Step 11: Relationship Growth
Written by Dave Lorenzo on December 11, 2015 / 60 Second Sale
This is step 11 in the free sales course. The title is: Relationship Growth.
Step Eleven: Relationship Growth
We’re back in step eleven. This step is the revenue growth step and we’re going to find some bags of cash lying around in your office right now. The revenue growth step is important because it focuses on relationships you already have, and we help you use those relationships, we help you develop them to the point where you can go back to them and deliver more value and earn more money as a result. I’m going to give you two very easy ways, very easy things you can do right now for revenue growth, and then we’re going to talk about the revenue growth cycle and how you can get your folks, your clients, into the revenue growth cycle.
The first two ways to grow revenue. First way is very easy. Action step number one, just raise your rates. That’s it. Every year the cost of living goes up. Every year there is some form of inflation. Simply go out and raise your rates every single year for folks you don’t have a long-term contract. This gives you, at minimum, another point of leverage because if people are willing to invest in your services for multiple years they will avoid that rate increase. You need to help your clients become accustomed to revenue increases every year, to rate increases each and every single year in your business.
Each year, on the anniversary of your working with them or at the turn of a calendar, you should sit down with your client and you should say, “It’s time for us to look at the upcoming year. Here’s what I’m thinking in terms of our fees and here’s where we will provide you with continued value for the long term.” Your people, the people with whom you work, service delivery people, their wages will go up every single year. They’re not staying stagnant. Your clients are in business and all their other fees are going up every year, so your rates should increase every year as well. This is if you’re in a service business.
What if you’re delivering products? It’s very easy when you’re delivering products because the cost of materials tends to go up on an annual basis. You can use that as justification for rate increase every single year. We would call this, I call this a rack rate increase. That comes from my time in the hotel business when our rate to average people would be one thing and each year we would increase it so that average people would pay more when they came to stay at the hotel. The cost of fuel goes up, the cost of heat, light, and power goes up, our labor costs would go up so our rates to our clients would have to go up as well. You should be no different. An annual rate increase, at minimum. You can even increase your rates as often as quarterly if you need to in order to realize more revenue.
The second opportunity for more revenue for you is with a client value review. Remember the options that we discussed earlier when we were talking about winning new business, closing new business. You sit down and you discuss three options, three potential options, for your client. Each year I’d like you to come in to your existing clients and I’d like you to re-interview them and see what’s going on in their business, what’s new, what challenges they’re experiencing, what’s keeping them up at night, and determine how you can provide even more value. Then, I’d like you to sit down with them and present them with three options. Option one is exactly what you’re doing right now. This is a good time to take your rate increase, when you’re introducing that option one to them. Option two is going to be a new problem that you’re going to solve that they’re telling you is a big deal for them. Option three is not only the new problem that you’re going to solve but it’s something that you’re going to do with them over the long term, a way that you can help them over the long term solve even more problems or help them keep problems from coming back, that sort of thing.
You’re going to do this value review once a year with them. This connection will take place so that you can raise your rates and you can also offer more opportunities to either capture business from a competitor or enter a new segment of business that you hadn’t previously entered with this client or perhaps solve a problem that may be semi-related to the work that you’re currently doing. Then you’re going to offer that home run option again. Your client should be accustomed to having this value review conversation each year. They will even start coming to you in advance and saying, “I’ve got this problem. Is this something you can solve for me?” You’ll find that when you do this, you’re not just selling a product or selling a service. You become a problem solver, a trusted advisor regardless of the business that you’re in. People will look for you to deliver that value in return for compensation.
The third action item in this step is going to be what I call the value curve. Any time your client comes to work with you he enters the gateway, if you will, of your services. That’s the entry point. He has an expectation that you do more than what you’re just offering, but that expectation is in the back of his mind and it fades very, very quickly. You need to get in front of your client as often as possible and help him quantify and qualify the problems that he’s facing and help him solve those problems. That’s the value curve.
I’d like you to imagine a hockey stick. The hockey stick is flat all the way until it reaches the curved point. Right now your relationships with your clients are flat. They know you for one thing. If you meet with them on a regular basis, at least quarterly, even more often than that if possible, every other month or every month, and you interview them and you find out what their problems are and you introduce them to people who solve problems that you don’t solve, they will start calling you with more problems. Then they will go down that hockey stick to the point where it curves and then you get to the meat of problems that you can solve and they can invest even more in you. If your client is calling you with all the problems he faces in your specific area, you know that you’re going to have an opportunity to make more money.
Let me give you an example. Let’s say you’re a financial advisor and you sit down with your client and you say, “Mr. Client, I know we’ve done your annual plan. Let’s sit down and look at everything else that’s going on in your life. Have you done a will? Yes you have. Have you done a durable power of attorney? Have you done a healthcare proxy?” You ask questions that good financial planner would require you to ask. Then you get into things like insurance, not only personal insurance, life insurance, but health insurance. You get into homeowners insurance. Things that you don’t sell, but you can introduce them to other people who you trust who may refer business to you in the future. You’re asking them about their entire financial picture. When they want to buy a car, they may call you. You don’t do the purchase or sale of cars, but you’ll give them advice on that.
The key is anytime they make a financial decision you want to get that phone call so that you don’t miss out on an opportunity to do business with them. That’s the value curve. You introduce them through the gateway of the initial service you provided to this world of your advice, or your counsel, and you help them understand the additional service you can provide by asking them more questions along these lines. You do this at least every other month at the outset of the relationship. If it’s someone who has a significant depth of wallet, you can do this on a more frequent basis, even monthly, so that they understand that you’re here for them, you want to advise them over the long term and you want to help them over the long term. The key with the value curve is never missing out on an opportunity to help your client and make more money in the process.
That’s step eleven in the sixty second sales process. That’s your revenue growth step. Your homework is to look at all your client relationships now, pick five, and have these in depth conversations where you speak with your client, interview them and offer your guidance beyond just the scope of what you initially recommended into a deeper and more long lasting and more profitable relationship for you.