Simple Sales in B2C Transactions

In B2C transactions, the buyer, user, and payer are usually the same individual. This unity simplifies the sales process, as the salesperson only needs to demonstrate the product or service’s value to one person. For example, when a consumer buys a smartphone, they are the individual evaluating the features, making the purchase decision, and ultimately paying for and using the device. The B2C sales process hinges on understanding the consumer’s needs and showcasing how the product fulfills them.

B2C sales focus on emotional appeal, convenience, and perceived value. Price sensitivity, brand reputation, and immediate benefits often weigh heavily in the decision. Because of this simplicity, the sales cycle is shorter, and the decision-making process is relatively straightforward.

The Dynamics of Complex Sales in B2B Transactions

In contrast, B2B sales involve multiple stakeholders, each with distinct responsibilities and objectives. These sales are not just about convincing one person but aligning the interests of an entire decision-making unit. This is especially true for large organizations where the stakes are higher, the budgets are significant, and the potential risks of a poor decision are magnified.

Related post: Your Customer is Afraid You’ll Cost Him His Job

To understand complex sales, it helps to break down the typical roles involved:

Money Guy (Payer): Often represented by the manager with budget authority, the money guy’s primary concern is financial. They evaluate the proposed solution’s Return on Investment (ROI), profitability, and cost-effectiveness. The money guy’s questions might include:

• How will this purchase improve the company’s bottom line?
• What are the potential cost savings or revenue increases associated with this solution?
• Are there risks of overspending or under-delivering?

A successful pitch to the money guy requires quantifiable metrics, such as financial projections, case studies, and cost-benefit analyses.

Purchasing Department (Buyer): Typically, this role is fulfilled by a procurement officer or purchasing manager. The purchasing department’s responsibility is to act as a gatekeeper, ensuring that all company policies and procedures are followed. Their concerns are often administrative and logistical:

• Does the vendor have the necessary credentials, insurance, or certifications?
• Are there any red flags in the vendor’s track record or references?
• Does the proposal meet compliance requirements?

The purchasing department’s role is crucial because it controls access to the organization. A persuasive argument to the purchasing department focuses on transparency, reliability, and adherence to procurement guidelines.

Tech Guy (User): This is the person or team that will use or need the product or service in their day-to-day operations. Often, this role is filled by technical experts, engineers, or end-users who directly interact with the solution. Their primary concern is functionality:

• Does the product solve their specific problem?
• Is it user-friendly and compatible with existing systems?
• Will it enhance efficiency or productivity?

The tech guy is often the initial advocate for your solution. Winning their support requires a deep understanding of their pain points and demonstrating how your product or service directly addresses their challenges.

Tailoring Your Approach to Complex Sales

Given the diverse priorities of the money guy, purchasing department, and tech guy, a one-size-fits-all sales pitch is ineffective. Instead, a multi-faceted approach is necessary, with tailored presentations and messaging that speak to the unique concerns of each stakeholder.

Crafting a Financial Case for the Money Guy:

• Emphasize ROI with concrete numbers. For example, “Our solution will reduce your operational costs by 15% annually, saving approximately $50,000 annually.”
• Use case studies and testimonials from similar businesses to build credibility.
• Address risk mitigation by highlighting warranties, guarantees, or proven success rates.

Building Trust with the Purchasing Department:

• Provide thorough documentation, including certifications, insurance coverage, and a history of successful projects.
• Be transparent about pricing, timelines, and deliverables.
• Offer references from past clients to validate your reliability.

Demonstrating Value to the Tech Guy:

• Use technical demonstrations, such as live product walkthroughs or prototypes, to showcase functionality.
• Tailor solutions to their specific needs. For example, if you’re selling software, explain how it integrates seamlessly with their existing systems.
• Provide training resources or ongoing support to ensure a smooth implementation.

Related Post: How to Overcome Client Skepticism

Managing Long Sales Cycles

Complex sales typically involve longer sales cycles due to the number of decision-makers and the higher stakes involved. It’s common for the sales process to stretch over weeks or months as stakeholders review proposals, compare alternatives, and conduct internal discussions.

To navigate this extended timeline:

• Stay engaged: Regular follow-ups demonstrate your commitment and keep your solution top of mind.
• Leverage champions: Identify a key advocate within the organization, such as the tech guy, who can push your proposal forward internally.
• Be patient but persistent: Respect the organization’s decision-making process while gently nudging them toward a conclusion.

The Importance of Relationship Building

In complex sales, relationships are as important as the solution itself. Building trust with each stakeholder can significantly improve your chances of success. To do this:

• Invest time in understanding their needs: Conduct thorough research before your pitch.
• Maintain consistent communication: Keep stakeholders informed throughout the sales process.
• Show empathy and flexibility: Understand their challenges and adapt your proposal to address them.

Conclusion: Navigating the Complexity

B2B sales are inherently complex, but understanding the distinct roles of the money guy, purchasing department, and tech guy provides a roadmap for navigating these challenges. By crafting tailored presentations and messaging, managing long sales cycles effectively, and building strong relationships, you can successfully address the needs of all stakeholders and close deals with confidence.

Do your complex sales presentations serve the informational needs of all parties?

The post How to Handle Complex Sales for B2B Businesses first appeared on SteveBizBlog.

This example illustrates a universal truth for businesses: not all customers are created equal. While some helped our business thrive, others quietly drained our resources. This is why Customer Profitability Analysis (CPA) is crucial. CPA helped us identify which customers were profitable (“ideal”), which were not profitable but helped cover most expenses (“laggards”), and which were actively harmful (“losers”).

Let’s explore how CPA works and how a company like mine could use it to transform its customer base and the bottom line.

What Is Customer Profitability Analysis?

Customer Profitability Analysis is the practice of breaking down all revenues and costs associated with individual customers to determine their overall profitability. It’s not just about how much money a customer brings into the business as revenue but about understanding the total cost of serving them.

Costs fall into two main categories:

• Direct Costs: Expenses tied directly to the work you perform, such as salaries and benefits.
• Indirect Costs: Overhead and back-office costs such as administrative time, rent/utilities, insurance, and other costs necessary to operate the business.

