Andrew Birol

Thursday, 31 October 2002 09:33

Wise choices

All businesses are facing challenging times, but it's worse for some than for others. I am working with two kinds of companies now -- those taking steps to thrive and those which must start doing so to survive.

Nobody likes change, but some owners overcome their fear, uncertainty and doubt to make moves before it's too late. They watch, listen and analyze their world.

Smart owners recognize that 20 years of industry experience is not enough to succeed in a changing environment. They accept and value lessons learned in other industries.

And owners who personally call on customers, fiddle with their machines, know their employees and monitor their daily revenue and expenditures do better. One of my mentors, Wayne Willis, says, "Until a company grows to $100 million, the CEO can still make time to review all expenditures over $1,000."

Proactive owners invest in critical initiatives when they need to instead of when they feel they can afford to. They respond to the messages and demands of their marketplaces and other stakeholders, particularly investors.

They accept that they must modify and improve on their best and highest uses to remain in business. And they create new and efficient ways of delivering value to customers. They do not lie low and wait for things to improve.

The results are significant. The owners are working harder in the short term as an investment for long-term payoff, while their inactive counterparts ignore the inevitable while it gets worse. They take more control over what they thought was not controllable. And they feel more confident in knowing what they don't know.

So what happens to owners who sit back and wait to be forced to react?

Owners who neglect building a strong foundation for the long term end up making painful and usually destructive last ditch efforts. One option is to engage a turnaround firm. These consultants are often seen as the cavalry coming over the hill, but more often than not, the owner loses his battle.

To avoid this, address the problems uncovered by the experts you hire. Nothing is more dismaying than pointing out a problem and being ignored.

In the final analysis, business problems are just like the ones in the old Fram oil filter commercial.You can pay a small amount for the oil filter now or you can pay a lot for a whole new engine later. Andrew Birol is president of Birol Growth Consulting, a Solon-based firm that helps grow businesses by growing their best and highest uses. He can be reached at (440) 349-1970 or at

Friday, 27 September 2002 12:11

Lessons from Europe

As WorldCom was crashing, the Dow tumbling 1,600 points and the euro achieving parity with the dollar, I spent 25 days traveling through Europe.

I talked to many entrepreneurs while observing local business conditions. As we strive to find our place and success in the emerging millennium, the Europeans are building their region into a highly advanced economic powerhouse.

What lessons can U.S. owners learn from European business?

European entrepreneurs are faring better than we are despite facing greater regulatory and resource challenges. They focus on generating short-term results while putting in place the ingredients for long-term success. Here are examples of their success.

* Live in the present. Despite sharing 3,000 years of history, most of it at each other's throats, Europeans have embraced a common currency, market and emerging economic system.

The lesson we can learn in growing our businesses is to not dwell on the past but accept that change, opportunity and the future are synonymous.

* Create opportunity out of scarcity. Europeans have less space, disposable income and personal freedom than we do, yet are just as capitalistic. They are less wasteful and make everything count more. In all aspects of business, Europeans find ways to charge for value.

Cover charges are standard at bistros. When you are finished, you either order more or vacate their valuable real estate. Conversely, an artist asked me for water. Instead of a pint, I bought him a liter. He asked why I bought so much when he didn't need it.

The lesson is twofold: Charge more for true value and make valuable resources go as far as possible.

* Don't think, do it. A Belgian antique trader said, "You Americans used to say, 'Go out and get it.' Now you seem to say, 'Bring it right to me.'"

Europeans focus less on how they need government or corporate assistance to grow their businesses. People don't talk about the time they spent working on something, but rather about what they accomplished.

While the grass always looks greener on the other side of the fence, we in Northeast Ohio need to acknowledge that real success will come from not looking to build up our institutions or develop a collective group think toward business success, but from focusing on the oldest and most basic of lessons -- discover your best and highest use, provide extra value, look for pain and problems in your market place, sweat the details and follow through. Andrew Birol is president of Birol Growth Consulting, a Solon-based firm that helps grow businesses by growing their best and highest uses. Reach him at (440) 349-1970 or at

Monday, 22 July 2002 09:53

A return to basics

Your marketing and sales team says the best way to increase sales is to buy new database marketing software. Or launch new distribution strategies. Or have sales people make more cold calls. Or add telemarketing. What’s the right answer?

