In this episode:
01:27 – “One of the best speakers I’ve ever seen”
02:59 – Can anyone sell from stage?
05:04 – Becoming a better performer
06:49 – Putting the audience at ease
09:54 – The policy of the velvet rope
16:50 – Putting the rope up
18:32 – A sample of elimination
20:53 – Getting the message across
22:57 – The importance of filters
31:45 – Deciding your price
36:04 – The numbers count
38:33 – What does the customer think?
40:52 – On stage price testing
44:15 – Matthew scares himself
47:21 – Summing it up
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When people pay, they pay attention. [Click To Tweet]
The red velvet rope creates desire. [Click To Tweet]
Don’t burn your energy on the wrong thing. [Click To Tweet]
There’s never a lack of opportunity. [Click To Tweet]
How much poo is in your peanut butter sandwich? [Click To Tweet]
James: James Schramko here. Welcome to SuperFastBusiness.com. Today, we’re going to be talking about selling. I’ve invited Matthew Kimberley. That’s Matthew, with two T’s, to the call. Welcome Matthew.
Matthew: Thank you very much! And Kimberley is spelled L-E-Y at the end.
James: You see, you’ve got to get these things right. You’ve got quite an awkward combo; from the outside surface appears to be a pretty regular name.
Matthew: I own every permutation of it. I believe in domain names, they’re all auto-forwarded to mine. But don’t try and test that. I’m sure we’ll find one that hasn’t been covered.
James: Well, speaking of domain names, we can find out more about you at MatthewKimberley.com. There we go.
Now, I saw you speaking at Chris Ducker’s event. You were a very good speaker, Matthew, very, very good. Probably one of the best speakers I’ve ever seen. Why do you think that is?
How Matthew became a good speaker
Matthew: Thank you, first of all. Thank you very much. It means a lot, especially coming from you. I’ve long had a narcissistic desire for approval. So, the old cliches about being the joker in the class are absolutely true. My first job, when my dad stopped giving me pocket money, was a street performer. And I realized that the more entertaining and the more endearing I was, the more likely I was to get paid.
So I played up likeability. And I did a lot of theatre when I was in high school. I’m naturally attracted to the warm glow of the audience expressing their appreciation. I did a bit of acting when I was older. Toured Italy with a theatre group and this background in I guess performing, performance education, education and performance served me pretty well. Most are very lucky to have Michael Port as a business partner.
If you’re familiar with Michael, he’s written a ton of books, including “Book Yourself Solid,” which is what I teach. But his newest product and service is called “Heroic Public Speaking,” which I’ve been heavily involved in the marketing and delivery of. So I’ve had benefits of sitting down and watching some of the best stage performers and public speakers in the world master their craft, and I’ve learned through osmosis. But anybody can do it. They really, really can, with the right training and teaching.
James: You’re like a self-interviewing candidate here. I was going to ask you, but Matthew, what if I’m shy or not very performance-oriented and I haven’t been trained as an actor? Could I still sell and could I sell from stage?
Selling vs. performing on stage
Matthew: Sure. So selling from stage and performing on stage are related but are not exactly the same. So some of the very best speakers who perhaps give keynotes or who entertain, and educate and teach would be able to sell from the stage with the right training, I believe. But as you know, James, I’m sure many of your listeners will know selling from the stage is not just a case of standing up and saying, “Here’s my material. And by the way, if you want to buy my thing, you can go ahead and do that.”
Now if you’re endearing enough, and if you’re authoritative enough, and if you’re credible enough, then that approach will work, just by making the ask, some people will say, “I’m interested.” And very often, the soft sell works from an integrity point of view for a lot of speakers rather than the hard sell. But if you’re sole intention is to get up on stage and have people flocking to the back of the room, then it’s well worth studying the best in the business at how they do that because there are various seeds that you can plant during your presentation, which have been proven. Studies show… yeah I often say studies show when I don’t have hard data to back it up.
James: Yeah. It’s like science has shown us…
Matthew: That’s right. The experts…
James: As they say. Well, who’s they?
Matthew: Or you can use the fear of isolation by saying, “as everybody knows…”
James: “A lot of people.” That’s one of my favorite ones. A lot of people said this shopping cart is ugly.
Matthew: There we go. Great. Or even the generic, “It has been proven…” OK, by who?
James: So, one might say that seeds could be planted and that even from your own experience, there are some things that you can specifically do even if you weren’t a gregarious, outgoing person that could still harvest you a sales crop and get you success and maybe defy your own perception of your ability to do this.
How to be a better performer
Matthew: Absolutely. So there are two elements. One, can anybody become a better performer on stage? Absolutely yes, by studying it with good teachers. Practice helps, but rather like doing push-ups, if you’re doing push-ups with the wrong form, then you may damage yourself in the long term. So get some good instruction on how to be a better speaker. It’s got nothing to do, well it has something to do with confidence, but it can be as simple as where you stand on the stage. Many speakers who are new or unpracticed, or even those who have practice have a tendency to wander around the stage.
James: Burn a hole in the dance floor, I call that. Where they’re walking up and down the boards with a nervous tension and you can hardly keep your eye on them.
