8/31/10

10 Ways to Get More Sales From Existing Customers

If you are looking to increase your revenue per customer, here are some tips on getting your sales staff focused on inside sales, upselling, and marketing additional services.

Every business needs new customers, but don't ever forget that your easiest and most predictable source of new revenue is right under your nose: It comes from the loyal customers who already know your company. Acquiring new customers is expensive (five to ten times the cost of retaining an existing one), and the average spend of a repeat customer is a whopping 67 percent more than a new one. So, sure, put some energy into new business development, but make sure your salespeople know that coming up with creative ways to sell more to your current customers is just as important. Here are 10 proven techniques to do just that:

1. Think lifetime value, not transactional value. To keep customers coming back to Zane's Cycles (and away from the superstores), Chris Zane offers a wildly attractive incentive to parents who buy their children's bikes from him: He'll credit the full cost of last year's bicycle toward an upgrade every year up to a 20-inch wheel. "We won't make money until they buy their second bike from us at full price," says the Branford, Connecticut entrepreneur. In the meantime, parents buy accessories for their growing children and, predicts Zane, are impressed enough with his commitment to service that they become customers for life.

Dig Deeper: Chris Zane on Attracting the Best Customers

2. Go for a no-brainer upsell. "We started noticing that our clients wanted us to store their media files because they had a habit of re-editing their sizzle reels several times over the course of the year," says Scott Gerber, CEO of SizzleIt, a New York City company that produces short promotional videos. The process became time consuming and tedious for the company, so Gerber started charging clients monthly and annual fees to store their data. "This created a whole new revenue stream for the company," he says, "not to mention it allowed us to get rid of large amounts of media files when clients didn't want to pay."

Dig Deeper: How to Upsell Your Customers

3. Offer complementary products or services. Put a little thought into what your customers are buying and the other needs that those purchases might trigger (think printers/ink cartridges). For instance, Language International's primary product is language study abroad programs. "But very often, our customers also need housing and travel insurance," says Karen Ong, CEO of the Boston-area company. Offering those complementary products has "helped us expand our gross margins from 21 percent to more than 25 percent," she says.

Dig Deeper: The Secrets to a Solid Growth Strategy

4. Stay in touch. Sometimes you may not see your best customers as often as you'd like, so you need to work extra hard to keep yourself on their radar screens. Jack Mitchell, the CEO of The Mitchells Family of Stores in Farifield County, Connecticut, has his sales people contact customers by phone, email, and handwritten note "not trying to sell them anything, but letting them we're available to do alterations, or to come to their home, look at their closet and see what is still wearable," says Mitchell. He knows that if he keeps in touch with customers in a low-pressure way, his best customers will find their way back his four luxury clothing stores when the economy improves.

Dig Deeper: Keith Ferrazzi on Making Business Personal

5. Practice the art of the perfectly-timed pitch. What is a key day to reap additional revenue, and what can you do to capitalize on it? "We always have success with our yearly Black Friday e-mail blast," says Zalmi Duchman, the CEO of TheFreshDiet.com, a healthy meal delivery service based in Surfside, Florida. So last year, on the day after Thanksgiving, the company sent an e-mail blast to its database of clients, and generated an additional $400,000 in revenue in three days. "For us it's the best of both worlds," says Duchman. "Everyone is looking out for specials, and it's right after Thanksgiving so people are thinking about dieting and their New Year's resolutions."

Dig Deeper: The Best of Inc.: The 7 Habits of Highly Effective Presenters

6. Help your customers sell more to their customers. If you're selling to other businesses, the best way to get more revenue from them is to help them increase sales to their customers. Nick Villaume, the CEO of The Dev Department, an Atlanta-based company that provides white label web development services to graphic design firms, developed a free credentialing system for the designers who are his customers. "This not only gives them the knowledge and confidence to sell more and bigger contracts, but also positions them as experts in their market," says Villaume. He launched the educational program six months ago and has since seen new client requests quadruple. "We are sending out many more estimates—20 to 30 per month—and about two thirds are closing," he says. "It not only provides more sales, but more profitable sales. We are spending less time coaching designers and less time doing non-billable revisions."

Dig Deeper: 5 Ways to Connect Customers with Buyers

7. Remind customers of everything you offer. Never assume that even your most reliable customers are completely aware of all the products and services you offer: you need to remind them regularly. Kelley Briggs, CEO of DesignWorks NY, a graphic design and marketing communications firm in Westchester County, New York, sends a personal letter to every customer once a year. She includes a list of her services with the ones they've used check off. "It reminds them of the types of projects we've worked on in that past year and shows them what services they did not use," she says. "It's an excellent cross selling tool." In recent years, clients who received the letter have signed on for additional projects such as annual reports, website design, and marketing strategy.

