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John Jantsch (00:47): Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantsch. My guest today is Mike MCIT. He’s the author of get different fix this next clock worth profit. First, the pumpkin plan and the toilet paper entrepreneur. He is also the founder of profit first professionals. The profit first professionals organiz organization is designed to support accountants, bookkeepers and other financial professionals to substantially differentiate themselves in the market. We are gonna talk about one of Mike’s old books because he’s come back and revised. It really added a lot of new content to it. Evergreen important topic of getting more done managing your time. So Mike, welcome to the show. This is at least your third or fourth time here.

Mike Michalowicz (01:32): Yeah. Awesome. To move back with you, John. Thanks. And thanks for the pre-show conversation. I was fine. Oh yeah. We had to get around and start recording some of this didn’t we so clockwork.

John Jantsch (01:41): This is a question I always ask people when they revise books, you know, David Meerman, Scott’s been on this show. I think he’s on like the eighth version or ninth version of his oh, the new rules, new the book. So I was like trying to tell people, I know there’s a whole lot of new stuff. We could go down a laundry list of it, but if I’m that person that already owns this book, like convince me why I should go out and buy another copy.

Mike Michalowicz (02:02): Yeah. So it’s 60% brand new. Wow. And 40% of the original content has been adjusted. So for fluidity, basically there’s two reasons why I do a revising expanded it’s so only the second time I’ve ever done one, um, is if there’s growing demand on the topic. So do I see the book there’s continuing and growing demand for the book?

Mike Michalowicz (02:21): And there is in this case, secondly, is there regular points of confusion? So I’m really fortunate to get emails from readers telling me what’s working, but also what’s not working. And there were, was a few significant sticking points under our belt for the last, I think the prior book came out four or five years ago under our belt. We have now thousands of implementations, we have a training institution or school or whatever you call those things, training curriculum that our, uh, readers can choose to go through. And we’ve now over a thousand student, over 2000 students, I’ve gone through that program. And so we get feedback, oh, this is what’s working. This is, what’s not working. This is why I’m confused. And my goal with a book is that no one needs to ask a clarifying question that every ounce of content’s in there, cause unlike a speech or a class or a workshop where student can raise their hand, say, can you give me more details?

Mike Michalowicz (03:12): Or another angle in a book, you get one shot the sentence it delivers or not. So it was stripped down to the bare bones infrastructure of the book reorganized and I rebuilt it out. So I think it’ll be easier, faster, better. You know, one of the things that I think as an author, you know, you’ve maybe taken your past and you put some examples and things in, but you know, 2, 3, 4 years down the road, you’ve heard from lots of people, you’ve got all these like rich treasure stories of stories. Right. And I think that’s, you know, don’t, you wish you had those in the beginning, right? I mean, that’s what really makes you write your first book. You, when you write your first book, you don’t have much practical experience. At least for me. Yes. I have people that I teach on the side, you know, is it my side hustle to my author business on how to do this.

Mike Michalowicz (03:57): And we had our workshops running for a year in advance, but there’s something different once the book is out, because you hear back from people that never go through any of those experiences, just read the book, telling you what’s working. What’s not those become good stories. And of course people have gone through it. So I, I mean, I’m biased, but it’s a markedly better book I believe.

John Jantsch (04:13): Yeah. Well the, the good news is you had a lot of experience with toilet paper when you wrote your first book. So that helped. Right?

Mike Michalowicz (04:19): that’s all right. Go straight for the potty humor. Shall we? No. Yeah. A little punch guy. Oh, all right. So you know, it’s really, uh, it’s really popular. I think for, you know, hosts like me to ask questions. Like, so what’s been your biggest learning, but I know that as you continue your write books, you are so engaged with the people that you work with.

John Jantsch (04:37): I think it’s fair to ask you. What’s been like a new learning for you. Like what’s been a big aha that you’re like, I don’t know why I’ve never considered this, you know, but this is, you know, this is now how I think about my business.

Mike Michalowicz (04:49): Yeah. So, okay. So I had a call. This is not in clockwork. I’m working on another book called all in I’m like, this was the defining moment for this book you ever have you ever have that moment where you’re like, God, I can’t find any good employees. And I’m saying this rhetorically, but that’s how I felt. You know it, some employees are great. Some are not a fit. And the feedback is higher. Slowly, fire quickly. If someone’s not working out, you gotta get rid of ’em fast. Right. And I’m like, gosh, how can that always be true?

Speaker 1 (05:15): Cause it seems like there’s always this churn of firing and you clean on a few good people. I got a call from this place in Texas. It’s a barbecue. It’s called Kings smokehouse or Kings barbecue smokehouse. And the owner, his name’s actually Stephen King. But not that Stephen King called up and said, I took, I bought this place. Which first of all, I’ll never buy a restaurant. yeah. Secondly he said, I took over and he goes, uh, these employees, many of them were just not a fit. They were bad employees. I had to fire his people. He goes, but I couldn’t afford to fire people particularly post COVID. Right?

John Jantsch (05:47): Yeah.

Mike Michalowicz (05:48): So instead he goes, I tried this thing, I gotta tell you about it. He employed. He didn’t even know that there’s a technical term out there called psychological ownership. And he goes, I employed it without knowing what it was.

