Mark Jewell's Blog: Selling Energy, page 309

Convincing the Landlord, Part One

When you approach a landlord with an efficiency project, one of the most common objections you may hear is, “My tenant’s leases are all ‘net’ – why should I care about efficiency improvements?” The next time you’re presenting an expense-reducing capital improvement to a landlord whose tenants might be the beneficiary of the resulting savings, be sure to mention one or more of the following points.  They will help inoculate your presentation against the objection “My tenants stand to get all the savings…”

Energy efficiency supports higher base rents. Why? Because when a tenant looks at a space, he or she generally considers total occupancy cost, which is base rent plus the tenant’s share of Operating Expenses. To the extent that you can compress the tenant’s share of Operating Expenses by sensibly applying energy efficiency measures, you’re giving yourself headroom to increase the base rent. The occupancy cost that the tenant sees doesn’t change – the landlord simply captures more base rent, which supports higher Net Operating Income, which is the mother’s milk of real estate investors.

You can use other people’s money (famously known in the industry as “OPM”) to pay for the improvement. Real estate developers live by the OPM model. They will take a construction loan from a bank or take-out financing from an insurance company or a pension plan. It’s all about leveraging other people’s money to make a healthier return on the equity they invest. How does the OPM concept apply to expense-reducing capital projects? Let’s assume the landlord’s model lease includes language that allows him to repurpose dollars his tenants are now spending on unnecessarily high utility bills. By exercising the lease’s Cap Ex Cost Recovery clause, the landlord could invest in energy-saving improvements that would lower the tenant’s share of the operating expenses, and then recover some or all of that savings in the form of additional rent until the capital improvement is fully paid for (plus interest in some cases). And what happens if the landlord doesn’t play the Cap Ex Cost Recovery card? He’ll likely spend his own Cap Ex Reserve dollars to replace the equipment when it finally fails. Moreover, at that point, he’s lost not only the opportunity to frame the equipment replacement as an expense-reducing capital improvement eligible for Cap Ex Cost Recovery, but also any possibility of collecting a rebate or incentive since the equipment is no longer operational.

Stay tuned for more on this topic tomorrow…
 

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First, Break All the Rules

A company’s success is directly related to the quality of its management. Without great managers, a business with even the most talented employees will struggle to succeed. So what makes a great manager? There are countless theories; however, many of them are truly “theoretical” and are not backed by actual research.

One of the most compelling theories comes from Marcus Buckingham and Curt Coffman, authors of First, Break All the Rules: What the World’s Greatest Managers Do Differently. These two gentlemen worked for the Gallup Organization and they decided to do some comprehensive studies involving more than 80,000 managers and over a million employees. Unlike the more theoretical management theories, their findings are backed by real data. In this book, you’ll discover what makes great managers unique and learn how to develop the skills necessary to become a top performer. If you work in management (or if you’re thinking about moving into a management position), I highly recommend picking up a copy of this book.

Here’s a summary from Amazon Books:

“The greatest managers in the world seem to have little in common. They differ in sex, age, and race. They employ vastly different styles and focus on different goals. Yet despite their differences, great managers share one common trait: They do not hesitate to break virtually every rule held sacred by conventional wisdom. They do not believe that, with enough training, a person can achieve anything he sets his mind to. They do not try to help people overcome their weaknesses. They consistently disregard the golden rule. And, yes, they even play favorites. This amazing book explains why.

“Marcus Buckingham and Curt Coffman of the Gallup Organization present the remarkable findings of their massive in-depth study of great managers across a wide variety of situations. Some were in leadership positions. Others were front-line supervisors. Some were in Fortune 500 companies; others were key players in small, entrepreneurial companies. Whatever their situations, the managers who ultimately became the focus of Gallup's research were invariably those who excelled at turning each employee’s talent into performance.

“In today’s tight labor markets, companies compete to find and keep the best employees, using pay, benefits, promotions, and training. But these well-intentioned efforts often miss the mark. The front-line manager is the key to attracting and retaining talented employees. No matter how generous its pay or how renowned its training, the company that lacks great front-line managers will suffer. 

“Buckingham and Coffman explain how the best managers select an employee for talent rather than for skills or experience; how they set expectations for him or her – they define the right outcomes rather than the right steps; how they motivate people – they build on each person’s unique strengths rather than trying to fix his weaknesses; and, finally, how great managers develop people – they find the right fit for each person, not the next rung on the ladder. And perhaps most important, this research – which initially generated thousands of different survey questions on the subject of employee opinion – finally produced the twelve simple questions that work to distinguish the strongest departments of a company from all the rest. This book is the first to present this essential measuring stick and to prove the link between employee opinions and productivity, profit, customer satisfaction, and the rate of turnover.

