Business Posts

6 Invaluable Selling Skills

In the NaperLaunch Academy workshop series, participants learn principles known as Professional Selling Skills. This sales approach could also be called “need-satisfaction” selling. The foundation of the workshop was developed many years ago and is based on scientific observation and analysis of successful salespeople. It was discovered that all successful salespeople automatically perform these basic skills almost flawlessly every time they engage in a sales interaction.

Need-satisfaction selling is a learned process of asking customers questions in such a way that they reveal their needs so that a seller can “support” those needs with a statement of the benefits of a product or service. It is a systematic approach to sales that a seller (or business owner) can easily learn and follow. With practice it becomes second nature and sales effectiveness increases dramatically.

There are 6 basic skills used in this sales approach or process: opening, probing, supporting the need with a benefit statement, handling objections, the trial close, and closing.

  1. Opening
  2. The skill of opening a sales interaction focuses on two key goals: building rapport and setting the objectives of the interaction.

    At the beginning of every sales interaction, the seller should begin to build rapport with a customer. Rapport is built by showing interest in the customer and the customer’s needs. Getting to know a customer and understanding their situation should actually start before any meeting or call. Sellers should invest time in researching the potential customer to understand their needs and experiences. Effectively building rapport puts the seller in a position of trust with the customer.

    Setting objectives for the sales interaction involves clearly stating the purpose and the expected outcome. This only requires a brief statement of what is hoped to be gained by meeting; however, a seller can also confirm acceptance of the purpose and expected outcome by the customer. Starting this way also gives the customer the chance to express specific things they want to know about the product or service, which will be immensely useful to the seller. If there is no agreement on objectives, then the seller should seek a different objective of the call until there is agreement. For example, instead of expecting to obtain an order, the objective might be adjusted to informing the customer about an offering and obtaining a commitment for a follow-up interaction.

    Once the opening conversation has introduced the participants to one another, established some rapport, and confirmed the objectives, it is time to proceed.

  3. Probing
  4. The next skill is called probing, which simply means asking questions–but not just any questions. Sales probes are intended to help uncover specific customer needs. Answers to sales probes should reveal what the customer really wants or needs, and the best sales probes will help uncover needs that the seller’s offering can solve.

    There are two types of probes: open and closed. An open probe gets the customer speaking freely, preferably about their routines and challenges. This may reveal specific needs that can be solved by the seller’s offering. Closed probes are more focused questions that may be answered with a shorter response, possibly a single word–yes or no. Closed probes are used to confirm or clarify the seller’s understanding of what the customer has said; in particular, they are used to confirm a need.

    In a sales interaction, a seller’s listening skills are more important than their speaking skills. Sellers must listen carefully to hear what the customer reveals in terms of problems (needs) that the seller can solve. When such a need is uncovered and confirmed, it must be supported with a benefit statement.

  5. Supporting the Need with a Benefit Statement
  6. A benefit statement describes the value that the customer will receive when using the product. It should not describe a feature of the product or service; rather, it must focus on the benefits of that feature. It should answer the question: What does the customer get?

    The first part of the statement generally acknowledges the customer’s need. The second part describes the benefit of the seller’s offering. The statement must specifically address and solve the need the customer has revealed. Lastly, the benefit statement concludes with a closed probe to confirm customer recognition of the need and acceptance of the benefit statement.

    If, as shown in Fig. 1, the features of a seller’s coffee pot are its heavy-gauge stainless steel construction and special silicone seals, then the benefits of that coffee pot to the customer are its resistance to rust, breakage, and leaking.

    Figure 1. Features and benefits of a coffee pot

    Features and benefits of a coffee pot

    In this example, the benefit statement should acknowledge that the customer indicated a need for a coffee pot that is resistant to rust, breakage, or leaking. Then the seller would point out that the superior-quality construction of the coffee pot being offered is such that it actually resists rust, breakage, and leaking. The statement would end with a closed probe: “Does that sound like the kind of coffee pot that you are looking to put into your warehouses?”