Mike Michalowicz (05:59): And so I’ve been researching this. There’s an interesting phenomena. You gotta check this out called psychological ownership. What it is, the feeling of possession without legal possession necessarily. Right. And ironically legal possession does not constitute the sense of ownership sometimes actually generates the opposite. So ownership to defining that is where we are all in on something. We, this is important to us. It actually is defining of ourselves as part of our purview, I guess. So when you hear someone say, this is my company, they’re showing a sense, psychological ownership over as opposed to this is John’s company. That where there’s a detachment. So what’s interesting is that I, the analogy I use is like renting a car. When I rent a car, they give me responsibilities care for no scratches, fill gas. When I leave that place. After the hundredth ID check I’m in that freaking OCN, I’m crunching down on the gas pedal, I’m hitting the brakes.

Mike Michalowicz (06:52): I’m hitting the curbs. I don’t really care about this car because I’ve been assigned some certain responsibilities to adhere to. I don’t have a sense of ownership. Now, the irony or the interesting thing is when I do own something like I own a car at home. That one I don’t mess around with, but here’s the ironic part. I don’t really own it. I’m making my payments to the bank that they’re the legal owners. I just have psychological ownership. So with this guy, Steven told me, he’s like, oh, I started to give people ownership, which is slightly different, subtly different, but significantly different ones. Outcomes than responsibility. Responsibility is clean. The clean, the inventory room, stock everything correctly. So there’s this one guy Joel’s a long answer, but there’s one guy, Joel, who I interviewed subsequently who was by all definitions, a horrible employee showed up late to work.

Mike Michalowicz (07:39): Steven hired Joel because his friend asked him to do him a favor, which is the worst way to hire someone. He was a mechanic, not an employed mechanic, but he’s working on his own card all times. So he was covered with grease and he was supposed to be a new waiter after one week. Steven’s like, I gotta fire this guy. He calls his friend, says, I’m. He says, give him one more week. Steven acquiesce is and out of a, kind of a hail Mary Steven goes to Joel and says, Hey man, it’s really, all this stuff is really difficult. I wanna give you ownership over something. Use those exact words. And there was this little box of straws on the bar. You know the one, when you pulled the one straw out and all the other straws kind of falling out, he goes, I wanna give that to you.

Mike Michalowicz (08:15): Meaning your job is to maintain that. Anyway, you sit, see fit. We’re gonna call it Joel’s straw box, maintain it. And Joel started doing a good job with it for the next few hours in the next day. And then Steven says, well, Hey, you’re doing a great job with that. Do you wanna own the bar mat? This guy Joel says, okay, starts controlling it fast forward. He starts this cascade effect fast forward. Now this is two years later. Joel’s his best employee. He does anything for the company. He goes above and beyond. What’s asked of him when he sees an opportunity to fix something, he fix it cause he acts like an owner. So I called Joel. I said why? And he says, listen, he goes, you don’t know anything about my background? I had a horrible background. I was abused as a child. I was told I could never own anything.

Mike Michalowicz (08:59): And that was the first time in my life. I was given control over something. The ownership, he goes, I’ll do anything for this company. And as I was wrapping up the call, I said, Joel, I heard that you’re into repairing cars. Tell me about that. He says, yeah, he goes, I love repairing cars. I wanna be a race car driver one day. That’s my dream. And I said, dude, the way you’re going, I think this is gonna happen. I said, it’s gonna be such a loss for the barbecue house. And there was this long pause and Joel looks back, we’re doing over zoom. He looks right in the camera. Like he’s a pro. And he goes, I’m never leaving the barbecue house. I’m gonna be a professional race car driver and still work there. I was like, no, how do we find people? Like you?

Mike Michalowicz (09:34): He didn’t have to find the a player. Yeah. He simply started mastering there’s many elements to it, but he started to master assignment of ownership and Joel’s behavior and other people’s behavior, radically changes. I know who his first sponsor’s gonna be right on the car. Right? Big, big barbecue patch on his. Exactly. Right.

John Jantsch (09:53): All right. So that was a great answer. I have a flip sort of side of that one. I asked you kind of, what’s been a new aha for you. What’s hard now. And we are gonna talk about the book I promise, but I just wanna take the advantage of the years of experience from you. What’s hard now that maybe didn’t used to be okay. So here’s what I didn’t expect is my goal was not to run all these different, I didn’t wanna run businesses besides selling books. Like I’ve done that.

Mike Michalowicz (10:26): It’s okay. It’s I have nothing against it, but I wanted my primary business to be books. But now as a business has grown, we’ve always partnered. It’s the challenge is ensuring that every partner is served to the level they wanna be served. So instead of me owning all these different businesses, like we started a business for this new book, all in this that’s two years away. Yeah. I gotta take care of that partner and be a service to them. Clockwork new book has a partner and I gotta be a service to them. And I didn’t really anticipate the challenges there of catering, but catering a way that there’s balance that everyone’s represented fairly. And the interesting thing is sometimes they raise their hand and say, but I’m not being treated fairly. And it’s like, we have to show the documentation. Like we’ve done the exact same thing for everybody else.

Mike Michalowicz (11:08): What we’re trying to do is rise. The tide and your boat will rise, but you know, the licensee fairly enough. But what about my boat is always, you know, their boat and not the, which from my perspective, I can’t worry about the boats. I gotta worry about the tide. So that striking that balance is a delicate court is necessary. It’s important. It’s just a little harder than I thought. I thought the boat, the tides rising, we’re all good. But uh, I gotta watch for the boats too with them.