Matthew: Sure. When you’re aware of that and you rehearse, then you can eliminate that entirely from your presentations by landing on one spot and delivering an important message. It doesn’t mean you can’t move when you’re talking, of course, but it means that if you move with intention, it’s likely to be more powerful.
One thing I learned from Michael Port, my teacher, you may remember James, when I speak about “Book Yourself Solid” from stage, there are four modules, and each one of those modules is actually mapped out on the stage. So module one is far right, and module four is far left, and two and three are in between those things. Everytime I refer to those modules, I go back physically to that point, which helps people with the mental recall. They can start to map out. They get a visual image of the thing I’m teaching as well as the taught things.
So there’s various techniques that you can learn. When to breath, when to swallow, how to land a joke, what to do if your joke fails? Typically double down and acknowledge the fact that it failed and do something self-deprecating.
James: You’re good with this self-deprecating stuff.
Matthew: Sure, sure.
James: You talked about some topics that I would probably find uncomfortable to deal with. I think you talked about hemorrhoids or something like that. Is that right?
Making your audience feel comfortable
Matthew: Well, that’s right. And I see that as the pattern interrupt. You know, because we want people to feel comfortable as quickly as possible because we want them to feel comfortable and we want them to obey us. Right? So if you remember the very, very first thing that I did when I stood up on stage is instructed the audience to do three or four things. The minute I got up on stage before I’d even opened my mouth and excused myself, I said, “Stand up, turn to the previous speaker and say, “You rock.” And everybody did.
And I said, “Turn to the back of the room and tell the organizer you rock,” and everybody did. And I said, “Turn to the person next to you and tell them you rock,” and everybody did. And then I got them to the funny exercise where they have to shake their hands in front of them, put on a pair of sunglasses because they’re about to be blinded by my brilliance. And that does a few things. It gets them a bit loosened up. More importantly, it gets them obeying you. So the audience obeys you.
And then I lead with a complete passage. So I might be here to talk about selling and getting clients. But here’s more interesting thing, which is definitely something you weren’t expecting, which will put you in a more relaxed state, which is a picture of myself looking relatively unhappy; and say, “That is the face of a man with hemorrhoids.” It’s absolutely true. There we go. I’ve done it again. I did have hemorrhoids. But that wasn’t the purpose of the device.
The purpose of the device is to make people say, “This guy is going to be different.” When was the last time they heard those words used by a speaker on a stage? Secondly, it will make them laugh because everybody likes bum-related humor. Thirdly, it makes them drop their guard for long enough that you can reassume the lead by saying, “Now, we’re going to go here.” And then we’re like what’s been fun so far, I’ll come with you.
James: Well it seems when you’re selling from stage and delivering information, it’s a good idea to have people ready to receive that. I know I’ve covered this on a few previous podcasts on this show. We’ve talked about presenting with my friend Dan Dobos. We talked about memory retention with Timothy Moser, and you’re doing the exact same thing. You’ve got people ready to receive what you’re talking about.
There were a few concepts you covered at the event that I thought were great, which is why I asked you to come and speak at SuperFastBusiness Live in Manly. You’re going to be delivering a blindingly good presentation in Manly at the event, SuperFastBusiness Live 11. So I’m looking forward to that. But I did want to dig into a couple of ideas that you presented on that we might give people a little taste of what’s to come. Is that OK?
Matthew: I’d love to James. I’m really excited to be speaking in Manly in March next year. I’m really excited for my first trip to Aus, and I can’t wait. I’d also like to manage expectations by saying it may be a blinding but it will definitely be quite good.
James: I’m sure it’ll be fine. One of the things about the event is that people have to pay to come. That’s different to like free previews, etc. I think this kind of aligns to your velvet rope concept that you share in “Book Yourself Solid.” Can we delve into that topic?
The velvet rope concept
Matthew: Absolutely. So “Book Yourself Solid” says that. It’s built on a couple of fundamental principles. First principle is that there are some people that you’re meant to serve and others not so much. So if you feel that you’re here on earth to serve and if you’re lucky enough to get remunerated for that, and if you’re lucky enough to get remunerated in direct correlation with your efforts, then you don’t have to serve everybody. Some people are meant to serve and others not so much.
One of the other fundamental principles of “Book Yourself Solid” is that marketing doesn’t get you clients, which is something I’d be very happy to talk about later if you’d like to. But because there are some people who are meant to serve and others not so much, the first thing, the very, very first thing we have to do when setting up any kind of service business is get crystal clear on who we’re going to work with.
Now this isn’t the same exercise that many people practice when they join marketing programs or when they read marketing books, which is to create an avatar of the perfect client who is a solicitor called Rob, who is 43 years old, recently divorced, has a house, has outgoings that are 40% of his take-home pay, and plays golf for the weekends, etc. etc. etc. We don’t talk about that at all. Instead, we talk about the inherent characteristics of the people that we’re going to be spending time with.
If you’re not working with your right people, then you’re not going to be doing your best work. Anyone who’s been a coach consultant, service provider, accountant, anybody who has to deal with people will know that there are some clients that they like more than others. And there are some clients who make them feel like they want to refashion their face with a blunt instrument when they have to meet them.
Now sometimes, you look at your agenda for the week and you say, “Oh crap. I’ve got to see Steve this week. I’d rather stay in bed.” Now this is problematic for a couple of reasons. One, because I believe if you have the luxury of choosing to work for yourself, you should choose who you work with.
