Mark Jewell's Blog: Selling Energy, page 275

Weekly Recap, May 8, 2016

 


 



 
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Monday: Read Paul Cherry's book Questions that Sell: The Powerful Process for Discovering What Your Customer Really Wants  to develop the skill of asking effective questions. 


Tuesday: How to discuss the concept of CapEx Reserves more effectively.


Wednesday: Ways to overcome the objection: "We only approve projects with a simple payback of less than two years." 
Thursday: How to respond to the objection: "We just don't have the manpower." 


Friday: Strategies for dispelling the common objection in a non-residential landlord/tenant setting: "My tenants pay for energy so I have no benefit."


Saturday: Take a look at this article on the HubSpot blog on "Tired of Useless Meetings? 9 Ways to Make Your Meetings More Effective".

 

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9 Ways to Make Your Meetings More Effective

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Have you ever been in a meeting and thought to yourself, “This is a waste of my time. Why am I here?” While meetings have the potential to produce great new ideas, reinvigorate the team, and facilitate collaboration, they also have the potential to steal valuable time from other important work.

I recently read an article on the Hubspot blog that suggests nine ways to make meetings more effective. Many times in my career, I’ve found myself sitting in someone else’s overly long meeting, seeing others staring at their phones, and thinking about all the disrupted workflows that were being squandered by a non-existent or abandoned agenda.

If you ever find meetings to be a waste of time, I highly recommend reading the article and working these suggestions into your next meeting. 

https://blog.hubspot.com/marketing/effective-meetings-tips

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Overcoming Objections, Part 3

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Part three of the “Overcoming Objections” series addresses a very common objection in a non-residential landlord/tenant setting:

Objection: “My tenants pay for energy so I have no benefit.”

How to respond: First of all, diagram the sentence. “My tenants pay for energy…” Stop right there! How exactly do they pay for energy? In many cases, you’ll find that the property manager is repeating a “myth,” not having read the lease himself and never having done a year-end “settle-up” report that allocates utilities (and other charges) to various parties.  Moreover, what if the leases include a Capital Expense Cost Recovery clause that would allow the landlord to claw back some or all of the resulting savings until the upgrade’s first cost is fully repaid (in some cases, with interest)?

While we don’t have the space to provide all the details in this blog, here are some basics to start thinking about that will leave you better prepared to field this objection in the future:

There are gross leases, net leases, and fixed-base leases. You have to know the ins and outs of each of these. Over my 30 years of commercial real estate experience, my studied observation has been that the benefits of energy efficiency can almost always be allocated in a manner that rewards the party paying for the improvement.  Sometimes it’s the tenant, sometimes it’s the landlord, and sometimes it’s both.  So taking the summarily dismissive position, “Well, my tenants pay for energy so I have no benefit”…that’s just crazy talk. Here are just two of the many factors to ponder as you craft your response to this sort of objection:

First, if you’re creative, you can find a way to reallocate an upgrade’s utility cost savings so that it winds up in the pocket of the person who paid for the improvements (see Capital Expense Cost Recovery above).

Second, the benefits of increased tenant comfort and convenience and decreased tenant churn typically dwarf the utility cost savings anyway.

A comfortable tenant is a happy tenant. A happy tenant is less likely to move than an unhappy one. Have you ever considered just how expensive tenant turnover can be for the landlord?  You have lag vacancy (looking for a new tenant)…build-out vacancy (building out the space for the new tenant)…free rent period (often necessary to induce the new tenant to sign)…the cost of reconfiguring the space to meet the needs of the new tenant…the leasing commission…other accounting and legal costs…and let us not forget the disruption caused by the move-out/move-in.

Even if a tenant does pay for energy and would be entitled to capture the savings from any contemplated upgrade without recourse by the landlord, that’s not necessarily a bad outcome.  Think about it.  The tenant would enjoy lower energy bills (which would reduce their overall occupancy cost and position them to be more qualified to pay rent).  In many cases, they would get improved comfort and convenience to boot!