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John Jantsch (12:08): All right. Let’s, let’s talk a little bit about clockwork. There’s a lot of ideas in here that, you know, maybe have been incorporated in some fashion in some other books, some other courses, some other people writing. Sure. So I wonder if you could talk a little bit about really what’s been your inspiration in terms of your own. I mean, essentially this is a time management, you know, book approach. What’s been your inspiration for developing that. Yeah. I mean, I think the inspiration is, I think it’s not time management, but that’s the benefit. Yeah. To the owners. I think what it really is empowerment team empowerment and building processes and systems, which then brings back time management so we can hone in what we wanna do.

Mike Michalowicz (12:46): Yeah. So I think that’s the starting argument I make. I think one of the big parts is team empowerment. So one of the kind of pinnacle tests of the book is what I call the four week vacation. And in, in my research of the companies, I analyze 90 X percent plus identified that if the owner was away for four weeks, that the business was experiencing all the elements of its business cycle within those four week periods. So in theory, if I could leave for four weeks, I could leave into perpetuity because everything’s happening during four weeks and these monthly cycles. Yeah. Yeah. But then the fear was like, oh, if I leave for four weeks, my employees make, oh, you’re making money off of my sweat. Mike goes to the beach and or the mounds with John and all I do is work. So that was the fear of what I found and why, including the book.

Mike Michalowicz (13:32): And there’s actually now every chapter has a section for employees is that this is actually an empowerment opportunity. We, as business owners act like superheroes. Yeah. We swoop in can fix anything. Cause we know everything about the business, but we lead this wake of damage behind us, or we interrupt someone’s ability to take true accountability over something because we swing and take it. When I left my business, I’ve been doing this for five consecutive years. Now when I leave my business each year for four consecutive weeks, I come back and my employees consistently say, oh, I feel even more empowered. I’ve taken on these responsibilities. Yeah. And then the interesting thing too, I, including this book, we tested our own business three years into this. So two years ago, every employee started taking four vacations. And it’s not, it is a benefit to my teammates, my colleagues here, but the real benefits back to the company, because if Jenna or Jeremy or Izzy, or one of our teammates leaves for four weeks in their absence, we have the cover for them.

Mike Michalowicz (14:27): So there’s this backup and redundancy that’s being trained. And, and the final assessment’s this everyone’s leaving for a period of time at some point. Yeah. Because they retire, maybe illness, an accident happens, life events happen. So this for vacation concept is something that I think the entire company should be doing to prepare for the inevitable and to strengthen the company.

John Jantsch (14:47): I had three employees go out on maternity leave at the same time. One time, you know what 10, oh my gosh. But it is reality. So I think we can prepare for that. I actually, the, just this year took myself and my director of operations were both out for 10 days at the same time. And we were actually on lake Powell, which we have no signal at all. So there, there was zero ability. Cause every now and then, you know, you’re like, well, let’s just make sure there’s no disasters.

John Jantsch (15:13): Right. But there was no ability to, and you’re absolutely right. People, we came back and people were like, let me tell you what I did. Right. I mean, it’s pretty cool. Yeah.

Mike Michalowicz (15:21): Yeah. You know, you know, the biggest interrupt to that. And I read about it in the book too is for, at least, for me was my own ego. Yeah. When I was away after like day two, I’m like, oh my God, I need to check in. Right. Like what are they doing? The place is burning down. And then I need to SWO in. But then when I came back and they said, they don’t need me. I’m like, oh, you don’t need me. And like, the tears were welling up inside. Like I’m not needed. Yeah. But it was once I started really understanding that this is a form of empowerment that I again, then kind of got my ego back in check and said, okay, this isn’t just about me.

Mike Michalowicz (15:50): This is about my teammates and elevating them. Yeah. Yeah.

John Jantsch (15:53): So, so there’s a big concept in the book, the four DS doing, deciding, delegating, designing, you can unpack that a little bit, but I was happy to see. And it makes total sense that you had it a 50, which is downtime, which we’ve been talking about a little bit. So go ahead and maybe do your quick spiel on unpacking the five DS.

Mike Michalowicz (16:09): Now I, yeah, so there’s, this is there’s four stages of a business and the business has to be serving all these. But when I say stages, we as an entrepreneur can elevate to the fifth, the fourth stage and, and implement the fifth. So the first stage is doing is the activity that a business must do to generate revenue, to be a service to clients. But it’s also the structural work that needs to be done.

Mike Michalowicz (16:29): So I create furniture that I sell the clients, that’s a doing activity, but also the invoicing, all the administrative work behind that is all doing work. A business, an optimized business will spend 80 to 90% of its time there. The next level up is deciding is necessary, but only in short spurts, it’s kind of like that adrenaline kick. It’s good for you until you have a heart attack. Yeah. And so deciding is where the manager, or in many cases, the business owner themselves is making decisions for other people. So, and so goes off to do the work. I TaskRabbit. They come back a second later and have a question, oh, do I sort invoices by first name or last name? And I think about it and I give them a decision. I call it colleague, it’s an Indian goddess with one head and eight arms.

Mike Michalowicz (17:08): The vast majority of small business lives in the deciding trap. One person being the brains for the entire organization. And it limits it to about three people. Four people max can work there. Yeah. To get past that with the move to the next D, which is delegation or delegating, delegating is not the assignment of tasks. That’s what we think it is. What delegating truly is the assignment of outcomes. It’s about that empowerment. You know, we agree you and I’m your employee. You say, here’s where we need to go. Mike, do you agree? And do you understand why? Yes. Here’s what my thoughts are. Guess the outcome, we have a best practice, you know, way we’ve historically gotten there, but your job is to get there no matter what. And if there’s a disruption or a better idea, take that. And you know this, when I come back with a question, say, Hey, John, I have a question.