After identifying direct and indirect costs, the next step is to allocate these indirect costs to specific customers using Activity-Based Costing (ABC). Traditional costing methods often distribute overhead expenses uniformly across all customers, regardless of their actual consumption of resources. This approach can lead to inaccuracies, as it fails to account for the varying demands each customer places on your business. ABC resolves this by tracing indirect costs back to the activities that drive them, and then assigning these costs proportionally to the customers who consume these activities.

For example, consider a technical documentation company where project requirements vary significantly. Some projects require specialized software with associated licensing fees, while others do not. Other projects involve staff working on-site at the client’s location, thereby not incurring the costs associated with office space and infrastructure, such as utilities and Internet connectivity. Using Activity-Based Costing (ABC), the company would identify key activities for each project. Each activity would be assigned a cost driver; for example, the allocation of software licenses or hours spent on-site vs off-site. By linking costs to specific activities and the customers responsible for them, ABC provides a clearer understanding of how indirect costs are incurred and distributed, enabling a more accurate analysis of profitability.

By subtracting total costs (both direct and indirect) from revenues generated by a customer, you can determine their actual profitability. Based on this analysis, customers can be categorized into three distinct groups:

1. Ideal Customers: These customers are highly profitable, easy to work with, and dependable. They are perfectly aligned with your business goals and should be prioritized and nurtured to sustain and grow their value to the company.
2. Laggard Customers: While these customers generate enough revenue to cover their direct costs and most of their indirect costs, they do not always fully cover their share of indirect costs. Despite this, losing their revenue could hurt the company’s overall profitability, as fixed indirect costs would need to be redistributed among your ideal customers, lowering their profitability. Laggard customers represent an opportunity to refine processes or strategies to improve their profitability.
3. Loser Customers: These are unprofitable customers who often fail to even cover their direct costs. Additionally, they place a disproportionate burden on indirect costs by consuming excessive resources. These customers drain profitability and should be fired, so they become the competition’s problem.

When Interleaf, the public company that acquired my documentation and training business along with several other similar businesses, hired me as Vice President of Operations, they were themselves acquired eighteen months later. Interleaf’s service division – which I managed – was slated for closure. I was tasked with finding a new home for our documentation and training clients. Using CPA, my team and I identified our ideal customers. One of my former partners and I created a new company specifically to continue to serve these ideal customers. Additionally, we selected a few laggard customers that we believed could be transformed into ideal clients with some effort. I offered the remaining customers, categorized as laggards or losers, to our competitors.

Many of these competitors, unaware of the principles of CPA, eagerly accepted these unprofitable customers, focusing only on their revenue potential. Over time, the strain of serving these laggard and loser customers took its toll on many businesses, leading some to even close. Their closure meant shedding their formerly ideal customers as well. We were ready and prepared to step in and absorb our competitors’ ideal clients, which strengthened our position in the market. By understanding and applying CPA and ABC, we not only avoided the pitfalls that plagued our competitors, but it also allowed us to remain profitable and position ourselves for sustainable growth. 

A Tale of Three Customers

Let’s look at how a company can apply CPA to evaluate three different clients. I’ll use the example of a documentation and training company like mine.

Ideal Customer: Innovative Tech Solutions

Innovative Tech Solutions is a SaaS company that consistently contracts the documentation firm to create user-friendly product manuals and training videos. They provide clear project requirements upfront, are responsive during the feedback process, and always pay invoices within 30 days, as agreed.

Revenue is strong, costs are minimal due to their efficiency, and the relationship has led to referrals of similar clients. This client is the textbook definition of an “Ideal” customer.

Laggard Customer: Regional Manufacturing Inc.

Regional Manufacturing Inc. contracts for employee training materials once a quarter. While they provide steady business, their projects often come with unclear expectations, requiring additional communication and rework. Payments occasionally occur after the agreed Net 30 payment term, and the team spends more time than they’d like resolving these issues.

Projects from Regional Manufacturing Inc. do not always return a profit to the company. That said, they consistently cover all their direct expenses and, in most cases, their share of indirect costs. However, there are times when they add to the company’s indirect costs, making their overall contribution less consistent. Despite this, customers like Regional Manufacturing Inc. are valuable during periods when revenue from other sources falls short, as their contributions help cover fixed indirect costs. With some targeted effort, this customer has the potential to become more profitable and a stronger long-term asset to the business.

Loser Customer: Retail Giant Co.

Retail Giant Co., despite its big-name appeal, is the company’s most challenging client. They insist on rock-bottom pricing, demand unlimited revisions, and regularly push back deadlines. Their payment terms are Net 30, but the actual payments often take 60 days or more, meaning the company often waits two to three months to be compensated for work already performed and delivered.

After running CPA, the company discovered that Retail Giant Co. accounted for 40% of their workload, but only contributed 32% of the company’s revenue, creating a significant drain on resources and contributing no profit to the bottom line. Moreover, the client frequently refused to pay for hours worked when deadlines – often missed due to their own delays – were not met. Additionally, their payment terms were so extended that the company sometimes had to factor their invoices to maintain sufficient cash flow, incurring extra costs that further eroded margins. In some cases, their projects didn’t even cover direct labor costs, let alone contribute to their share of indirect costs. This demanding client also created substantial stress for the team, leading to burnout and turnover, further compounding the negative impact on the business.

The CPA Process in Action

After the company conducted a CPA analysis to get a clear picture of profitability, here’s what they discovered:

Firing the Loser Customers

As the CPA shows, Retail Giant Co. was clearly a loser customer. While it’s never easy to part ways with a client that accounts for nearly one-third of the company’s revenue – especially a high-profile one at that – it became evident that letting them go was the right choice. To outsiders, the sharp drop in revenue might create the impression that the business was in trouble. However, in reality, the reduction in revenue was a calculated move that significantly boosted profitability. By eliminating this unprofitable client, the company doubled its profits for the owners, proving that prioritizing profit contribution over total revenue is the key to long-term success.

