Posts Tagged ‘customers’

Last week, my business made £1,180 from a customer without doing any work. All it took was for this particular customer to pay their invoices late.

I know that Late Payers are a constant worry for the majority of freelancers and small businesses. The majority of my own customers pay late. However, on the whole, my late payers are only 2 or 3 days late in making their payments – which I can live with.

But this one customer was over 80 days late in their payment, and the amount was large – very large. In fact, the original invoice was nearly £60,000 in value. As you can imagine, when the amount is so large, and with payment being so long overdue, it can lead to a lot of sleepless nights – will they pay at all? Will I have to take them to court? Will they eventually turn around with 1,000 reasons why they are not paying (delivery was not as they wanted, etc)? In short, would I ever see the money?

I had a signed contract – so was covered from that point of view. In the contract, it talked about my terms and conditions, which included my late payment penalties – so was covered there. And my online accounts system (the wonderful FreeAgent was regularly sending them chase notifications).

After the invoice was 30 days overdue, and after a lot of worry – I bit the bullet – and raised a late payment invoice for 30 days of interest (8% over the base rate – so maths = (((amount of invoice + 8.5%)/365 days) * 30 days) plus my £50 admin fee.

30 days after that, I raised another 30 days of interest and another late payment fee, and then a third late payment invoice. They now had four invoices outstanding (the original plus 3 late payment invoices)

After the third invoice, it did seem that I was wasting my time – I was calling them and was being given more and more complex reasons for the late payment (we have a new accounts system, the payment manager is on holiday, its in the next payment run) – I even started to research on Google which debt collection company would have the most success (and which would cost me the least).

And then, guess what…. they paid. There was no email or call or anything – the money just magically appeared in my company bank account. Not only did they pay the original invoice, but also the late payment invoices – so an extra £1,180 into my bank for no effort from me.

And you know what – that’s more money than I would have gained in interest in having it sit in a bank – so I am very happy.

We all suffer bad payers – but don’t give up. Chase, chase, and chase some more. When things get too much, threaten and then do it – raise that late payment invoice. Don’t put up with those late payers. And don’t wait until they pay to raise a late payment invoice – raise one a month – it acts as a reminder to pay the original invoice (and that you are serious).

As long as you have a signed contract and a clear set of terms, the law is on your side.

In my previous post, I talked about how I have started sending out regular newsletters to my old customers and future prospects. Today, I wanted to cover why, who and how.

Keeping In touch – The Why and Who

I have no doubt that when it comes to marketing, out of sight is also out of mind. Which is why I wanted to start sending out newsletters. But I am also a believer that its easier to win back old customers that it is to find new customers – you never know when that old customer will need some help on a new project, or some additional consultancy time or help on a new project.

With this in mind, I decided that the initial target of my newsletters would be my old customers. So a quick email went to each of them saying that I had been working recently on some exciting other projects and I thought that some of the things I had created whilst working on these other tasks could benefit them to (pretty much those exact words). I said that I was going to be sending out a regular update of some useful routines and tips, and also stressed that the updates would only come from me every 2 weeks or so – so it would not be overload. I also pointed out that if they were not relevant, they could unsubscribe at any time.

My feedback was good – I got 100% sign up on everybody I emailed (although it did help that I had worked with them in the past, therefore they knew what I did and how I liked to share useful information).

Of course, I then took the opportunity to contact my current handful of prospects and offered to sign them up in the same way. So far, the uptake from prospects has been 45% – which I am fairly happy about.

The newsletter – The How

From the beginning, I wanted my newsletter to be no effort for me. I also wanted to keep track of my subscribers, and see if anybody was actually reading the newsletters (no point in wasting time producing something that nobody was reading). After a quick bit of research, I decided that I would use the marketing email system – mailchimp.

Mailchimp is an internet based mass emailing system. It is really designed for sending out large numbers of emails as part of a marketing campaign (you know the ones, the ones we all get every day and curse (50% off sprockets in our Spring sale)).  But it works just as well for sending out newsletters.

Mailchimp is not designed to be a free service, but it is free for the first 2000 subscribers with 12,000 emails a month (enough for everybody who could run a small business to keep in contact). If your newsletter gets more than 2000 subscribers or needs that number of emails, you are doing so well you can probably afford to may the $10 a month usage fee.