Your customers feel neglected or don’t do as much business with you as they used to. Your customer service manager recommends a retention program. What should the program include? What channels should you use? Do you have the right software?

If you’re in senior management, chances are these scenarios are painfully familiar. Decisions like these are crucial to your company’s success.

The fact is, all marketing, sales and customer service efforts come down to three basic goals — finding customers, keeping customers and growing customers. The advances in business industry have been incredible, but we’ve lost our focus. To get the greatest value from our efforts, we need to simplify our thinking and go back to the basics.

If you market products and services to businesses, ask yourself the following questions:

  1. What is your company’s best and highest use in the marketplace? Are your products or services optimally bundled into a compelling offer?

  2. Can you quickly identify the real pain that you resolve for customers and explain how your product or service alleviates that pain?

  3. Who are your very best customers? Even the most sophisticated companies still define their best customers by such elementary criteria as SIC code, sales volume and number of employees. Targeted marketing requires a deep understanding of customers and their needs, to be gained only if you’re exceptionally close to customers. Have you asked your best customers why they like you, why they buy from you and whether they’d refer you? Referrals are the only true measure of customer satisfaction.

The crucial intersection

If you can answer these three questions, you can identify the crucial intersection that should drive all your sales and marketing efforts. It’s the point where your firm’s best offer is of most value to a narrow slice of the market because it resolves the greatest pain.

The more precisely you can define this intersection, the better you can pinpoint prospects. This should be the rallying point for all your company’s marketing, sales and customer service activities.

Using sales funnels to guide your efforts

Defining your target prospect is the first step. Using a series of scoring tools that strictly adhere to your target prospect profile, you can create three sales funnels that will organize and implement your plan for finding, keeping and growing customers.

All marketing, sales and customer service activities must be designed, justified and measured by their value to each funnel — acquisition, retention and development.

Finding customers

The acquisition funnel systematizes the activities needed to turn suspects into prospects, prospects into qualified prospects and qualified prospects into customers. Your goal of finding customers becomes the end and your marketing the means to that end.

Keeping customers

The retention sales funnel fulfills your goal of keeping customers, by progressively moving one-time buyers or ex-customers to the desired status of customers who make multiple or sustained purchases. These are the customers with the highest long-term value.

Growing customers

The development funnel is used to grow customers. Here the goal is to move stable customers through activities that convert them into up-sold/cross-sold customers, then to the status of advocate or champion.

The results of these activities are obvious: a larger number of customers with the highest value to your company. The “graduates” of this three-funnel process are to be coveted and honored with no costs spared.

This system simplifies all your marketing, sales and customer service activities. By returning to the basics — offer, need and target market — you define your best prospects. This drives the creation, execution and measurement of all sales and marketing activities through the acquisition, retention and development funnels and provides a method to the madness.

On one hand, it’s remarkably simple. On the other hand, your work has obviously just begun. Implementing and managing your business through this process requires discipline and passion. But when you have simple goals and clear ways to get there, the results are worth it. Andy Birol is president of PACER Associates Inc. (, a Cleveland-based business-to-business consulting firm that works with owners to help them focus on the best way to find, keep and grow customers. He can be reached at (440) 349-1970 or by e-mail at

Monday, 22 July 2002 09:51

Keep them coming back

Keeping customers is a key success factor for any business, because the actual value of a business is often determined by the future cash flow of existing customers. But that same cash flow provides the financing for the investment in finding new customers, and most other needs of the business.

To meet your business’s goals, you probably have a mental picture of what activities and processes will maximize customer retention and profits. And if you believe there is a “right way” for your business to retain customers, why not define your best practices just as you would for accounting or manufacturing?

