When my team and I meet with our clients, we're often advising them on their business model as a whole. Sales is the engine that drives a business, but the rest of the business has to be operating correctly as well.
Part of that is simply being sure you're charging enough for your goods or services. But for a business that has been around for a few years, that's not always black and white.
It can take a lot of guts to make major changes in your business! We help clients not only with what they need to do, but also how they need to do it. The change itself may be simple, but that doesn't mean it's easy.
One of our clients dealt with a shift in his business a number of years ago. We helped him discover that he needed to raise his prices and helped him plan for an effective way to communicate that change to his existing clients.
Dealing with hackers
Our client sat down with me to talk about a change he was seeing in his business. His company designed and hosted websites, and they had recently dealt with an increased amount of hacking attempts on client websites.
"As a result," he shared, "we've upped our level of service, but we haven't upped the amount our clients are investing on an ongoing basis."
"Let me get this straight," I said. "Currently, you charge a little bit every month for hosting. It hasn't included a tremendous amount of work, and historically that's been okay. Now you see a lot more opportunity, so you want to change your business model to a much more inclusive package."
"That's right," he replied.
His plan was to add some additional services and up the security included with his hosting. He was struggling with raising his prices and ensuring a smooth transition by communicating that well with his clients.
Shifting the business model
At this point, our client had been in business twelve years. So it was a lot easier for me to see how much he needed to increase his price than it was for him.
"Based on what you've shared, you need to triple your prices," I told him.
"Oh, wow!" he responded. But as we talked through the reasons that would probably make sense, it became clear that the price itself wasn't the issue. He was more worried about communicating that to clients and how many clients he might lose.
My team and I had been working with him for several years at that point. We knew that in other areas of his business, he was making a shift toward building long-term relationships with clients that were willing to make more significant investments on an ongoing basis.
Once he and I talked through that, he knew it was the right move to make.
Communicating and implementing the change
Our client ended up setting aside several days and working closely with me on communicating the change with his clients. He set up a couple different tiers of clients and ended up calling some and emailing others. He did make sure each client knew about the change that was coming and why it was important.
He decided to let everyone get a few months of the new service level at the old price so they could determine if they wanted to stay at that new price or not. When he finally rolled out the plan, his prices were originally three times the amount they had been, although he's increased them even more over the years.
He ended up only losing about 15% of his clients. Since he'd tripled his price, that meant two-and-a-half times more revenue for his organization!
Guts for change
We talk a lot in Sandler about five seconds of guts. Most of the business change our client went through wasn't really complicated. But actually executing it wasn't easy! It took a lot of guts.
There may be changes that you need to implement in your business. Maybe you need to raise your prices. Maybe you need to have the guts to communicate some bad news to a prospect or clients. Maybe you need to focus more on selling one area of your business than another.
Are you going to have the guts to make that kind of change for yourself or your organization?
Resources
Guts are important! There are a number of articles we've written on how guts play into personal and professional development.
Here are just a few of them:
- Using guts and humor to stand out
- Guts to ask questions up front
- Eating elephants
- Completely avoid cutting your prices
We also have tools available to help you understand the how of doing things versus the what. First up is a video that talks about the difference between simple and easy.
Second, we have a book that I actually wrote, Motivation the Sandler Way. In it I talk a lot about the "how" of motivation. If you need your team to have guts as well, you can learn how to leverage the inside and outside forces that inspire people to take action.
You can read more and even download a free sample here:
Finally, you may be dealing with a change in your organization where you need help. We help managers and business owners with the how of positive change in their business. If you or your team need that sort of help, we would be happy to talk with you.
You can call us at 405-844-1700 or email me at mike.crandall@sandler.com.
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