Making the Most
of Trends in Sales
By Richard Brooks
This last month I attended two of my favorite industry events, ALC Summit in Las Vegas and Elia Networking Days in Vilnius (Lithuania). At both, I spoke on the topic of sales and was fortunate enough to have many sales focused conversations with the participants afterwards.
Attending conferences provides lots of benefits. One of these is the opportunity to benchmark your own capabilities against industry peers. Our industry is packed with intelligent people committed to solving problems. This is the recipe for magic. Go to conferences and talk to people, and I guarantee you’ll come home with pages of new ideas and solutions to all your business challenges.
This is exactly what I did. Since returning home, I have had time to reflect on these, and this article contains several common themes I noticed of how language entrepreneurs are solving the challenges presenting themselves in sales today.
Language isn’t a commodity
A commodity is defined as a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services and usually refers to a raw material used to manufacture finished goods.
Time and time again, we hear that language services are commoditized, but the service is so broad I can’t see how it can fit the above definition. While some of us fall foul to this, some entrepreneurs seem to navigate through this and make exceptional margins. Our industry goes from strength to strength with many successes and examples of value being created. So while the service is feeling commoditization pressure, it’s not happening everywhere in our world, and it’s not happening as profoundly as some other industries.
Procurement professionals are experts at buying services, and since the recession in 2008 they’ve had much more commercial power to lean on suppliers to lower costs/extend payment terms. They do this by segmenting suppliers in a similar method to which we do in marketing and applying generic strategies to each group. If you find yourself in a business relationship where, time after time, you’re having conversations centered around price, it may be that your service isn’t seen to be as commercially important as some others by the procurement team.
A robust investment all marketers can make in advance of commoditization pressure is a customer relationship management system. This should be used to gather data around profit margin associated with each customer, calculated by price-paid less cost-to-serve. The most profitable relationships should be nurtured, invested in and value added wherever possible. Innovation counters commoditization with quick wins being developed around bundling and segmentation strategies.
Pricing is often an overlooked opportunity for innovation. Companies spend years developing services, but sometimes hardly any time thinking about how to price them. Pricing can also be driven by inertia and remain the same for years, so be careful picking your pricing strategy as it has a habit of hanging around.
It is a particular hot potato at the moment as the world has marched itself into a period of high inflation and higher cost of capital. This puts costs up for all businesses all over the world and you’ll have no choice but to look at how you price your services.
It may be that you simply did not realize that there are other options open to you to price your language projects other than a per hour or per word/line/page rhetoric. The disadvantage of showing itemized pricing lists is that they can be quickly compared, a quick fix is to stop doing this and price on a per project basis. To further innovate in this area, pricing policies can be developed around retainers, cost plus, consultancy, and value-based pricing. Widen your pricing benchmarking beyond our industry, and you’ll find many more examples of how companies extract value. Also, talk to your customers about it, as you might find that either they do not know how language projects should be priced or would prefer you priced a different way.
Build the capability into your company to understand and encode what the customer is trying to achieve with your service. Theodor Levit sums this up in his timeless quote, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” This statement is as true now as it was then. Your customers will want the benefits of your service, not the features. This is where you need to focus your marketing messages to educate your customers.
Every product in the world provides value in some form, language services provide this in spades. Our job is to find out how our service creates value in our customers supply chain and communicate that value back to them. Be the messenger of value not the messenger of low price.
Companies who use this strategy do three things well:
- They develop a deep understanding of the value their solutions provide to all customer segments
- Get their client facing teams fully prepared and excited about the value their solution delivers
- Create effective communications, tailored for each segment, to help customers fully appreciate the value of the service offered
The key point here (and I can’t stress this enough) is to be able to understand how much value your service is creating for your customers. This will involve a journey into the world of the customer’s customer and even supply chains to methodically appreciate how, where, and why value is created. With this information, your service can then be innovated at the point of value-in-use, delighting your customer and improving customer retention rates in the process.
As the skills demanded from sales teams increases and the number of suppliers to large enterprises reduces, it has led to a growth in the popularity of key-account management and, in turn, more advanced sales processes.