Setting up a newsletter is a snip – you can quickly design a sign-up form, manually add your subscribers if needed, and then design your newsletter (in terms of Mailchimp, each fortnightly email I want to send I setup as a campaign so I can track who is reading it).

One of the magical things about Mailchimp is that when you register, you give it your personal details including web site, and it does so much work for you – it goes to your web site and finds your web site style sheet and graphics – so straight away it sets up a template with your company logo, fonts and address. All I had to do was enter the text. Text editing is a breeze – you can change the look feel, fonts, colours and so much more within your text. you can also include graphics if required.

Once you have your first newsletter done, you can then duplicate it for the next week, and the next – and just have to paste in the text you need – for that weeks edition. The creation of a newsletter really just takes me 4 or 5 minutes (once I have the text from my Evernote files – see my previous entry).

Once defined, the mail can then be sent straight away, or (as I do) scheduled to be sent at a point in the future. I already have newsletters set up taking me into the summer.

When the emails are sent, MailChimp takes care of everything – the email is sent from your email address, and appears in both text and HTML format (depending on the recipients email client and preferences). Once sent, everything is tracked – for each weeks newsletter, MailChimp tells me how many emails it went out to, how many people it was sent to, how many opened the email , how many clicked embedded links in your mail, how many unsubscribed and how many people it was forwarded on to.

I am sure if I was a big company, I would be using MailChimp for sending offer and sales emails – but even for something as modest as my newsletter, it does everything I need.

So everybody’s happy. My old customers and prospects get some (hopefully) useful information, I get to be noticed by them every week (which should lead to more work), and I get to get on with my day job, leaving Mailchimp to track how well my newsletter is performing.

If you would like to take a look at my sign-up form or even read what I am sending out (my tips are about SQL Server databases tips and useful functions), my sign up form is here.

Enjoy.

Times are still tough out there (so I am told), and judging by search queries being run through Google and posts on small business forums I visit, a lot of small companies are finding it increasingly difficult to find new customers.   The two biggest phrases I see from SME’s at the moment are “dealing with late payers” and “how to attract new customers”.

This is odd, because if small companies and freelancers are struggling in making sales, it does not really explain my recent experience dealing with small companies.

Over the last few weeks I have spent some background time working on a project for a customer, finding one or more suppliers to provide IT software development services.   The customer needed a company or two to provide a mixture of services such as web site design, some database design, and application development.  My task was to define the requirements, help find companies to perform the work, vet the companies and make recommendations.

How I found the Companies

Luckily, finding the companies was not my task – it was given to an office junior who used a combination of google searches (both using adword adverts and natural results), advertising on freelancer work sites, and using a small list of previous suppliers.   In all, I was given a list of 31 possible suppliers to approach with the specification of work required.

It’s worth noting that for the sake of integrity for this work, I did not put my own company forward for doing the work.  I was simply tasked to create the outline specification, recommend a supplier and then work with them during development of the systems.  The budget for the entire work package (not including my own companies time) was £198,000 – a fair chunk of work then.  Most ‘chunks’ of work were budgeted at between £17,000 and £34,000.

The shocking Response

After  discounting 2 companies (due to geographical restrictions on the project), 29 information packs were sent out – including the outline requirements spec for all work required, rough time lines (spring next year for completion so no pressure), asking them to get in contact with bits they were interested in and outline costs.  I didn’t include the outline budgets – I didn’t want to tell anybody what they should charge.

Out of the 29 packs sent out – the stats after 4 weeks were as follows:

• 9 companies never made contact – in any form.  No emails, no calls, no letters – nothing.  I have called all 9 companies and all 9 are still in existence.
• 7 companies made contact by phone, said that the information was good enough to work with, and would provide outline costs and timelines within 2 weeks – none of them sent anything through.
• 5 companies visited for meetings for more information.  Out of these 5, 1 company visited 3 times.  Out of the 5 companies, none provided any costs or timelines – they simply. . . .vanished.
• 2 companies responded with what I would call a standard information pack; a background of their company, projects they worked on in the past, and various services they offered.  Nothing was provided specifically for the project – no timelines, costs or even reference to the project.
• 3 companies provided responses with what they would do, how long it would take, how many people would be assigned, how they would do it – but all 3 would not give a price – any price.  No day rate, no total, no overall outline– it was as if pricing was a national secret.