Mike Michalowicz (17:47): The response is no questions. I hired you for your brain. Mike, go and figure this out, get to that outcome. Yeah. So that’s true empowerment of employees. And that moves us, the owner to the ultimate stage, which is designing, designing is visioning the goals and outcomes for the business and then strategizing ways to get there. This is the hardest work yet. We think it’s the easiest. We think doing’s the hardest. That is the easiest. It’s easier to dig a hole than it is to solve a Rubik’s cube for most people. Yeah. So most people would rather just sit there and sweat it out, digging a hole than thinking we’re making great progress, but we got to get the puzzle aligned in the right direction to move our business forward. So get out of doing and start envisioning where your business needs to be. The last part is downtime.

Mike Michalowicz (18:27): There was a study came outta the UK. This is a new addition to the, they identified that the average knowledge worker produces 3.2 hours per day, regardless of hours work, you work eight hours, you’re producing 3.2, you work five, 3.2. We need to recover. So intentionally give your colleagues downtime. And we do it through breaks or interns. We hire a lot of part-time employees. In fact, the vast majority of our staff is part-time. So downtime is on their own time. We give our part-time workers, eight hours of project work, traditionally eight hours of work, they get done in four or five hours. So clearly eight hours things. It’s kind of a ruse. It’s really about the project output. And we do the sabbaticals all to recover emotionally and physically with through downtime.

John Jantsch (19:08): Yeah. There’s a lot of, a lot of companies actually like a number of countries studying that whole idea of the four day work week.

John Jantsch (19:14): And you know, the fact that people are getting as much done because we just, you know, we don’t fill it up with silly meetings or acting like we’re working.

New Speaker (19:21): That’s right. We, we were trying to hear we’re small. You know, my, my author office were 10 employees and we cut it to a four day work week, two years ago, partly cuz of COVID kind of forced it. And so we, no one works Fridays except for me. I choose to. And my gosh, the output is the same. It’s not higher. And people come so refreshed on Monday. There’s I asked employees a few days ago. I’m like, how does Sunday night feel? I’m excited. It’s a change up again. I’m coming back to work where before it was like, oh my God, the weekend flew by, do I have to go back to work?

John Jantsch (19:50): So one of the, I am totally on board with, you’ve gotta get outta doing and get to designing. There are some people that just, well, Mike, let me just say, I think you’re a doer. I mean, you are like an action taker. You like to like funnel with the stuff. Right. So does that make, and I think a lot of business owners are that way. So how do you get the right balance? I mean, especially you bring in people to do the doing and you do, you know, so, so not, I mean, you’ve got some people that 80% of their work is doing right. And you’ve got, obviously the business owner should be spending more time designing, but how do you get them to let go? Because I think that’s probably,

Mike Michalowicz (20:25): yeah, you gotta go into what’s called collective. Yeah. It’s a big challenge. You gotta go into what’s called collective design. Yeah. So it is not the natural tendency for a lot of people.

Mike Michalowicz (20:33): In fact, most people who are doers today start a business because they say I’m already doing this. Right. I might as well continue to do it on my own, which is basically a freelancer. So we don’t have the natural 10 or perhaps capability. Yeah. But when you bring in your collective team, then you can do brainstorming and strategizing and the collective brain can be of service. I suggest of doing that. If you do that, don’t have the meetings in the office where the regular routine is kind of distracting, overwhelming, get outta the office once a week or once a month, just for a few hours and say, here’s the biggest challenge we have. What’s everyone’s ideas. The other thing is if you get bigger, you may even want to bring in a person that is a designer. Yeah. Someone that can work on that strategy.

Mike Michalowicz (21:11): Yeah. The risk for owners though, is, you know, it’s a big blow to the ego. In certain cases I’ve seen owners take on who they thought were next level designers, executives from these large corporations and stuff. And there’s a total disaster. Yeah. Because small business ownership, you get your hands dirty, big business, you know, you’re kind of pulling strings. And sometimes there disconnect between the pulling of strings versus actually designing in the trenches.

John Jantsch (21:34): So I noticed you had Geno Wickman, the author of traction and created dos system. Right. New forward for the book. Would you say clockwork for, particularly for people out there who are familiar with the principles of Vos, would you say they work pretty well together? Yeah. Yeah. And I think that’s why Geno wrote the forward. So Geno talks about there’s different phases of the entrepreneurial journey versus just the idea starting up.

Mike Michalowicz (21:56): He actually wrote a great book called the entrepreneurial leap. Yeah. It’s a great book on like, should I do this? Should I stay? Or should I go, as the song goes, listeners, go back and you can find my interview with Geno on, on when he came out with that book. Go ahead, Mike. . Yeah. Yeah. And that’s a, it’s a fantastic book. Then when he wrote EOS or traction, the entrepreneurial operating system, it really requires that first level of management, second level of management to be in place. It’s not just one person doing it cause there’s a lot of components. Yeah. So he’s like, there’s this bridge here and clockwork fails it. Clockwork is designed from that few employees, a handful of employees up to 25, 50 employees. We have some people that have a hundred employees doing it. And then clockwork has run its life.

Mike Michalowicz (22:35): Once you get past that 50 employees, there’s this level of sophistication that starts kicking in where EOS is idyllic for that, it has rhythms and so forth. Clockwork is not about that. It’s about bringing a non-efficient business to a, a pretty proficient level of efficiency, proficient efficiency. And then Geno’s book takes a little bit further. So he wrote the forward cause he saw this as the bridge between his two books.