And what happens when the tenant’s employees experience the improved comfort and convenience? They’ll stop pining for a different office! On top of it all, a happy, comfortable employee is more productive and profitable, which makes the tenant better able to pay its rent (and potentially less resistant to increases in base rent when the time comes for that tenant to renew).

It’s a complicated picture, for sure. However, when someone says, “My tenants pay for energy so I have no benefit,” be ready to ask questions that will help you ascertain the real story so that you can educate your prospect and help him/her make a better decision.

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Overcoming Objections, Part 2

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Part two of the “Overcoming Objections” series covers the classic issue of the reluctant prospect who insists that his/her company doesn’t have the human resources to oversee the process of implementing a new efficiency project.

Objection: “We just don’t have the manpower.”

How to respond: First of all, who is “we” and what “manpower” is your prospect worried about spending? Do they not have the manpower to walk the auditor around their building? To overcome this objection, you really need to reframe the situation for your prospect.

Your prospect seems to be inferring that all of his/her employees are too busy to take on any new projects. Given this fact, you might assume that the prospect’s organization is understaffed and would benefit greatly from having another set of hands around the office. If you determine that this assumption is accurate, use it to your advantage – reframe your project’s estimated cost savings:

“The coordination of this project will likely take about 50 hours of your time over the course of the next year. The project (once the initial cost is repaid) will save you about $100,000 a year. Just out of curiosity, what does your average engineer

make?” Then zip it. They’ll probably tell you their engineer’s salary… “He makes about $90,000 a year.” You respond, “Great. Would you sacrifice 50 hours of your time this year to get a free engineer in perpetuity?”

They would be crazy to say “no.” Now obviously the numbers will not always work out this favorably.  However, your goal is to first turn your prospect’s objection into an objective, and then reframe the benefits of your proposed project so that it decidedly meets that objective.

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Overcoming Objections, Part 1

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There are a handful of common objections that we efficiency sales professionals tend to hear time and time again. Over the course of the next few days, I’ll be sharing a few of these objections and some strategies for dispelling them.

Objection: “We only approve projects that have a simple payback of less than two years.”

How to respond: First of all, simple payback period is not the ideal metric to use in most situations. If your prospect insists on using it, however, the least you could do is make sure you emphasize the other savings and benefits of the project that are non-energy-related, such as lowered maintenance, increased productivity, higher tenant retention, etc.  When I say “emphasize,” what I really mean is thoughtfully quantify and monetize those non-utility-cost financial benefits, so that they are more than just glittering generalities as the prospect evaluates their potential effect on his/her return.

As you consider this challenge to move beyond the most obvious utility cost savings, incentives and rebates, remember that energy efficiency projects can deliver three distinct kinds of benefits, and you have to address each one.

The first is obviously the utility-cost financial benefits mentioned above.
The second is the non-utility-cost financial benefits.
The third is non-financial benefits, such as ENERGY STAR building labels, LEED certification, and all the other things that make you feel good but do not necessarily equate directly to increased financial returns. 

On this last point, please remember that in some cases, what you thought was a strictly non-financial benefit may actually support non-utility-cost financial benefits.  As just one example, there are more than a half-dozen studies that show a statistically significant correlation between having an ENERGY STAR label on a commercial building and the following very real “non-utility-cost financial benefits”:  higher base rent per square foot, lower vacancy, and higher sales price per square foot.  Each of those benefits can help drive a building’s net operating income and appraised value higher.

Most mere mortals in this industry can focus on the utility-cost financial benefits effectively, but they fail to incorporate the other two buckets of benefits. Why would you ever let a customer determine the simple payback period of a project by just taking the first cost and dividing it by the utility-cost financial benefits? What if one of the other two buckets is five or even ten times more impressive than the utility-cost financial benefits?

I tell people, “Listen, if you want to use a broken yardstick like simple payback period, at least be fair and put all the benefits that can be quantified and monetized in the denominator of that simple payback period calculation.”

