This Changes Everything

The landscape is littered with the debris of once-great corporations.

Two-thirds of the American automotive industry is now in Chapter 11 reorganization. (One of those cases is, as of this afternoon, pending a decision by the Supreme Court on whether or not shafting the protected creditors is legal. I hope the courts rule in favor of the bond-holders and not cave in to the pressure by the Administration to pay back their union cronies with a fat slice of GM and Chrysler. To approve the Administration’s plan would be to forever smash the rules of bankruptcy that have protected American investors to this point. If the Court upholds the Administration, watch American investing dry up as venture capitalists find safer places to invest-and that includes foreign investors.) Meanwhile, the President promises to “save or create” (how can you ever tell the difference in these two????) 600,000 jobs over the next 100 days-at a time when the economy is losing 600,000 jobs A WEEK. Big deal.

The sea has changed, and probably changed forever.

The old, comfortable ways of doing business are under assault and many cherished tactics and theories are being dissolved like a penny in strong nitric acid.

In my next blog post, I will outline a sales approach that may work in this new economy (inspired by the insurance company commercial that talks about naming your price). But before I get to that, I must spend some time in this post laying a foundation.

There was a time-only recently-when Americans had more money than sense and confidence to go with it. In such an environment, “selling up” is not difficult if you use the right approach. When there are more dollars than a basic solution requires, selling better stuff is easy.

But when an economy gets shaken so badly that its participants lose faith in the system and start to fear for their very survival, all the old rules of conduct come crashing down.

Here in Phoenix, a number of high-end restaurants have closed (but very few “low end” places) as folks have to rethink whether or not to spend $200 on dinner for a family of four or spend $60 somewhere not as upscale but with good food. We are starting to see the closure of upper end shops and boutiques, and services that once thrived in an affluent economy but now are starving for business as people decide to walk their own dogs or cut their own grass.

And in this climate, it no longer makes sense to focus exclusively on a selling-up approach. There will be some customers who will still want the very best and can still afford it. When that is the case, you should use a sell-up approach. But when most families now are having to make meager savings stretch as far as possible, when the old A/C unit dies, a new 18 SEER Rolls Royce type unit may not be a practical solution.

An ethical approach to sales means that we offer our customers the best solutions we can to fit THEIR constraints. While we can easily justify in our own minds (as contractors) the replacement of an old unit with the best we can install, to the customer, that decision is not so easy. If the customer really has an issue with spending $12,000 for a new system when a $4,000 system will work adequately, we must be very careful about pushing them beyond where their economic situation allows them to live comfortably. We might make a fast buck, but we may also drive one customer out of our economy as their savings evaporate and go dry before the economy rebounds (if it ever does) and they lose their home. Personally, I would not want that on my conscience.

The problem is, in most sales systems, we never try to determine what the customer thinks is a reasonable price for a system and so we spend a lot of time designing an elaborate solution and then announce the total investment required, and watch as the homeowners squirm and nervously smile, and promise to get back to us after they get two more bids. What they don’t have the cahoneys to say to us is that our price was not only higher than they expected-it was MUCH higher than they expected and clearly beyond what they felt they could invest at this time.

So we lose them to a “low-ball” scum-bag. But we didn’t have to. We could have figured out the dimensions of the sandbox up front and helped the customer get a superb solution within their budget. But we don’t get the dimensions of the sandbox.

In the next blog post, I’ll share an idea on how to do that and how to use it to close a sale in a shaky and competitive economy.