Dig Deeper: A Pitch for Marketing Multiple Services

8. Create incentives for in-house referrals. Scott Gerber's video production company, SizzleIt, often works with large companies, and he has found a way to effectively turn one client into multiple clients. "We inncentivized our current clients to recommend us to the project leaders in other parts of the company by offering them steep cash discounts for successful referrals," says Gerber. At a time when corporate budgets are tight, that lowered the cost of doing business with SizzleIt, strengthened customer relationships, and generated more income without the cost of attracting new clients.

Dig Deeper: Using Sales Contests to Get Employee Referrals

9. Give customers a say in what you sell. Last October, ModCloth (No. 2 on our Inc. 500 list this year), started an initiative called Be the Buyer, which allows shoppers to vote online on clothing samples. If a garment gets enough votes, the online clothing retailer will add it to its offerings, and then send emails to visitors who voted for the item. The program allows the company to confidently gamble on items it might have thought were risky choices, plus it encourages a high level of customer engagement with leads to repeat sales. Co-founder Susan Gregg Kroger says the initiative has also significantly boosted web traffic to the Pittsburgh-based company.

Dig Deeper: How to Use Crowdsourcing for Business

10. Put some skin in the game. Greg Alexander, the CEO of Sales Benchmark Index, an Atlanta company that helps clients increase the effectiveness of their sales forces, says that the percent of his compan's revenue that came from existing customers jumped from 20 percent to a whopping 80 percent in two years. His secret: he started writing performance-based contracts. "We said if we don't deliver don't pay us. If we do deliver, pay us a percentage of the gain," he explains. He also started compensating his team according to the results they delivered for customers. "The 'skin in the game' technique resulted in our firm doubling revenue," says Alexander.

Dig Deeper: Pay for Performance and Nothing Else

How to Keep Customers Smiling

Simple tips to keep customers smiling. On his blog, Quick Sprout, tech entrepreneur Neil Patel has a simple formula that quite succinctly sums up the goal of good customer service--"Smiling customers make for successful businesses." With that in mind, Patel has a list of 12 tips to get customers smiling. The suggestions range from basic common-sense things, such as having good manners, to things that sometimes businesses tend to overlook, like following up with customers or finding ways to make them happy when they aren't expecting it. They may be simple things, but as Patel explains, they go "a long way towards cultivating positive feelings, and your customers will remember that you treated them well."

How to regain your pricing power. It's an issue many online companies have to address at some point: how to prevent the bottom from dropping out of your pricing structure. MIT Sloan Management Review has eight ideas for you, and some of them are extreme. One suggests banning customers who abuse return policies and another encourages buy-back programs in which companies buy back their excess inventory that is being sold through independent resellers at steep discounts, and then ship it overseas to protect prices.

Israel's tech start-up gold mine. The Israeli Defense Force has long contributed to top advancements in science and technology. But it now seems to be propelling Israel's economy as well. This week The Economist reports that Israel's technology exports grew by more than five percent last year, thanks in part to its army's conscription and training regimen. The IDF trains its high-tech units with the equivalent of a bachelor's degree in computer science and encourages soldiers to take on a creative, entrepreneurial spirit by asking questions and pitching ideas to superiors. This culture has fostered the growth of start-ups such as Check Point, a large developer of internet-security software, and Optibase, a video-technology company based in Tel Aviv. Optibase vice president Eli Garten said his firm, and the top talent it recruits, might not exist without training from the IDF.

Hurricane Earl guns for the East Coast. Business owners along the East Coast of the U.S. might want take steps to prepare for Hurricane Earl, a category four hurricane with winds of over a hundred miles an hour (via Business Week). The hurricane might reach North Carolina by Friday and if history is any indicator, most business owners are unprepared for the impact of a natural disaster.

Google's social media rampage. Google has gobbled up its fifth start-up this month alone, this time purchasing SocialDeck, a mobile and social media game developer (via Reuters). The M&A flurry has mostly centered around social media and gaming companies, fueling speculation that Google is looking to build a strong Facebook competitor. Meanwhile, Zuckerberg's empire has scored a not unexpected point with MySpace singing its swan song. But Google's raw muscle shouldn't be underestimated either. See how a mere twitch of their algorithm cost this business owner $4 million.

A new iPod? Zzzzzzzzz. Tomorrow, Steve Jobs will appear at Apple's sixth annual September press conference. As he does every year, Jobs is expected to reveal some new music-related gadget, like a new iPod nano, which begs the question: does anyone actually want a new iPod nano? As Fortune reports, two years ago, the presentation was so underwhelming that the price of Apple shares fell 4.7 percent in two hours. So what might Jobs (the master of hype, himself) do this year to make the conference relevant again? Fortune suggests a few possibilities, including a nano with a touchscreen and app capabilities, a new iPod touch equipped with a front-facing camera, or the widely-anticipated $99 Apple TV. Whatever the announcement, though, Fortune writes, "If you go with no expectations, you might just enjoy the show."

http://www.inc.com/staff-blog/how-to-keep-customers-smiling.html

Little Tricks to Get More Customers Smiling

It always surprises me to hear about how few business-people implement strategies of doing what they can to make their customers feel good. I know that trying to keep customers happy is a generally unspoken rule when you’re in business, because satisfied clients are usually always the goal.