Turning Laggards into Ideal Customers

The company recognized the potential of Regional Manufacturing Inc. and took deliberate steps to improve the relationship by employing a 13-step onboarding process. They began by setting clear expectations and introducing a detailed project scope template to minimize miscommunication and ensure alignment on deliverables. To streamline processes and reduce inefficiencies, they assigned a dedicated account manager to oversee the client’s projects and handle communication. Additionally, they offered a small discount as an incentive for early payments, which successfully encouraged Regional Manufacturing Inc. to pay invoices before the Net 30 deadline. Within six months, these efforts transformed Regional Manufacturing Inc. into a more reliable client, increasing profitability and alleviating stress for the team.

Cultivating Ideal Customers

The company leveraged strategic account management principles to retain and grow relationships with its ideal customers, such as Innovative Tech Solutions. Unlike customer service, which is primarily reactive and focused on preventing client attrition, strategic account management takes a proactive and offensive approach. Its goal is not merely to address client needs but to actively grow sales within an account while uncovering new business opportunities.

Using these principles, the company went beyond exceptional customer service. While they consistently delivered projects ahead of deadlines and included thoughtful extras like executive-level support and complimentary project summaries for larger initiatives, their approach didn’t stop there. They scheduled quarterly check-ins, not just to resolve issues or ensure satisfaction but to discuss evolving client needs and identify growth opportunities. Recognizing the potential of client advocacy, they also created an active referral program, securing two new clients with profiles similar to Innovative Tech Solutions. This proactive, growth-oriented strategy helped reinforce customer loyalty, expand relationships, and generate new business, demonstrating the distinct advantages of strategic account management over traditional customer service.

Conclusion: The Power of Customer Profitability Analysis

Customer Profitability Analysis isn’t just a financial exercise – it’s a strategy for reclaiming control of your business. By understanding the true cost of serving each customer, you can make informed decisions about where to focus your time, energy, and resources.

Whether you’re running a technical documentation company, a coffee shop, or a software firm, the principles remain the same. Identify your ideal customers, nurture them, and find ways to turn laggards into ideal customers. And when necessary, don’t hesitate to let go of loser customers who hold you back.

The rewards – a more profitable business, a happier team, and better clients – are well worth the effort.

When was the last time you reviewed your customer list and conducted a CPA analysis to discover your ideal, laggard, and loser customers?

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At its core, ABC isn’t just a method for allocating costs; it’s a lens through which you can see the real mechanics of your business. I came to realize that traditional costing methods could obscure valuable insights, lumping indirect costs into broad categories that fail to tell the whole story. ABC cuts through that fog, illuminating the specific activities that drive costs and enabling precise, actionable insights.

When I attended the IBM workshop, I was managing the documentation and training division within Interleaf, a service-based enterprise. Interleaf had recently acquired my documentation and training company along with two other documentation companies, and our main deliverables included user manuals, service guides, and training courses for Interleaf’s customers. Like many service businesses, I struggled to identify which customers were genuinely profitable.

The Challenge of Costing in a Service Business

Service businesses often struggle to allocate costs accurately. Unlike manufacturing, where you can point to raw materials or machine hours, service costs are tied to less tangible elements, such as people’s time, varied skill sets, and different support functions. In my documentation and training division, I thought I understood my costs. I knew how much I paid my team, how much time we spent on client projects, and what it cost to run the office. But I couldn’t shake the feeling that some clients and projects were far more profitable than others – and that I wasn’t capturing this difference in my pricing.

At the workshop, the instructor posed a simple question to me, “Do you really know what it costs to deliver your services?” At the time, I thought I did. Like many in the class, I assumed that as long as revenue exceeded direct costs, the rest was just a matter of covering overhead. But as the session unfolded, I realized how wrong I was. My assumptions about profitability were based on broad averages that hid the nuances of my operation. This is where ABC came in.

Understanding Activity-Based Costing

ABC is more than just a costing method; it’s a way to see your business operations with precision and clarity. Instead of lumping overhead costs into broad categories and allocating them across all billable hours, ABC identifies specific activities that drive costs and assigns those costs based on actual consumption.

For my business, breaking down our operations into discrete activities was essential, particularly because the costs varied significantly depending on the type of customer and deliverable. Each deliverable had unique cost drivers, and identifying these activities allowed me to uncover the real dynamics of resource usage.

In the following example, we will be examining how to allocate costs for a technical writer using Activity-Based Costing (ABC). While the focus here is on technical writer hours, the same principles apply to other roles in a documentation and training business, such as editors, graphic designers, instructional designers, course developers, and programmers. Each role would have its own direct costs, general overhead allocations, and project-specific adjustments.

1. Establishing the Direct Cost for Technical Writer

The first step was to identify the baseline rate for the function.

Direct Cost

The direct cost of a technical writer includes:

• Average base salary: $75,000/year
• Payroll taxes: $6,000/year
• Fringe benefits: $20,000/year

Total annual compensation: $101,000/year
Hourly direct cost: $101,000 ÷ 2,080 hours = $48.56/hour, rounded to $50/hour.

G&A Allocation

General and Administrative (G&A) costs include:

• Sales and Marketing: $100,000/year
• Administrative Support and Management Salaries: $150,000/year

Total G&A costs: $250,000/year
Total billable hours (all roles): 45,000 hours

G&A overhead per hour: $250,000 ÷ 45,000 = $5.56/hour.

Baseline Rate

Adding G&A to the direct cost:
$50/hour (direct cost) + $5.56/hour (G&A overhead) = $55.56/hour, rounded to $56/hour.

This $56/hour is the baseline rate applied to all technical writer hours before office or project-specific allocations are added. The baseline rate is a ‘peanut butter’ allocation that is spread evenly across all billable hours for writers. Be mindful that this would be developed for all roles, such as editors, graphic designers, instructional designers, course developers, and programmers.

2. Allocating Office Overhead Costs

Office-specific costs are allocated to all hours worked on site, as off-site projects do not consume office resources.

