Mark Jewell's Blog: Selling Energy, page 264

The Internal Champion

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When you’re approaching a new organization with an efficiency project, you want to make sure you’re putting your project in front of the right people. We’ve talked about research, influencer maps, and other strategies for finding the decision-maker(s). Today, I’d like to share a question that is very effective in finding a valuable internal champion: 

“Are there particular departments or individuals here that focus on energy efficiency?” 

When you ask this question, be poised to write. They’re usually going to give you a rapid-fire list of people and departments (or at least you would hope they do). Once you have this information, go back to the drawing board. Research the people; see if you can find any previous efficiency projects that they’ve been involved with; figure out where they fit on the influencer map; and, consider how you might approach them with a value proposition that resonates at their frequency. 

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Be Prepared

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The preparation you do before stepping into the meeting room can make or break a sale. You never know how many tricks you’re going to have to pull out of your sleeve to convince a prospect that your project is worth pursuing. So, be more prepared than you think you need to be to ensure that you’re equipped with tools to tackle any situation. 

In addition to researching your prospects and their organization, you should consider what key metrics they might be using to measure their success. What are their decision-making drivers? A restaurant might measure their success based on how many meals they sell. A hotel might look at the number of rooms they fill in a given time period. A commercial property owner might look at vacancy and tenant churn. A farm might look at crop production per acre of land. If you understand what your prospect is using to measure his or her success, you can figure out how your product or service might positively affect these key metrics. How can you reframe your project to relate energy savings or other benefits to their success metrics? 

Also be sure to look at their net profit margins (as discussed last week) and talk to your past customers to see what other good outcomes may be associated with your energy efficiency maneuver. Herald any and all advantages the next time you talk to a person in that same segment that you're trying to convince to do a similar project.

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Funding Efficiency Improvements, Part 2

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Today, we’ll continue with several more ways to fund efficiency improvements. Once again, here are the six categories that will be discussed in the context of each of the funding methods: 

Is it on the balance sheet?
Is there an initial payment required?
Are there ongoing payments?
Who actually owns the improvement?
Who gets the tax deductions (if there are any)?
Who owns the performance risk? 

Leases: Statement 13 of The Financial Accounting Standards Board (FASB) helps investors determine whether something is classified as a capital lease or an operating lease. You will want to determine which type of lease is appropriate before presenting this information to a prospect interested in a leasing arrangement. Again, be careful not to step into the role of financial or tax advisor unless you're qualified (and carry professional liability insurance) to do so! 

Before we begin, realize the difference between the Lessor (the person who provides the equipment) and the Lessee (your prospect, who ultimately installs the equipment). 

Capital Lease:

Balance Sheet: It will show up on the balance sheet.
Initial Payment: In most cases, there is no initial payment.
Additional Payments: Most common capital leases involve fixed payments.
Ownership: Even though the money is coming from a leasing arrangement, your prospect will generally be the “owner” from both finance and tax perspectives.
Tax Deductions: There are generally tax deductions for a capital lease, and the Lessee generally receives the benefit of these deductions.
Performance Risk: As in the cases presented yesterday, the performance risk for a capital lease belongs to the Lessee.

Operating Lease: These are less common than capital leases in the context of expense-reducing capital projects; however, they can be used in certain cases (and you should therefore understand how they work). It can be challenging to fit a high-dollar tangible capital efficiency improvement project into the operating lease category, and you have to be careful to adhere to the qualifications of an operating lease as defined by FASB. Also beware of impending changes on which leases need to be reflected on an organization’s balance sheet… another reason not to step into the shoes of an accountant or tax advisor! I’m not here to give you tax advice; however, I will say that before you jump into an operating lease in the context of a high-dollar capital improvement, consult with a genuine tax or financial advisor. 

Balance Sheet: Unlike the previous scenarios, an operating lease will not show up on your balance sheet. (As mentioned above, beware of impending changes in this treatment.)
Initial Payment: There is generally no initial payment.
Additional Payments: You will generally see fixed payments for a certain number of months or years.
Ownership: In an operating lease, the Lessor claims ownership.
Tax Deductions: Tax deductions will generally be split between the Lessee and the Lessor.
Performance Risk: The performance risk for an operating lease generally sits with the Lessor. If the improvement doesn’t perform as planned, the Lessor is generally responsible for rectifying it. 