But do you actually implement best practices to get customers smiling?

Here’s good reason to work on making customers smile more: When Harris Interactive conducted a poll a few years ago, 88% of people felt that good customer service beat out hot deals and offers. That’s a nearly unanimous statistic, and I’m pretty positive that not much has changed were you to ask people the same question about how they feel today.

Plus, it just makes logical sense… smiling customers make for successful businesses.

Let’s start with a very easy tactic you can implement starting right now.

Little trick #1: Smile warmly

You’d be surprised at how much of a difference a smile can make, whether you’re reassuring a customer he’s making a good choice or trying to defuse a sticky situation. A smile shows that you’re calm, in a good mood and willing to help do what you can.

Little trick #2: Bring smiles into your phone conversations

You may not realize how much the tone of your voice changes when you smile, but it’s actually very noticeable – people can hear smiles even if they can’t see them. If you rarely talk on the phone, use emoticons in emails and text messages. Some people say that emoticons aren’t really professional, but one well-placed “smiley” takes the tone of the text to a whole new level.

Little trick #3: Say your customers name twice

Speaking of making sure your message is well received, get people paying more attention to what you’re saying by using their name. We tend to focus when we hear our name, and you’ll find that customers seem to listen a little more to what’s just been said or what’s about to be said if you use this tactic. The best way to use this technique is to say a person’s name twice in any conversation. It shows you’re highly aware of the person, tuned into the conversation, and it creates better personal rapport.

Little trick #4: Touch a customer while smiling

An effective way to create more rapport is to actually touch someone briefly as you smile at them. One of the best ways to brighten moods is to give someone’s shoulder a gentle squeeze while you say something reassuring or complimentary. And yes, offer them a smile – they’ll automatically return it to you.

Little trick #5: Tell a customer he’s special

This is so easy to do, and it costs nothing to boost someone’s morale. People love to feel accepted and liked, so telling someone he’s a special customer can go a long way towards making him feel awesome about himself – and that’s definitely going to make him feel good about you as well.

Want to add some extra punch to that last tip? Tell someone else that you think someone is special… while that person is standing right there listening. Think about how you’d feel if you hear someone you’ve hired or bought something from tell another person that you’re a great person. You can’t help but want to smile when you hear compliments like that!

Little trick #6: Treat your staff and employees well

Speaking of good feelings, don’t forget to spread smiles amongst the people who work for you. By doing so, they’ll treat your customers the way you treat them. If you’re always smiling, happy, and glad to talk with your staff, you’ll find they reflect that treatment towards people who buy from your business. Imagine the results!

Little trick #7: Follow up with clients

Many buyers have a great experience but find that once the purchase is over or the contract ends, service stops there. Keep up contact, because it lets people know you were thinking of them – without trying to sell them on anything. Email or call the customer just to ask how it’s going and whether the person’s enjoying his or her purchase. Don’t pitch your services; just be nice.

Nothing brings a smile to someone’s face more than feeling appreciated and remembered, so send a thank-you note to customers. Avoid generic cards; pick something unique that fits the person’s personality or that relates to a conversation you’ve had. Mention you’d enjoyed working together. If they’ve just accomplished a business goal, send congratulations. A birthday? Wish them joy.

Little trick #8: Give the customer what they want

Here’s a way to turn a frown into a smile – or at least, into a satisfied customer: give the customer what he wants. This is especially useful in the case of client complaints. Offer the customer the benefit of the doubt, ask which solution is desired, and do everything you can to make it happen.

This doesn’t mean breaking the rules. It means it’s okay to break the policies and create an exception to help restore good feelings. That can definitely earn you points; the customer will tell friends about what you did… not what you wouldn’t do.

Little trick #9: Show that you are trying

And if you can’t give the customer what he wants? At least show you tried and that you were willing to accommodate the request. Sometimes just the fact that you cared is all it takes to help people smile again.

Little trick #10: Do the unexpected

People guess at what you might say, and they tend to think they know what you’ll do before you even do it. Surprise them – in a good way. Watch for opportunities to please clients out of the blue when they least expect it. When you hear of a small “wish” the client doesn’t expect to become true, you’ll know that’s the perfect moment to reply, “Actually, it’d be my pleasure to help you with that.”