John Jantsch (22:57): Mike tell people where they can find, I know you’ve got a number of places, but obviously find more about this book, catch up on any of the books that you’re working on. And obviously all of the various programs that you.

Mike Michalowicz (23:08): so clockwork.life. Cause we, I believe is a lifestyle. clockwork.life is where you can get stuff on this book and me, you can go to my site, no one can spell MCIT. So while Mike MCOW exists, the shortcuts Mike motorbike.com because I used to have as a nickname, it’s only grated nickname I’ve ever had.

Mike Michalowicz (23:24): So the other ones were not usable on the web. So Mike motorbike.com and uh, you’ll get stuff on the books and clockwork.life for the books was, oh,

John Jantsch (23:33): you and I have been hanging out so long that my spell check knows how to spell MCIT. So got that.

John Jantsch (23:37): That’s a victory. That’s a victory. Mike, always great catching up with you. And uh, hopefully we’ll run into you one of these days out there on the road again soon.

Mike Michalowicz (23:45): Oh, that’d be great.

John Jantsch (23:46): Hey, and one final thing before you go, you know how I talk about marketing strategy strategy before tactics? Well, sometimes it can be hard to understand where you stand in that what needs to be done with regard to creating a marketing strategy. So we created a free tool for you. It’s called the marketing strategy assessment. You can find it @ marketingassessment.co not.com.co check out our free marketing assessment and learn where you are with your strategy today. That’s just marketingassessment.co I’d love to chat with you about the results that you get.

John Jantsch (00:00): This episode of the duct tape marketing podcast is brought to you by business made simple hosted by Donald Miller and brought to you by the HubSpot podcast network business made simple, takes the mystery out of growing your business. A long time, listeners will know that Donald Miller’s been on this show at least a couple times. There’s a recent episode. I wanna point out how to make money with your current products, man, such an important lesson about leveraging what you’ve already done to get more from it. Listen to business made simple wherever you get your podcasts.

John Jantsch (00:46): Hello and welcome to another episode of the duct tape marketing podcast. This is John Jantsch. My guest today is Jeb Blount. He is the CEO of sales gravy, the author of 14 books, including fanatical prospecting, sales, EQ objections, virtual selling, and his brand new book. We’re gonna talk about today, selling the price, increase the ultimate B2B field guide for raising prices without losing customers. So Jeff welcome to the show.

Jeb Blount (01:15): Well, thank you so much for having me back. I always love to be on your show. It’s one of my favorite podcasts.

John Jantsch (01:20): Thank you. Thank you so much. So, you know, one of the things interesting, I know a lot of the book, you talk about a salesperson that has an account that has to go out and you know, it’s like, oh, we’ve had this cost come. We have to raise prices, but I will tell you working with so many small business owners, they’re not charging enough right now. And one of the things I tell them all the time is you’ve gotta go raise your prices. So a lot of that’s kind of in their head, isn’t it? I mean, it’s like, I don’t think I can get this, or I don’t deserve this or whatever it is.

Jeb Blount (01:49): Yeah. You know, there, there is the, I don’t deserve it. And I think that’s, I think that’s a very common feeling with small business owners, especially when they’re dealing with bigger companies. And I know that as a small business owner, as you know, a company that’s growing I’ve, I’ve often felt the same way that maybe I don’t deserve this and that to somewhat some, you know, some extent is something that is totally in our heads, right? That it’s a lie that we tell ourselves. And I mean, there may be some cases where we don’t deserve it, but in most cases we do. But on top of that is, you know, the constant fear of the business owner that if I go ask for a price increase, I’m gonna lose my customer. I’m gonna lose the orders. Maybe they’ll throw in my face. Something that went wrong in the past and well, there’ll be conflict. And, and of course there’s a potential that they just say, no, and I get rejected. Yeah. And that makes me feel really bad. So, and those fears by the way, are things that we make up in our own head that we have to get past. And some of those fears could be true. I mean, you could go in and create a lot of problems if you haven’t been taking care of your customer and then you go ask for a price increase.

John Jantsch (02:51): Right. Well, and so, so the sales rep of course like a business owner, a lot of times I tell them, you just gotta, you gotta understand the value you bring and go ask for the money. But a sales rep, a lot of times, I mean, somebody told them, go tell the client, the right is going up. Right. It’s not, you know, it’s not my fault, but I’m the one that has to deliver the bad news. And I might lose that commission. Right. Because they go somewhere else. So, you know, how do you, I mean, be in that particular instance, you know, how do you get over that kinda head thing? It’s like, it’s not my fault, but I gotta deliver the news.

Jeb Blount (03:23): Yeah. Well the, with the salesperson, the same fears are in play. So the, one of the biggest problems for salespeople is the boss says, you gotta go get a price increase. Right. When I, it wasn’t uncommon. You know, when, back when I was working for a boss that they would come in, bring you your accounts and say, we need 6% across the board. Go figure it out. Right. And you know, you’re sitting there like rolling the dice on which customer are gonna take the price increase too. And very much like when we were talking about, you know, the business owner says, well, I kind of don’t deserve this. I think salespeople get the same thing in their head. We don’t deserve this. Or in a lot of cases, they feel like they’re doing something to their customer versus doing something for their company. And by the way, that’s, that is exactly true for the business owner as well.