“There are vital performance and career lessons here for managers at every level, and, best of all, the book shows you how to apply them to your own situation.”
 

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Weekly Recap, December 28, 2014

Monday: Read Scott Berkun’s  Confessions of a Public Speaker  and improve your public speaking abilities.




Tuesday: Learn why it's important to take personal responsibility for any communication issues that might arise during the sales process.  




Wednesday: Discover some methods for moving a discussion forward after your prospect tells you he or she does not have the budget for your project.




Thursday: It's time to plan for 2015. Discover some tips on how to set yourself up for success. 




Friday: Read this fun story about how reframing costs can help you achieve your goals.




Saturday: Read this article from Entrepreneur and learn why it's important to keep yourself in mind when looking for productivity solutions. 

 

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Know Yourself

Productivity is a personal thing. New software, apps, strategies, and philosophies for productivity are constantly being developed. Many of them are great; however, none of them works for everyone. The key to finding what works for you is to know yourself. What are your needs? What kind of work environment do you thrive in? How does your energy level fluctuate during the workday? What are your strengths and weaknesses?

As you search for new ways to improve productivity, keep yourself in mind. It sounds obvious, yet it’s easy to buy blindly into a productivity solution that looks compelling on paper. So think about how you would interface with the solution before you waste time trying to implement something that doesn’t align with your natural tendencies and abilities. For more information about how to “know yourself,” read the following article published this week on the Entrepreneur blog:

http://www.entrepreneur.com/article/240828

 

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Affording More Leisure

I talk a lot on this blog about how to reframe efficiency so that the savings or benefits of a given project help a prospect satisfy some other goal or desire. If your prospect is family-oriented, it’s likely that they value leisure time and want to maximize the hours that they have away from work – hours that can be spent enjoying time with their family. You may be able to reframe the benefits of your efficiency project so they resonate with this value by comparing the amount of money that your project would save them with the cost of fun family activities (such as vacations, tickets to see movies or shows, etc.). 

One of the best examples I’ve heard of this kind of reframing comes from a top-performing sales professional in Connecticut. For the sake of anonymity, we’ll call him Don. Don told me, “You know, I use the same winning sales strategies that I use in my work when I go home to my wife. My wife was recently interested in buying a station wagon for the family, and she wanted the Subaru Outback (which is far from the cheapest alternative). She told me that she’d always admired the Subaru from afar and that she really wanted to own one.”

So Don said, “Honey, that’s a really expensive car. Why don’t we buy the Saturn station wagon instead?” She said, “Well, I drive the kids around all day. I'm in the car a lot and I really want a Subaru.” Dave responded, “It’s $60 more a month…” She said, “That’s fine. It’s just $2 a day – not a big deal.” 

Before I continue with this story, let me stop and remind you that people don’t make decisions; they make comparisons. The minute she hears $60, she’s thinking, “That’s just $2 a day...that’s half of what I spend on a cup of coffee at Starbucks every morning.” 

Don, being a sales professional (as opposed to a salesperson) says to his wife, “Wait a second, Honey. You know, we’ve been looking at Jet Skis for the family and if we actually bought one, the payment on it would be about $60 a month. So, which would you rather have, the Subaru Outback and no Jet Ski, or the more reasonably priced station wagon and the Jet Ski so our kids can learn to do watersports at our lake house?”

As soon as he reframed that $60 from, “Eh, it’s $2 a day,” into, “Wow, that’s a filmable moment every weekend with my kids on a Jet Ski... memories that we’ll have forever,” you can imagine what car they agreed to drive home the following weekend... and you can also imagine what it was pulling: that Jet Ski on a trailer!

Now, this story isn’t about an efficiency sales situation; however, it certainly underscores the fact that comparisons really do drive decisions. It’s your job to frame each comparison optimally so that the most likely outcome is a thumbs-up for your proposed project.
 

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Gearing Up for 2015

The New Year is right around the corner. If you have not already spent some time reflecting on 2014 and planning for 2015, my advice to you is that you start now. Here are several questions you might ask yourself to help guide your plan for 2015: 

Who were my best customers this past year?
What made my best customers the best? Can I identify any patterns among this group?
Who were my least profitable or most difficult-to-deal-with customers? Can I identify any patterns among this group?
Did any industry or segment comprise a particularly noteworthy portion of my deal flow?
Which of these industries or segments did I spend the most/least time researching and/or pursuing?