Little trick #11: Give a gift

Another pleasure you can offer customers is to give them a little gift. Surprise customers with a gift card or send them a token of appreciation in the mail. It doesn’t have to be much. $15 to spend at Amazon or a free book you think they’d enjoy always brings a smile. You could also offer them a discount on their next purchase or toss in a little extra on their order, or maybe even give them a coupon code to a product or service unrelated to your business that you know they might find useful.

Little trick #12: Have good manners

Although this may seem obvious, it’s often overlooked. Say please, thank you and you’re welcome often. Get into the habit of being polite. A meaningful “you’re welcome” goes a long way towards cultivating positive feelings, and your customers will remember that you treated them well.

Conclusion

I’m sure I’ve left some great tips to get people smiling off this list, so help me out. How do you make your customers smile? What do you do to get that happy look on their face?

http://www.quicksprout.com/2010/08/27/little-tricks-to-get-more-customers-smiling/#more-2187

8/30/10

How to Evaluate Your Company’s Financial Position

Bank balances don't tell you enough to gauge your financial health. Here's where to look in your financial statements and other data for a full checkup.

The Great Recession has made checking in on the basics of your company’s financial position more than just a to-do item: it’s become an absolute necessity. Unfortunately, understanding how healthy your company is financially takes more than just logging in to your online bank account and checking balances. And that’s where most entrepreneurs get turned off. Who wants to really dig into those complicated balance sheets and income statements anyway? Isn’t that what I have an accountant for?

In general, yes, you should have a competent CPA to help you organize the financial details of your business. But that doesn’t let you off the hook: as the leader and/or owner of your business, the onus is on you to make sure you’re headed in the right direction. The good news is that you don’t necessarily have to fully immerse yourself in those financial statements to take your company’s financial temperature.

What you do need to do, however, is look at a combination of both financial and operational metrics that benchmark your company’s current financial performance against your competition and your own past results. Start by taking a crash course in understanding your company’s critical numbers. Then, consider these tips on a few additional metrics that will help your company stay on the right financial path:

Scrutinize Your Cash Position

As the old saying goes, cash is king. A financially well-run business will have an improving cash position at the end of each and every month, says Victor Cheng, a CEO coach and author of the book, Extreme Revenue Growth. Said another way, a healthy company generates a positive cash flow, meaning the money coming in exceeds the funds flowing out the door. Keeping a running tally of your cash position over the past three months is a great way to see if your business is generating cash over a sustained period of time. “It is pretty much impossible to go out of business if you are paying your bills on time and your bank account balance keeps growing each month,” says Cheng.

Cheng says that you want to look at a three-month trend because it will help you identify red flags. For example, if sales have increased 20 percent, but your cash position is rapidly declining, there’s likely an issue with your accounts receivable. “It means that there is a cash flow timing problem on those sales and it’s incredibly risky for a business to do that, especially if they don't realize they are doing it,” he says. If, on the other hand, the cash position is improving but sales are declining, it means the company is making good improvement in internal operations, efficiency, and financial management - but the company has a serious external or market problem to solve.

Dig Deeper: How to Read an Income Statement

Check Your Solvency

One way to check the financial health of your business is to calculate the following:

  • Cash in Bank / Monthly Expenses = Number of Months Until Bankruptcy

This ratio shows you how many months your business can survive if sales suddenly stopped and none of your customers paid their bills that month, says Cheng. “It is ratio I developed to freak out non-finance entrepreneurs so they will start paying much more attention to cash management and not just sales,” he says.

For example, Cheng says it is very possible for a business doing $1 million a year in revenue to double sales and go bankrupt in the process. Whether this happens or not depends on how quickly the cash is collected from customers and deposited in the bank relative to when you have to pay the bills for the increased expenses associated with the new revenue. “If the entrepreneur has to increase expenses today, but collects that additional $1 million six months from now, they can very easily go bankrupt before they collect their money," Cheng says. "In cash management, timing is everything."

As such, another useful exercise is to chart your company’s accounts receivable and accounts payable aged in thirty-day buckets, says Frank Stitely, a CPA in Chantilly, Virginia, who also pens the blog, “How to Screw Up Your Small Business.” The accounts receivable numbers reveal the cash coming into the business and highlight any problems with old receivables, meaning money you have had trouble collecting from customers. The accounts payable numbers show the cash commitments of the business over the next thirty days to vendors. Since you’re on the hook to pay your bills, any aging trend in the amount of money you’re owed could spell trouble. “When a business owner sees a quarter of accounts receivable over sixty days old, he or she should panic,” says Stitely.