Do that one simple thing (i.e., insist that the prospect incorporate benefits beyond utility-cost financial benefits), and you may very well turn a payback of several years into six months or even less.

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Discussing CapEx Reserves Effectively

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On Friday, we talked about the types of Profit & Loss benefits you might choose to discuss with your prospects. Today, we’ll delve into the concept of Cap Ex Reserves, a topic you should really understand when approaching an income-producing property with an efficiency project…especially one where the tenants presently pay the utility bills and would benefit from efficiency maneuvers.

 

An income property owner who offers space for lease will inevitably need to address capital equipment failures from time to time. Most leases treat any expenses incurred to replace this capital equipment as the landlord’s responsibility, figuring that maintaining the infrastructure of the property is an inevitable “cost of doing business” when you earn your living renting space to others for a profit. Income properties typically maintain a Cap Ex Reserve account to handle these sorts of expenditures.

 

Interestingly enough, if your prospect has Cap Ex Cost Recovery language in his or her lease (as discussed in the “Cap Ex Loophole” blog in March), it may be possible to replace that soon-to-fail equipment as part of an “energy efficiency” agenda before it actually stops working. That way, while your prospect might use Cap Ex Reserve dollars to purchase the replacement equipment, they could recoup that capital within a reasonable span of time by recapturing dollars that the tenants are presently squandering in unnecessarily high utility bills. Essentially, the landlord would assess the tenants for an amount (less than or) equal to the reduction those tenants are likely to see in their utility bills, essentially repurposing those utility savings so that they amortize the cost of the new equipment. In some cases, the lease even allows the landlord to charge a specified interest rate to cover the “carrying cost” of waiting for the principal to be fully reimbursed by the tenants.

 

Years ago in New York City, former Mayor Bloomberg convened a large task force of developers to explore the opportunities for optimizing the use of this so-called Cap Ex Cost Recovery provision to accomplish energy-saving retrofits in tenant spaces in the middle of existing leases. They came up with a new arrangement called the Energy Aligned Lease Clause. It said that if a landlord did an improvement that was projected to reduce operating expenses for the tenants, he/she could recover 80% of the projected savings in the form of additional rent and would pass the other 20% of the projected savings to the tenants. This approach would give the tenants a “buffer” equal to 20% of the projected savings in case the landlord’s engineers were overly sanguine about how much savings could be produced by the proposed retrofit.

 

The advantage of doing this, of course, is that you make the tenants more willing to participate in this Cap Ex Cost Recovery exercise without overly elongating the landlord’s payback period. What would have otherwise been a four-year payback project might turn into a five-year payback project because the landlord is letting the tenants enjoy 20% of the savings.

 

Still, if it increased tenant goodwill and allowed the landlord to execute capital improvements that would have otherwise hit their Cap Ex Reserve Account without any hope of reimbursement, it would certainly be worth doing.

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Discovering What Your Customer Really Wants

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One of the key components of being a successful sales professional is having the ability to ask effective questions and subsequently modify your pitch to address the needs of the prospect. I’ve addressed the importance of skillful questioning in previous blogs (see “Be A Good Listener”. Why do I keep coming back to this topic? Because I believe it is one of the most crucial skills to develop as a sales professional, and one that can take you from “good” to “great.”

 

Paul Cherry’s book Questions that Sell: The Powerful Process for Discovering What Your Customer Really Wants is a great resource for developing this skill. If you’re losing sales because your prospect is unable to “connect the dots,” I recommend reading this book.

 

Here’s a summary from Amazon Books:

 

"Simply knowing the right questions to ask can make the difference between finalizing a sale or losing it. Most sales people have extensive knowledge of their products, but many fail to ask the questions that will help them uncover the real needs of their customers.