Office Costs

• Annual office rent and utilities: $100,000
• Annual computer, Internet, and office equipment costs: $50,000
• Total office-specific costs: $150,000
• Total on-site hours: 41,000 hours (45,000 total billable hours – 4,000 hours for two writers working off-site at the client’s offices)

Office overhead per on-site hour:
$150,000 ÷ 41,000 = $3.66/hour, rounded to $4.00/hour

• Off-site Projects (e.g., Project A):
  $56/hour (baseline), as no office overhead is applied = $56/hour
• On-site Projects (e.g., Project B and others):
  $56/hour (baseline) + $4.00/hour (office overhead) = $60/hour.

3. Allocating Software Costs (Usage-Based Allocation)

Certain tools, like version control systems, are used exclusively by specific projects, and their allocation varies based on the project. For Project A, the customer required that the software cost be invoiced separately as a monthly line item, ensuring clear visibility. In contrast, for Project B, the software cost is integrated into the hourly rate, streamlining billing while still reflecting usage.

Software Costs

• Annual software license cost: $10,000
• Project A usage: 4,000 hours
• Project B usage: 2,000 hours
• Total software usage hours: 6,000 hours

Monthly Invoice for Project A

• Total software cost for Project A:
  $10,000 × (4,000 ÷ 6,000) = $6,667.
• Monthly invoice amount for Project A:
  $6,667 ÷ 12 = $556/month.

Per Hour Allocation for Project B

• Software cost per hour for Project B:
  $10,000 × (2,000 ÷ 6,000) ÷ 2,000 = $1.67/hour, rounded to $2/hour

Project-Specific Fully Burdened Rates

• Project A (Off-site):
  $56/hour (baseline rate)
  Software invoiced separately at $556/month.
• Project B (On-site):
  $60/hour (onsite rate) + $2.00/hour (software) = $62/hour.
• Other Projects that do not use the version control software (On-site):
  $60/hour (on-site rate).

Summary of Fully Burdened Rates

ABC allowed me to assign costs to these specific activities based on their consumption of resources, such as staff time, software, or physical infrastructure.

By breaking down operations in this way, ABC not only revealed the true cost of each deliverable but also highlighted why these costs existed. This clarity empowered me to make more informed decisions and better align pricing with the value delivered to clients.

How ABC Works with Customer Profitability Analysis (CPA)

The workshop also introduced me to Customer Profitability Analysis (CPA), which builds on ABC’s foundation. CPA examines the profitability of individual customers or customer segments, taking into account not just revenue but also the costs of serving them.

For my business, ABC provided the granular cost data I needed to perform CPA. By linking activities and costs to specific clients, I could calculate the actual profitability of each account.

This analysis transformed my approach to client relationships. Instead of focusing solely on revenue, I began evaluating clients based on their overall contribution to profitability.

Lessons Learned

One of the most valuable lessons learned from the IBM workshop was the importance of looking beyond surface-level metrics. Traditional costing methods had masked the true dynamics of my business, leading me to underestimate the costs of certain activities and overestimate the profitability of some clients. ABC changed that.

Another key takeaway was the value of data. Implementing ABC required detailed tracking of activities and costs, but the insights gained were well worth the effort. I learned to view data not as an administrative burden but as a strategic asset.

ABC and CPA are often seen as tools for large corporations, but my experience proves their value for businesses of all sizes. By shedding light on the hidden drivers of cost and profitability, these methodologies empower businesses like mine to make smarter decisions.

In the years since that workshop, I’ve continued to refine how my clients can use ABC in their business. Whether I’m evaluating a new client, planning a project, or reviewing my own operations, ABC ensures that every decision is grounded in reality.

How can you use ABC in your business?

The post How to Unlock the Power of Activity-Based Costing first appeared on SteveBizBlog.

Doing Your Homework

One of the most important aspects of successful cold outreach is preparation. Asking to speak to the “President” or “CEO” without naming them signals that you haven’t done your research. This approach almost always results in being sent to voicemail—a polite but definitive brush-off. According to a study by HubSpot, 42% of salespeople identify researching the prospect’s company to determine its challenges and opportunities as the most effective way to make the sale.

I often recommend that my clients leverage online tools and resources like LinkedIn to identify key players within the organization. LinkedIn, company websites, and business directories like ZoomInfo or D&B Hoovers can provide valuable insights into the corporate structure. By addressing the gatekeeper with a specific name of the contact you want to reach, you demonstrate that you’ve taken the time to understand the company. Not only does this respect the gatekeeper’s role, but it also subtly conveys professionalism and intent.

Leveraging the Sales Team as an Entry Point

When cold-calling a company, gaining access to a salesperson can be a powerful strategy. Salespeople are often the most approachable and talkative employees in an organization. This is not surprising, as their role inherently requires them to engage with potential and existing clients. They can serve as an open gate to the inner workings of the company and may even provide you with details about the decision-making hierarchy.

When you ask to speak to someone in sales, the gatekeeper is less likely to block your call since the request seems relevant and non-threatening. Once connected, build rapport with the salesperson. You might ask questions like, “What challenges do you typically hear from your customers?” or “How do you position your products/services to align with your customers’ needs?” These questions can naturally lead to a conversation about the internal decision-making process.

Renowned sales expert Jill Konrath, author of Selling to Big Companies, emphasizes the importance of leveraging insider information. She writes, “Sales reps are often the most willing to talk because they understand the game. They’re in it too. Use this to your advantage to map out the buying process and identify key decision-makers.”

Navigating the Decision-Making Process

If, after speaking to the salesperson, you still haven’t identified the decision-maker, it’s time to dig deeper. Ask the salesperson direct but open-ended questions such as, “How will the decision to buy my product or service be made?” This question shifts the conversation from the specific individual to the process, which can yield critical information. If the answer you receive is vague or incomplete, follow up with a probing follow-up question such as, “Then what happens?” This iterative approach helps you trace the path of the decision-making process until you reach the final authority.