The other thing is, when you’ve got going to meet Steve, finally, Steve’s not an idiot. Steve’s going to sense that you’re perhaps not bringing your A game. And even if you think you’re bringing your A game, you’re not. Because if you replace it, if you honestly look at the situations, when you replace Steve with Bob, who is the very perfect kind of person for you, you and Bob are both going to leave on a high. You’re going to be on a high during your sessions. Even if it’s a hair dressing session.
It’s going to be more enjoyable for both of you and here’s what’s going to happen, Bob is going to leave your session, your service, your appointment, your consultation. And he’s going to have a big grin on his face and the first person bumps into him is going to say, “Bob, what have you been up to?” And he’ll say, “I’ve just been with James.Wow. James is on form today.” Whereas, poor Steve who’s had to sit through you forcing your A game or forcing any kind of game at the table even though you don’t particularly want to be there is going to leave and someone’s going to say, “Steve, what did you do today?” He goes, “Nothing much.”
If you are not doing your best, it’s true, you do more of your best work with your best people, they will attract more of the right people. We all know that feeling. For your business, if you’re working with dud clients, then you’re going to have a problem because of the old 80/20 rule. 20% of your clients will bring 80% of your revenue. And 20% of your clients will bring you 80% of your problems, and your headaches, and your customer care issues, and your refund requests, and your 3 o’clock in the morning urgent telephone calls. Those are the ones who you should get rid of. You should dump them.
So when you enforce a strong red velvet rope policy, just like you would with a bouncer on the door to a nightclub, you want to keep out the riffraff. Now, your riffraff will be different to my riffraff and that’s good because there are some people we’re meant to serve and others not so much, and everybody’s different. So James, you might open nightclub for goths.
James: I might not to.
Matthew: Well OK, so maybe I would open a nightclub for goths.
James: I’m more likely to open a club for surfers or something.
Matthew: Cool. Excellent example. So the surfers, you’ve got that laid back vibe going on. Everyone’s got bleach blond hair and sun tans and slightly stoned drools going on and somebody who’s suited and booted, dressed up for the nines for a night on the town with champagne and caviar and ostentatious shows of wealth is probably going to show up at your club and say, “I don’t belong here, so I’m going to go somewhere else.” And that’s good for you and it’s even better for your clients who are inside the club because they don’t want someone who’s making them feel different. Right, if you’re running a membership community, there’s a couple of bad apples can spoil the whole barrel.
James: One bad apple can polarize the barrel over. I’ve had it before. It’s fascinating thing. I think of it this way right; if you had a peanut butter sandwich, how much poo would you tolerate in that sandwich before the whole thing gets put in the bin?
Matthew: I love that. That’s absolutely brilliant. Yeah, no. You wouldn’t tolerate any.
James: I really only use that metaphor because you’re on the call and you’ve already set the bar for the direction of reference points.
Matthew: That’s wonderful. Thank you so much. I’m going to get a reputation.
James: That’s my pleasure. That’s like a tweetable.
Matthew: How much poo is in your peanut butter sandwich? #Schramko.
James: Well how much would have to be there until you decide not to eat it? You know it’s like, it’s just a very small contaminant can change the whole thing. So how do we put a velvet rope up around an event?
Matthew: Can I just revisit this? You know this week, I don’t when this interview is going out James, but you know, this week in the newspapers, there’s been a ban on cilantro imports from Mexican farms into the U.S. because that question, actually had an acceptable answer, how much poo is in your cilantro coming in from Mexican farms? Did you know that?
James: This is a Donald Trump initiative?
Matthew: No. It was an FDA.
James: Because it’s not so for the Mexicans.
Matthew: No, I heard that as well. I heard that as well. No police car coming or whatsoever, but you know, it’s not entirely irrelevant to what’s happening in the marketplace because the U.S. FDA, they’ve said the answer to how much poo will we tolerate in our cilantro is zero.
James: Not much at all.
Matthew: 8 out of 11 farms have toilet paper and feces found on the plants themselves. We’re just going to hold off until they get sorted out.
James: So they’ve got a velvet rope policy on the border control, and the export and import industry.
Matthew: Absolutely right. You should implement the same thing in your business. So if you do have that bad apple showing up, everybody’s experience is going to be ruined including yours. And your business will suffer.
James: Would you say there’s merit in having a sign of an apple with a cross through it? Is it like who this is not for, is a good way to put a velvet rope up?
How to put a velvet rope up
Matthew: There are various ways of doing it. It has to start with you clearly, before you communicate what your red velvet rope policy is, you’ve got to be clear what it is with yourself. So people often say, “At the moment I need the money so I’m going to compromise.” And that’s completely understandable. If you’re just getting started, the first person who is not perfect for you comes waving a big checkbook and wants you to do some work, of course you’re going to take it. Let’s be practical.
James: But plus also, in the beginning, you don’t even know who the bad apple looks like until you get a couple. And then you can start recognizing them. Hey, I’ve seen your type before pal. I’m going to definitely put you on the no entry; not wearing shoes, people who don’t wear shoes generally aren’t well behaved at the bar when we want to close.