Jeb Blount (04:03): Sure. So for me, you know, the, I, you know, I just like everybody else, I’ve experienced the anxiety of having to do a price increase as a salesperson. And I’ve experienced the anxiety of having to deal with price increase as a business owner. And one of the things that helped me really get over that hump is understanding the power of a price increase. So there’s a reason why you tell your clients, you gotta go get a price increase. And one of those reasons is that a price increase is almost pure drop through to the bottom line. Now forget about a time that we’re in right now, where we’ve got inflation or, you know, there are supply chain issues. Whenever you get a price, increase the drop through on a price increase versus going out and getting a new piece of business is about 400% higher to your bottom line.

Jeb Blount (04:47): That’s a big number. So what I had to do as a salesperson and later on as a P and L owner, is to really understand what the purpose of a price increase is also it’s important. And this is also important for business owners who have salespeople working for them. And you gotta go tell your salespeople to go, to get a price increase is understanding how that new profitability helps the health of the company. And for, especially for, you know, for the group of people that pay most attention to you at duct tape marketing, you know, there’s nothing in the world that is more important than free cash flow, right? And a price increase is instant cash flow in instant revenue increase. And that is by the way, as long as you keep your customers, you may have to get the price increase and keep your customers and keep your orders. And essentially that’s what the book is all about. Yeah.

John Jantsch (05:34): So you mentioned the current climate we’re in, you know, it used to be like the annual price increase, but obviously people are dealing with weekly and monthly. I had a remodeling contractor give me a bid on something. And he said, this proposal is good for 24 hours because I don’t know what it, you know, the door’s gonna cost tomorrow. Right. So, so what’s changed in this current client about, you know, the approach. I mean, because some of it’s just like emergency, right?

Jeb Blount (05:58): Yeah. You know, there, when you start thinking about approaches or you’re thinking about is messaging, right? So there are, there’s essentially a couple of different ways that we deal with price increases. One is a price increase that we just give to our customers and then we defend it. So we tell our customers, you’re getting a price increase. And then we deal with the objections. We message it. We talk about it, but we give everybody the same price increase. And typically you do that when the risk of losing your customers or the orders is relatively small against the gain that you get on the price increase. And typically the price increase itself is gonna be small relative to what your customers are spending. The other is when you, the price increase may be negotiable or there is some risk. You may either present the price increase as if it’s non-negotiable, but you’d be willing to negotiate.

Jeb Blount (06:43): Or you go in and you ask your customers. So for example, if you’re a small business like mine and you’re dealing with big multinational fortune 500 companies where the risk of losing that company to my company is really high. Then I’ll typically go sit down with my customer and I’ll message it. Like I’ll build a business case for why I deserve the price increase. And that could be based on past value I’ve delivered. It could be on some future value that I’m going to deliver, but in a time like this often it’s an economic fairness message. In other words, what I’m doing is I’m laying out to them where my costs have gone up, where I’m getting impacted. So for example, in my world, because we fly all over the place, it’s travel, you know, the cost of travel has gone up exponentially over the past few months.

Jeb Blount (07:25): So we have to go to our customers and say, we’re raising the price on what we charge when we travel someplace. And this is why, and the good news is that because most people, this is humans. Okay. So most humans have an innate sense of fairness when you can articulately lay out the case, the economic fairness case for why this should give the pricing increas. In most cases, the probability is relatively high. They’re gonna say, yes, you just have to be able to make that case. And in a time like ours, where it’s, it is an emergency in some cases, and it is a moving target. What you really have to be prepared to do is to deliver that message. So you wanna sit back, practice that message. And by the way, deal with any objections you might get and have rebuttals for those objections. So

John Jantsch (08:10): One of the cases I make sometimes where we’re getting people to raise their prices to, to a level that might be fair is that they actually might be better off losing some of the clients that leave for that. I mean, you talked about the bottom line, right? If, you know, drop 20% to the bottom line, but you lose, you know, 3% of the customers doing it, right. You’re better off. And in some cases, not always, but in some cases, in my experiences, that’s a client that you probably didn’t have a great relationship with anyway, and that may be your fault, or it may just be that it wasn’t a good fit anyway.

Jeb Blount (08:42): Yeah. I use, uh, to analyze where, which customers I’d like to lose. I just use a, basically a four quadrant. I call it a fit matrix. And at the very top right hand quadrant is, it’s a, it’s easy to work with. Yeah. And high profit. Yeah. And right below, that would be easy to work with low profit. Yeah. On the left hand side, it is hard to work with high profit. And on the bottom left hand side, it is hard to work with low profit. Yeah. It’s the hard to work with low profits that I typically go after. And this is, you know, me as a small business, I had a fortune 100 company that we were working with. We had closed a deal. We celebrated it in about a year into it. We realized that we made a grave mistake. They were killing us.

Jeb Blount (09:23): They wanted so many of our resources. You know, they had 20 people for every one of my people and they would just had this endless just line of requests for us. And my whole team said, we gotta fire this customer, cuz we were really hard to work with. We weren’t making a lot of money. And so I didn’t wanna go burn the bridge because I just felt like it would be a bad thing just to go tell a big company like that when I’m a little tiny company, just go away. So I went in with a 300% higher price than I had previously given them when we signed the deal in the first place. And I expected them to throw me out the door. And when I gave it to them, the buyer simply the person that I was dealing with with the contract and procurement said, how can you justify this?