Research by Gartner suggests that the average B2B buying group consists of six to ten stakeholders. Understanding the roles of these individuals and how they interact is essential to tailoring your pitch. Some companies may have formalized procurement processes, while others rely on a single decision-maker’s discretion. Your goal is to align your outreach strategy with the company’s specific decision-making framework.

Related Post: How To Handle Complex Sales For B2B Businesses

Handling Objections from the Decision-Maker

Once you reach the decision-maker, overcoming objections becomes the next challenge. Pricing is one of the most common concerns, especially in small to midsize businesses where budgets are tight. Addressing this objection requires reframing the conversation to focus on value rather than cost.

A master salesperson once shared a compelling way to handle this by asking the prospect, “Price or profit, which would you rather have? Price lasts for a moment, but profit lasts a lifetime.” This statement shifts the focus from the immediate expense to the long-term benefits of your offering. Sales literature often highlights that successful salespeople are those who can position their product or service as a solution to the customer’s problem rather than a commodity with a fixed price.

To strengthen your case, use case studies, testimonials, or data to demonstrate how your product or service has delivered measurable ROI for similar companies. For instance, you might share how another client saved 20% on operational costs or increased revenue by 15% after adopting your solution.

Related Post: How to Overcome Client Skepticism

Adapting Your Approach to Different Scenarios

Different companies require tailored approaches, particularly when navigating interactions with gatekeepers. In some organizations, the gatekeeper wields significant influence over the decision-maker, making it essential to build rapport and gain their support. For example, in my invisible fencing business, I would often bring a basket of homemade cookies from my wife to the receptionist at veterinary offices. This small, thoughtful gesture created goodwill and opened many doors for me.

The key is to treat gatekeepers with respect and professionalism, acknowledging their role as a vital part of the process. Be polite, genuine, and professional in your communication. Instead of bypassing or dismissing their role, involve them in the conversation by saying something like, “I understand you likely receive calls like this frequently, but I truly believe our service could benefit your company. Could you help me connect with the right person?”

This approach not only demonstrates respect for their position but also fosters a sense of collaboration, increasing your chances of making a meaningful connection.

If the gatekeeper is particularly resistant, consider using a name-dropping strategy. Mentioning someone you’ve already spoken to within the company (such as the salesperson) can lend credibility to your request. For example, “I was speaking with [salesperson’s name], and they suggested I reach out to [decision-maker’s name] directly to explore how we could collaborate.”

Conclusion

Selling to small and midsize businesses involves navigating a complex web of gatekeepers, sales teams, and decision-makers. Success requires a combination of preparation, strategic questioning, and a focus on value. By conducting thorough research, leveraging salespeople’s openness, and employing thoughtful communication strategies, you can increase your odds of making meaningful connections.

The process may seem daunting, but persistence and adaptability are key. As sales expert Jeffrey Gitomer states in his book The Sales Bible,

“The sale is won when the value exceeds the price.”

Remember this principle as you refine your approach to navigating the decision-making process and ultimately closing the deal.

What processes are you using to get to the decision-maker?

The post Tips to Make Successful Sales Calls first appeared on SteveBizBlog.

In this post, we’ll explore the reasons behind this digital privacy movement, what’s changing, and how you can adapt your marketing strategy to continue reaching your audience effectively. We’ll also discuss ways of leveraging contextual advertising and establishing meaningful partnerships to place your products or services where they’ll be seen by the right eyes, even without cookies.

Why Digital Privacy Has Become a Major Issue

The demand for digital privacy has been building over the years. Consumers are becoming increasingly aware of how much personal data is collected and used to influence their online experience. High-profile data breaches and misuse of consumer data, like the Cambridge Analytica scandal, 23andMe, and AT&T, have only heightened these concerns. Many consumers now seek more control over their data and transparency regarding its use.

Key Drivers Behind the Digital Privacy Movement

1. Consumer Demand: Consumers want to know how their data is being used and want the option to opt out if they choose. Recent surveys indicate that privacy is now one of the top concerns among Internet users.
2. Regulatory Pressure: Governments worldwide ensure companies adhere to higher data protection standards. Regulations like the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) are reshaping how businesses collect and process personal data.
3. Tech Industry Changes: Companies like Google and Apple are making privacy a focal point of their platforms. Apple’s App Tracking Transparency (ATT) feature requires users to explicitly allow tracking. Google plans to depreciate third-party cookies in Chrome by 2025, replacing them with privacy-centric alternatives like its Privacy Sandbox.

What Does the “Death of Cookies” Mean for Your Marketing?

If you’ve been relying on cookie-based tracking to target customers across various platforms, the “death of cookies” fundamentally changes how you can reach audiences.

What is Cookie-Based Tracking?

Cookie-based tracking involves placing small data files, called cookies, on a user’s browser to monitor online behavior, capturing data like sites visited, time spent, and specific clicks. This information helps businesses create user profiles for targeted ads across different sites. For instance, after someone browses hiking boots on a retailer’s site, ads for those boots may reappear on other sites the user visits. This approach has made it easier for brands to stay visible to potential customers and increase engagement through retargeting.

However, with the gradual phasing out of third-party cookies, these tracking methods are becoming obsolete, posing a challenge for marketers who rely on strategies like retargeting, lookalike audiences, and personalized recommendations. These tools, essential for reaching specific audiences, will be limited without cookies to track user behavior across sites.

Yet, the shift away from cookie-based tracking opens the door to new, privacy-respecting engagement methods. As privacy standards rise, marketers must start exploring fresh ways to connect with their audiences while fostering trust and transparency.

Shifting to Contextual Advertising

As the era of cookie-based tracking fades, contextual advertising is emerging as a viable, privacy-friendly alternative. Unlike behavioral targeting, which tracks user behavior across sites, contextual advertising displays ads based on the content of the website or page a user is currently visiting. For example:

• Running Shoes on a Running Site: If your business specializes in footwear for runners, advertising on websites or blogs dedicated to running ensures your promotions reach an audience already interested in the sport. For example, placing ads on platforms like The Running Channel or iRunFar can effectively target runners seeking information and gear recommendations.
• Archery Equipment on Bowhunter TV: Suppose your business sells archery tackle for hunting. In that case, you might partner with platforms or websites focusing on bowhunting, such as Bowhunter TV or an archery hunting blog. This approach ensures that your ads are presented to users already interested in the subject.