Matthew: Uh-huh. You talking about Taki Moore?
James: Oh, actually he wouldn’t be at a bar at night. He’d be having some healthy smoothie and have an early nap.
Matthew: But he’d definitely be shoeless.
James: Definitely be shoeless. I’m sitting here in bare feet. But I wouldn’t expect to go into a nightclub. I would expect the velvet rope policy to apply, and they would think that I’m lowering the clientele image, the perception of their establishment. But I think that also here in Australia, they’d be very concerned that I might cut my foot and sue them.
Matthew: Interesting. So there are many reasons to keep people out.
James: Eliminating liability might be one. Preserving culture might be another. But what we’re saying is you should not try and serve everybody and identify through a gradual process of reducing your compromise and learning about who’s good or bad. What I specifically want to sort of buckle down is how do we communicate this?
Matthew: Sure. Firstly, you decide what it’s going to be. We suggest that you don’t start with things like profession, or net worth or the kind of car they drive. That comes next. Once you know who your ideal client is, you can start to look at your target market, but we see them as different. Instead, look at the inherent co-characteristics of that person. What kind of person is that person? What are their core value sets? What kind of beliefs do they have?
Let me give you an example of what my red velvet rope policy document reads like because that will help perhaps make it real for everybody. So firstly, my idea of client has a sense of humor and particularly, they can take the piss out of themselves. Because if they can’t do that, we can’t do our best work together. Because I like to prod, and tease, and if they can’t take that, then we’re going to have a problem. I also use, frequently use, bad language. So if they have a problem with that, if they’re too uptight around that, we’re not going to do our best work together.
Secondly, they are committed to lifelong learning. I like to see there’s a mental actual curiosity there. If people don’t ask why, that can be a good thing sometimes, I think, if you’re a coach. Don’t ask why, just go and do it. But unless they understand the mechanisms of the why, or they’re curious to know that, then we probably won’t work too well together.
And the third thing is that they’re very good at taking responsibility for themselves, which means if I pick up on words like “the economy tanked,” or my clients aren’t used to this kind of thing, or they’re not responding because I want to, or my kids ate my homework or whatever it is, then we’re going to have a problem. They must be able to take responsibility for their own actions. These are core to me. They’re absolutely key.
The fourth one, which is useful, is punctuality. If I see that somebody is habitually late to appointments, then that is a sign of disrespect, I believe. So we’re going to have a problem. My time is pretty valuable and if you don’t value it, then I can’t be responsible for my actions.
So you can drop a list of these core characteristics; what kind of person they are? And you have to live through, as you said James, you have to live through a couple of bad ones in order to truly appreciate it.
James: What’s your system for conveying this, where in my case, I have a video explaining to people who’s going to get the most value from me. And then I have a checklist, which I go through on a one-to-one call as a decision making tool. If someone get’s past those phases, they’re going to get great results. How do you convey it?
Conveying the message
Matthew: There’s two ways of doing it; the overt and the covert. So I should prefer the covert way of doing things because that allows people to self-select much better than saying, “By the way, this is for action takers. If you’re not an action taker, don’t apply. By the way, this isn’t for opportunity seekers. If you’re an opportunity seeker, don’t apply.” Because nobody labels themselves like that. That’s almost from first psychology.
Instead, I like to, through my marketing activity, I am as inappropriate in terms of, “This is the way that I choose to do it.” I make it crystal clear what kind of person I am. And if you don’t like it, then you can go away because that’s great. That’s what I want. If you can’t deal with the fact that I drop F bombs, and that I swear, and that I talk about hemorrhoids, then we’re not going to be a good fit. So I make sure I do all of that in my marketing. So the right people are attracted. That’s the first thing.
And the second thing is absolutely right. You have your overt ones, which when you get people on the phone, you get that checklist. You ask them the questions by how much money did you earn last year as a good one, not because you necessarily care how much money they earn last year, but because the follow up question is the most interesting one, which is, “And how did that correspond with your targets and why didn’t you hit your targets?” And if they say why, then it’s because, you know, they had a bad coach, or the economy tanked, or I have no idea, or I did absolutely everything and nothing happened; then you can see that they’re responsibility shirkers, for example.
James: Well, quite a lot of my questions might be an overt question with a covert reasoning behind it. If I set a minimum monthly income of $10,000 per month as an application criteria, the covert reason why that’s important is that my monthly fee of $1500 is a very small percentage of their revenue compared to if they’re bringing in $1500 per month. You actually use the word before and it’s such an important word that involves compromise. If they compromise for income and enough money to live off, they’ll start doing desperate things and all the good work that we could do will go out the window because they’ll behave like a trapped animal rather than someone who’s going about things in an orderly fashion.
Filtering is critical
Matthew: You’re absolutely right. Pricing, you said your audience is paying for SuperFastBusiness. When people pay, they pay attention. That’s an excellent filter. A red velvet rope policy is a filtration device.
James: Yeah. I use the word filter in all of my conversations and methodologies. That’s something that a listener will be familiar with me having said that many times. I think filtering is absolutely critical in so many aspects. Of course the customers you deal with, it’s the people you hire to work in your business, it’s the amount of time you want to put towards your business, it’s where you spend your attention. You gave us some great insights as to how to command attention when you’re up there on the platform. The velvet rope, it actually creates desire for people who know they’re the right person. I think they’ll get a lot of value from knowing that they actually fit the criteria and that other people don’t. It probably makes them very compelled to want to do business with you if they recognize that this VIP line is just for them.