 

‘Questions That Sell’ helps readers use advanced questioning techniques to sell their products based on value to the customer, not on price - and increase their success rate as a result. The book contains powerful examples, exercises, and hundreds of sample questions, including:

 

-Vision Questions: Tap into a customers' needs and desires for the future

-Questions to Uncover Problems: Fix something that's not working for the client

-Pay-Off Questions: Get customers to articulate for themselves how much the product or service is worth.

 

‘Questions That Sell’ is an invaluable resource for connecting with customers, understanding what they need, and closing more sales, faster."

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Weekly Recap, May 1, 2016

 


 



 
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Monday: Read Mike Schultz and John E. Doerr's book, Rainmaking Conversations: Influence, Persuade, and Sell in Any Situation on how to be a good conversationalist. 


Tuesday: Focus on the why and connect the dots for your decision-maker. 


Wednesday: Understanding Tax Deductions and Credits, Part 1.  



Thursday: Understanding Tax Deductions and Credits, Part 2. 
 


Friday: Discussing "P&L" Benefits Effectively



Saturday: Take a look at this article published by Fast Company on "7 Daily Mantras to Boost Your Productivity".

 

Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Daily Mantras to Boost Your Productivity

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One of the best ways to stay productive is to remind yourself to stay productive on a daily basis. I don’t mean simply saying to yourself, “Remember to be productive!” I’m talking about specifics. Create a list of mantras that you can keep in mind everyday, each one pertaining to a specific aspect of productivity. These will serve as simple “best-practice” reminders that will help keep you on track.

 

Fast Company published an article with seven great examples of productivity mantras. Two of my favorites are: “Achieve small goals every day,” and “More is not indicative of better.” I recommend reading the full article for the rest of the list and the explanation of each mantra. And if you’re inspired, consider making your own personal mantra list!

 

http://www.fastcompany.com/3037625/how-to-be-a-success-at-everything/7-daily-mantras-to-boost-your-productivity

 Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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Discussing P&L Benefits Effectively

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Energy efficiency can affect many line items on a business’ Income Statement (also known as the “Profit and Loss Statement” or “P&L”). If you look at the full picture through the lens of business acumen, you’ll see how effective it can be to discuss the potential P&L benefits of your efficiency project with your prospects. The following list gives you an idea of the types of line items that you may choose to discuss: 

More sales: If you install attractive LED lighting in a grocery store, for example, the store will likely see an increase in grocery sales.
Less payroll: If your efficiency solution increases productivity (as we have discussed in previous blogs), employees may be able to do more work in less time.
Less repairs/maintenance: A new, high-efficiency product usually requires less maintenance than an old, soon-to-fail one.
Less scrap: You may recall a story I told about the aluminum windows and doors manufacturer that reduced scrap rate by 25%, effectively turning a 4.2-year payback into a 39-day payback.
Lower utilities: Of course, your efficiency product will probably have a positive effect on the utility bill, so this one will be included in virtually every case.
Higher rental rates: With all of the added benefits of efficiency, your prospect may be able to increase rental rates without deterring potential tenants.
Better tenant retention: An efficient building is more comfortable, more attractive, and requires less maintenance. All of these factors help retain existing tenants who might otherwise choose to move to a building that features the high-end amenities you are offering to your prospect.
Better tenant attraction: As in the case above, an efficient building is more comfortable and attractive than an inefficient one. Add in an ENERGY STAR® or LEED certification and you’ve got yourself a recipe for tenant attraction.
Less need for Cap Ex Reserves: This is a topic that warrants further discussion, so stay tuned for more on this on Tuesday!

 Love one of our blogs? Feel free to use an excerpt on your own site, newsletter, blog, etc. Just be sure to send us a copy or link, and include the following at the end of the excerpt: “By Mark Jewell, Wall Street Journal best-selling author of Selling Energy: Inspiring Ideas That Get More Projects Approved! This content is excerpted from the Sales Ninja blog, Mark Jewell's daily blog on ideas and inspiration for advancing efficiency. Sign up at SellingEnergy.com.”

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