Benefits of Contextual Advertising

• Relevance: Your ads appear on sites relevant to your industry or product, ensuring an interested audience sees them without requiring personal data.
• Brand Safety: Since your ads are linked to content that aligns with your products or services, they’re more likely to appear in brand-safe environments.
• Compliance with Privacy Laws: Contextual advertising doesn’t rely on tracking users across sites, making it a compliant choice in a privacy-centric world.

How to Leverage Contextual Advertising

1. Identify Relevant Content Partners: Look for blogs, websites, or online magazines with a readership that aligns with your target market. For instance, if you sell sustainable clothing, consider partnering with a website that covers eco-friendly lifestyle topics.
2. Focus on Niche Sites: If you’re a freelancer or micro-enterprise, you likely have a specialized service or product. Identify niche websites or communities where your target audience gathers. For example, if you offer eco-friendly packaging solutions, placing ads for your products on sustainability-focused websites or forums can attract businesses and consumers committed to environmental responsibility.
3. Engage with Industry Influencers: Many niche sites are run by industry experts or influencers. You might consider reaching out to them for partnerships or sponsorships that go beyond traditional ad placements. For example, if you create handmade pet products, you could partner with a pet care blog or YouTube channel.

Related Post: How to Get the Attention of an Influencer

How to Negotiate Contextual Advertising Partnerships

Engaging with website owners to explore contextual advertising opportunities involves a strategic approach to ensure mutual benefit. Here’s a step-by-step guide to facilitate this process:

1. Identify Relevant Websites: Begin by pinpointing websites whose content aligns with your product or service. For instance, if you’re a freelance nutrition coach specializing in plant-based diets, look for health and wellness sites focusing on veganism, clean eating, or sustainable lifestyles.
2. Research the Website’s Advertising Options: Examine the site for an “Advertise with Us” section or similar pages detailing their advertising offerings. This can provide insights into available ad formats, audience demographics, and pricing structures.
3. Initiate Contact: If advertising information isn’t readily available, contact the company directly. Use the contact details on the website, such as an email address or contact form. Craft a concise and professional message expressing your interest in advertising opportunities.
4. Propose a Contextual Advertising Strategy: In your communication, highlight how your product or service complements the website’s content. For example, if you’re promoting eco-friendly packaging, explain how your ads would provide value to their environmentally conscious audience.
5. Discuss Advertising Formats and Placements: Engage in a dialogue about the types of ads they offer, such as banner ads, sponsored content, or native advertising. Ensure these formats align with your marketing objectives and resonate with the site’s audience.
6. Negotiate Terms and Pricing: Once mutual interest is established, discuss the specifics:

6. Ad Placement: Determine the optimal location of your ads on the site to maximize their visibility.
7. Duration: Agree on the length of the advertising campaign.
8. Cost: Negotiate pricing that reflects the site’s traffic, audience engagement, and your budget.
9. Request Performance Metrics: Inquire about the site’s analytics to assess potential reach and engagement. Metrics such as average number of visitors per month, page views, and audience demographics can inform your decision.
10. Formalize the Agreement: Once terms are agreed upon, document all details in a formal agreement or contract. This should outline responsibilities, deliverables, timelines, and payment terms.
11. Monitor and Evaluate: Track its performance against your objectives after the campaign has been launched. Use this data to assess the effectiveness of the partnership and inform future advertising decisions.

By following these steps, you can establish effective contextual advertising partnerships that align with your marketing goals and resonate with your target audience.

Adapting Your Marketing Strategy for a Privacy-Focused Future

As digital privacy reshapes the landscape, small businesses must take steps to adapt:

1. Shift Focus to First-Party Data: Collect data directly from your customers through email sign-ups, surveys, or creating an account on your website. Building an email list, for instance, lets you engage with customers directly, even without cookies. I always recommend that my clients develop a value ladder, the lowest rung of which includes a call to action (CTA) to download something of value, free of charge, in exchange for the visitor’s email address.
2. Build Loyalty Programs: Loyalty programs encourage customers to share their information in exchange for rewards, giving you valuable insights while fostering a stronger connection with your audience.
3. Invest in Content Marketing: Content marketing allows you to create valuable, informative content that organically attracts visitors to your website. By focusing on quality content that aligns with your audience’s interests, you can attract visitors and gather first-party data without relying on third-party tracking.
4. Consider Geotargeting and Local SEO: If your business serves a specific region, geotargeting and local SEO can help you reach customers in your area. This approach works well for businesses that depend on local customers, like a café, personal trainer, or boutique.

Staying Ahead of the Curve

As digital privacy continues to evolve, keep an eye on trends and stay proactive in adjusting your marketing strategy. Platforms like Google’s Privacy Sandbox may offer new ways to reach customers in a compliant manner. Meanwhile, focus on providing value, respecting privacy, and building a loyal customer base through genuine engagement and useful content.

Digital privacy may be changing the marketing game, but freelancers and micro-enterprises can continue to thrive with the right strategy. Embrace this shift as an opportunity to connect more authentically with your audience and explore partnerships that align your message with valuable content. As the marketing world evolves, those who adapt and respect consumer privacy will build stronger, more trusted brands.

How are you adapting to digital privacy and the death of cookies?

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Chapter 7 Bankruptcy: Often seen as a last resort, Chapter 7 bankruptcy is a liquidation process. Businesses undergoing Chapter 7 are not expected to continue operations and will eventually close down. When a company files for this type of bankruptcy, an automatic stay is triggered, halting most collection activities by creditors. A trustee is appointed to liquidate the company’s assets to pay off creditors, with secured creditors taking priority. This was an option John hoped to avoid, as it would not only mean the end of his baby Reliable Towing Services but also necessitate laying off all his employees, further compounding the impact of the closure.

