Mark Jewell's Blog: Selling Energy, page 269
July 7, 2016
Old vs. New Maintenance Costs
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One of the many benefits of upgrading to more efficient equipment is reduced maintenance costs. In some cases, the cost savings from reduced parts and labor are significant enough to make a very compelling case for change.
If you plan to approach a prospect with an efficiency solution that you know will yield significant savings through reduced maintenance, how do you accurately estimate the amount your prospect has been spending so that you can produce a realistic financial summary? In my experience, there are several great ways to discover this information without talking to your prospect ahead of time:
Befriend a trusted contractor who maintains the equipment you intend to replace.
Talk to a chief engineer in a similar building who is open and willing to show you the receipt books of what he or she has paid to maintain the equipment.
Contact a manufacturer’s rep in your territory to find out what the local cost is for labor and materials.
Talk to a mechanical service contractor who has a maintenance agreement or is in the business of selling maintenance agreements. You can be fairly certain that they know how much it's going to cost them to maintain equipment if they're willing to sell contracts that are fixed-cost to maintain it over time.
I can assure you that you’ll be far more successful if you invest some time before you approach a prospect to come up with an accurate estimate of old vs. new maintenance costs.
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July 6, 2016
Habits of Successful Networkers
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“The way of the world is meeting people through other people.” – Robert Kerrigan
Networking is a necessary component of building your business and is the quickest way to force relationships within the industry. The wider your network, the more people you have lobbying for you. So how do you master the art of networking?
A recent article in FastCompany suggests making it a daily or weekly habit, not just big in-person networking events, or going the extra mile with personalized hand-written notes or thank you’s.
For those of you who are not currently using networking to its highest potential, I highly recommend reading this article.
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July 5, 2016
The Proper Metrics
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One of the major topics I teach at our financial analysis workshops and every Efficiency Sales Professional Boot Camp is how to use proper financial metrics. The difference between the simple metrics that most efficiency salespeople use and the proper metrics that efficiency sales professionals use can often mean the difference between hearing a “no” and a “yes.”
Unfortunately, your prospects may be very attached to popular, substandard metrics like simple payback period, return on investment, and internal rate of return. In some cases, they may even be resistant to proper metrics like net present value, modified internal rate of return, or savings-to-investment ratio because they don’t understand the calculations and would rather use what they already know.
When a prospect is using substandard metrics to drive capital budgeting decision-making – especially with expense-reducing capital projects – it's your job to play the adult in the relationship and to share with that person (in a “tough love” way if necessary) that those metrics are not going to serve them best.
Unless you know for a fact that your prospect is already using the right metrics to evaluate projects, it’s a good idea to include both “popular” and “proper” metrics on your financial summary spreadsheet. This will allow you to compare the metrics they are used to seeing with the ones you recommend they start using, and through that comparison, demonstrate why they should be using more advanced metrics to evaluate the project.
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July 4, 2016
Principles of Sales greatness
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One of the many books I recommend to my students is Little Red Book of Selling: 12.5 Principles of Sales Greatness, by Jeffrey Gitomer. There’s a wealth of sales wisdom in it that I think we can all benefit from. This short book offers advice on how to overcome your fear of rejection, how to avoid arguing about price, how to use your passion to your advantage, and much more. I highly recommend picking up a copy of his bestselling book.
Here’s a (concise) summary from Amazon Books:
“Salespeople hate to read. That's why Little Red Book of Selling is short, sweet, and to the point. It's packed with answers that people are searching for in order to help them make sales for the moment—and the rest of their lives.”
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July 3, 2016
Weekly Recap, July 3, 2016
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Monday: Read the book Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty, and Maximize Profits, by John Goodman, and improve your customer service plan.
Tuesday: Learn how to demonstrate how your efficiency solution might generate higher property and/or enterprise value.
Wednesday: Prepare your mindset and rid your mind of negative thoughts before meeting with a prospect or client.
Thursday: Check out 5 ways to keep your phone from taking over your life.
Friday: Explore 4 persuasion techniques in order for your prospect to feel a compelling desire to purchase your product or service.
Saturday: Check out this article from Inc.com on "Here's What Hitting the Snooze Button Does to Your Brain".
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July 2, 2016
You Snooze, You Lose
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It’s 6:30am and the alarm clock rings. Many of us “early birds” jump out of bed with a smile on our faces, ready to tackle the day. However, “night owls” probably have a different reaction to the 6:30am alarm clock – one that involves multiple uses of the “snooze” button and the question, “Why do I have to get up so early!?”
A recent article from Inc.com suggests hitting snooze isn’t actually helping the early morning struggle by not allowing your body’s natural “get going” mechanism to work its course. By not completing a full sleep cycle, you can feel less rested or engaged in the first half of your workday. If you consider yourself a “night owl” or find yourself constantly hitting snooze on your clock or cell phone, I recommend reading the following article.