Matthew: You’re absolutely right. We all know the image of the ragamuffin peering through the windows of a restaurant, which has a red carpet and a red velvet rope outside. It’s an aspirational thing for those who are outside of it. We want to belong. We want to become members of a club, and we want to prove that we are worthy. If you can get your customers coming to you and saying, “I’m in. What do I need to do to show you that I’m worthy?” Isn’t that better than turn around and having to pitch them, and close them, and chase them, and follow them up?
It’s also something you can mention. You can say, “Look, let’s sit down. See whether you pass the red velvet rope policy.” Because then, they’ll be on their best behavior for the interview, which is great. But it’s flexible. It’s scary to do it at the beginning, particularly if you don’t have any revenue coming in. So it is a flexible thing. You have a looser policy at the beginning, you have to be burned, I believe at least once, to learn that this lesson is truly important. At the moment, it might sound, yeah, yeah, yeah, it’s easy enough for them to say, but learning through experience, you will do whether you like it or not because even if you implement your red velvet policy, you will occasionally have failures.
For things like online products or limited time workshops, which have a small amount of interaction, you can be pretty loose with it. If you’re delivering a webinar for 80 bucks, a paid webinar for 80 bucks, then your red velvet rope policy isn’t going to particularly important because you’re going to be with those people for 90 minutes or a couple of hours.
James: Well, you’re also leveraged with a webinar if you turn off the sound and if you’re the only one saying the comments. It doesn’t even matter if someone trolls you; you can just ignore them. But things like where your personal time is required like a workshop and you need to sort of be more interactive, or especially anything that starts getting closer to one-on-one, then you cannot afford to burn your energy on the wrong thing.
Matthew: And the chances are, unless you’ve done this exercise or some form of exercise in the past, you are having some kind of red velvet rope policy failure today. One of the things that I make all of my clients do, and it’s the most uncomfortable thing you can do at the beginning of a relationship with a business adviser or consultant is dump the dud clients, even if that client is worth 60% of your revenue. If he’s taking up 100% of your time, then that’s a problem. And the chances are, there’s only going to be a red velvet rope policy failure that allows something like that to happen.
So look at your existing clients. Put them in three columns: your duds, your mid-range clients and your ideal clients. Dump the duds. Fire them. And pass them on to somebody else, refer them to somebody else. How you’d have that conversation is that most horrible conversation you’ve had is terrifying because you believe you won’t be able to replace the revenue, but the truth is more likely to be that you can’t replace the revenue while you’re committing all your time and energy to these dud clients anyway. So you say “Listen, I believe that I’ve done all what I can for you. It’s been interesting working with you. You have to lie. It’s been interesting working with you. I believe at the end of next month, I’ve probably reached the limit what I could do for you, so I’d like to refer you out to somebody else.” And very often they’ll apologize. They’ll say, “No, no, I’m sorry. Let’s see if we can make it work.”
And then you look at your mid-range clients. What do I have to do to turn them into fantastic clients? Is there a conversation I need to have? Do I need to lay down some laws? Do I need to get them to be more responsive? Very frequently comes down to responsiveness. Do I need to get them to participate more? Or do I move them out as well? And then you double down on your ideal clients and you implement a good referral strategy.
You’ll find that your energy level has increased the amount of time you have to work in your business increased the amount of time you have to commit to marketing, and finding more of those great clients increases, and life gets better. It’s easier to implement this red velvet rope policy when you’ve got an entire marketing and sales system in place. It’s scary to fire a client when you don’t know where the next client is coming from. If you don’t know how to get the next one, it’s almost impossible to fire the one you’ve got.
James: Well, I’m often having this situation but with business models and product lines within my business. Putting up a red velvet rope around which ones can have the attention of our business and our staff, it’s much easier to let those ones go. They never cry, or moan or whatever. But we basically have a knockout competition to see which ventures that we have within the business deserve more or our attention, and which ones get filtered out with a red velvet rope. If they don’t meet the criteria then they get chopped. This is such an important thing.
You could almost tie this to an 80/20 discussion of some clients that you’re dealing with are going to give you such a great joyous activity in return versus the other ones. That might be a good way to start thinking about where you put that red velvet rope up, who can come through and who can’t based on what you’ve learned.
In fact, we did exactly the same in the car dealership with our used car stock. We looked at everything we’d ever sold and worked out which ones sold quickly for a profit, and which ones sold slowly for a loss. We were able to work out where we put the red velvet rope up in terms of what we should buy to put into stock. That was very helpful for us to do.
Matthew: I love that. I love that. You can use it for everything, not even your existing business lines or your existing stock. You can use it for assessing your opportunities because one of your MO, James, one of the biggest issues facing many small business owners, freelancers, self-employed entrepreneurs, particularly those at the beginning, is opportunities everywhere. There’s never a lack of opportunity.