Here are easy six steps to lead your customers through the retention sales funnel:

Define your new buyer’s bonding process

Determine how your new buyer will gain confidence, recognize value and build a continuing relationship with your business. That will help you clarify your understanding of your buyer’s behavior until you have it down cold. Then, by examining your previous successes with first time buyers who became great customers, a pattern will emerge.

Outline your company’s best way for keeping customers

From the moment you land a first time buyer, exactly what happens as you proceed to retain him or her?

When do you use customer service, sales, telemarketing and the Internet? Is there a best way for your business to do this or is it always a random act?

Try to identify the three most likely sequences that result in keeping customers.

Create definitions for your funnel

With this wealth of raw data, now it is time to bring some structure to the picture. Using the funnel in Figure 1, define each stage of the funnel for your business, from your one time to your closed customer.

Typically a one-time buyer is someone who is testing a larger relationship with your business. You have offered, or they have picked, a single product or service that allows them a low risk method to sample your firm and its capability to deliver on its promises.

A win back buyer is similar to a one-time buyer, although they have a previous, probably negative, experience with your firm. Often these “damaged” buyers, if “repaired,” are the best candidates for becoming stable customers.

A reorder buyer is someone who has made a passive decision to repeat his or her initial decision to work with you. They may not have had a great initial experience, but their expectations were met. While they are not yet loyal, they see potential for this.

Determine how many new buyers you need at each step of the funnel.

To start, divide your average sale from a stable customer into your sales goal from retained customers. This gives you the number of stable customers you must land. Then move up the funnel and decide how many buyers you must attract at each step. If you need to qualify two reordering customers for each kept customer you create, then plan to do so.

Understand what your customers are worth and what you can spend to get them.

Now that you know how many customers you need to meet your goal, decide what your one-time buyers are worth to you:

a) Divide the number of one-time buyers it takes to create a stable customer into the value of a stable customer. For example, if a stable customer sale is worth $4,000 and you need four first-time buyers to create a stable customer, then a first time buyer generates $1,000 of revenue.

b) If you must spend $100 to create those four one-time buyers, then each prospect costs $25.

c) By subtracting the cost of a first-time buyer, $25, from the revenue of a prospect, $1000, you have $975, the real value of a prospect.

This exercise is critical as it gives you a benchmark of what to invest in a first time buyer and what to expect in return. Don’t overdeliver on service, instead, set and agree on a level of service and provide what is expected. If you follow this rule of thumb, you will now have a budget and confidence to spend just enough to obtain your stable customers and maximize your profits.

Create stable customers effectively.

With financial guidelines for keeping customers in place, now choose your tactics. Pick your sales, marketing and customer service activities for each step of the retention funnel. For example, you may want to use seminars to create stable customers, but may choose to emphasize customer service over sales reps to create reordering customers. You can evaluate your activities, tools, and programs based on how cost-effectively they deliver the number of stable customers you need. Your choices will be easier and less risky than ever, because they will be based on meeting your goals you have set. Andy Birol is president of PACER Associates, which works with companies who need to focus on their best ways to find, keep and grow more customers. It helps businesses that sell their expertise or market a customized product to other businesses.

Monday, 22 July 2002 09:50

Dual purpose

If your business retains stable, profitable customers, consider turning them into advocates and champions of your products and services. It’s easier than you may realize to get your best customers to help you promote your business to prospects, but it requires a careful blend of technical, financial and relationship skills.

Define the bonding process for turning your best customers into advocates and champions.

How do your better customers adapt your products and services to best suit their individual needs? Do those customer relationships resemble partnerships or strategic alliances? If so, these are your potential champions.

They can help by introducing your firm to prospects. Once you determine how these customers become champions for your business, a pattern will emerge that you can duplicate.

Outline your company’s process for growing advocates and champions.

From the moment you land a customer, plot the development of the relationship. Is there a point where you begin to involve them in your new product development process and customer councils? If so, what led to this point?

Is there a best way for your business to do this or is it always a random act? Try to identify the three most likely sequences that result in growing champions. But remember, companies do not become your champions or advocates, the people in them do.

Create definitions for your development from customer to champion.