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July 1, 2016
4 Clever Persuasion Techniques
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Last week I wrote a blog on one of my favorite books: Yes! 50 Scientific Ways To Be Persuasive (see “Improve Your Persuasive Prowess”). It goes without saying that persuasion is an art which every sales professional should strive to perfect. Regardless of your particular sales strategy, you must be able to present a persuasive argument in order for your prospect to feel a compelling desire to purchase your product or service.
I found a blog published by HubSpot that outlines four techniques that persuasive people possess. I recommend reading this article and implementing these four principles to become more persuasive.
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June 30, 2016
Block It Out
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Smartphones have become one of the most valuable tools in the business world. They give us access to our email, contacts, and a wealth of productivity-boosting apps.
Unfortunately, these same devices also have the potential to interfere with our ability to stay focused on our work. By availing ourselves of the many beneficial features of a smartphone, we’re allowing ourselves to be reachable by others at virtually all hours of the day, whether by text, phone, or email. The resulting constant stream of “pings” can not only take us out of the focused work zone, but also result in excessive communication that ends up being counter-productive.
An article published in A Life of Productivity suggests “five ways to keep your phone from taking over your life” and adds that switching to airplane mode during the day may be a good idea to block distractions. If you find that your smartphone is becoming less of a productivity tool and more of a distraction, I recommend reading this article.
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June 29, 2016
Benefits of a Positive Mindset
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While closing a sale is a great way to put yourself in the right mindset for selling, you don’t need to wait for success to experience the benefits of a positive mindset. Before you approach a prospect or client, rid your mind of any negative thoughts. Is the weather terrible? Was the commute excruciating? Did your flight get delayed? Whatever the case may be, think only about the good things in your life and visualize yourself closing the sale. If you ever walk into a meeting and think to yourself, "There’s no way I’m going to make this sale," you might as well turn around and go home. Even if it seems like everything is going wrong, you can always be grateful that you have the opportunity to meet with a potential customer.
Remember also that your mindset not only affects your emotional state, but also affects the way you’re perceived by others. If you have negative thoughts, they’ll end up working their way into your conversation with your prospect. You’d be surprised how much of a subconscious effect negativity has on people’s perception of you.
Make a conscious effort to prepare your mindset before you meet with a prospect. It takes time to form a habit, but with diligence and practice, you’ll soon forget how to be anything but positive!
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June 28, 2016
Building Value Through Energy Efficiency
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If you’re selling efficiency solutions in the built environment, you may find yourself being asked by your prospects, “Will this energy efficiency upgrade increase the value of my building?” This can be a difficult question to answer because it varies from situation to situation. The first thing you should do is determine whether you’re dealing with an owner-occupied building or a non-owner-occupied building.
In an owner-occupied building, there are at least two ways to connect enhanced energy efficiency to increased value. The first approach relates to the value of the real estate itself. If an appraiser notices that the building has been outfitted with state-of-the-art energy-efficient equipment, he/she should assign the building a higher value per square foot. Those improvements insulate the purchaser from deferred maintenance, technological obsolescence, future regulatory imperatives, occupant comfort issues, and similar concerns. The “cost approach” to appraisal should consider the quality of the installed systems. Moreover, the “market comparison approach” to appraisal should give the appraiser ample justification for adjusting the value per square foot higher when recently sold similar properties are used for comparison.
The other way to connect the dots between enhanced efficiency and higher value focuses on enterprise value rather than the real estate itself. Let’s assume you’re a publicly traded company whose stock price is conditioned on earnings per share and the price-to-earnings ratio that the market has presently assigned to the company based on a variety of factors beyond the scope of this blog. If energy efficiency lowers operating expenses, earnings increase…which means earnings per share increase…which means (at a stable P/E ratio) the share price increases…which means (at a constant number of shares outstanding) the market capitalization of the enterprise increases. Admittedly a lot of dots to connect; however, the positive correlation between enhanced efficiency and higher enterprise value can be described… and this analysis doesn’t even consider the earnings increase an enterprise may enjoy as a function of the non-utility-cost financial savings (e.g., productivity benefits resulting from improved thermal comfort, indoor air quality, etc.).
In income-producing buildings, connecting efficiency solutions to improved building value is a whole lot easier. The appraiser will be focused on a number called “net operating income,” abbreviated as “NOI.” When the appraiser feels comfortable with that number, he or she is going to divide it by a market-considered capitalization rate. The higher the NOI, the higher the value of the building, assuming a stable cap rate. Perhaps you secured that higher net operating income by raising the rent (because the building is now more comfortable or the tenant’s operating expenses are reduced). Perhaps the building enjoys higher occupancy (because the building is now more attractive to occupy, or more people renewed their leases). Perhaps you reduced the landlord’s share of operating expenses. As long as the NOI is higher, the appraisal should reflect a higher value at a stable cap rate. That's what you need to do: increase NOI before the appraiser evaluates it. You needn’t worry about whether the appraiser has the technical background to recognize a magnetic bearing chiller or variable frequency drives or whatever your efficiency enhancement(s) might have been.
Keep all of the above in mind and you’ll be better prepared to demonstrate how your efficiency solution might generate higher property value and/or enterprise value.
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