At the beginning, when I go to start, when somebody says to me, “Hey, I have a great idea for something that we could do together.” I’d be really excited because it represented a new business line and a new opportunity. But as you know and as anyone who’s been in the business for a few years knows, is opportunity is everywhere. You can wake up in the morning and create 15 or 20 opportunities for yourself. But the most important thing is saying no to 98% or 99% of those new opportunities, if not 100% of them for limited periods of time in order to focus on where the money is, where the longer term planning is, and on the one thing that you’re doing well.
James: Well, it’s what my surfing coach reminds me about wave selection, when I’m out there in the lineup, because I used to just go for any wave that I could actually get up on and shred, but he’ll teach me to pick the right ones, because there’s going to be more waves coming through. They don’t just stop. It’ not like, oh, this is the only wave, you must go now. Like, three sets later, there’ll be a better shaped wave, so unless you’re in a surfing contest with a timer, you can actually pick your opportunities.
I really don’t rate opportunities much at all, but I do rate execution of opportunities in turning them into reality. The author Neil Rackham from SPIN Selling calls it Entelechy, it’s an unusual word, but that’s turning opportunity into its actual full potential.
So you’ve given us some great tips, you’ve talked about that people will value you more if they pay something. One question that does come up a fair bit in our community, is how much to charge for something. I’ve already had an email today from someone who purchased a ticket to SuperFastBusiness Live, and he was outraged. He said that I am undercharging for this event and that I really should put it up.
Matthew: He can send the balance through to me, James.
James: Well, I think he’s probably feeling that he would have paid a lot more for the ticket and that I’m ripping myself off and he was concerned for me. But also, I think he’s really got a nice expectation, in part because you’re coming to the event, of course, Matthew, but then there’s a few other speakers as well, but the idea is that he’s putting a big value on the event, and he feels that he’s purchased a ticket for less than what he would have paid.
What should you charge?
How do we know how much to charge? That’s a very evil, open-ended question there, I imagine, but give us some final thoughts on that and then I’ll let you go.
Matthew: Sure. So, the correct answer is it’s a multiple of 47. We have identified 12 individual pricing models, which still don’t answer the question how much to charge, but guide you in your pricing strategy. We have everything from prestige pricing, which means I want to be seen to be the most expensive, because there will be a market for that, to penetration pricing, which is deliberately low-boarding it to get a foothold n a new market. They’re all backed up by strategy.
So with that in mind, when you’re thinking about your cost, you’ve got to think about two things, I believe. One, does it make sense for, say you’re pricing a brand new service, does this service, the price that you have randomly, for want of a better word, selected, does it make sense to your business? Does it make sense to your business model?
What is the purpose of the product or service, and therefore, does the price correspond to the strategic purpose of the product or service? If the strategic purpose of the product or service is to get newcomers in the door, a relatively low cost in order that you can convert them into customers for life or upsell them to other offers, then it would make sense that product or service is provided at a loss, so for less than it cost you to deliver it.
If, however, it’s part of your core revenue model, it’s how you make money, and it’s how you put food on your table, then you’re going to price it accordingly. You’re going to make sure that it is delivered profitably. Now, if you are selling your time for money, firstly stop.
James: Yes, well said.
Matthew: Secondly, how do you value an hour? Well, I know you have a way, don’t you, James?
James: Yeah, I have my effective hourly rate calculation, and it serves as a wonderful filter for knowing if something might be worthwhile, and it does tie in well with your first point about does it serve the business. I’ve seen people who are a little bit reserved about pricing, they make the obvious solution of charging something very low, like $9 a month or something, but it doesn’t serve the business for a few reasons.
One is, a customer looks at the $9 per month thing and doesn’t value it very highly, because of Cialdini’s, one of his influence rules is that expensive equals good, so therefore cheap equals crap. And the other thing is that they can’t really scale that $9 enough into the market to get enough customers that would actually give them anything like a reasonable return, so they’re always on that desperate and compromised hamster wheel. So it’s very important not to undervalue yourself.
Matthew: Yeah, you bring up a crucial point, which is when you’re thinking about your business model, not just what is the purpose of the business, or what is the purpose of the service or the product, but also how much money does your business need to make in order to be profitable? Or what are their goals, I imagine that most business owners have some kind of goal, whether they’ve written them down or not, and let’s say your goal this month is to generate $9,000 in revenue. There are a couple of ways of doing that. There are more than a couple. There are probably 9,000 ways.
James: Yeah. There’s actually 17, Matthew.
Matthew. OK, right. They say one of them is you sell a thousand $9-a-month memberships. That’s one option. And the second option could be that you sell two private coaching clients a package that gets them you for a weekend for 5k. Now, forgetting the fact that one is leveraged and one isn’t, I know what I’d rather do. You’ve got a month to find 2 clients, or you’ve got a month to find a thousand clients. You know, it’s a no-brainer for me, personally.
But you have to bear in mind, I see many, many, many, many, many, particularly coaches, because I work with coaches at the beginning of their careers, the Book Yourself Solid School of Coach Training. They come to me and say, “All I want to do this year is make 100k.” Or 150k. And I say, “Great. Let’s look at your pricing. What can I buy?” They say, “Oh, you can buy my coaching services.” I say, “Great, what does it cost?” And they say, “A hundred bucks an hour.” I say, “Ok. So this year, you need to sell a thousand hours of coaching.”