Determine each stage of the process — from a closed customer to an advocate or champion. Typically, a stable customer has hit some milestone in his or her relationship with your business. It could be a third purchase, the purchase of a service that increases dependency, or the exchange of previously withheld information or advice.

Pinpoint these milestones. At this point, a buyer evolves into a customer.

Then look for when the customer begins to buy multiple products and services. It’s around this time when they may ask to participate in customer councils, suggest strategic alliances, or want to test pilot new products and services. At this point, the customer becomes a cross-sold or up-sold customer, and it’s a good sign he or she is well on the way to becoming a champion.

Customers take the final step and become champions when they give you a reference and provide ongoing referrals. It means they believe in you and your firm and will proactively help you succeed.

Determine how many champions and customers you need at each step of the development cycle.

Divide your average sale from a customer into the total sales you expect from your advocates. This gives you the number of advocates you must land. Decide how many customers you need at each step.

If you need to qualify three cross-sold or up-sold customers for each advocate you cultivate, then plan to do so. Similarly, if you need to land five customers to produce three cross-sold or up-sold buyers, then land enough customers and dedicate the resources to do the job.

Understand what your champions are worth and what you can spend to get them.

While there is always enough economic justification to invest in customer development, often, too many customer relationships whither from inattention, another form of under-spending. Here is a three-step method to ensure that doesn’t happen.

1) Divide the number of customers it takes to create a champion into the revenue of a champion. If you need five customers to create a champion and a champion generates $50,000 of revenue, then a customer represents $10,000 of potential champion revenue.

2) If you decide you must spend $5,000 to create a champion, you can spend up to $1,000 cultivating each customer.

3) By subtracting the cost of developing five customers, $5,000, from the revenue of a champion $50,000, you have $45,000, the real value of a champion.

This exercise is critical because it provides a benchmark of what to invest in a champion and what to expect in return. Often, the investment will not be a direct cash outlay, but rather one of your staff’s time and expertise.

Create champions effectively.

With the financial guidelines for keeping champions in place, choose your tactics. Pick your sales, marketing and customer service activities for each step of the customer development. You may want to use seminars to cross-sell or up-sell customers, but may choose to emphasize executive tours and referral kits over more sales rep visits to create champions.

Evaluate your activities, tools and programs based on how cost-effectively they deliver the number of champions and advocates you need. Your choices will be easier and less risky than ever, because they will be based on meeting your goals you have set.

If you focus on your goal of creating champions, you will have the ultimate benchmark for delivering excellent customer service. This is because a satisfied customer will refer your firm to prospects, while an unsatisfied customer won’t.

Next month, we’ll put the process to the test and see how it works.

Monday, 22 July 2002 09:48

Visual basics

With the Internet, the U.S. Postal Service (USPS), the fax machine, our in-box and electronic documents, even the most conscientious or inquisitive among us can be overwhelmed. Many of us are secretly (or not so secretly) giving up and just not reading all we should.

Certainly, unsolicited direct mail is the first to be tossed into the wastebasket. So why then is there more direct mail than ever?

Nobody ever mails anything twice that didn’t pay for itself once. Direct marketers are trained to mail up to the point of financial break even that occurs when the value from responses does not cover the cost of mailing more pieces.

I don’t accept this explanation alone. Given the explosive growth of e-mail and the Web (with its substantial cost advantage), and the ever-increasing cost of “snail mail,” there are great alternatives to “ink on paper.” Direct mail should be declining in use as a marketing tactic. But it is not.

So why is direct mail still such a critical and successful tool for so many marketers?

First, because successful business marketers focus on the key components of direct marketing. They know that the greater the percentage of response, the more successful the mailing can be. Their choice of mailing list will determine some 40 percent of response, the offer they make another 40 percent and the creative approach, the final 20 percent. Business marketers know they will achieve success if they make intelligent decisions and execute them effectively.

Second, the needs of the business-to-business sector are growing. The goals of finding, keeping and growing customers are creating countless problems for which direct mail is the perfect solution. These include prospecting, lead qualification, closing, keep-sold, win-back, referral development and customer satisfaction measurements. The flexibility of direct mail, from its creation to its measurability, continues to be a highly predictable and practical solution.

