Bank Alfalah | SME Toolkit

How to Network Effectively

Adapted from content excerpted from the American Express® OPEN Small Business Network

Networking is the art of making and utilizing contacts. The goal of networking is to create a pool of people and information that can directly increase the quality of your product or service, decrease customer attrition, and, most importantly, leave your competition wondering how you won a job they never knew was available.

Many small business owners don’t want to network because they think its about shoving your business card in someone’s hand and boasting about what you do. In fact, networking is actually about getting to know people whom you can help and who can help you.

Networking expert Steven M. Krauser, President of Network Associates, Hicksville, N.Y., contends that most business people don’t know how to make networking an effective business tool. “If the result of your networking is a stack of business cards in your top right hand desk drawer and not a lot of additional business, then it may be time for you to re-evaluate your methods”, he notes.

Krauser says small business owners should approach meeting people using two goals: get to know as many people as possible, and get them to know you. He then recommends the following four steps to make your networking work:

Give and get information

Networking is a two-way street. When you meet someone, you want to ask them about their business and tell them about yours. Start with the basics – name, company, affiliation, position, nature of business, etc. You next want to find out if you can benefit each other. Try covering these topics:

  • What does your company do?
  • What types of clients do you serve?
  • Who makes the buying decision within a firm for each of your services and/or products?
  • What sets you apart from your competition?

Evaluate the value of the contact

You can’t network thoroughly with everyone. Once you have the preliminary information, you need to decide if this person is worth meeting again and creating a relationship with. Can you help them and can they help you? The answer should be “yes” to both.

Another criterion is to look for people who are truly interested in helping others solve a problem, no strings attached. In other words, don’t think of yourself as a networker but as a problem solver, and look for those same characteristics in someone you will consider adding to your personal network.

Form a strategic alliance

A network is not a collection of business cards, but of people. Take the time to understand the business of those in your network. If you’ve chosen members wisely, this should be a pleasure. And make sure that you educate them completely about what you do and whom you do it with. Give each other updates and encouragement. In effect, you become each others’ sales people.

Remember that the purpose of networking is not to get your contact’s business; instead, you’re trying to get business from everyone this person knows.

You should also be able to turn to those in your network for management ideas, advice, leads, even vendor recommendations. You will learn from each other and contribute to each other’s growth, both in terms of profit and performance.


As your contact base grows, you have to re-evaluate the people in your information loop. Practice effective time management skills and prioritize your contacts. You will want to get in touch most often with those that can be most useful to you. They will become your inner circle.

Be careful never to burn bridges; you never know when someone will be able to help you, or when you will be able to help them. If you feel as though someone is not useful to you right now, you still will want to check in with them now and again, because they may become important down the road. In other words, be nice to everybody because you never know where they’ll show up.

Copyright © 1995-2016, American Express Company. All Rights Reserved.

Find Your Highest Potential Customers

Adapted from content excerpted from the American Express® OPEN Small Business Network

The 80/20 rule – that 80 percent of your sales come from the top 20 percent of your customers – applies to most small businesses. Nurturing that precious 20 percent means focusing your marketing programs on the customers who drive your company’s profitability. A laser-like focus on these high-profit buyers also prevents you from expending too much effort on lower profit customers.

Remember that profitability does not necessarily correlate with the amount of money a customer gives to your business. In many businesses, smaller sales can be highly profitable, while larger sales can cost the company a lot to administer or deliver, and therefore have a smaller profit margin.

Use the tips here to unearth your most profitable customers.

Calculate acquisition costs

To assess customer profitability, you need to determine how much it costs your business to attract each customer. Many small businesses will be able to get away with a cost of sales analysis that is much simpler than what larger companies use. Keep in mind that the cost of sales numbers produced through these calculations are averages, to be used for rough evaluations of your customer base.

To conduct a simple analysis, first review the effort involved in closing a typical sale. Be sure to include expenses like a salesperson, direct mail, Web site development or other advertising costs. Estimate the total cost of your outreach and divide it by the number of sales you close annually to do a “quick and dirty” analysis.

Calculate cost of customer service

It is important to track your customer service expenses to measure how profitable your current customers are. The equation is similar to the cost of sales analysis. Apply costs for service-related items such as order taking personnel, project manager salaries and delivery of your product or service to each customer. Estimate the average cost of servicing each customer by dividing by the number of customers you serviced during the year. If you need help determining key service expenses in your industry, ask your accountant for industry standards. Keep in mind that the cost of service numbers produced through these calculations are averages, to be used for very rough evaluations of your customer base.

Create a high-potential profile

With the two figures above and the revenue that each of your customer provides, you can determine a rough sense of individual customer profitability. You can use this information to develop a profile of your high-potential customer. Look for common characteristics and behaviors. Do they fit into specific demographic or geographic categories? Do they have certain shared attitudes or values? Do they make their buying decisions in a similar way? This profile will help you develop the most effective marketing programs to reach these targets, extend their value to your company, and attract more high-profit customers.

Some businesses might want to go a step further and develop a customer potential pyramid – a three-segment hierarchy that breaks out the company’s high-potential, medium-potential, and low-potential customers. The purpose of this profile is to look for marketing tactics to migrate customers into the high-profit categories.

