page 194, additional research?

[Big Rob]

This is my first post, I'm currently a partner in a technology company and I'm trying to convience my partners that we need to eliminate bad customers. One thing we are doing that I disagree with is we always offer a "Free estimate" this usually results in "Free Diagnosis" which results in a free education to the customer. We are essentially giving away in minutes an education and expertise that took us years to aquire.

So I'm trying to convince my partners to eliminate the free estimate and charge for diagnosis and audits.

I've highlighted much information in the four hour work week but I don't feel that one resource is going to convince them. I wonder if anyone knows of research, books, quotes or any other resources that prove the point of "Not giving things for free but instead offering "lose win and Risk reversal"

Thanks for your help.

[Sven]

That could be a difficult one... There seems to be a conviction in the way of success here.

I agree that you should not give away somthing for free that is at the core of what you do and cost you a great deal at the same time.

Could you think of a test where both ways of enticing customers are tested side by side, preferably with a third option? If you do this in direct mail (yes, the old fashioned way ;-) they should not interfere with each other and still the results can be analised well.

The point off cource being that the result that brings in the best profits is used in the furure. If they are not willing to do this kind of testing it may be worth contemplating leaving and setting up business for your self, maybe not to do immediatley but in the near future.

[dsharpe]

Big Rob,

You might try "Breaking the NO Barrier" by Walter Hailey. It's mostly about sales, but there's a good bit on the 80/20 rule. Also, Jay Abraham has some excellent case studies on what happens when you eliminate the freebies and expect more from your clients.

When I was doing marketing consulting, one of the main methods of getting clients was a free one-hour analysis of the business. It generated a lot of interests, but not a lot of paying clients.

You can see the same thing in direct response marketing--someone who requests the "free information" is a much less qualified prospect than someone who sent in $2.00 for the same info.

One of the most effective ways to educate and convince people about marketing methods is to test and compare--do it your way for a while and compare the results with the way things have always been done. If it's done properly, the results will be hard to dispute.

You may need to adjust the sales process to educate the prospect about the benefit of paying for the analysis, but that shouldn't be too difficult.

Good luck--implementing these principles can be challenging when other people are involved in the decision!

Dave

[Big Rob]

Thanks, I have found some info about not giving things away and I have convinced my partners to give it a try so long as I can come up with a way to approach the customer.

[kamakiri]

One thing to be aware of is the life time value of a customer. How many of the people you did the estimates for came back within a year or two? In the pizza business (and any business for that matter), the cost to generate a new customer is much higher than to generate repeat business from that same customer.

Instead of looking at a discounted pizza order of $12.99 with $1.00 in profit as a bad thing, try looking at $12.99+($15.99 x 10) or $172.89 as the yearly sales from that same customer. My business is pizza, so that example was the easiest to come up with. With a one shot deal, you will have different numbers, but still the cost of gaining a new customer is significant.

Have you though about trying to automate the estimate process? It should be easy to get all of the things you have done before into a database with estimated prices. That is a way to get wheel kickers in, but not waste your working hours.

[Mike Rhodes]

2 solutions to your problem:

1. automate the freebie.
convert your wisdom into a knowledge product that you can giveaway (or not - see below) that doesn't cost you anything (other than the time to put it together)
this is effectively a sales pitch, BUT it must also offer great calue & be useful to your prospect.
It might also highlight the fact that doing whatever it is all by yourself is way to complicated/time-consuming/hard/painful & they should therefore hire you

1b. give this away for free, but make them pay S&H. might only be $7 or so, but now you've done 2 things
Cover the cost of fulfillment (cd burning etc) + postage
AND you got proven buyers on your list. If someone won't dip into their product for a credit card for a $7 bill, they're unlikely to go for a $700 one!

2. go to StategicCoach.com & buy some of Dan Sullivan's products.
The absolute best is The Great Value Creator Escape™ but for some reason it's no longer for sale on the site.... Google it ?

good luck,
mike

[lisaC]

I get paid well to teach salespeople selling technology solutions how to handle exactly these types of things. You are going to have a period of time where the customers and prospects you have been giving stuff away to for free are going to expect it and freak out when you "turn off the faucet". Losing a customer that never buys, buys seldom , or is not profitable is NOT a loss. You already know that, you need help on "what to say" to the customers...I noticed you are new to this community, I am too. So from one newbie to another, here are links to 2 of our salesTIPs. One is on how to respond to outrageous requests from customers, the other is how to "Just say NO" to RFP's and other requests for FREE information...and do it with dignity and class.Let me know if these help:
http://www.sales-rap.com/email/salestips-b02.html (outrageous requests)
http://www.sales-rap.com/email/salestips-b18.html (say NO to requests for information)

[badhank]

Quick answer:
Easier to ask forgiveness than ask permission...

Just quiet down about it for a week or two, then start handling these cases by yourself, and handle it as you see fit, win/lose, whatever. Once you prove it works everyone will act like they were all for it, chance is hard for some ppl.