Dig Deeper: 5 Ways to Improve Cash Flow

Keep an Eye on Overhead Costs

While most business owners focus on growing revenues, they also need to keep an eye on how much they’re spending on overhead (rent, salaries, etc.) to support those sales. A quick way to do that, says Cheng, is to calculate what percentage of your revenues are used to pay overhead:

  • Overhead Expense Percentage (OEP) = Overhead Expenses / Sales

Cheng notes that the number by itself is not that useful. What makes it powerful is when you track it over a 12- to 24-month timeframe. Any fluctuation can reveal problems. “If a company’s sales drop 30 percent, but the OEP skyrockets, it means the company’s overhead has stayed the same while sales dropped, and the company is taking on significant financial risk if they don't cut overhead to get the OEP back to it’s historical level,” Cheng says. He further noted that many small businesses collapsed during the Great Recession because their owners failed to cut enough overhead to compensate for their loss in sales.

Dig Deeper: How to Read a Balance Sheet

Look Beyond Your Financial Statements

Checking up on the health of your business requires more than just the numbers in your financial statements, says Dave Haviland, president of Phimation, a consulting company based in Ann Arbor, Michigan. “Since financials are generally backward looking, they measure results,” he says. “To look forward, you need to look at operational metrics.”

Haviland suggests tracking metrics in each area of your business. For instance:

  • Marketing and sales: track the “backlog” (work already signed but not yet billed/produced) and “sales pipeline” (prospective work in the sales process). These are important because they give you a forward-looking view at what the revenue line will look like, says Haviland.
  • Production: track your “utilization,” which measures how efficiently your company is using its resources.
  • Human Resources: By tracking “suggestions and complaints” (such as notes put in a suggestion/complaint box) you can learn how engaged your employees are. Another suggestion is take a “green/yellow/red” measure, where people put the color dot that represents how their day went. When you count up all the dots and track it over time, you can begin to get a sense of how productive your staff feels they are.

Haviland says you should prioritize what matters most to your business when coming up with other potentially helpful metrics, such as ones built around customer satisfaction and supplier performance.

Greg Alexander, CEO of Sales Benchmark Index, a sales consulting company based in Atlanta, advises tracking your New Business-to-Repeat Business ratio. This ratio tells you the revenue contribution from new prospects and the revenue contribution from existing clients. “Healthy businesses depend on bringing in new clients as well as generating repeat business from existing clients,” says Alexander. “However, if new business is outpacing existing business, you may have a customer retention problem. If business generated from existing clients is outpacing new business, you may have a marketing and sales problem.” Alexander says the right ratio for your company will depend on what kind of business you’re in, noting that his is a 1:5, where repeat business outpaces new business by a five-to-one ratio.

Dig Deeper: How to Choose the Right Finance Professional

Think Strategically

While monitoring a daily dashboard is great for tactical adjustments, says Haviland, there are also monthly or quarterly metrics that can highlight more strategic changes in your business. Examples of metrics that tell you if you’re staying relevant to the market (and which markets are best) include:

  • Percentage of revenue from new products/services
  • Revenue mix by product
  • Revenue mix by customer segment

Again, the best way to keep on top of your company’s financial picture – and to ensure that you sound the alarm before big trouble has already arrived - is to use a mix of current and long range metrics taken both from your financials as well as the operational side of your business.

By seeing how individual parts contribute to the whole, you'll be able to best identify where your business is stumbling. Once you've zeroed in the trouble spots, you'll have the chance to take the necessary steps to fix them.

http://www.inc.com/guides/2010/08/how-to-evaludate-your-financial-position.html

10 Things Employees Want Most

Don't want your employees to go the way of JetBlue's Steven Slater? Here are 10 things that could keep them happy.

It’s no coincidence that Steven Slater, the now-famous JetBlue employee, has been elevated to the status of a working person's hero. He did what so many frustrated employees would love to do, if only they had the courage, the beers and the inflatable slide to help them escape a less-than-pleasant office environment.

It should come as no surprise, though, that the most successful businesses are the ones that work the hardest to please their employees, and it's up to managers to make sure they're giving their staffs what they want to the best of their abilities.

After reading the book Why Work Sucks and How to Fix it by Cali Ressler, Jeff Gunther, CEO of the Charlottesville, VA-based software company Meddius, decided he would change the way his staff works by instituting a results-only working environment, often referred to as a ROWE. Meddius employees can work any time from any place in any way, as long as they get their work done. Gunther has found that by giving employees the trust and autonomy they need, they've actually been more productive and loyal to the company.

We've broken down the 10 things employees want that will help you keep them on board.

1. Employees want purpose. Don't assume that a hefty paycheck and regular bonuses are the most important things to your employees. They, like you, want to know that what they're doing on a daily basis has some purpose behind it. "What people want most is the chance to make a difference," says Alexander Hiam, the Massachusetts-based author of Business Innovation For Dummies. "When you have a chance to have your ideas heard and one of them actually gets implemented, it's such a boost."