Chapter 11 Bankruptcy: More complex and costly than Chapter 7, Chapter 11 involves reorganizing a company’s debts and assets to allow the business to continue operating under court supervision. This process would enable John to keep Reliable Towing Services running and potentially restore it to profitability. Similar to Chapter 7, Chapter 11 also implements an automatic stay on debt collection, providing essential time for the company to stabilize its operations.

The Mechanics of Chapter 11 Bankruptcy

In Chapter 11, the company remains in control of business operations as a “debtor in possession” (DIP) and is tasked with proposing a reorganization plan. This plan details the company’s assets, liabilities, and operational adjustments needed to regain financial stability. Creditors are classified into groups such as secured and unsecured, each group having the right to vote on the plan based on the impairment of their claims.

In the context of Chapter 11 bankruptcy, understanding the distinction between impaired and unimpaired claims is crucial for both the debtor and creditors involved. This distinction has a direct impact on how different creditors’ claims are treated under the reorganization plan, which in turn affects their rights and expectations throughout the bankruptcy process.

Unimpaired Claims: A creditor’s claim is considered unimpaired if the terms of the debt as agreed upon in the original contract are not altered by the reorganization plan. This means that the creditor retains the same rights, and the debtor must fulfill obligations such as repaying the principal and interest at the agreed rates and schedules. Essentially, unimpaired creditors are expected to receive full payment as if the debtor were not undergoing bankruptcy. Because their legal, equitable, and contractual rights remain untouched, unimpaired creditors do not vote on the reorganization plan; their acceptance of the plan is presumed.

Impaired Claims: Conversely, a claim is impaired if the reorganization plan modifies the original terms of the debt agreement. Modifications can include changes in the payment amount, postponement of due dates, or alterations in the interest rate. Impaired creditors are directly affected by the plan since their terms are being adjusted to accommodate the debtor’s financial situation. Such creditors have the right to vote on the reorganization plan because their claims are being altered, and their approval of the plan is crucial. For a plan to be accepted, a certain percentage of these creditors, calculated based on the total dollar amount of claims and the number of creditors, must vote in favor of the proposal.

This classification of claims into impaired and unimpaired plays a pivotal role in shaping the negotiations and outcomes of the Chapter 11 process. It determines creditor participation in the voting process, influences the structuring of the reorganization plan, and ultimately affects the feasibility of the debtor’s efforts to successfully reorganize and emerge from bankruptcy. For a business like “Reliable Towing Services,” understanding and strategically planning around these classifications could mean the difference between a successful and a failed reorganization, as the support of key creditors is essential for the plan’s approval and implementation.

For John, this meant a chance to renegotiate the terms of his fleet financing and other significant debts under the supervision of the bankruptcy court. His plan would need to demonstrate how Reliable Towing Services could continue operations, meet new credit terms, and eventually exit bankruptcy as a viable business.

Navigating Creditor Classes and Voting

In Chapter 11, creditors are also categorized into classes such as secured, priority unsecured, and general unsecured, based on the nature of their claims. Each class votes on the proposed reorganization plan. Secured creditors, whose loans are backed by collateral such as John’s tow trucks, have typically the strongest say in the voting process because their claims are prioritized.

John’s challenge is to convince these secured creditors that restructuring his debt is preferable to liquidating his assets. His plan will need to address the impaired creditors, those whose terms would be modified, persuading them that the long-term benefits of his continued business operations would outweigh liquidating his assets.

The Reorganization Plan

The reorganization plan is the cornerstone of the Chapter 11 process. It must outline a clear path for financial recovery and operational continuity. For John, this means identifying new market opportunities to replace lost contracts, perhaps by diversifying into roadside assistance services or in partnering with city enforcement on impounds – a potential growth area that could stabilize his revenue streams.

The plan would also detail how different creditor classes are treated, specifying which debts would be restructured or maintained. Unimpaired creditors, whose terms would not change, automatically accept the plan, while impaired creditors vote on its acceptance based on how their rights are altered.

Confirmation and Beyond

Once the reorganization plan is voted on and accepted by the necessary creditor classes, the bankruptcy court must confirm the plan. This confirmation is contingent upon the plan being feasible, proposed in good faith, and compliant with legal standards. For John, this stage will be pivotal. A confirmed plan would allow him to move forward, restructure his debts, and begin the process of rebuilding Reliable Towing Services.

Post-Bankruptcy Challenges and Opportunities

Emerging from Chapter 11 can redefine a company’s business trajectory. While the company may face hurdles like reduced credit ratings and wary lenders, successful execution of the reorganization plan can restore credibility and financial health. For John, this could mean not only returning to profitability but also potentially exploring new business models adapted to the changing market dynamics.

Conclusion

The story of Reliable Towing Services serves as an example of how a business can navigate financial crises through the structured process of Chapter 11 bankruptcy. By understanding the intricacies of bankruptcy types, the roles of creditors, and the strategic importance of a well-crafted reorganization plan, companies can work toward a second chance at success, transforming challenges into opportunities for growth and stability.

What plan do you have if a financial disaster strikes?

The post From Chapter 11 Bankruptcy to Rebirth: Lessons in Business Survival first appeared on SteveBizBlog.

At its core, a sales tax license gives you authorization to act as an agent for a specific taxing jurisdiction to collect their sales tax. It’s important to note that sales tax isn’t something businesses themselves pay—rather, they collect it on behalf of the government jurisdiction such as a state, county, or city. To help shed light on how to collect sales tax correctly, here are seven key rules every entrepreneur should understand, along with some insights into current legislation and best practices.

Rule 1: The Business Does Not Pay Sales Tax

One of the most common misconceptions is that businesses themselves pay sales tax. In reality, businesses act as intermediaries, collecting sales tax from their customers and passing it on to the relevant taxing authorities. You are merely the agent collecting the tax on behalf of a government jurisdiction. When you collect sales tax, it is not your money. It is money held in trust for the jurisdiction, and failure to remit these taxes can lead to significant penalties.

Failing to pay collected taxes can result in a business being held personally liable. It’s vital for business owners to understand that sales tax collection and remittance are not optional but mandatory duties.