And their face always drops. Because that’s a lot, right? For anybody. So that would be a case where the pricing doesn’t make sense for the business model. It just doesn’t make any sense if you want to earn a hundred thousand dollars.
Knowing your numbers
James: And you can easily work this out using a spreadsheet, which is what we do, it’s called factoring. And you put in your unit price, and put a range of quantities, and you can actually model, financial model, the potential revenue based on the pricing and expectations of customers before you ever even buy a domain name. You can already find out today what it might look like at $100 an hour because it’s maths, or in the States they might say “math.” It’s mathematics.
Matthew: Yeah, we do the same thing. We have our 90-day planning, in the Book Yourself Solid mentoring program. We even developed software for this. You enter the name of your product, you enter the price of your product, and it will tell you how many quantities, how many units of stock, even if your stock is a coaching package, a coaching weekend, if you consider them to be units of stock you know what you have to do every morning.
All I have to do now, all I have to do is sell one unit of stock this week. And so what am I going to do? What is the marketing activity that’s going to lead to the sales conversation that’s going to lead to the sale of that one unit of stock? And when you know those numbers, it becomes freedom. It’s liberty, because if you know that you have to, I don’t know, reach 300 new people through your marketing activity, in order to generate 30 new leads, and one of those new leads is going to turn into a sale, all you have to do every day is go out and find 300 people. And there are myriad ways of doing that.
It’s a beautiful way of doing things. I have a sales training and a sales background. Knowing your numbers is crucial. When you know what your price is, and you can inventorize your stock, or create an inventory of your stock, even if it’s a service, then it make the rest of your days much easier. You no longer come up and scratch your head and say, what do I need to do today? You know exactly what you need to do, because you know what your conversion rates are from this marketing channel to signups to your list, you know what conversion rates from signups to your lists are, to sales, and then you can just tweak the effectiveness of that and let the marketing run itself.
James: Exactly. My assistant sends me a report every day in Slack, which I would consider the pulse of the business, and I can tell you exactly how many opt-ins I need over the last 30 days to generate $1 million profit per year. If that number’s going up or down, I can pretty accurately forecast our profit on an annualized basis. So you have to know your numbers. There’s no excuse.
Does it make sense to the customer?
But the good thing about pricing is you can model it, and factor it. So you talked about it’s got to be important for the business, it’s got to work. Was there a second part to your pricing methodology?
Matthew: Yeah. It’s got to make sense to your customer.
James: Yeah, the old customer thing.
Matthew: Believe it or not. And this is really a case of licking your finger, sticking it in the air, and seeing which way the wind is blowing. Listen to what people are saying. Watch what they’re buying. Test your prices if necessary, and position accordingly. If you’ve got a customer who’s telling you, a thousand bucks doesn’t make sense because it’s too cheap for something, then that means that the chances are all the other customers are absolutely thrilled and it was just his way of complimenting you and saying thank you for a great deal.
You know, James, you mentioned a customer told you SuperFastBusiness Live was too cheap. That was his way of saying “Dude, I’m stoked. Thank you so much for this fantastic opportunity.”
James: Yeah. Well, look, my favorite survey for customers is a shopping cart button. They vote with that one, and at this point we’re still in July, the event is in March, and there’s 100 tickets sold at this point, so I know that the pricing is fine. And that’s because I’ve got a reasonable sample size. If we were trying to sell it and we hadn’t made a single sale, there might be a disconnect with something to do with my understanding of what it could be worth versus the customer’s.
I know there’s surveys on preferences versus performance, where people say one thing and then do another, so I’m not huge on asking customers how much they’d pay, because they’ll often give you a finger in the air number, but when you ask them to buy it, they don’t. Because I’m sorry, I’m not ready yet, or whatever.
So the shopping cart button is a good way to put your finger in the air, on a small scale, so you can test small and then roll out big. And you can segment your customers these days, especially online. But I imagine if you’re speaking from stage, like a good comedian, you could test your offer with different audiences and refine and tweak that presentation over the course of different presentations to get the sweet spot.
An unusual price-testing method
Matthew: That’s exactly what you do. That’s exactly what you do. You can even do it during the presentation. I’ve seen many people do it.
James: I could do this book yourself solid thing, hey?
Matthew: Well, I’ve seen people introduce their product halfway through, their selling from the stage opportunity, halfway through, at a particular price. They say, 500 bucks. So if you were down, and you want the best price, they say 500 bucks, rush to the back of the room now. And they’ll see 2 or 3 people run to the back of the room.
And then a bit later on, they’ll say, and you’ve been such a good audience that if you want to get this product for only 300 bucks, not the 500 bucks I’ve just promised you, rush to the back of the room now. And that’s when everybody else goes. So I’ve seen people price test in the middle of their presentation. They honor the lower price for everybody else.
James: I like that. It’s also sort of a price stack. And I had a phenomenon when I spoke in the U.K. once, where before I mentioned what I was selling, or how much, people were going to the back of the room to buy it, because they knew they wanted to come on board. Because I’d planted some seeds about that there is something, and they didn’t know how much or what, and in that particular event it was 380 people in the room, I sold 98 at 1,000 pound each, or 999 pounds, and I sold half of them before I got to my offer, and as I was rolling out the offer, there were some price stacking, and it just sent waves to the back of the room.