Just 3 companies provided the information – what they would do, by when, and how much.  And guess what, all 3 got the business (they all wanted to do different parts).

What this means for you

The companies made it so easy for me.  I could happily recommend the 3 companies who got the work as they were the only 3 companies to respond with the information needed.  Any of the other companies could have been awarded some or all of the work too, just by providing the information that was required.

Now I am sure that if asked by a potential customer to provide a bid, you would create a quote in the agreed timeframe with the information requested.  But, it just strikes me as crazy that so many companies are searching on how to find work and customers, when the work was there all the time, and all they had to do was respond.

There is an old quote about selling Power Drills which goes:

The customer Doesn’t need a Drill.   What they need is a hole

The same is true with anything anybody sells – they don’t need the Thing – they need the Outcome.

They don’t need the car, they need to be able to get to somewhere whenever they want.   They don’t need a seat on a plane – they need to be somewhere else that’s sunny.  They don’t need the flashy new web site – they need more customers.   They don’t even need that consultancy service – they need answers and advice they can depend on.

It’s an interesting flip on sales thinking.  Are you selling the Thing, or the Outcome.

It’s one of the things I am testing in some web site, brochure and leaflet changes.   My web site was all about the service I offered – so I am trying versions that are all about what the Outcome is – and its showing good results.

So what are you selling?  The Thing (that nobody wants or needs), or the Outcome?

Is it time to check the wording on your adverts, web site and literature?

Over the last couple of months, I have seen a few other freelancing and small business blogs talk about things to do when work dries up.  I guess maybe this is a common topic because the economy is still suffering (so I am told).

My problem with such lists is that they are all painting around the edges with suggestions such as “catch up with filing” or “tidy your storage system” – which is all fine, but I imagine that most freelancers, contractors and small business bods would rather be doing productive work earning cash than taking time to “spruce up your office plants”.

So may I present:

an alternative top 20 list of things to try when things turn quiet:

1. Setup or refine adwords – If you don’t have an adwords account, set one up to advertise your services.  If you do have adwords in place, try some new ad variations and A/B split test the adverts.
2. Refresh your web site – Bring it up to date, and create landing pages for your core skills – linking them to your adword (or other) adverts.
3. Create marketing material – Create a brochure, flyers and other material for sales presentations, networking and meetings
4. Create client case studies – Case studies create a strong story and you can never have too many.  Have them in both printed and web based formats.
5. Update your CV – Bring your CV up to date with your latest activities, skills and training
6. Scour the contracts boards – There are plenty of web boards with both contract and freelance positions available.   Search them every morning and the phone will start ringing.
7. Start an a/b split test on your web content – You web site may be good, but could it be better?  Use A&B testing to see if your visitors agree. I am going to talk about A&B testing tomorrow.
8. Write to previous customers – Use your list of contacts, and send them a (good) mailshot asking if they need more work done.
9. Make contact with other freelancers for any off shoot work – Use your outlook, Gmail or Linkedin contacts list and make contacts with your social peers in case they need a helping hand
10. Send a mailshot to likely local customers – People love to buy local.  Hit the yellow pages and send a mailshot to local companies who could use your services
11. Lean a new skill through a 30 day teach yourself book – There are lots of great books available to teach you new skills.  Take the time to add to your skill set.
12. Streamline your business processes – Look at all the aspects of your business from quotation, to invoicing to support.  Are there any parts that can be improved, streamlined or automated.
13. Invent a value add to your service – Can you take the slack time to add a new feature of benefit which would make you or your product more sellable?
14. Create an off line revenue generation idea – Do some brain storming and start a bolt-on enterprise to generate money whilst you sleep.
15. Look for more LinkedIn contacts, and tell all contacts of your availability – If you haven’t updated your LinkedIn contacts for a while, time to see who else is worth adding
16. Review your company spending costs – If times are lean, maybe it’s time to review your company spending and see what costs can be cut to increase profit
17. Think about taking on a short term Contract – You may prefer working from home on a freelance basis, but when times are tough, don’t rule out taking a short contract through an agency.  Very short (day or week length) contracts sometimes pay very well.
18. Spend time doing a technology refresh – Look at the tools that you use – can they do with a clean up or upgrade?
19. Investigate (R&D) on new products – Things are always changing.  Take some time to do some web research or attend open events.  What new products are out there, what are suppliers launching?
20. Clean your environment and do filing whilst you wait for work to come on – And of course the office clean.  But only when you have done everything else and are waiting for the phone to ring.