Reallocate efforts around least profitable customers

In support of your focus on the top 20 percent of your customer pool, you should make an effort to not attract unprofitable customers. Review your records for those customers who cost you valuable time and money and create a profile of them in the same way you built a high potential profile. To the degree that you can, be sure that your marketing programs exclude these customers, to keep you efficient and profitable.

Since every relationship is an important link to other customers, try to avoid alienating anyone by telling them you don’t want their business. Instead, just avoid focusing resources on reaching them.

Copyright © 1995-2016, American Express Company. All Rights Reserved.

Making Cold Calls

Adapted from content excerpted from the American Express® OPEN Small Business Network

Cold calls are phone calls or visits to sale’s prospects who don’t know you. The objective of a cold call is to gather information about the prospect’s potential, educate the prospect on the benefits of your product or service, and in many cases, to get an appointment. There are several challenges to cold calls and they include: fear; getting past assistants, secretaries, and other gate keepers; finding the right contact; and finding a way to make a pitch quickly that will move the sales process forward.

The tips below will help you overcome these challenges:Ask your current clients for referrals and then use their names to break the ice during your call. To get referrals, engage your clients and customers in conversations that will unearth the referrals instead of simply asking them for names and numbers. For example, if you ask someone if they know anyone interested in buying insurance, they’ll probably say no because they can’t think of anyone on the spot. But if you talk to that person about having kids and whether his friends are having kids too, he’ll realize he knows a bunch of people concerned about planning for the future…who might want insurance.

You’re never going to be ready to make sales calls, so don’t wait for the perfect moment. Your fear will never dissipate completely because putting yourself on the line and inviting rejection is never going to be appealing. So instead of coming up with reasons to procrastinate, plunge right in.Whether you encounter a secretary, an assistant, or the prospect on the phone, be upfront about why you are calling. Introduce yourself and state the purpose of your call. Be honest and succinct. People are annoyed and suspicious if you are cagey about why you are calling. Find out if it is a good time to talk – if it is, give more information; if not, ask when it would be convenient for you to call back.

If someone is difficult to reach, either because an assistant or secretary answers the phone or voice-mail picks up whenever you call, try calling at unusual times. A prospect is more likely to pick up his or her own phone at 8:00 a.m. or 6:30 p.m. Plus, they are more likely to be relaxed and have time to speak, since they won’t be facing the 9-to-5 pressures. If you are making sales calls in person, evening is probably better than morning for making odd-hours calls.

You shouldn’t wait for your prospects to get back to you. They may not, even if they are interested. Don’t presume that when prospects say they’ll call you back they actually will. Put your ego aside and call them. And when you do, be nice, no matter how annoyed you are that they never called you back.

We all know sales people who don’t stop for a breath while they steamroll us with a pitch. Don’t do this. It’s unnatural, and it doesn’t work. People buy from people they like, who they feel understand them and their business. Engage your prospects by asking a lot of questions and being genuinely interested in them.

Use cold calls to gather information about your prospect’s needs. You will, of course, need to provide enough information about the benefits of your product or service to make the person want to speak to you. But don’t talk too much. If you launch into a long sales pitch without finding out what your prospect is thinking, you will turn them off. Ask a prospect questions about their problems and needs (you can even write down these questions in advance) and listen closely to their answers. Then target your benefit information to solving those problems and meeting those needs. Try to Get a Face-to-Face Meeting

When someone asks you to send literature, ask if you can come in and present to them for 15 minutes. It might actually be more efficient for them to learn about your business this way because you can encapsulate information and answer their questions. In addition, meeting someone face-to-face humanizes the relationship and will make it easier for them to remember who you are and why they may need your products or servicesCopyright © 1995-2016, American Express Company. All Rights Reserved.

Successful Sales Letters

Adapted from content excerpted from the American Express® OPEN Small Business Network

While the telephone is still the primary tool for reaching your prospective customers, there are many times when you will have to write a sales letter. A strong sales letter can reinforce your sales message, significantly enhance the image of your company in the mind of your prospect, and get your foot in the door. An ineffective letter will cause your prospect to lose interest in your product or service, and can easily cost you an account.

Sales letters tend to fall into one of three categories — letters of introduction; follow-up letters; and cover letters for presentation packages. As the name suggests, letters of introduction are used to introduce yourself to a prospect and let them know you are going to call them on a specific day and time. Follow-up letters serve to reinforce a point made during previous contact; it could be a phone conversation or a face-to-face meeting. Cover letters are sent as part of a larger package, and alert the reader about what to look for in that package.

Click on the following tips to help you create successful sales letters:The most off-putting word in a sales letter is “I” and the most effective word is “you”. Never begin a letter with “I” because chances are the reader won’t get to the second word. It all comes down to selling benefits — your prospects are not interested in the features of your products services, but in what how your products or services can benefit them. Change “I can train your service reps in the latest satisfaction techniques” to “Your customer complaint ratio will drop by training your reps in the latest customer satisfaction techniques”.