Jeb Blount (10:04): I, then I explained it. I said, you guys are really hard to work with. Were a small company. You asked for all these things. A lot of the things you ask for are off contract and we feel obligated to do it for you because you’re, you know, you’re the big gorilla and you know, your team needs things done right now. And the only way that I can keep serving you is I gotta hire more people in order to come in and do this. And the procurement person just, you know, they just looked down at the contract for a minute and looked at me and goes, you’re right. We are really hard to work with signed the contract. And then we were good again, like it felt, I mean, I felt like we didn’t resent them. They signed up for more, which was a good thing for us.

Jeb Blount (10:38): And I found that happens often that in a lot of cases, you’re undervaluing yourself. Yeah. That’s the first thing you and I talked about. But if, if you can, if you can put your customers in segments like that, it’s a lot easier when you look at it and you realize I’m not making any money at this, it doesn’t make a difference how much revenue you’re making. If you’re not dropping to the bottom line, you have no cash flow. You have no cash flow, you’re dead. So you can at least look at it and go, okay, that gives me the courage to go in and have a conversation with them cuz I’m not making any money. And oh, by the way, if a few of these went away, I could probably spend those resources right on the easy to work with high profit customers and make them even more profitable and sell more things to them.

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John Jantsch (12:02): So one of the things you, uh, mentioned already also was this idea of relationship building. And I think it’s like a lot of things you get that next sale or that price increase months before it actually happens. Right? Yes. And so, you know, what’s your advice to folks to say, look, it’s inevitable. You’re gonna have to go ask for this. How do you set the table?

Jeb Blount (12:23): Well, if you think about price increases in the suite of things that we sell, price increases are on the expansion side of the, of the equation. In other words, I already have the customer, I need to expand the relationship. So price increases should not be, as we think about this time that we’re in right now, something that we’re thinking about right now, price increases are something that we’ve gotta be thinking about forever because we’re always looking to expand those accounts. And when we’re in that boat, it’s in our best interest to make sure that we’re managing our accounts in the book. I just break down something really simple, but I just tell you the truth. And that is that about 70% of the time when you lose a customer, it’s because of neglect. Yeah. And that would be true is if you go in and you ask for a price increase or you present a price increase and your customer gets mad at you is probably because you weren’t taking care of them.

Jeb Blount (13:13): So the easiest, fastest way to get price increase is just manage your accounts. You just take care of them, do the things that you’re supposed to do as a business, delight your customers, deliver a great customer experience, make sure you’re constantly solving problems. And if you’ve ignored an account for a long time, and that happens in business and it happens with salespeople as well in their portfolios, if you’ve ignored it, don’t let the first conversation you have with that customer in six months, be about a price increase, put yourself together, a campaign, go in and set the stage, go solve some problems, do an account review, rebuild a relationship and then come back in with a price increase. But the biggest problem that we, you know, that we see in with price increases across the board is that because they’re unpleasant for both parties, the, the party that has to bring the price increase to the customer has a tendency to put it off.

Jeb Blount (14:03): Yeah. So they end up dropping a price increase in the customer’s lap, but don’t really give them any time to deal with the price increase. Yeah. And if you’re just, if you’re a business, you know, you’re and you buy things from other, from vendors, like most of us do, you can imagine that what, that the sort of, what that would put you in terms of a, you know, a bad spot or how it might back you into a corner. If one of your vendors came with you as came to you with a price increase at the last minute, and you didn’t have time to figure out how you were gonna absorb it or pass it on to your customers or deal with it. And that typically happens because we, we just don’t want to confront our customer with the truth.

John Jantsch (14:40): Yeah. It’s funny too, because nobody likes change. It’s really funny of any kind. I mean, I swear there have been times when I’ve tried to give somebody something for free and they were, you know, suspect. I hadn’t told him why I hadn’t said because. And I think that’s, you’ve been talking about this price increase. Like it’s just a unilateral kind of price sheet kind of thing. But as I listened to you, describe this. It’s almost like you can, if you have the right conversation, you can actually come to an agreement together on what’s the right approach. Can’t you?

Jeb Blount (15:09): Yeah. I mean, if you’ve got a great relationship with your customer and in, in the book, I give you eight different narratives, right? That can be woven together in ways that allow you to have that conversation with your customer. But if you’ve got a great relationship with your customer, and I think, you know, that most of us do what I found is that the thought of going in and having the conversation about the price increase is way worse than the actual conversation itself. and it’s a lot better. If you can go in and you can make your case, just build a good business case and sit down with your customer and work it out with them that in most cases, because human beings are inherently fair to each other, that you’ll be able to work something out without a lot of objections. And it’s also important.

Jeb Blount (15:53): I think that you start thinking about how do you set the stage? Because what you talk about is you don’t really like change. Nobody likes change. If you spring it on someone, you’re likely to get a really tur response or you may get pushback. If you start setting the stage forward, if you start talking about the marketplace and your price is going up and you know, I’ll even say to someone, you know, we’ve been raising our prices on our other customers right now, we’re holding the line with our existing customers, but there’s a pretty good chance that we’re gonna have to come to you with a price increase sometime in the near future. I didn’t actually put a price increase in their lap, but I began to get them accustomed to the fact that it’s gonna happen. Yeah. And they’re thinking about it. So, and that typically makes it a little bit easier for them to absorb the price increase in our conversation or notice, I guess probably a better way of saying that.

John Jantsch (16:41): All right. What about the sales rep that’s faced with the situation? We all know there are companies out there that, that do this where the real reason they’re raising the price is because they can. Right. And so now the sales rep is faced with that’s their only, I mean, they’re obviously not going to go in and say it. That’s why we’re raising the price, but that’s their only real talking point. So, you know, how do you suggest somebody handle that when they really don’t have a great rationale?

