Raise Your Prices Soon
Prepare Now
The following prediction is based on:
─ Recent comments from economists with successful track records
─ Current results from clients
─ A majority of forecasts from Vistage Members and Chairs
─ Unexpected anecdotal evidence
PREDICTION: 2011 is going to be a build-boom year.
Some companies will use it as a building year; others will see it as a boom year.
A building year means that the numbers will steadily go up. A boom year will be one of those times you look back on and wish every year could be like that.
The trends do not seem to be industry-specific. I have clients, for instance, in construction who are responding to record numbers of RFPs and others who cannot hire people fast enough. Meanwhile, many construction companies still struggle.
The most exciting part for me is seeing the new sales models that are emerging. For instance, Andy Burkhart, a CEO in Wisconsin, has broken the code for selling commercial lines of insurance. His approach can only be classified as game-changing and will, I believe, become a new model for the industry. (Well, it can also be classified as proprietary, so you will not see the details here.) It's brilliant. (Selfishly, he claims the idea came to him in one of my seminars)
Ari Ioannides and Michael Hanahan have broken the code for software business models with BoardDocs. Again, their concept is their property but I am trying to motivate them to write so everyone can benefit from their "no paper/no real estate" model. In fact, several high tech clients are developing "extreme" sales and business models.
Michael Gerster at WIKA and his team are taking what should be cut-and-dried manufacturing to the next level using concepts that seem to break the rules we lived by only a few years ago. They are combining the best practices of American and European cultures, integrating Pacific Rim capabilities in new and different ways and forming interesting alliances up and down their supply chain.
While I cannot give you specifics, here are some principles these and other companies are using to prepare for the upcoming season of price increases.
─ Integrity - an essential element of leadership, planning, production and sales
─ Quality - this is not a time to scrimp, it's a time to develop smart products from smart ideas derived from smart market analysis
─ Innovation - instead of getting outside the box, these people are getting outside the cube by looking at multiple dimensions in their product lines and their markets
─ Courage - each of these companies and others like them have stared down competitive, economic and even physical threats
Prepare now
Will you be able to arbitrarily raise your prices as the recovery grows? Of course not!
Prepare your sales team now:
- Develop tools for showing your customers the cost justification, ROI, total cost of ownership (TCO), or any other explanation that will make it easier for them to buy. If you do not have these tools, some of your competitors will be holding to their lower price points and your salespeople will be at a distinct disadvantage.Tools can be worksheets, spreadsheets, simple calculators or complex analysis and quantification tools.
- Train and retrain your team members, especially in the areas of business function selling. This is where you combine consultative selling with specific, department by department solutions. Actually, your CFO can be instrumental here. Conduct a qualified and quantified needs analysis followed by a qualified and quantified cost justification.
- Conduct a market analysis of potential markets that are outside your current base. Focus on the "Who Else?" and the "What Else" now so you will be prepared to address the opportunities. Turn your marketing people loose on this one.
Other ideas
Some other ideas that are less universal include:
- Acquisition vs. Alliance - Are you thinking abut forming a strategic alliance with another company? This might be a great time to think acquisition instead. The advantages include single management, simpler strategies and synergy. Todd Wille took this approach with Unify (software company) and Steve Blue, CEO of Miller-Felpax and author of "Burnarounds", is taking the same approach in what should be a dying industry. Apparently there is some investment capital on the sidelines that can be released to a solid business case.
- Gather the Spoils - By now there are few peacetime generals running businesses. Most were defeated by the downturn. As a result, there are able buyers out there who have lost their sole or preferred providers. They have a need - can you help? This might involve forming a strategic alliance (or acquisition), engaging in some aggressive vertical integration or rethinking your sales model. This is a great time to consider what else you might want to add to your product/service mix.
Get Ready!
_________________________________________________