Class Overview

• Course: Introduction to Entrepreneurship

• Class: 5: Sales & Customer Service

• Date: February 11th, 2025

• Instructor: Arabella Pollack

Key Learning Objectives

• Understand the role of sales in entrepreneurship.

• Recognize the benefits of commission-based pay for sales staff.

• Learn the approach salespeople take during sales calls.

• Grasp the concept of Customer Lifetime Value (LTV) and the importance of customer satisfaction.

Importance of Salespeople

• Proximity to Customers: Salespeople are often the frontline for customer interactions, providing valuable insights into customer needs and experiences.

Types of Corporate Sales Roles

• Hunter vs. Farmer Roles:

  • Hunters: Focus on acquiring new customers.

  • Farmers: Focus on nurturing and retaining existing customers.

Customer vs Consumer

• Key Distinction: Not all customers are consumers. A customer is anyone who purchases, while a consumer is the end user.

• Channels of Marketing:

  1. Consumer Marketing Channels.

  2. Involves various intermediaries like wholesalers and retailers.

Sales and Business Development

• Career Prospects in Sales:

  • Sales offers responsibilities, autonomy, and can lead to financial benefits through commission structures.

  • Understanding market dynamics and having measurable impacts are key to a successful sales career.

Commission Structures

• Types of Commission:

  • 100% Commission: Earnings are solely based on sales.

  • Base plus Commission: A guaranteed base salary plus additional earnings from sales.

Importance of Customer Retention

• Financial Sense:

  • Acquiring new customers can cost significantly more (5 to 25 times) than retaining existing ones.

  • A mere 5% increase in retention rates can boost profits by 25% to 95%.

Customer Lifetime Value (LTV)

• Definition: The total value a customer brings to a business over their entire relationship.

• Impact on Business: Understanding LTV helps in strategic planning and improving customer service.

Cost of Customer Dissatisfaction

• Financial Impact:

  • A dissatisfied customer can result in significant losses. Example scenario:

    • Average customer spends $100 per week, visits for 50 weeks a year.

    • Total loss could be projected over a 10-year retention period.

Calculating Customer LTV Examples

• Variations Across Businesses:

  • Lexus: LTV of $600,000.

  • Starbucks: LTV of $14,000.

Keys to Successful Selling

1. Build Rapport: Establish a connection with the customer.

2. Listen Carefully: Identify customer pain points.

3. Present Solutions: Highlight how your product/service addresses their needs.

4. Handle Objections: Be prepared to respond to concerns.

5. Ask for the Sale: Confidently close the deal.

6. Don’t Take Rejection Personally: Learn and move on.

7. Continue Prospecting: Always look for new leads.