©iStockphoto/Alonzo Adams

Tyre kickers or real customers

ASSESSING new clients and (carefully) keeping the tyre kickers to a minimum is a major challenge for businesses. A young, hungry start up business just doesn’t have years to wait for that next deal.

Partner in sustainability consultancy Shaper Group Nick Palousis “definitely” restricts the time he spends with potential new clients. There are no hard and fast rules, rather the time investment is decided on a case-by-case basis.

Shaper Group works with private companies, government and non-profit organisations, advising on sustainability strategy. As this kind of consulting work is relatively new, many potential customers have extremely limited knowledge of sustainability. This kind of scenario can trigger endless rounds of meetings, client queries and conversations before any formal work arrangement is settled. Some clients take more convincing than others.

“They want to become sustainable but don’t know how,” says Palousis. Some weeks Palousis will spend 80 per cent of his time on new business development, other weeks only 20 per cent. If cashflow is looking strong for three to six months, more time can be spent speculating on customers that might not convert.

Shaper Group has experienced so much tyre kicking in the past few years that “we are finely tuned to whether someone is going to buy or not,” says Palousis, who can spot a client with a real drive for their sustainability services. With these clients it is more straightforward to discuss budgets and fees and get to work.

For Palousis, a critical indicator of the potential of the business relationship is whether the contact at the organisation dealing with the Shaper Group has genuine access to decision makers. “Sometimes we find a great potential business but it turns out, the place is overwhelmed with bureaucracy so it’s hard to access a decision maker and/or a budget.”

With other potential clients, there is long-term potential in the relationship so it’s worth spending longer periods of time building up trust and demonstrating the value of the services Shaper offers. “They need to know what they are buying before they can set a budget,” he says.

In other situations, Palousis can smell a department looking for a “home brand” sustainability service or, most irritatingly, just another quote. “They try and use you as one of three quotes,” he says, having already decided on another provider. “We don’t want to be that extra quote.”

Entrepreneur and social media strategist Lara Solomon is not a fan of time wasters either. Solomon has a list of questions ready for new customers to assess their potential.

“I try to limit my time to one hour free and then they have to pay, so they can kick my tyres at a cost,” she says. Her questions are based on “ideal” customer profiles and the capabilities of the business. Shaper Group’s Palousis says that potential customer profiling centres around current business performance, their market share and their reputation. Companies looking for a greenwashing service are quickly dropped. “We won’t go down that track,” says Palousis. “And we select clients based on longer-term work rather than a single transaction.”

California-based consultant David Brock’s strategy for vetting potential new clients includes “vicious disqualification” (how’s that for calling a spade a spade?) to help determine whether the customer has a need to buy. Brock has consulted to a range of Fortune 25 companies (as well as the National Australia Bank locally).

“Too often, we see sales people chasing bad deals, wasting the customer's time and the resources and time of their company. We actually focus sales people on ‘vicious disqualification’ rather than qualification, focusing on high quality opportunities the customer is very serious about.”

Brock defines a real customer as someone with a genuine, pressing need. “That is, they have a problem or opportunity, they are committed to spending money to solve the problem and they are interested in considering your solutions or products,” he says.

Lara Solomon has recently shifted from running product-based businesses, including a successful venture selling Mocks (mobile phone socks) to the service industry running social media strategy firm Social Rabbit.

One of her biggest frustrations with tyre kickers is that they never know what they want. With the service industry, this is a critical area where new business development can get time consuming. “I am not sure where to draw the line. I think that comes with experience,” she says.

A critical reason to ration time spent with tyre kickers is so that business development time is invested wisely. Shaper Group is a sustainability advisor to the prestigious Geneva-based World Economic Forum that hosts the Davos summit each January where Bill Gates, Warren Buffett et al congregate to discuss world affairs. This WEF endorsement has been highly useful in building corporate networks and credibility and makes getting meetings with CEOs a lot easier.

“Now we can get a meeting in two days instead of six months or never,” says Palousis.

Shaper Group also hosts drinks in capital cities and many Shaper Group staff speak at conferences and write articles on sustainability.

Melbourne photographer James Braund has decades of experience meeting new clients and pitching for projects.

“If it is only on price, I'm looking for the door,” he says. His approach to new clients is to establish whether there is a meeting of minds and if he is going to get along with the client. This rapport is essential, as photographic work tends to be intense and short-term. “The old gut is usually a good indicator,” he says.