    In a sales interaction, this 3-step process of probing, uncovering needs, and supporting needs with a benefit statement is repeated continuously until the customer either cannot identify any more needs or exhibits buying signals. Buying signals are responses that indicate customer interest; they are sometimes verbal expressions and other times detected only in customer body language. With mild buying signals, the seller might proceed to a trial close. When strong buying signals are obvious, then the seller should proceed to the close. However, most of the time, some type of customer objection will arise. We will cover handling objections first and then return to the closing skills.

  7. Handling Objections
  8. In our experience, all possible types of customer objections to a sales offering fit into one of four categories: skepticism, indifference, misunderstanding, or drawback.

    Skepticism means the customer does not believe the seller’s claims about the product or service. The handling skill would include probing to determine the source of the skepticism. Once the source is identified, the seller may be able to offer some form of proof of the claims, such as research findings, third-party authoritative articles, or customer testimonials. This requires the seller to anticipate possible sources of skepticism and prepare valid proofs ahead of time.

    Indifference means that the customer is exhibiting no interest in what is being offered. It does not matter what the product or service delivers in benefits because the customer does not perceive any need for that benefit. The sales response is two-fold: First, remind the customer of other needs and their associated benefits that have already been confirmed and supported during the interaction. Second, try to uncover hidden needs that have not yet surfaced by probing. Perhaps the customer does not recognize what the product or service can do and may actually have some needs that have not yet occurred to them.

    After reviewing any newly confirmed needs and supporting them with benefit statements, the sales approach is to probe for additional needs by asking the customer to provide more information about their operation or processes. When the review is complete, if new needs are supported, the seller can return to the trial close. On the other hand, if no needs have been confirmed or supported, then the prospect is not a potential customer and the seller can stop wasting time and look for a new prospect.

    When a misunderstanding occurs between customer and seller, the basic handling step is to probe to discover the root cause. The misunderstanding can usually be clarified and resolved through discussion. Sometimes the misunderstanding comes from an uncovered need; when the need is revealed, the seller can support it with a benefit statement and move back to the trial close.

    A drawback is the toughest objection to handle because it usually means there is some customer need that cannot be supported with benefits from the product or service being offered. In this case, the seller simply cannot meet the need. The only way to overcome a drawback is to support enough other needs to overcome the impact of the drawback. The sales response is to confirm previously supported needs to remind the customer of the other benefits of the sales offering. The seller can also probe for any hidden needs that can be supported.

    Once enough benefits have been accepted that the customer accepts the drawback due to the other benefits of a product or service, the seller can return to the close.

  9. Trial Close
  10. When a customer seems to be giving buying signals, a seller can verify agreement using trial close techniques, for example, asking “Do you see any reason we can’t move to the next step?”

    If any customer stalls are encountered, a seller should execute the 3 steps to commitment strategy:

    1. Get the customer saying yes by reviewing each of the needs that have already been discussed and asking for agreement that the customer expressed that need.
    2. Keep the customer saying yes by confirming acceptance of each benefit that has already been stated in support of each of the needs.
    3. Help the customer visualize the benefits of using the product or service being offered. If all responses are positive, continue to the close.

    If the customer raises any objections to continuing during the trial close, the seller should execute the appropriate handling skill based on the type of objection raised.

    At any time in the sales interaction, if the customer signals a readiness to buy or move to the next level, it should not be ignored by the seller. Do not talk yourself out of a sale! When there is clear consensus to move to an agreement on next steps, the seller should move to the close.

  11. Closing
  12. Closing is really just reaching agreement on what will be done next. If there has been no trial close, the seller may use the 3 steps to commitment strategy described above to review the needs and benefits of the offering. Then the seller can outline the next steps in placing an order, making the arrangements for delivery of the product, or scheduling the offered service. These agreements should address when, where, and by whom next steps will be taken. Next steps might be setting a follow-up appointment or executing a buy order or similar interaction.