Third, industry advances continue to add new value to using direct mail. For example:

  • The quality and specificity of lists, along with ever-better database software, allows for smarter targeting.

  • The high ticket value of business products and services lets marketers make really valuable and compelling offers to prompt prospects into self-qualifying themselves.

  • The ability of direct mail to generate awareness and build traffic for a company’s Web site is often more effective than using search engines.

  • The creative use of impact, dimensional, oversize and colorful mailings will always provoke attention.

  • Our confidence and ability to work with the USPS, reliably execute better programs and accurately track results is higher than ever.

The usage and applications of direct marketing in finding, keeping and growing customers seem to be as broad and as pervasive as ever.

So, if no one reads any more, how come we still get so much direct mail? Because it works.

Andy Birol ( is president of PACER Associates, Inc., a Solon-based consulting firm that works with companies who need to focus on their best ways to find, keep and grow more customers. He can be reached at (440) 349-1970 or

Monday, 22 July 2002 09:44

What customers want

In an otherwise forgettable movie named “Return to Eden,” Rosie O’Donnell plays an undercover detective pursued by an amorous young admirer.

At one point, he pleads, “Just tell me what you want. I can do everything for you!” To this, O’Donnell replies, “If you really want to please me, go paint my house!”

How many times have you been pursued by sales reps or presented with marketing campaigns claiming to offer a total solution? And how many times has a total solution been what you really needed?

Too often, businesses assume their prospects want it all at once. Here are common examples of total solution providers pushing their whole product line at the same time:

  • Telecommunications companies that offer phone, cellular, e-mail, pager and voice mail services.

  • Banks that advertise checking, credit cards, investments and mortgages.

  • Internet service companies that promote strategy, design, hosting and fulfillment services.

The fatal flaw of offering everything

Besides the fact that it is very difficult to present many products all at once, it usually doesn’t work for the customer. Customers want to test a company’s ability to deliver one product at a time. In other words, they want to date before going steady.

Customers also have specific needs. There is almost always a product or service they would choose to try before others. If forced to “take it all or leave it,” a customer may buy a total solution. But at the first sign of disappointment, remorse will overflow.

Does this mean, then, that it is foolish to offer customers a variety of products to meet their individual needs? No. Instead, try this three-step process:

1. Understand your customers’ typical buying patterns.

Analyze what your customers buy from you. That will help you determine which products or services are the first ones they buy, the ones that encourage return purchases, the impulse purchases that don’t lead to more and the ones that existing customers buy.

An example is telephone companies, which promote long distance deals to attract first-time buyers, friends and family deals to lock them into a long-term relationship, telephone equipment as impulse purchases or personal 800 numbers to existing customers.

2. Offer your products and services in the right order for your customers.

Sequence and stage your products and services. Offer conversion products that turn prospects into first-time buyers, then offer reorder products which prompt first-time buyers to become regular customers. Finally, offer logical products that cause first-time buyers to expand their relationships with a vendor.

When I served as a product manager for the Bank of Boston, we offered CDs to attract prospects with funds to invest, created rollover programs to encourage CD customers to reorder our product and advertised checking products to build long term relationships with CD buyers.

3. Market your products and services in the right order for your customers.

Create sales and marketing programs that offer products and services in the correct order and to prospects and customers who are ready to buy them. Here are some recent examples:

  • Sprint Telecommunications offered a hotline pre-selling Rolling Stones tickets to anyone willing to switch over its long distance.

  • Progressive Insurance does a magnificent job of telling its less attractive customers that their policies would cost less if they switched to the competition.

  • provides topical newsletters to customers based on their previous purchase history, correctly assuming they can be upsold or cross-sold.

It is possible to offer a wide range of products and services to customers without overwhelming them, but the effort must be organized and presented in a systematic process based on how and when customers buy.