Industrial design firm Design + Industry has more than 8,000 clients in its database, one full-time sales manager and three staff who work in client relationship management. Design + Industry works with offshore and domestic clients, a ratio of 30:70. Over the past two decades, Design + Industry chief Murray Hunter has learnt that a new lead might go cold and then three years later they come back and bang, he has a major commission.

“You can’t speed this process up,” he says. “Right now we are finding that people want to be nurtured.” This means re-quoting on proposals, chopping and changing job requests. However with overseas clients, Hunter is currently favoring a strategy where he quotes as soon as he can. “That turns them on or off,” he says.

Hunter estimates Design + Industry’s pitch success rate is around 50%. He credits much of this success to the marketing package that “validates and enforces what we do, in particular the website and the firm’s reputation backed up by more than 100 industry awards the firm has won”. (All that time-consuming form filling can pay off.)

Talking turkey

Finding the right bedside manner to discuss fees can be tricky.

“We are pretty frank,” says Palousis. “But sometimes the conversation isn’t mature enough to talk turkey.”

His strategy is to ensure he has tested interest levels, found out whether there is a budget available for the service - otherwise what’s the point?

Dr Simon Longstaff, head of the St James Ethics Centre is in the curious position of running a non-profit organisation than runs a diverse range of services from free phone consultations through to workshops for cashed-up corporate clients; his team of up to 20 is a mixture of staff and volunteers.

Longstaff has also been working with the Federal Government establishing the Good Business Register to help SMEs plug into ethical supply chains. The St James Ethics Centre has a policy not to turn anyone away because of an inability to pay. Similarly, if a company is offering thousands of dollars to do a project, the Centre will not take on the work if it feels it cannot make a positive contribution to the client’s business – despite the lure of the fees and what that money could do for the Centre.

This approach to new business is not purely about an opportunity to sell, but is instead framed as an opportunity to provide genuine benefit with the business’ products/services.

“If you are in a relationship that is not just about a transaction, there is something that potentially you can build a little deeper,” says Longstaff.

For Longstaff, a business that is very clear about its core values and principles and can apply them across the spectrum of relationships has the best chance of success.

“Otherwise you fall back into the arms of unthinking customer practice and say ‘I do it because that is the way everyone else does it’. In those circumstances you really do fail. You can’t see the risks involved.”

Fees at the St James Ethics Centre work on a scale based on experience - Longstaff’s time is the most expensive. However the Centre’s policy of not turning people away means that staff cannot present fees and say ‘take it or leave it’.

Says Longstaff: “Some people say, ‘we want Simon and we are a big company and we are prepared to pay for him’, other people will claim that we are a bit expensive.” In those situations, Longstaff asks them why they believe they should be paying less than would normally be the case. “They might have an argument, some good reasons and we ask them to tell us what they are,” he says.

When it comes to new clients, it is worth remembering that patience can really pay off. It’s taken more than four years and 15 trips to the United States for the Hobart-based company CBG Systems to land a $4.5 million contract with the US Navy for its fire protection products to be used in high-speed US Navy boats but this month, CBG Systems hit pay dirt.

“It’s been a very expensive three years but it has paid off,” says CBG Systems’ managing director Noel Richardson. The first US Navy contract is to supply fire protection for nine navy boats and there is the potential for this order to quadruple.

Richardson’s seasoned advice for getting a deal over the line centres around establishing networks that relate to the customer and having a depth of knowledge to be able to sell your product into the industry. “You’ve got to have faith in the product,” he says. “We knew we had a product that could do the job.”

CBG System’s success backs up Longstaff’s premise that if you want to be in any kind of marketplace, you need to be able to make sure that your offer to the market is something that is likely to be meeting the interests and dictations of that marketplace. “There is a process to getting known and establishing a reputation,” he says. “That’s worth investing in.”

How to eliminate tyre kickers:

   1. Accept the fact that new customers need to be nurtured AND vetted.
   2. Practice vicious disqualification.
   3. Believe in your product/service and know its benefits.
   4. Have absolute confidence in your fee structure and market competitiveness.
   5. Establish networks linked to your customers (and potential ones).
   6. Don’t discuss fees until the client is totally clear on what the product/service will be, then talk turkey.
   7. Devise brilliant and time-efficient ways to demonstrate your business’ capability: different formatted presentations in hard and soft copies, online and off (iPad anyone?) that can be used infinitum.
   8. Rather than spending time with tyre kickers, make a decision to invest the time in other forms of marketing such as pro bono, brand alliances, events (horrendously time-consuming but rewarding) award applications, coffees with contacts, website updates and PR.

This article first appeared on SmartCompany.com.au, Australia’s premier site for business advice, news, forums and blogs.

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