Key-account management is a systematic process where a company identifies customers who are strategically important to them and maximizes cooperation to create value.
It requires a much more in-depth understanding of the customer’s business model. The skill set required to analyze and develop value propositions is much closer to general management than that of a traditional salesperson. It can involve detailed analysis of the supply chain and your customer’s business to determine and illustrate where value is created by your service.
While this topic is huge and in large businesses requires teams of people supported by analytics, some key philosophies can be adopted in smaller businesses. One of these is asking the key question: “What’s in my customer’s interest?”
The best sales team
There’s nothing better than a portfolio of happy customers who want to evangelize about your service. Word of mouth is incredibly powerful and is often how companies grow in their early stages. Customers rely heavily on their own research and trust their peers more than a company’s marketing campaigns.
SiriusDecisions surveyed over 600 B2B marketers last year in a B2B Buyer’s Survey and found the following:
- In the early-buying stages, 51% say peer referrals are most favored
- In the mid-buying stage, peers are ranked as the most influential information source (23%)
- In the late-buying stage, peers are the most trusted information source (29%)
This behavior can be measured and encouraged. Think of where your customers sit on the ladder of loyalty and ask the question what you can do to move some of them up to be your advocates and partners. An easy way to start this is to make your content easy to share. The more content you make accessible to your happy customers, the easier it will be for them to share it online with their network.
Make sure you invest in getting to know what your customers think. Advocates of your service should be cherished not squandered. It might not always be a great conversation when things aren’t going to plan, but bad news early is good news.
Buying has changed
Ever since the search engine became commonplace, buyers’ behaviors have changed. It’s possible to google (other search engines are available) anything and gain a basic understanding of a topic, service, or product. You no longer need the advice of a salesperson in order to help you make a buying decision. Now the majority of the sales process is conducted inside of buying companies and without the knowledge of the sales team.
Think about your own experiences when you last purchased something of value: a new phone, car, or even a restaurant booking. I bet you would have carried out your own research and read reviews, watched YouTube, browsed websites, used search engines, and even read social media. This is called the buyer journey. It happens at both business to consumer (B2C) and business to business (B2B) sales/marketing processes.
Your marketing dollars can be invested in outbound advertising such as directory ads, brochures, web ads, etc. Inbound, on the other hand, attracts visitors at the right time of the customer journey by solving problems they are facing at that particular moment. Inbound educates and doesn’t tell. The content you’ll develop includes: how-to guides, blog posts, case studies, opt-in email newsletters, whitepapers, review videos, and more.
Inbound content marketing is a broad topic. To start, develop a process to produce your content and break the buyer journey down into three stages: awareness, consideration, and decision. With the relevant educational content at each stage a funnel of opportunity can be built, measured, and improved. Pay particular attention to how people interact with your content and the speed at which they move through your marketing process. This should produce qualified opportunities who are ready to buy, dramatically shortening the traditional sales cycle.
We all love a new customer. But not all customers are created equal. Different customers will have a profoundly different impact on your business. Sometimes customer acquisition can be strategic, sometimes it’s just for cashflow.
It’s important that you measure the cost to serve each customer (or segment if you’re working in B2C) to determine true profitability of each.
Some are only ever going to look for the lowest possible price or simply be a pain to work with and eat up margins elsewhere in the company. To address this we can look at a tool called the customer attractiveness matrix. This can be installed as early in your buyer journey as possible. Make sure you avoid focusing your marketing spend and adding value on the wrong type of people.
The trick here is to work out which attributes of a customer are attractive to your company. It could be reputation, margin, size, revenue, payment terms (I’ll let you do your own brainstorming). Weighting each one of these attributes and scoring them.
Customers where you have a lot of relative strength with and they score highly on the attractiveness grid are potential future key accounts for your business.
Richard Brooks is a business leader and consultant who has spent over 25 years in the localization industry and has held executive board positions at both European Language Industry Association and the Association of Language Companies.
I recently carried out a piece of research for a professional institute in the UK. The project was to find out what small to medium…→ Continue Reading
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