Do not try to sell products and services on your schedule. Instead, understand your customers’ behavior and adapt your company’s approach accordingly. In other words, perhaps Rosie O’Donnell’s overzealous admirer should have taken her advice, and first painted her house!

Andy Birol ( is president of PACER Associates Inc., a Solon-based consulting firm that works with companies to focus on their best ways to find, keep and grow customers. He can be reached at (440) 349-1970 or

Monday, 22 July 2002 09:39

Share the scoop

Starting in first grade at recess and continuing at the workplace water cooler, we have always yearned to know the inside story.

Maslow should have included “getting the scoop” in his hierarchy of human needs. Addressing this need when marketing to a prospect works just as well.

If you sell a product or service to another business, you know it is critical to establish and maintain a meaningful dialogue with prospects. Examples are everywhere and can be seen at most good Web sites, as well as in more traditional media.

An example from the Internet is as follows. Once a prospect or other interested party has been successfully urged to visit a Web site, that person is often asked to register an e-mail address to receive ongoing information of value. The new e-term for this is “permission marketing.” A good business-to-business example of this can be found at To receive business leads, a visitor must divulge his or her identity and register so that a connection can be made between a potential buyer and a seller.

Long before there was an Internet, this was known as exchanging information of value. One example is the telemarketer who calls to offer a free informational seminar or white paper in return for an executive’s commitment of time and interest.

Regardless of the buzzword or what medium is used to disseminate information of value, the process is the same. Establish a dialogue with your audience, offer value, deliver what you promised, and hopefully, you will build better relationships. The right medium will help you break through the clutter caused by information overload.

My e-mail newsletter, “Re-Focus to Grow,” is an example. Starting in the spring of 1999, I felt a need to keep in touch with my network of more than 1,000 business friends in and around Cleveland. While advertising or spamming them would be unacceptable, sharing my stories and observations was appropriate, so I began to assemble stories, articles and news about my business.

Next, I needed to implement the newsletter on a shoestring budget. Here is how I did it.

  • A review of my Rolodex revealed that 50 percent of the business cards included an e-mail address. Calls by my assistant yielded e-mail addresses from another 35 percent. Only one individual declined to provide an e-mail address. This was flattering and confirmed the value of first establishing personal relationships, then maintaining them with technology.

  • Next, I had to produce the newsletter. Writing it started out taking two days, but both the time it took and quality of the end product have improved. I am currently re-engineering the format for the third time to keep it short, punchy and to the point.

  • The effort of sending this newsletter is divided among maintaining e-mail addresses, writing/editing issues and producing the mailing using Microsoft Word and Outlook. I have also sent it out as a live Web page. If a reader keeps a live connection to the Internet, he or she can click on an icon. Thanks to Joe Palko (, for introducing me to this application.

Feedback has been positive and the value to my business has been high (including leads for consulting, speaking, writing, training and testifying). Most important, I have been able to keep in touch and hear from my business network, which is vital to a one-person consulting business.

Perhaps making an offer to exchange information of value would help your firm find, keep and grow more customers as well.

Andy Birol is president of PACER Associates, which provides expert advice to owners who need to grow their businesses offline and online. Birol can be reached at (440) 349-1970 or at

Friday, 19 July 2002 07:12

Taking stock

By now, there's no question that the U.S. economy is mired in an economic slowdown. While your specific industry may be strong, slowdowns are epidemic in nature and have a way of leaking into otherwise solid sectors.

Expectations drive consumer behavior. A mindset of limitations is replacing an attitude of abundance. As a result, people are hedging their bets and risking less.

All of this has put business owners in a precarious situation that they didn't experience during the roaring '90s. But your business doesn't have to stop growing just because the masses are taking a wait-and-see attitude.

Here are 12 tactics to help ensure your business doesn't follow the downward trends.

B>Obtain warranty and maintenance contracts that extend the useful life of the status quo.

B>Offer programs/products and services that promise reduced costs and greater efficiency. They will be more attractive than those promising increased sales.

Recognize that channel power will go to those with paying customers or the ability to retain their margins.

