Edmonton Business Coach | A High Closing Rate Isn’t Always A Good Thing
Hi, welcome back to inspired method marketing, we are your Edmonton Business Coach here on YouTube. My name is Karen. This is my husband, Trevor, and today we’re going to be talking about how a high closing Rate isn’t always a good thing. Zig Ziglar says it is unwise to pay too low. When you’ve paid too much, you lose a little money. That is all. When you pay too little you sometimes lose everything because the thing you bought was in capable of doing what it was bought to do.
The common law of business balance prohibits paying a little and getting a lot. So true. If you buy a no name brand, usually you’re wasting your money and you have to go buy a brand name anyway.
Yeah, people who buy on price typically we have to buy that product more than once.
Yeah, total waste. As your Edmonton Business Coach , we know that 50% of all Canadian businesses will go out of business in the first five years and 29% of these failed business owners will list running out of cash as a reason for their failure, making running out of cash as the second most common reason for business failure. That’s so true.
So the story we have for today is some business owners get a bit inflated in boasts. They’ve got an 80% or better closing ratio. And that’s not always a good thing, meaning sure you’re making sales, but you have to ask yourself, hmm, there’s something awry. So what are some questions that people have about this topic?
Are the businesses that are booking all their leads making a lot of money?
Well, from experience as an Edmonton Business Coach, if you have everyone saying yes to your appointment saying yes to your product, the guess is that you are probably priced too low. You are priced way too low. So everyone is saying yes, everyone’s getting onboard. But then at the end of the day you know, you’re not able to make ends meet because you’re always out servicing. All running around and putting in more time and effort than you’re actually bringing in and finances. So I would say they’re not making a ton of money.
Are these normally one person businesses or businesses with small teams?
This would usually be like a one-person business who’s doing this and true, they don’t have a lot of overhead, right. So they’re not, you know, paying for lots of the employees. They’ve just got themselves on their own.
They’re out there, and they’re doing the job and they’re closing this, the deals that are taking the phone calls or doing the marketing, they’re doing everything for the business. And yeah, they’re busy but they’re not being very productive. And if that makes a lot of sense. And if it’s a small team, maybe one other person, typically it’s just a one person team.
Do these same businesses have enough of a budget to hire to do all the work required?
And that’s the problem. As your Edmonton Business Coach I’d say That’s the problem. They’re not making enough cash or it’s not enough revenue because they’re basing their pricing model on, we can do it cheaper than anybody else because we are just a one person team. We have low overhead, Yada Yada.
But they don’t think about, okay, if I wanted to bring on another person, how much is that gonna cost? And then if I have to upgrade my equipment or supplies, how much is that going to cost? What are the tax implications? So they’re not pricing according to what’s realistic. You’re pricing according to an employee mindset, which is how much do I need to survive for a month? And that’s all, that’s how I’m going to price myself. And then they basically present sales on work.
Hmm. Does this mean the business owner isn’t a fact to working for free?
Pretty much. Pretty much. They’re working for free. So it’s, it’s not very, not very productive for you. Not Very, you’re not going to last a long time if you’re always just, you know, wanting to be the lowest price. Right. and if you do start having a team onboard, most of your money is going to paying for that other employee, or are you paying for equipment and supplies and really you’re not getting paid what’s worth your time.
So it’s very, very tricky to get started in a business and not be pricing yourself right. And you’re, yeah, you might be busy and getting a lot of work, but if you’re not making a profit, you’re not making any money.
Is this sustainable long term? As an Edmonton Business Coach I’d say Absolutely not.
You cannot. Yeah, pretty obvious. You can’t do this long-term. I’m just being a one man show and pricing yourself so low that you know, everybody’s saying yes, but you’re not making any money because you will run out of time as all you’re doing is taking care of clients, but you’re still you know, not making a profit. You’re not making profit and you’re not winning.
No thanks. Do these owners also have a false misconception that price is the most important?
Yeah, that is the biggest problem. They think that, you know, people buy on price and everyone is concerned about the lowest price, which as an Edmonton Business Coach I’d say is not true. It comes back to the old adage of the Nissan versa. Nissan versa. Is the lowest cost of ownership vehicle in the market? No.
Did we come here in a Nissan Person Today? No. Nope. And chances are you probably with didn’t use a Nissan versa today either. And it’s because it’s a cheap car. Low cost of ownership, but it doesn’t suit everyone’s needs. If it did, then why do people buy Mercedes? Why do people buy, you know, for pickup trucks? It’s because they have different needs, different likes, different tastes, and it’s based on the amount of value that is brought to that person who is the purchaser.
It has nothing do with the price. Otherwise we wouldn’t be a nation filled with debt most do when we buy things on credit. So that’s, that’s where that is. Yeah.
What are some considerations that customers normally value more than price?
As an Edmonton Business Coach, we see that people value convenience, making value, a time savings. They value features and they also value service. Yeah. Yeah. All of the benefits of those things is what people now really value when it comes to no company. Companies that we deal with on a regular basis, let’s say what’s one we go to regularly?
A restaurant, Papa John’s, Papa John’s fast, convenient and always a coupon available on always tasting great. And it’s decent value, right? We don’t, you know, go for the cheapest ones out there, but we get something that feeds the family is fast, convenient, comes to your door. Right. We don’t have to go and get it. I mean other, other restaurants that we enjoy, we go to Earl’s restaurant, which is a great because why? There’s always good quality, nice atmosphere friendly service and the food is always good.
Like really good. So when we go there or to the cake, why do we order the cake? Because it is always a great steak. Yeah. So people value quality, they value value, time-saving, they value convenience and service. Yeah.
Once you have a differentiated value proposition, will it fit every customer?
No. There’s going to be people who aren’t interested in your product, your service. And that’s the beautiful thing about being in business. Like you find your lowest and your smallest viable market and you go after them and help them as much as you possibly can.
And then just keep doing that and figuring out how to get better and serve them in new ways on a regular basis. Even improving your teams and your systems and you will make more money. That’s what we do as an Edmonton Business Coach.
Well some customers be willing to pay more for a specific value proposition.
Yeah, absolutely. And I think we kind of reiterated that before when we talked about the restaurants or vehicles. You know, people are interested in what’s going to serve in whether it helps them with their status in their social groups or if it just makes them feel better. Like when someone is you know, getting a nice piece of clothing or they’re being treated well at a restaurant or let’s say hitting a vehicle.
If they’re treated well and they feel like they’re getting a high value for their money spent, then yeah, be, are completely willing to spend more money on that product or service. Absolutely. Yeah. I always think of Maslow’s hierarchy of needs. If you’re just looking to get the basics, you’re at the bottom. But as you move up, your priorities change and your needs and wants change.
So last question, can you then use that extra profit on each transaction to build a team and scale?
That is the point. That’s the point of this video. Your Edmonton Business Coach says don’t go for lowest price. Don’t make your differentiating factor price. Make your differentiating factor you know, the best, all of the best quality, the best service speed. Anything else other than price.
You can always add more value by adding something to the offering that doesn’t necessarily cost you money or time, but even just being, being a professional, showing up on time, going the extra mile, doing these things for your clients and customers, those things are going to help you become more profitable. And yet, if you are a little bit more expensive, people will pay for convenience. They will pay for being treated properly.
They will be more than happy. If you are going over and above and going that extra mile, they’re more than happiness For that service. Nice. All right. Thanks for joining us today here on Youtube.
We are the Edmonton business coach. Don’t forget to like the video. Leave us a comment and subscribe to our channel to get the latest videos. Have a great day.