Last week I found myself in an interesting discussion with a Marketing guru.   This lady suggested to me that to sell more of my services, I needed to remember CP30 and R2D2 from Star Wars.   Yeah, I know…. its an odd comparison.  But stick with me.

The question she posed to me (and you should answer now) was as follows:

George Lucas phones you tonight to tell you that the star wars droids are real, and that you can have one for your home free of charge.   He will arrange for one to be delivered to your house tomorrow – which do you want – R2D2 or C3PO?

This marketing guru said that when asked, over 90% of people would pick R2D2.  There are many reasons for this – he is friendly (not sure how beeps and fart sounds can be friendly), he is cuter, he is more of a hero that C3PO, he is a lot less grumpy/stuck-up and he is a lot cooler than C3PO.

Great!   So R2D2 gets delivered, and he trundles around the house for a while.   But then what?   Yeah, he may be cool, but can you communicate with him?   Can he do the dishes?  Can he wash your car, make your bed, make you a cup of tea or pop some toast in the toaster for you?  No!

What you really NEED is C3PO.   He can do all the things that R2D2 can do (which is effectively talk to wall interface ports to open blast shield doors), plus make you tea, toast, etc.  He can even climb the stairs.

The point she (and now I) was making is that given a choice, peoples first choice is the cool, the trendy, the one that will get nods of approval from other people.  But what people really NEED is the thing that can do the job.

The secret is of course, is to make you service or product offering as cute and cool as R2D2, but once the wow factor has passed, to be able to get on and do the job.

I have a number of customers; some are new customers and we are just starting to do business together, and some are customers I have had for many years.  But there is one thing in common for all of my customers.  NONE of them are my friends.

It’s something I sometimes struggle to remember.  It’s very easy to treat them as friends because we know each other so well, spend so much time together and even do trips together where we share meals and drinks at night.  But, they are not friends.  At the end of the day, they are customers, and there are many good reasons for remembering to treat them as such:

• Friends you joke around with, but customers deserve respect and professionalism.  At all times
• Friendship leads to familiarity, familiarity leads to contempt, and contempt leads to ex-customers
• It is much harder to negotiate terms, rates and situations with friends
• Friends can ask for favours – customers can’t (well they can, but it’s harder)
• With friends you share secrets – you may bad mouth people, but in front of customers every previous project, customer and even competitor deserves respect.  Otherwise, what will they think you are saying about them?
• Friends can call you up at weekends – customers can also call you, but they get charged 7day support for doing so
• Customers pay you, friends don’t

I am not saying that you have to be stand-off-ish.  You can be friendly, courteous, and can even share a joke over a drink.  But at the end of the day, your customers are just that – customers – and should be treated as such.

One of the problems of doing ‘business’ is that you often get into a grove of doing stuff.  I am sure when a project or contract comes along, you have your own methods of doing things.  Your own routines and procedures.  Your own version of A leading to B leading to C leading to project completion.  I imagine that if you are anything like me, this method of working is based on years of experience and refining your techniques until they are razor sharp – delivering work in the most efficient way FOR YOU.  The problem is, these ways or methods may seem alien, strange or scary to other people (hence the image).  For some customers, it may be their first time using freelancers, so will not know what to expect.

Which is why when you start a project with a new customer, co-worker, or prospect, it is worth taking the time to take them through your processes.   The job is not done when the order arrives, or even when you produce the estimate.  From the very start, tell them what the next steps will be, what you will be doing, and when.  Let them know what they need to do, or that they can relax whilst you do the next step in your process, and what this will lead to.

Communication is the name of the game in small business, so don’t keep your customers guessing.   Let them know what the chain of activities are, where they are in the chain, what comes next, and always keep them updated on where they are in the path to completion.

I am not a salesman.   In fact, I am hopeless at sales.  But that’s good – I don’t want to be a salesman – I am a technical person who loves what I do.  The problem is that in order to generate revenue from customers, I also have to do some selling.   But that doesn’t mean I have to like it and frankly, I am rubbish at it.   But, I have had a lot of success over the past couple of months using a technique which was suggested to me by a salesman at the end of one of my mentoring groups.

