Jim's Marketing Blog

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When I started out, it was all about closing the sale.

Good salespeople were often referred to as good closers.

Decades later, I still see sales recruiters asking for candidates who have a proven record of closing.

Here’s why we need to be extremely careful before adopting the closing mindset, or any of the countless closing tricks and techniques.

The closing mindset

The challenge with the closing mindset, is that it positions the prospective customer as little more than a barrier. A hurdle between you and the sale. An obstacle to be overcome. Little wonder so many closing techniques are based on psychological tricks.

The use of long, extremely uncomfortable silences at key points in the sales process, for example, is used to put pressure on the prospective client. So is refusing to accept a “no” from them, by asking what they need additional clarity on, each time they want out.

In a nutshell: The focus is on outmanoeuvring your opponent. It’s them against you.

Here’s a very different approach, along with why I strongly recommend you use it.

Opening relationships

I built my reputation in sales by adopting the polar opposite approach. Instead of focusing on closing, I focused on opening.

Opening relationships, to be exact.

I found (and still find) the idea of closing to be self-defeating. I discovered that you can achieve a great deal more, by opening relationships with people. This means taking time to listen to them. And then learning about their challenges and what they want / need. If our marketing is targeted correctly, we’re automatically only speaking with people who are our ideal profile of client.

When handled correctly, and preceded with effective marketing, this means there’s no need to close anything (or close on anyone).

The whole process becomes a naturally-flowing conversation, where we seek to help people overcome a challenge, with the products or services we provide.

It also means refusing to sell anything to anyone, if we believe it’s not what they need.

Too passive?

This approach may sound passive, but consider your friends. Consider the people you like. The people you trust. The people you love to have around you. Are they aggressive towards you? No! That’s because we prefer those who respect us and are open and honest with us.

We like people who are open and honest.

We buy from people who are open and honest.

We trust people who are open and honest.

We recommend people who are open and honest.

In short, the more open we are, the more opportunities we’re open to.

Photo: Shutterstock.

Without knowing it, many small business owners are engaged in a dangerous race to the bottom. In today’s post, I explain what’s meant by marketing professionals when we say race to the bottom, and why it’s almost always a terrible strategy for small businesses.

Race to the bottom: What does it mean?

In marketing, we tend to use the term to refer to making sales or winning new clients, based on being the cheapest option. This is most common among commodity businesses. The ‘winner’ of the race to the bottom is the business that’s the cheapest / lowest priced at that time.

Some large businesses use their financial muscle to work successfully with small profit margins. They have deals available to them, which smaller businesses can’t access. This allows larger businesses to compete in your marketplace, profitably, with extremely low prices (or fees).

However, small business owners tend to just lower their prices, as a way to make more sales or attract more clients. They then find competitors do the same, as you’ll see in a moment, and the race to the bottom begins.

This small business scenario, along with a better alternative, is what today’s post is all about.

The race to the bottom prize?

The winner gets, wait for it… the privilege of building a business on a foundation of customers or clients, who will leave them the moment a cheaper provider comes along.

It’s a high risk, low return strategy. It requires you to constantly look for ways to lower your overhead, cut corners and speed things up. All this, in an effort to attract the least loyal profile of customers in the world: Those who switch from provider to provider, looking for the lowest prices.

Why is such a high risk, low return strategy so popular with small business owners?

Simple.

They see it as an easy way to attract more customers or make more sales. However, a look at the medium and longer-term picture shows how this can go horribly wrong.

Here’s what I’ve seen small business owners do over and over again.

Bob’s race to the bottom

Let’s take Bob the business owner as an example.

• Bob decides to lower his prices by 10%. He soon notices a slightly better sales conversion rate.
• So, he lowers prices by another 5%. And it improves sales even more.
• Some of Bob’s competitors decide to do the same.
• The race to the bottom is on!
• Bob now needs to lower his prices by another (whatever)%, because his competitors are charging the same kind of prices as him. Bob’s prices are now rock bottom or very close to rock bottom.
• Bob continues to make some sales, BUT with very little profit.
• THEN… if a well-funded competitor decides to sell at a loss for 6 months (to gain market share), Bob has to try and survive on fewer and fewer sales, relying on income from hardly profitable customers.
• Alternatively, if Bob’s overhead increases and he has to start increasing his prices, all those price sensitive customers he raced to win, will start looking for the new, cheapest provider.

It’s very easy to attract customers by reducing your prices. However, it’s unsustainable. So, if this is something you are considering, please think again my friend. Consider the medium and longer-term consequences of winning the race to the bottom.

Relax. Here’s a better approach. One that works extremely well. (You’re welcome).

Photo: Shutterstock.

As regular readers will know, I have long been an advocate for adopting a global approach to business. It’s not something that works for every industry, but where it’s possible, it’s exceptionally effective. That’s because it affords you greater protection against economic conditions, whilst also providing you with a wider spread of business.

I was mindful of this earlier today. I discovered what I’d already guessed: That the biggest market for my paid services in 2018 has been Australian business owners. If you’re interested, here’s the top 5.

1. Australia.
2. UK.
3. Canada.
4. Ireland
5. New Zealand.

The United States has topped my list, every year for almost 20 years. But things change in business. And the rate of change has never been greater. Which is why as business owners, we need to adopt an agile mindset. Because what looks certain today can change in a heartbeat.