Dig Deeper: Building a culture of employee appreciation


2. Employees want goals.
To instill a sense of purpose in your employees, be sure to lay out a clearly-defined set of goals for them on a regular basis. At Meddius, Gunther's team of managers re-aligns each department's goals every three months. "The goals have to be very measurable, obtainable goals," Gunther says. For the sales team, for example, that might mean setting a goal as to the number of deals the team is expected to close in a certain period of time for a certain dollar amount. Once goals are in place, it is up to each team to decide how to achieve them.

Dig Deeper: How to set business goals

3. Employees want responsibilities. Sometimes the hardest part of being a manager is delegating, but employees crave your trust, and with that trust, should come responsibility. "People are so busy and harried themselves that all they do is work, they don't really manage," Hiam says. "Ask people if there are more things they can do, and then you can catch your breath and be a manager."

Dig Deeper: How to delegate properly

4. Employees want autonomy. Take it from Gunther, giving your employees freedom over how they work can actually make them more productive. Unless you're managing an assembly line, give your employees the freedom to work in a way that works for them. Daniel Pink, the Washington D.C.-based author of Drive: The Surprising Truth About What Motivates Us, says, "Let people figure out the best paths to the goal, rather than breathe down their necks all the time."

Dig Deeper: How to build a beautiful company

5. Employees want flexibility. In addition to deciding how they work, the experts say employees also appreciate having a say over when they work. Gunther has, of course, set up a radically flexible schedule for his employees that might not work for every office. But, he says, it has enabled him to find and retain top talent for Meddius. "We've had people who have taken significant pay cuts to work for us, because at their old job they were told to show up and be at the office between 8 a.m. and 5 p.m.," he says. "Generation Y is looking for a synergy between their personal lives and their professional lives." Set up a flexible vacation policy or a telecommuting policy that enables employees to work from home. It involves a great deal of trust, but, as Pink says, "If you don't trust your employees, you've got much bigger problems."

Dig Deeper: Beyond Flextime: Trashing the Workweek

6. Employees want attention. Just because you're giving employees the control they crave doesn't mean they don't want guidance and feedback. Hiam suggests checking in with them every few weeks, even if it's just for a minute or two. "Look them in the eye and ask how things are going. Find out what's really going on in their world," he suggests. "Responsibility is about giving them a chance to make a difference, but attention is the human dimension of managing." And don't be fooled into thinking that the traditional annual performance review is your big chance to tell your employees what's working and what's not. In Pink's words, "There's no way to get better at something you only hear about once a year." That's why, at Meddius, Gunther uses the year-end to make decisions about promoting employees, and uses the quarterly meetings where goals are set, to address big operational issues within each department.

Dig Deeper: How to communicate employee expectations effectively

7. Employees want opportunities for innovation. Not long ago, Google announced its 20 percent creative time policy, which encourages employees to work on any innovative ideas they have that are company-related during 20 percent of their hours at work. Both Hiam and Pink applaud this concept. "People need to be given a chance to bring about something new and exciting," Hiam says. "Just asking people for ideas doesn't create innovation. It's a culmination of creativity and leadership." Though you might not be able to give your employees this much time on the clock to work on side projects, you can always foster innovation through employee brainstorming sessions that allow the staff to work with new people and generate fresh ideas.

Dig Deeper: 10 employee perks we love

8. Employees want open-mindedness. When your employees come to you with their ideas, you need to treat them with equal parts sensitivity and honesty. Be sensitive because, according to Hiam, the more an employee gets shot down by an authority figure, the less likely he or she will be to make suggestions in the future. It's also important to be honest because, as that authority figure, you may know what's best for your business and what's not. You don't have to accept every idea that comes your way, but, Hiam says, "Don't just shut someone down. Say, 'Here's what I know: years ago we tried something similar. Here's what happened. Give some more thought to your idea, and come back if you think you can make it work.'"

Dig Deeper: A little enlightened self-interest

9. Employees want transparency. When Meddius publishes each department's quarterly goals, Gunther does it as well, not because he needs reminding, but because he believes his employees should be cognizant of where the organization's going. "Employees, especially the younger work force, want transparency," he says. While it's not necessary to publish that information, Hiam emphasizes that the communication channel between a manager and his or her employees should always be open. "That's why you need to build it by talking about ordinary everyday things," he says. "You need to have rehearsed talking about ordinary things before you can talk about anything major."

Dig Deeper: Testing a company's commitment to transparency

10. Employees want compensation. Your employees do need to provide for themselves and their families, so, of course, salaries, bonuses and benefits are important, but perhaps not in the way you might think. Pink's research on what motivates employees has led him to one conclusion: "The best use of money as a motivator is to pay people enough to take the issue of money off the table." He says it's better to pay people a little more than the norm and allow them to focus on their work than to pay them based on performance. "Don't pay people a measly base salary and very high commissions and bonuses in hopes that the fear of not having enough food on their tables will inspire them to do extraordinary things." The way Gunther has employed this strategy is by providing his employees with full health care benefits at no cost, so they can rest assured that their families are fully protected. "It's a huge expense, but to employees, it's really valuable."