Jeb Blount (17:04): Well, first of all, you wanna make sure that you are being professional and you’re being nice and that you don’t walk in already defensive. I’ve had that happen where I’ve had a salesperson come with a price increase and they’re te and they’re, you know, they’re cold because of their own emotions rather than mine. Yeah. And you don’t wanna do that at all. And certainly right now, if you’re in a situation where you can raise your prices and drop more money to the bottom line, you absolutely should. I mean, as a business, that’s your job to make profit. And by the way, there’s a difference in, you know, doing that. And then, you know, shoving something down someone’s throat and doing, you know, doing something that, that lacks in the integrity. I’m just talking about. Yeah. The regular course of doing business, you’re in a situation where you can drop more profit in and continue to serve your customers.

Jeb Blount (17:47): You should do that. So you start off with again let’s so let’s start setting the stage. Let’s build a campaign, let’s start, preframing the price increase early. Let’s be professional. Let’s be super nice. And then go back to our narratives. One of the narratives that you want to use in a situation like that is past value. Here are all of the things great that we have done for you. Yes. You’re gonna be paying more for the same thing you were getting before, but look at all the things that we have contributed to you and your business over the years. And, and when you use that approach, most people will accept the price, increase most business people, especially people that you know, that are in the B2B world, right? They get it, they understand what’s happening. They don’t like it. And they’re not gonna be, you know, jumping up and down and, you know, bringing in a bras band to welcome your price increase in, but they understand and they get it. The key is the way that you approach it, relaxed, assertive, professional confidence. It wins the day. Every single time

John Jantsch (18:48): You have a framework and I’ll just kind of tease it and you can talk about as much as you want, but obviously it’s a big part of the book and that’s, so there is actually a system, you know, for going out into, and you actually call it deal, you know, an acronym for that, that has four parts. So I’ll let you just kind of take that as far as you want it to.

Jeb Blount (19:05): Yeah. The deal framework is simply a framework for negotiating a price increase. So in, in some cases, especially with your higher risk customers, and there’s also a risk profile matrix inside the book that allows you to take your accounts and drop ’em into that risk profile, to make a decision about how you want to approach them with the price increase. But the deal framework is simply the process of if you begin negotiating and they, you typically sounds like this, John, they’ll say something like, um, Jeb, like, like I totally get that. You gotta give a price increase, but we’re, we can’t pay this much. We haven’t, we don’t, we’re not budgeted for that. Okay. Well, that’s great. So you’ve accepted the price increase because you said I get it, but I’m not paying that much. Now I gotta work out something with you. So I wanna get onto the table what their issues are.

Jeb Blount (19:52): So I, I don’t wanna negotiate before I do that, then I want to give them, you know, my point of view. So, so I want to, I wanna explain the price increase and the reason why I’m doing the price increase and the business case behind it, even though if I’ve already explained it before typically a negotiation, people get amnesia. So I wanna come back and explain it again. And then what I wanna do from there is I want to get to a place where we can both agree. And for me, the one thing that I wanna protect during a price increase negotiation is my points. So let’s say I’m doing a 10% price increase. If I give up five points, that’s 50% of my price increase. So the way that I do that is I try to find things like funny money. And what funny money is something that I have that I can give my customer’s valuable to them, but really doesn’t mean that I’m giving up anything on my end.

Jeb Blount (20:42): So for example, let’s just say that I’m a business and I offer training for my customers and I’m giving a price increase to a big customer and the training typically they have to pay for, and they don’t, they haven’t paid for it. I might say, I’ll give you the training in exchange for the price increase. Well, the training’s probably online. It’s not costing me a whole lot of money to, to run it. And I didn’t give up my price increase points. Cause you gotta remember those price increase points. Those are, you know, those are gonna be adding up. Those are they’re they’re, they’re, they’re, you know, they accumulate over time. So giving up five points over months and months of time can be a really big number for you. So I, compoundings the number of the word that I’m looking for, but they compound over time.

Jeb Blount (21:22): So, so you want protect your points at all costs. And so that’s typically what I’m doing. So, so deal is just discussing the issue. It’s explaining my, you know, my situation or my business case. It’s aligning on an agreement typically a little bit of give and take. I want to give away things that don’t cost me anything while I’m protecting my points. And the L just stands for locking it down with a handshake or an agreement or a signed contract or money in the bank or something that, that symbolizes the fact that we have come to an agreement.

John Jantsch (21:55): So I know you work with a lot of sales managers who are tasked with coaching, a group of people around doing this. And so you do finish off the book with a nice section for those folks as well. And I, so if you’re a salesperson sales manager, there’s gonna be something in, in you in, in this book for everyone, J Jeb, you wanna tell people where they can find out more about your work at sales gravy, and then obviously all the books and, uh,

Jeb Blount (22:18): Yeah, absolutely. Well, the best place to find out about books is go to Amazon Barnes and noble, wherever you buy books. And you’ll be able to find selling the price increase there and my other books. And then if you wanna learn more about me, you can go to my website, jlu.com. My last name is spelled B L O U NT, or to sales, gravy.com, where you can check out all of our resources that we have for sales and sales people and anyone who is customer facing.

John Jantsch (22:44): Awesome. Well, Jeb’s great to appreciate you taking some time to step stop by the duct tape marketing podcast. And hopefully we’ll run into you one of these days soon out there on the road.

Jeb Blount (22:53): Yes, sir. Thank you.

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