    For more information or assistance with these and similar subjects we recommend one of three options:

    1. Register to attend the NaperLaunch Academy Workshop Series.
    2. Arrange to meet with a NaperLaunch coach.
    3. Arrange to meet with a business librarian.

For more information, titles on this subject available at Naperville Public Library include the following:

Little Red Book of Selling
Value-Added Selling
Secrets of Question Based Selling
Sales Bible
Posted: 
Monday, March 22, 2021 - 08:15

Accounting vs. Bookkeeping

As a new business owner, you may hear the terms bookkeeping and accounting used interchangeably. While both bookkeepers and accountants work with financial data and help business owners manage their finances, they have complementary but different responsibilities. This blog post will distinguish between the functions of each and their respective roles in a business.

A bookkeeper completes the clerical side of accounting functions, recording transactions and maintaining accurate records. Bookkeepers record, or “post,” the sales, expenses, cash, and bank transactions of the business. This enables a business owner to easily understand how much money is entering and leaving the business.

The complexity of the bookkeeping process depends on the size of the business and the number of transactions conducted daily, weekly, and monthly. However, the following are common bookkeeping tasks:

  1. Recording income and expenses
  2. Managing payroll
  3. Creating invoices and making payments
  4. Comparing the balances in a business’ books against bank transactions and reconciling any discrepancies
  5. Tracking accounts payable (money owed by the business) and accounts receivable (money owed to the business)
  6. Maintaining the general ledger, the master accounting document containing all of the business’ financial transactions

Most businesses use the double-entry bookkeeping system, in which every debit to an account requires a corresponding and opposite credit to another.

An accountant uses the data recorded in the business’ ledgers to interpret, analyze, and report on the financial health of the business. Accountants offer detailed insights that inform business decision-making, including:

  1. Preparing big-picture financial statements to assess the financial health of the business, such as balance sheets and income and cash flow statements
  2. Analyzing journals and ledger entries and making any necessary adjustments
  3. Providing tax advice and completing and filing tax returns
  4. Offering financial advice and insight regarding the consequences of financial decisions

How a small business handles bookkeeping and accounting can vary depending on the size of the business and the owner’s areas of expertise. At a minimum, a business owner must keep records of expenses and sales and, if the business has employees, manage payroll. You may decide to handle those functions yourself initially and just retain an accountant or CPA as an advisor.

Very simple bookkeeping and accounting may be done manually. There are also a variety of accounting software packages available for business owners who are inclined to do their own. QuickBooks is the most popular brand and has the largest market share. It is used by most bookkeeping services and can be used to generate financial reports.

As your business grows, you may decide to hire someone to join your company or you may hire a third party to provide bookkeeping, accounting, and/or tax advisory services.

For more information about bookkeeping and accounting, as well as other aspects of business operations for new startups, visit our BizVids Tutorials or register for a NaperLaunch Academy workshop. NaperLaunch coaches and SCORE mentors are also available to provide one-on-one virtual assistance.

Posted: 
Monday, March 15, 2021 - 09:00

Risk, Insurance, and Small Business

Owning a business presents opportunities for personal financial success and satisfaction in a particular occupation. However, it also comes with several different types of risk. These include economic, compliance, security and fraud, operational, reputational, financial, and competition risks. Risk managers are engaged in identifying risks and deploying proven techniques to treat each of these types of risks.

Today we will consider the operational risks of a business and the treatment technique of risk transfer. This post is for informational purposes only and nothing here should be taken as advice or direction. Any purchase of insurance should be discussed in detail with a qualified licensed insurance professional.

Operational risk can happen internally or externally or involve a combination of factors. Something could unexpectedly happen that causes a loss of business continuity. That unexpected event could be a natural disaster or fire that damages or destroys a physical business. It might involve a server outage caused by technical problems, people, or a power cut. Many operational risks are also people related. An owner or an employee might make mistakes that cause injury or damage that will, at a minimum, cost time and money. Whether the result of a people or process failure, operational risks can adversely impact a business in terms of money, time, and reputation.