Performance Contracting:

Balance Sheet: It’s probably not going to be on the balance sheet. If it’s a true performance contract, it will be on the contractor’s balance sheet.
Initial Payment: There will most likely be no initial payment.
Additional Payments: There could be either variable or fixed payments, depending on the agreement.
Ownership: In a straightforward performance contract, the contractor will do the audit, design the improvement, source the material and labor, pay for the project, monitor it, and then send your prospect a bill for a portion of the savings to help amortize the cost of the improvement and capture profit from the project. Whether and how soon the prospect actually owns the project vary greatly and depend on the contract particulars.
Tax Deductions: This depends on the ownership arrangement defined in the contract particulars.
Performance Risk:  The performance risk will generally be carried by the contractor if that contractor is being paid based on performance.

With all of these scenarios, the particulars can vary (perhaps substantially) as a consequence of the contract and/or other factors. The devil is always in the details, so study everything very carefully and seek counsel if necessary before advising your prospects!

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Funding Efficiency Improvements, Part 1

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There are lots of ways to pay for energy efficiency improvements. You should know not only the various methods of funding, but also how each of these methods affects your prospects so you can help them decide on the most appropriate one for their situation. When doing so, be sure to provide useful info; however, also be sure to disclaim responsibility for giving legal or tax advice. That should be provided by the appropriate legal or accounting professional. 

I’ve taken the liberty of breaking these funding methods down into six general categories and filling in my best impression as to what generally happens in each situation. Of course, any specific circumstance may vary greatly...

Is it on the balance sheet?
Is there an initial payment required?
Are there ongoing payments?
Who actually owns the improvement?
Who gets the tax deductions (if there are any)?
Who owns the performance risk?

Cash Purchase:

Balance Sheet: It affects the balance sheet because the prospect’s cash balance will go down (and his or her assets in plant and equipment may be significant enough to show an increase on that line item).
Initial Payment: Your prospect will pay 100% of the cost upfront. 
Additional Payments: None (paid in full initially).
Ownership: Your prospect paid for it, so he or she claims full ownership.
Tax Deductions: Yes. Depending on the situation, this may include depreciation and/or investment tax credit.
Performance Risk: This belongs to the prospect. If the improvement doesn’t perform according to plan…better luck next time!

 Loan:

Balance Sheet: It will show up on the balance sheet. In this case, it would show up as a short- or long-term liability (depending on the length of financing).
Initial Payment: In most cases, there will be an initial down payment.
Additional Payments: Fixed payments based on the length of the loan.
Ownership: Even though it’s a financier’s money paying for the improvement, your prospect will be the owner.
Tax Deductions: Yes. Depending on the situation, this may include depreciation, tax credit, and/or an interest deduction.
Performance Risk: As in the case of a cash purchase, the performance risk for equipment financed with a loan belongs to the prospect. 

Stay tuned for more on this topic tomorrow…

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Improve Your Public Speaking Abilities

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Whether we’re presenting a proposal to a single prospect or giving a keynote speech to a large group of industry leaders, our work as efficiency sales professionals requires us to speak in public from time to time. It’s one thing to be persuasive on paper, and it’s another thing to be a persuasive communicator in person. When your prospects are deciding whether or not to make a major purchase, their assessment of you as a sales professional plays a big part in their decision-making process. In other words, if you give a lousy presentation, it doesn’t matter how good your project looks on paper – your prospect will not have the confidence he or she needs to feel comfortable moving forward. 

Public speaking comes naturally to some people. Unfortunately, not everyone is born with this innate ability. The good news is that this skill can be greatly improved through practice, and there are many resources available that can help you perfect it. One of my favorite books on the subject is Scott Berkun’s Confessions of a Public Speaker. Berkun is a seasoned public speaker, and this entertaining book explores public speaking techniques through stories of Berkun’s failures and successes. If you’re interested in improving your public speaking abilities, I highly recommend picking up a copy of this book. 

Here’s a summary from Amazon Books: 

“In this hilarious and highly practical book, author and professional speaker Scott Berkun reveals the techniques behind what great communicators do, and shows how anyone can learn to use them well. For managers and teachers – and anyone else who talks and expects someone to listen – Confessions of a Public Speaker provides an insider's perspective on how to effectively present ideas to anyone. It's a unique, entertaining, and instructional romp through the embarrassments and triumphs Scott has experienced over 15 years of speaking to crowds of all sizes. 

“With lively lessons and surprising confessions, you'll get new insights into the art of persuasion – as well as teaching, learning, and performance – directly from a master of the trade. 