In many cases, it is necessary to begin your letter with a brief introduction to who you are and what you do. This is basic for a letter of introduction, but if you’ve already spoken with this person, saying who you are will re-establish a sense of contact. For example: “It was great speaking with you last Thursday. Acme Partners is an advertising agency that can help you boost your Web site traffic with a focused banner ad campaign”.

The body of your letter should contain three or so key points, set apart by bullets. Readers like bullets because it makes the letter easy to read. As the writer/seller, you benefit by immediately pointing your reader in the direction of the important points you want to make.

What result do you want from your letter? Are you looking to get a face-to-face appointment? Are you answering questions raised at a previous meeting? Do you want to make your prospect better informed? Do you need to get a signed contract? You need to close your letter by requesting a specific, quantifiable action. For example: “I will call you on Tuesday, November 18 at 10 a.m. to schedule meeting” or “Please return the enclosed contract Friday, December 12, or call me if you have any other questions”.

It’s rare that someone is going to read anything past the first page, so keep your letter to one page. Many readers look immediately to the bottom of the page to see if the signature is there, so they know who the letter has come from. Staying at one page will also force you to be succinct, since a rambling letter is an ineffective letter.

You will immediately gain their confidence if you show that you understand what your customer’s company is all about. This is especially important when you’re trying to reach a large corporate customer. Briefly talk about their brand, their image, and their needs. For example: “Acme has a reputation for providing superior service and keeping its customer’s needs first” or “There is enormous cachet to owning an Ajax Widget”.

Back up your claims with statistics. This shows that you understand the issues of their business, while demonstrating that your product or service can solve a problem. It also gives your prospect a reason to support your product or service within the company. For example, a software training company pitching a corporate client might cite: “According to Acme Research Associates, the average computer user wastes over 100 hours a year trying to figure out how certain tasks are done”.

Your sales letter is, in essence, a very brief sales proposal, so you need to show that you are thinking about your prospect’s needs. You might be hesitant to put your best ideas in your letter, fearing that your prospect will use them but not hire your company. That’s a mistake. By putting your ideas in your letter, you will make your prospects feel like they’re getting something already, and that they’ll benefit from your products or services. More importantly, you’ll be demonstrating that you’re creative, on the ball, and have your client’s best interests in mind.

Get another pair of eyes to look at any letter before you send it out. This will help you determine if your letter is clear and if you’re getting your point across. Also, ask the person to look it over for typos; you don’t want to lose out on an account due to a misspelled word or other careless mistake.

Copyright © 1995-2016, American Express Company. All Rights Reserved.

How to Learn Your Prospect’s Needs

Adapted from content excerpted from the American Express® OPEN Small Business Network

Before you can sell anything to anyone, you must first understand what it is they need. Here are some ways to do that:Prior to your meeting with the customer, do your homework to find out as much as you can about his business. Read relevant trade journals, do a periodicals search for articles about his product or industry at the library, read the Wall Street Journal. Find out who your customer’s competitors are, what changes are coming in his business and what his chief concerns are likely to be. But always keep in mind that you will gain the most valuable information and insight into your customer’s business concerns by talking directly with him.

Don’t walk into a customer meeting with a pre-conceived idea of what you’re going to sell them and how you will sell it. You’ll sell more in the long run by finding out what aspect of the transaction matters most to your customer. For example, even if you and your competitors are each selling the same widget at the same price, your customer may be most concerned about payment terms, another might be focused on the reliability of shipments, while yet another may care most about product warranties. If you walk in and flip open your widget case before you find any of this out, you’ll have missed an opportunity to distinguish yourself from your competitors.

When you’re on a sales call, you’re there to gather at least as much information as you communicate. This means asking questions and then keeping quiet until your customer has finished with his answers. Don’t start answering objections before your prospect has finished talking. The more you can get your customers to talk, the better you will understand what matters to them. Once you know that, you can make sure your presentation addresses their concerns — and eventually get their business.

Avoid asking closed ended questions that will get you “yes” or “no” answers. Such questions typically start with words like “Is,” “Do,” “Are”. Instead, try to ask questions that begin “what” “when” “where” “how” “tell me” and “why,” because they almost force the person to elaborate. You will get replies that start conversations. For example, “Do you have problems with vendors?” won’t get you as far as “Tell me what you would like your vendors to do better.” Your goal is to get your prospect talking about his problems and concerns so that you can determine ways your business can solve them.

Instead, ask questions that will solicit key information. If you ask a customer “Can I give you a proposal on that project?” you’ll get a “yes” or “no” answer and that’s that. But if you start the process by saying “Tell me the criteria you look for in a proposal…” you are learning critical information instead of ending the discussion.

Use written questionnaires or telephone surveys to learn more about your customers and prospects. Solicit comments from current customers about their level of satisfaction with your product or service. Or you might design a survey that will educate you about your prospects’ business needs. When a customer or a prospect takes the trouble to complete a questionnaire, you’ve achieved something more than just learning from the responses. The fact that he’s made even the minimal effort tells you something about his level of interest in your product or service. You now have a qualified lead to follow up.

Copyright © 1995-2016, American Express Company. All Rights Reserved.