Dig Deeper: The price of a healthy staff

http://www.inc.com/guides/2010/08/10-things-employees-want.html

8/26/10

How to Manage Managers

Your company's managers are smart, committed, and passionate. How can you make sure they perform to their potential?

When you work for yourself, as most entrepreneurs do, the notion of "managing" those you have hired to do just that may seem quaint in light of all the work you need to catch up on. But as the company you started begins to grow, and you hire more and more people to fuel that growth, it is a good idea to take a step back from the day-to-day grind and consider what it might mean to both you and your company if you devoted some of your time to thinking about how best to manage your managers. After all, the more people you empower to make decisions, and that free you up to think more strategically, the faster, at least in theory, your company can grow.

"Don't fall into the trap of believing that management is an indefinable art," says Ed Muzio, CEO of Group Harmonics, a workplace consulting firm in Albuquerque, New Mexico. "It's not. The key to managing anyone is to set clear performance expectations in advance, and hold the person accountable. That may be more difficult to do for managers than direct workers, but it's no less important."

How does one best managing a manager anyway? Here are some strategies to consider:

Managing Managers: Set the Vision

The first key to managing your managers is to make sure your managers know what they're managing toward.

One way to do this would be sharing clear short-term (one year) and long-term (three- to five-year) business plans, says Jenni Luke, national executive director of the Step Up Women's Network, a national membership organization for women: "This provides measurable goals to achieve in the short term and gives long term vision for the business so that when managers must make decisions independently, they have the proper strategic context in which to make them."

Another approach to aligning your vision with your managers, says Jill Morin, CEO of Kahler Slater, an interdisciplinary design and consulting enterprise in Milwaukee, is to ascertain answers to questions such as:

  • Do they embrace your organization's vision?
  • Are they on board with your core beliefs, your values, and your mission?
  • Do they have a clear image of what the future holds when the business achieves its vision for success?

"The bottom line," Morin says, "is without these essential starting points, it won't matter who or how you manage."

Dig Deeper: America's Most Productive CEOs

Managing Managers: Document the Details and Communicate

As a boss, one of your goals should be to make sure that your managers have all the tools necessary to do their jobs well. As part of that, you should make developing an employee handbook, which contains policies on issues like vacation and over-time as well as structured feedback regarding performance a priority. "Having the handbook will help you set expectations with the team before problems arise, and they will arise," Luke says.

Managers need to understand not only the "what" but also the "why" behind any strategic plan," says Morin. That way, they can offer their own ideas on enhancing and executing the plan, and do so without needing your involvement every step of the way.

"Yes, Jack Welch said it first, but you cannot over-communicate the vision, goals, and strategies for the business, especially if your managers are smart, committed, and passionate about achieving success," she says. "And why would you have hired them in the first place if they weren't?"

Bi-weekly individual meetings and bi-weekly team meetings serve the purpose of checking progress against goals but also enable the sharing of best practices and experiences that others on your management team can benefit from, says Luke. Then, supplement these regular meetings with quarterly meetings focused on the bigger picture such as budget, product or program development or long-range planning so that the managers know they will be expected to contribute to this top-level thinking and planning. "Giving your managers the freedom to do the work and engaging them in planning should engender a sense of ownership in the success of the business unit which is exactly what you need," she says.

Dig Deeper: How to Communicate With Employees

Managing Managers: Measure Tasks

A key part of knowing how well a manager is doing is to establish straight-forward quantitative measures based on the performance of their team, says Luke, who suggests looking at objective goals set in your business plan such as:

  • Is your manager achieving revenue targets?
  • Are they operating on budget?
  • Have they developed new customers?

Dr. Alice Waagen, founder and president of Workforce Learning, a leadership development company in Washington, D.C., says that you can even establish clear performance guidelines about what makes up a good manager along the lines of something like:

1. A good manager creates short- and long-term goals for all staff.

2. A good manager sets realistic standards and targets to measure progress to plan.

3. A good manager provides specific, objective feedback on an ongoing basis, informing, enlightening and helping staff members improve their performance.

"For managers to succeed, they need time to learn to manage" she says. "And then, once they do, they need to be held accountable for their results."

"When you add all that up, it means that you need to clearly communicate to your manager what you expect them to accomplish through his or her staff," Muzio says. "For example, you might say, 'Your job is to make sure the five people who work for you make 400 widgets each week,' or, if the goals change, 'your job is to make sure each of the five people who works for you has a clear performance target, hits the target, and together those targets roll up to the output goal you and I set together each month. You can vary the structure, but keep the simple focus: Your job is to make sure your people produce what is necessary."