I probably could have stopped early and made more, however it is a good way to test. If I were to deliver that thing again, and that was a real test, because I was selling everything digital, and remotely delivered from Australia to the U.K. No workshop, no physical component, and it was definitely a test. But it’s a good way to test, and it’s great if you’ve got 10 more speaking gigs rolled out. So it’s definitely, you’ve got to try to get close to the mark, but I think thankfully for me, being the last speaker, I was able to at least poll the audience and survey who’s in the room and what they respond to.
So my point here, and it’s a long-winded one, I’ll admit, is that you can often see what other people in the marketplace are offering or actually buying, to get a pretty good feel for what might be true for you if you could at least match their relevance and match their messaging as a starting point.
Matthew: That’s so important. So many people I see blame pricing on why they’re not doing the business they want to do. And it’s not always pricing. It might be pricing, chances are there are other people paying similar prices to what you’re trying to charge for similar products that are just better presented. And I don’t mean presented from the stage, I mean they’re better marketed and better sold.
So don’t blame your prices. Don’t think the answer to getting more customers is to drop your prices. I’ve actually very rarely seen that to be the answer for people who provide services which are considered to be valuable in and of their own. If you’re providing commodities, sure, drop the price, win the contract, you know.
James: Well, then you might get a Groupon effect, where you’re getting untargeted… you might have dropped the rope a little bit too low, and they’re just helping themselves, but you get the wrong people in there.
An unexpected pricing result
Matthew: The first time I scared myself with pricing and surprised myself was when I had a call for a client, who I walked in there and I said, if they give me 10k, then I’ll take the business. This was several years ago, I said give me 10k, and that was what I was shooting for. And so I figured, we did the regular presentation, there was an informal 20-minute meeting and at the end of it, the guy said, so we think we’d like to get started, how much would it cost? And I said, I just decided there and then, I was going to ask for 20k. Just double, just because I thought that I could.
They were a big company and the sales training I was going to give them was going to give them many, many, many multiples of 20k. So I had no problem with the value, it was just I was pushing myself outside my comfort zone, from a pricing point of view, just to see what would happen. And of course, there was this long silence. He sighed heavily and he said, “You know, that’s a lot more than I thought you were going to ask for.” And I thought, oh bugger, I’ve screwed it up. And he looked me in the eye, he said, “Would 18k be OK?”
Inside, I’m going, “Yes, yes, yes, yes, yes, yes.” And of course, I take a deep breath, I look him in the eye, and I say, “Well, because I like you, I’ll do it this time.”
James: It’s such a great example of how different we perceive the same thing. It’s the same product you’re talking about. My favorite example of that is the exercise of thinking of a color. If I say, think of the color blue, how hard could that be? Blue is obviously, it’s just one word, and it should mean exactly the same to everyone. But I’ve never actually done the example where two people were thinking the same shade of blue. Whether it’s a dark blue, a light blue, or an aqua blue… what color blue were you thinking of, Matthew?
James: Ha, see? I’m more of a midnight blue sort of a guy, but that’s a great example. They couldn’t be more different, really, a midnight blue versus a turquoise, and if something so simple can be thought about in such a different way, then certainly price is a pretty tricky beast to deal with. But I like your point, lowering it is usually not going to be the best solution. Because it also might scare people into thinking you’re desperate or you don’t value yourself.
Matthew: So if I’d panicked instead and said, you know, I want to get 10k, which would still have probably been really good price, good fee for me at that stage, if I’d had the conversation with myself instead of the client, and fallen prey to acts which I’d been guilty of in the past, which is justifying to myself why I’m probably not worth 10k so I’ll go into 8, you know, I’d be happy with 10, and I’m panicking because 10 seems like a high figure, so I’m going to say, well, you know, normally it would be 10 but for you I’ll discount it already before you even tell me whether you’ll pay 10, so it’s 8, 8k instead. Which could equally, easily have happened. He still would have knocked me down by a couple of k, because that was his job. And they wouldn’t have paid so much attention to me, I believe.
James: Perfect, so you can actually stand out by taking a premium position in the marketplace.
Matthew: You certainly can.
The wrap up
James: Well, Matthew, I’ve held you for a very long time here and you’ve talked about some very important concepts. I hope you’ve enjoyed it. We’ve covered some topics that I won’t repeat here, but you’ll have to go back and listen, if you’ve just joined us. The red velvet rope policy, also known as a filtering device, very important concept. It applies to many parts of your business, but especially in marketing.
We’ve talked about pricing, and some pricing policies, we’ve talked about how you might plant some seeds in a presentation to get a result, even if you wouldn’t consider yourself an outgoing or a confident speaker, doesn’t mean you can’t sell. And if you are outgoing and confident, you probably could sell like a lion if you could learn some of the techniques.
Matthew Kimberley can be found at MatthewKimberley.com, and you’re a big proponent of Book Yourself Solid, Matthew, and you’re going to be coming and talking to our audience about that at SuperFastBusiness Live, and I can’t wait to see you and I’ll still laugh at the same jokes, even if they haven’t changed.
Matthew: I’ll throw in a couple of new ones just for you.
James: Thanks mate, I really appreciate that.
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