The goal of this exercise is to take a bird’s eye view of your year, to identify what did and did not work, and to determine what skills you may have developed in the past year that you can leverage in 2015. Let’s say you spent a lot of time in 2014 working with a specific industry, segment, organization, or professional role, and you can now honestly say you know how your solution maps into benefits they care about.  Guess what?  Simply cloning those profiles should give you plenty of prime target(s) for 2015.

You may be familiar with Scott Channell’s “60/30/10” rule, which states that 60% of your success comes from who you call, 30% comes from what you say, and 10% comes from everything else. You can make the most of the “60%” by profiling your 2014 customers (both the good ones and the bad ones) and vowing to pursue only the ones that fit the “good” profile. Bottom line, don’t waste your time spinning your wheels on bad prospects. Life’s too short.
 

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No Budget

“We don’t have the budget for it.” Sound familiar? I’m sure many of you have come across this objection when trying to get efficiency projects approved. It’s true that many organizations don’t have a budget specifically for efficiency; however, there are many ways to fund efficiency improvements, and you need to be prepared to put those options on the table the minute your prospect expresses this concern.

The first question you want to ask your prospect in this situation is: “What budget are you referencing – capital or operating?” You want to make it clear that your prospect is spending plenty of money now (on unnecessarily large utility bills) and that you may be able to repurpose those dollars to cover the debt service to purchase new, efficient equipment with no additional monthly outlay – and perhaps even wind up with positive cash flow each month. Put another way, if they have budget to pay for overly large utility bills each month, they probably have the budget to finance the solution – provided they are credit-worthy, of course.

We mentioned loans, leases, and performance contracting earlier this month. In case you missed those blogs, you can view them here: Funding Efficiency, Part One and Funding Efficiency, Part Two. In a future blog we’ll discuss PACE financing, an avenue that is growing in popularity as building owners seek to accelerate the pace (pun intended) and magnitude of efficiency-related capital improvements.

Ultimately, there’s almost always a way to come up with the capital necessary for efficiency improvements. Don’t walk away when your prospect tells you he or she doesn’t have the budget. Sometimes it’s as simple as moving dollars from one budget line item (“Utilities”) to another (“Debt Service on New Efficient Equipment”).
 

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Communication Quality

On Friday, we discussed the importance of guiding your prospects through the project and communicating with them regularly to make sure they’re in the loop. Today, I’d like to add on a bit more about communication because it’s so vital to success.

Communication is your responsibility. If you meet with a prospect and he doesn’t seem to understand what you’re trying to convey, is it his fault? No. It’s yours. It’s not helpful to come back to the shop after a meeting and say, “He just didn't get it,” or “He was so dense,” or “What a dope! I can't believe he spent the money on a new marble lobby in his office building instead of investing in a new chiller with me.”

The quality of your communication is your responsibility. If a person misunderstands, that’s your problem. Perhaps you should have slowed it down and asked more questions to check for understanding. Maybe you should have reframed the value proposition so that it made sense from his perspective. Would the outcome have been different if you had given an example that resonated with him? Perhaps you should have learned a little more about his segment, his industry, his organization, and/or his role and used that insight to formulate a more compelling value proposition.

The good news is, if we’re smart, we learn from our mistakes. If we place the blame for a failed opportunity on anyone other than ourselves, we lose the opportunity to learn and grow from that mistake (and we’ll end up making it over and over again). Take responsibility, reflect on your failure, and use it as an opportunity to improve. As Malcolm Forbes famously said, “Failure is success if we learn from it.”
 

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Confessions of a Public Speaker

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 and anecdotes 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, December 21, 2014

Monday: Read Tom Rath and Donald O. Clifton’s best-selling book, How Full is Your Bucket?, and learn some tips and tricks for staying positive. 




Tuesday: Discover the various line items on an Income Statement that can be used to boost your value proposition. 




Wednesday: Learn about Cap Ex Reserves in the context of efficiency projects. 




Thursday: Build your case before meeting with a prospect by considering what key metrics they might be using to measure their success.




Friday: It's important to guide your prospects through the project from start to finish. Don't be afraid to remind them of what they need to do next.   




Saturday: Read this article from LifeHacker and learn about the Kaizen Productivity Philosophy. 

 

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