Pick and choose your partners on both the supplier and the customer side. Loyalties and relationships of convenience/laziness will be broken. In times of stress, relationships either deepen or disappear. You can't be all things to all people.

Move cautiously. The transition from having not enough people to having too many people may be sudden. "Bargain-price" human resources can help increase customer service or search for new customers.

Focus on the PACER circles (best and highest use, target market and customer pain). As demand slows, every purchasing decision will be questioned. The practice of finding the best suppliers may be replaced by finding the one lowest cost supplier.

Be aggressive. As people become more risk-averse, selling on the basis of fear, uncertainty and doubt will be effective.

Target your bottom line. Capital goods will be harder to get approved by customer finance departments. If they are approved, they will be prioritized in the following order:

* Those that improve profits

* Those that increase sales

* Those that decrease production costs

* Those that decrease administrative costs

Utilize technology. When tech capability becomes greater than the market's capability to absorb it, prices falls when everyone beyond the early adopters stop buying it. The minute the technology isn't used, the value drops. Technology starts to be given away and revenue streams are devalued. Inevitably, the technology is adopted and price goes up, or, more likely, the next great thing replaces it as the cycle repeats itself.

Outsource part of your operations. Demand may or may not decrease, but the need to deliver your product or service doesn't.

Leverage goodwill if you've already created it with your customers.

Rethink the time vs. money tradeoff. People may have more time to spend on tasks they formerly might have paid others to perform.

While there is no surefire way to avoid a slowdown, if you're proactive in your approach, odds are you'll be better off than your not-so-prepared competitors. Andy Birol ( is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at

Friday, 19 July 2002 06:28

Going the extra mile

In these uncertain economic times, many sales and marketing people are growing increasingly frustrated over the ambivalence of prospects and customers.

Despite strong consultative sales efforts, many sales professionals are finding it takes more time and effort to close business. Even more frustrating are prospects who express remorse over or simply reject customized solutions they helped to define. While buyer anxiety over the economy is increasingly the cause, what is the answer?

If a prospect is not convinced that your solution will work, why not warranty the product or offer a service agreement to ensure results? While this is nothing new for capital goods and software products, most any product or service can be warranted or guaranteed through a service contract.

Why would it make good sense for you business to offer a warranty or service agreement?

  • It represents an opportunity for you to eliminate a perceived or real element of risk in the minds of your customers or clients. This will be particularly attractive to managers oversensitive to meeting company objectives and minimizing their personal career risk.

  • In a downsizing world, fewer internal resources can be used to ensure the job gets done. Outsourcing is often a likely consequence to cost cutting.

  • If priced correctly, service and warranty contracts are profitable. It is more difficult to compare and price shop agreements than products or services.

    What parts of your product or service can be delivered through a warranty or a service agreement?

    Almost any business, from a consumable or durable product to an intangible service, can be covered. The key is to be creative and break down what you sell in the eyes of what the customer or client is buying.

  • Delivery. When, in what form, within what time frame and with how much notice? For example, the challenge of food service is not having food ready, it is having it properly presented in quantities that match quirky appetites.

  • Performance and output. How will the product or service meet the defined need, to what standard, with what outcome, through whose cooperation or involvement? For example, can you commit to your product or service being available 24/7/365?

  • Acts of God: Standard insurance policies cover many of these, but how can you be creative? If Ohio can have an earthquake, what else could happen?

  • The unforeseen. We all laugh at how quirky life can be, even when it comes to routine tasks. Somebody must have insured (and profited) from Tiger Woods' cataract operation. The bigger the downside, the bigger the opportunity.

As with anything new, there are pitfalls. Here are a few worth considering:

  • You are now in the service business. This may be very different from how you operated before. You own the problem long after you have booked the sale.

  • You must deliver to the letter and in the spirit of your customers' expectations

  • You are financially exposed in a new way. Be sure you cover your risks

The bottom line is that selling warranties and service agreements in an uncertain economy can be a real source of salvation for you and your customers. As with all new businesses, if you set, agree on and meet reasonable expectations, success will be yours. Andy Birol ( is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at