Getting a third party to bear the costs of operational risk is called a risk transfer. To get a third party to accept the risk will require something in return. Insurance is a common example of a risk transfer. When individuals or businesses buy insurance policies, the risks of unknown severe financial losses are transferred to an insurer for a smaller and predictable expense: an insurance premium.

There are four fundamental insurance coverage contracts or policies that are applicable to most small businesses, depending on the nature of their specific operations. Here is a brief description of each with some suggestions on how to shop for coverage and what to ask an insurance professional when seeking an insurance risk transfer.

The Business Owner’s Policy (BOP)

A BOP combines business property and business liability insurance into one convenient policy. The property coverage part protects a business from losses resulting from fire, theft, or some other covered disaster causing damage to business owned property. The liability coverage part protects against claims involving bodily injury, property damage, or personal or advertising injury that could arise from regular business operations.

Businesses can tailor a BOP to help meet their unique needs by adding optional coverages like data breach, business income for off-premises utility services, and other specialized coverages.

Consider buying a business owner’s policy if:

  • Your business has a physical location, whether it is out of your home or in a rented or owned office, retail space, or similar workplace.
  • There is a possibility of being sued–for example, by a customer who was injured because of your negligent act.
  • You have assets that could be stolen or damaged–whether digital assets, customer data, equipment, furniture, cash, or inventory.
The Business Auto Policy (BAP)

Business auto insurance protects a business against financial costs resulting from an auto accident if you or an employee is found at fault. The BAP will pay for property damage and bodily injury resulting from use of the business’s vehicle. The BAP can also cover medical expenses for the people in the business’s vehicle and physical damage caused to an owned vehicle.

The BAP will pay for claims such as these:

  • An employee injures a pedestrian while driving a company vehicle and the injured pedestrian requires medical treatment.
  • An owned vehicle swerves off the road while being driven to work and causes property damage to structures or other vehicles.
  • An employee driving on a work-related errand accidentally hits another car, causing damage.
The Commercial Umbrella Policy

Commercial umbrella policies provide an extra level of liability protection over the policy limits of underlying coverage. Significant assets can be at risk when businesses are the target of lawsuits. If the cost of a claim exceeds the limits of a business’s underlying primary insurance in the BOP or BAP, for instance, then the umbrella policy will cover the amount of claim that exceeds those limits. Without commercial umbrella insurance, business owners could be obligated to pay out of pocket for legal fees, medical bills, and damage expenses that exceed the limits of their underlying primary business coverages.

Consider purchasing an umbrella policy if:

  • The work performed in your business has the potential of causing significant damage or injury.
  • The characteristics of your expected customers suggest potentially higher financial value of injuries or property damage you may cause (e.g., you perform work for celebrities or high-net worth clients).
The Workers’ Compensation Policy

Workers’ compensation insurance provides benefits to employees for work-related injuries or illnesses, including medical care, lost wages, and more. Workers’ compensation insurance also provides a deceased worker's family with a financial benefit. If a worker's family decides to sue the company, the employer’s liability coverage part found in all workers’ compensation policies can also help cover related legal fees incurred by the business.

Workers’ compensation insurance can help protect your business and employees in events such as these:

  • An employee slips on ice while walking up the stairs to the office, causing injury that requires an emergency room visit and weeks of recovery time.
  • An employee’s back is injured when lifting a box of printer paper and requires a doctor’s attention, medication, and physical therapy.
  • An employee returning to the office from visiting a client is injured in a car accident and requires hospitalization.

We have only discussed four basic policies here, but there are many different insurance policies for just about everything you might imagine. If other coverage is needed, an insurance professional can describe additional policies intended for situations involving employee theft, professional liability, and product liability, as well as fidelity and surety bonds.

Business librarians, NaperLaunch coaches, and SCORE mentors are available for one-to-one mentoring sessions on these and other topics. They are also discussed in the NaperLaunch Academy Workshop series.

Posted: 
Tuesday, March 9, 2021 - 08:45