This technique is simply to hold back, and keep some bait for the fishing (this was how it was described to me).   Look at it this way, when we are meeting with a prospect or putting out a proposal, it is far too easy to give all the information, all the recommendations, all the relevant links and all of costs.   This is done on the belief that the more we provide, the better the outcome.   But then, we move into the follow up and chasing phase of the selling process… and then what?!?!   What do you say in those emails?

I have received my own share of emails saying just “Have you had a chance to look at the proposal, are you ready to sign up yet?”    Constant contact with the prospect is important, but the contact needs to add value.

Which is why holding back or 2 or 3 small items gives you the perfect reason for follow up and further conversations.   Much better to email or call the prospect with something along the lines of “By the way, in regard to the proposal, I thought you would like to also know that ….” followed by the extra bait.  But again, 1 item at a time gives reasons for chasing and follow up calls in the future.

I hate selling, I hate the closing even more, but using this technique makes phoning or sending those emails a lot easier, and I can confirm I have made a lot more sales because of it.

One of the things that I have found to be on the increase for me personally over the past 18 months or so is end of work payments.   By this, I mean that I have done the work, completed the project for the customer, installed the software/delivery/report and raised the invoice.  Then, right at the end, the customer will ask for something more.   I am not talking about extra product work (more developments), but instead the customer needs additional services such as support, or call off help time, or question sessions.  I have been asked to supply this extra resource in a variety of ways, and all have their own advantages and disadvantages:

Support and Maintenance
For any company looking for growth, this is the ideal situation – its how big business makes their real money.  Once you have delivered a project, a sum is agreed between you and the customer, and they pay you this fee annually up front and you provide fixes, advice and resolution.  Note, support and maintenance never includes new features or tweaks (these are for enhancement requests for which you charge your normal rates).   Its insurance for the customer – they know your be around to fix things that go wrong and they know how much it will cost them as they have paid up front.  The flip side is that if the support payment charge is too low and they hog a lot of your time with questions and problems, you can actually make a loss against the revenue it can bring.   Of course, if they only need you a little for the year, you have made a shed load of money for little to no effort whilst you go off and do the next project.

The ratio between a support/maintenance figure and the initial delivery/development cost will vary from industry to industry, and of course will be down to the size of the project.  But a starting point (this is typical for say computer software supply) would be around 25-28% of the initial cost, but be prepared to haggle over the final figure.  And of course, if the support is renewed at the end of the 1^st year, don’t forget to include a provision to uplift the yearly charge by inflation.

Call Off Booking
Call off booking is where the customer may need help in the future, so they agree to pre-book and pre-pay for a number of days of effort, and they are then free to ‘call off’ (use) the time as and when required.  They would do this as it makes the administration easier on their side.  Whilst they don’t want to set up formal support agreements, and at the same time don’t want to go cap in hand to their boss to raise purchase orders every time they need help, raising an order for 5 or 10 days of support time in advance may be an easy decision.   For call off booking, its best to make sure that the payment is in advance of use, that the days paid for expire after a set length of time if not used (say 6 months or a year), and that they understand that because they are not on a formal support contract, it will be provided on a best endeavours basis (i.e., you will provide support when your time allows).

Clearly with such an arrangement, you will need to carefully track your time, and I suggest a minimum time slot for rounding.  For my customers, I provide call off booking with a minimum use of ¼ of a day.  If they pre-pay for 5 days and need a quick answer by phone or email, this uses a ¼ day of their 5 days.  This saves having to reconcile down to minutes and hours.   I justify this minimum by the fact they will be interrupting normal work, and it may take an hour or so to get back on track.

Whilst it’s not as good as support and maintenance, call off pre-booked time does mean that you have the cash in the bank for work that may or may not be required in the future.

As and When Agreements
The next arrangement is not really an arrangement at all – it’s most likely what you do now.  When they don’t want to set up support, and don’t want to pre-book, they will just call you when ever they need help, and you charge them.   There is no advantage for them and no advantage for you – so it’s a neutral balance.

Agreed future call off rates and time
The final option is the one to avoid at all costs – where they force you to agree to future day or hour rates, and to be available, with no promise of the work.  All the advantages are on the customer side – and you don’t get any balancing money up front.   The difference between this agreement and the “as and when” is that they have nailed you down to price.  This is not an issue until the time you want to raise your rates, and find you can’t.