exceptional value.

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Did you know that 20% of your carpeting is likely to get 80% of the wear? If you did, you’re probably familiar with what’s commonly known as the Pareto Principle.

It’s named after the Italian economist Vilfredo Pareto, who in 1897 found a consistent mathematical relationship between the proportion of people living in England and the amount of income or wealth this group enjoyed. He found that 20% of the population enjoyed 80% of the wealth!

This principle has since been expanded to this:

The minority of causes, inputs or effort usually lead to a majority of results, outputs or rewards.

In other words, 80% of what you achieve comes from 20% of the time spent. And 20% of customers produce 80% of the revenue; 80% of what we accomplish comes from 20% of our time and so on.

The reason it’s so valuable is that it’s counterintuitive. It’s not what we expect.

It’s strange how business seems to be governed my unwritten rules. I’ve recently discovered one of my own.

I’ve recently checked my database of unconverted leads for the past few months. That is, prospects who have asked for an in-home quotation but have not gone ahead. It’s brought up an unusual principle that I’ve called ‘The Principle of the Inverse Appointment Time’

I discovered that in the last few months I have only eight in-home quotes that have not turned into jobs. Of those eight, I noticed a similarity that I’ve turned into this rule:

“The more impatient they are to get a quote, the least intention they have of getting the job done.”

Of those eight quotes, SIX told me there were in a hurry to have the work done and I needed to provide a quote as soon as possible. In nearly all of these cases, I changed my schedule to provide a quote quickly. Once in the home, it seemed that the urgency had dissipated.

Now, we always qualify our prospects. In fact we try to DISQUALIFY them to be absolutely sure that we are not wasting our time with people who don’t want our level of service or can’t afford it. And yet six have fallen through the net! (Interestingly that’s 75% - almost following the 80/20 rule).

There’s always going to be time wasted with prospects that will not go ahead. So how can this be kept to a minimum? Well, now I follow the rule: “The more impatient they are to get a quote the least intention they have of getting the job done.”

I only want to visit homeowners who are pre-interested, pre-qualified, pre-educated and pre-disposed to using me. If they’re NOT, I spend time to make sure they are…before I visit.

If they want me to quote in a hurry, I direct them to my website and ask them to come back to me if they are (pre)interested (and now pre-educated). This also is counterintuitive. They expect me to drop everything and come round immediately. Do I lose a few? Probably. But I sure save a lot of time in relation to the inconvenience and frustration caused.

Probably around 80%.