If you fail to collect sales taxes when required, the consequences can be severe, depending on the jurisdiction. Each state has its own tax laws and penalties, but in general, failure to collect or remit sales tax can result in a range of penalties and liabilities. In most states, business owners, officers, and sometimes even employees responsible for financial decisions can be held personally liable for uncollected or unpaid sales taxes. This means that even if the business closes, the state can pursue the individual(s) responsible for collecting sales taxes and seizing their personal assets if necessary.

Rule 2: Sales Tax Is Typically Imposed on Tangible Products

In general, sales tax is imposed on the sale of physical goods. However, as the economy has shifted toward more service-based industries, some states have expanded their sales tax base to include certain services. However, not all services are taxed, and the types of services that are taxable can differ greatly between states.

For example, Hawaii imposes a General Excise Tax (GET) on most goods and services, including professional services like consulting, legal services, and healthcare. Similarly, states such as New Mexico, South Dakota, Washington, West Virginia, Texas, Connecticut, Florida, New York, and Minnesota also apply sales tax to certain services. As an entrepreneur, it’s crucial to understand the specific rules regarding taxable services in each state where you conduct business.

You should also be aware that digital products, such as downloadable music, software, or e-books, may or may not be subject to sales tax, depending on the state. As digital commerce continues to grow, more states are enacting laws to tax these transactions.

Rule 3: Sales Tax Is Only Imposed on the End Consumer

Sales tax is a consumption tax, which means it is only imposed on the final consumer of a product. For instance, if you’re selling electronic components to a manufacturer who uses them to build a larger product, this transaction is not subject to sales tax. The tax is only imposed when the finished product is sold to the end user.

This concept is important for business-to-business (B2B) transactions. Businesses buying goods for resale can typically present a resale certificate, which exempts them from paying sales tax at the time of purchase. Instead, sales tax will be collected from the final consumer when the goods are resold, often at a higher price. As a seller, it’s important to keep copies of these certificates for your records in case of an audit.

Rule 4: Multiple Taxing Jurisdictions Can Apply

Sales tax collection gets even more complicated when you consider the number of taxing jurisdictions that can apply to a single sale. In addition to state-level taxes, many cities and counties impose their own sales taxes. In some cases, special taxing districts—created to fund specific projects such as public transportation or construction—may also have their own tax rates.

For example, a sale made in Colorado Springs, Colorado, is subject to state, county, city, and special taxing district taxes, including the Regional Transportation District (RTD). The sum of all these taxes creates the total sales tax rate for the customer. As a business owner, it’s your responsibility to ensure that the correct tax rate is applied based on the location the customer takes delivery.

Rule 5: Sales Tax Is Based on Where the Consumer Takes Possession

The location where the customer takes possession of the product plays a crucial role in determining which sales taxes apply. If you operate a physical retail location and customers pick up their purchases in-store, sales tax is straightforward. However, if you offer delivery services or sell products online, things get more complicated.

For mobile or online businesses, sales taxes are applied based on the location where the customer takes possession of the goods, just like with physical goods. This means that if you sell a product online to a customer in a different taxing jurisdiction, you must calculate the sales tax based on the jurisdiction where the product is delivered. This assumes you have a sales tax license for all relevant destination jurisdictions.

As you will see in the next rule, there are thresholds, often based on sales volume or the number of units sold, that determine when you need to obtain a sales tax license for a specific jurisdiction. This is simpler for mobile businesses vs online businesses, as the number of licenses you need is limited to your service area. However, tracking the tax rates across multiple jurisdictions can still be challenging, and tax automation software such as Stripe, Avalara, and TaxJar can help manage these complexities.

Rule 6: South Dakota v. Wayfair Changed the Rules for eCommerce

In June 2018, the U.S. Supreme Court’s ruling in South Dakota v. Wayfair, Inc. drastically changed how sales tax is collected for online businesses. Prior to the ruling, businesses were only required to collect sales tax in states where they had a physical presence, such as a store or warehouse. However, the court’s decision allowed states to require online retailers to collect sales tax even if they don’t have a physical presence in that state.

This ruling opened the door for states to pass economic nexus laws, which require remote sellers to collect sales tax if they exceed a certain threshold. For example, many states now require online retailers to collect sales tax if they make more than $100,000 in sales or 200 transactions in the state. Click on the link for a full list of the economic nexus thresholds by state. If you’re selling online, it’s essential to stay up to date on the sales tax rules in each state where you do business.

When it comes to online businesses, I often recommend that my clients use a marketplace facilitator such as Amazon, eBay, or Etsy, which will handle sales tax collection and remittance on your behalf for a small fee.

Here is what you need to know about collecting sales taxes as an online retailer.

Rule 7: Buyers Are Responsible for Uncollected Sales Tax

Many people don’t realize that if a seller doesn’t collect the required sales tax because they haven’t met the threshold to obtain a sales tax license for certain jurisdictions, the tax isn’t waived. Instead, the responsibility shifts to the buyer. This is called “use tax,” and it applies to all purchases where the seller didn’t collect sales tax for specific jurisdictions. For example, if a customer buys a product online and the seller collects sales tax for the state but not for local jurisdictions, the customer is likely still legally obligated to pay the use tax to those local taxing authorities where the sales tax wasn’t collected.

Although many consumers and businesses are unaware of this responsibility, states are becoming more aggressive in enforcing use tax collection. Some states require businesses to report out-of-state purchases on their tax returns, and failure to pay use tax so can result in penalties.

Conclusion

Sales tax may seem like a confusing and intimidating subject for new entrepreneurs, but understanding the basics can help you navigate the complexities more confidently. Remember that as a business owner, you’re acting as a tax collector for government jurisdictions. Whether you’re selling physical products, services, or operating online, knowing when and how to collect sales tax is crucial for staying compliant and avoiding penalties.

As you grow your business, staying informed about changing sales tax laws—such as the 2018 Wayfair decision—is critical. Resources like the Tax Foundation and state tax agencies can provide updated information to ensure you’re compliant in all your sales.

Are you handling Sales Taxes properly?

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