“Highlights include:

Berkun's hard-won and simple philosophy, culled from years of lectures, teaching courses, and hours of appearances on NPR, MSNBC, and CNBC
Practical advice, including how to work a tough room, the science of not boring people, how to survive the attack of the butterflies, and what to do when things go wrong
The inside scoop on who earns $30,000 for a one-hour lecture and why
The worst -- and funniest -- disaster stories you've ever heard (plus countermoves you can use)

 “Filled with humorous and illuminating stories of thrilling performances and real-life disasters, Confessions of a Public Speaker is inspirational, devastatingly honest, and a blast to read.”

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Weekly Recap, August 21, 2016

 



  
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Monday: Read the book First, Break All the Rules: What the World’s Greatest Managers Do Differently, by Marcus Buckingham and Curt Coffman, and discover what makes great managers unique.


Tuesday: How to hold a productive meeting in seven minutes or less.  


Wednesday: Avoid these ten common words that people who lack confidence and authority always use.  


Thursday: Explore a number of useful mobile apps, tips, and tricks for commuter productivity.  


Friday: Learn how to discuss net profit margin effectively. 


Saturday: Check out this article from the Hubspot blog - it has a bunch of great techniques for keeping your prospect focused. 

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Techniques for Getting Distracted Prospects to Focus

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Potential distractions during a phone call can be deadly. Concentration is key to getting accurate information and messages across, and many people struggle hard to stay focused through the bombardment of communications that are so prevalent in our society today. If you find your prospect falling into the “distraction trap,” check out this article from the HubSpot Sales blog – it has a bunch of great techniques for keeping the prospect focused, so you can deliver your pitch. For my money, that’s an invaluable thing.

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Discussing Net Profit Margin Effectively

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It should come as no surprise to anyone who reads this blog regularly that it’s vital to reframe your product or service to make it as compelling and desirable as possible. One method that we find works wonders in a business-to-business sale is equating projected energy savings with additional bottom line profit. If you know the net profit margin of the organization you’re targeting, it’s easy to calculate the amount of revenue that would be required to generate the same positive impact on the P&L. 

(Before we continue down this road, realize that “net profit margin” is the measure of profitability that’s calculated by expressing net profit as a percentage of revenues.) 

So how can you leverage this comparison? Let’s look at a hypothetical scenario. Suppose your prospect’s organization is operating at a 4% net profit margin. If you were to bring the organization $1 in energy savings, that would be the equivalent of earning another $25 in revenue. You can calculate this by dividing the projected energy savings in dollars by the net profit margin (1 / 0.04 = 25). 

This is a very powerful driver. You’ve probably heard me say, “People don’t make decisions – they make comparisons.” Most managers know how difficult it is to generate $25 in revenue. It may be a revelation to hear how easy it is to generate the net profit margin equivalent of that revenue through energy savings. By comparing the intangible energy savings to a figure that they understand well, you make it a lot easier for them to see the value of the project. 

Don’t know your target’s exact net profit margin? You should be able to find net profit margin estimates for that particular industry online. A little research ahead of time will tell you if the relationship between energy savings and equivalent revenue generated is an angle worth leveraging as you build your case for project approval. 

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How to be More Productive on Your Commute

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Productivity is a lifestyle. While it’s important to be as productive as possible during the workday, you should maintain a productive mindset even when you’re away from your desk.

 

The average American spends 50 minutes a day commuting. That’s more than 10% of an average workday. Think about how much you could get done if you had 10% more time on your hands! Needless to say, commute time is “wasted” time if not used productively.

 

Of course, there are limitations to what you can do while commuting, and I would always advise against doing anything that detracts attention from driving. There are, however, dozens of tools in the marketplace that are designed to help you be (safely) productive on the go. An article published on the Slate blog recommends a number of useful mobile apps, tips, and tricks for commuter productivity. If you’re thinking, “I can probably make more out of my commute time,” I would recommend you read this article and explore some of the productivity suggestions.

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Avoid These Words

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When you’re communicating with someone in writing, the words you choose to use have an impact on the way your reader perceives you. If you look at emails that C-level executives send and compare them with those sent by lower-level employees, you’ll notice that the executives’ emails are more concise and direct. They choose words that are straightforward and definitive. Why? As leaders, executives must project confidence and authority. They also can’t afford to give wishy-washy directions to their employees, so they choose words that are not likely to be misinterpreted.

 

Whether you’re a C-level executive or not, you can use words to project your confidence. And as we all know, confidence is a key trait of an efficiency sales professional. The next time you’re writing an email, read over it before clicking “Send,” and see if any of your words evoke a lack of confidence or show hesitation in what you’re trying to communicate to the reader.

 

For a list of some of the most common words to avoid, check out this article from Inc.

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