Dig Deeper: 10 Things You Should Never Micromanage


Managing Managers: Manage Behavior

Employees usually don't quit businesses, they quit bosses. That means that while tracking how a team performs quantitatively is critical in evaluating a manager, "it should also be an equal priority to assess qualitative measures of skills such as leadership, strategic thinking, and business development instincts, which can be a far more challenging task," says Luke.

That's why you want your manager to maintain positive, functional relationships, Muzio says. "Don't dismiss expectations about relationships as soft or emotional; they are extremely practical," he says, pointing out that it costs at least two- to three-times an employee's annual salary to find a replacement. "Good interpersonal relationships lead to output consistency and group longevity. A manager who leaves unhappy, dysfunctional relationships in his wake is a manager that will cost you money in employee complaints and turnover."

So how can we actually measure and evaluate to these standards? Waagen suggests tips such as:

1. Look for telltale signs of bad management, such as missed deadlines or unusually high absenteeism or turnover. Chances are, if you do not see these key signs, the manager is doing a pretty good job.

2. Walk around and talk with the manager's direct reports. Are employees engaged and involved? Are they excited by their work? Do they appear to have a clear idea of the specific tasks or projects they need to accomplish and why?

3. Interview employees. Ask them when was the last time they talked with their manager? Probe whether or not they are happy on the job. Their responses can provide terrific feedback.

Dig Deeper: A Little Enlightened Self-Interest


Managing Managers: Be a Coach, Not a Referee

Even the best managers mess up sometimes, and "people problems" – which are usually brought to your attention when a subordinate comes to you to complain about his or her manager - are often the cause, says Morin of Kahler Slater. She suggests that you resist the temptation to get directly involved or, worse, to fix the problems yourself.

"Instead, use these challenges as opportunities to coach your managers on how to deal with conflict – personally, professionally, and productively – rather than ignore or dismiss it," she says. "Then you can circle back to assess progress."

One of the mistakes any CEO can make is forgetting to look in the mirror. Said another way, keep a close watch on your own behavior as a way to inspire your managers to emulate you, says Marilyn Suttle, a Detroit-based personal and professional development coach. To do that, she suggests asking yourself questions like:

  • Do you shy away from conflict?
  • Do you demand and force rather than encourage and inspire?
  • Do you ask questions and solicit input from others in the company?

"The point," says Suttle, "is to become a role model and mentor your managers into becoming the best versions of themselves."

Dig Deeper: The Leadership Makeover

http://www.inc.com/guides/2010/08/how-to-manage-managers.html

The Best Investment Advice You Will Ever Get

I’m going to simplify what I consider to be the best investment advice I have ever been given and share it with you. Here you go:

1. If you have any credit card or other type of consumer debt on which you pay 5pct or more interest, pay it off. Compound interest is your enemy. The chances of you earning more on your money than you are paying in consumer interest rates are slim. Pay it off.

2. Cash is King. Now that Madoff is in jail, no investment can offer returns with zero risk. If you don’t fully understand the risks of an investment you are contemplating, it’s ok to do nothing. In times of massive uncertainty like we are facing today, doing nothing is a valid and IMHO preferable investment strategy. Just put your money in the bank.

3. Cash Creates Transactional Returns. What does this mean ? It means that you should analyze what you spend money on over the course of a year. You will get a better return on your money by being a smart shopper and taking advantage of cash, quantity or other types of discounts than you will in the stock market. Saving 15pct on the $1k dollars worth of items you know you will absolutely spend money on is a better return on your money than making 15pct in a year on a $1k investment because you don’t pay taxes on it.

If you have under 100k dollars in liquid assets, your net worth will be higher in one year if you follow this advice than if you follow ANY other investment advice any broker or banker will give you this year.

http://blogmaverick.com/2010/08/25/the-best-investment-advice-you-will-ever-get/

10 Money Moves That Will Always Pay Off

Few things in life are guaranteed. When it comes to money, even fewer.

But these are nervous times. The stock market is swaying like a drunk debutante. The economy is wobbly. Who can trust anything any more? Most people are hard-pressed, nervous and unsure of what to do.

Relax. Here are 10 sure-fire money ideas.

Guaranteed.

1. Max that 401(k)

This is a slam dunk for you. Every dollar you invest saves you money on taxes because it comes off your taxable income. So Uncle Sam is effectively chipping in.

The money can then grow each year, free of any state or federal tax on the interest or capital gains (though when you withdraw your money in retirement it will be taxable income).

Even better: Many companies offer to chip in as well, up to a certain level, by matching contributions with money of their own.

2. Give up the vacation home

Sorry to be a spoilsport. But the finances just don't stack up. The math on most vacation homes -- unless it's dirt cheap, or so near that you go there most weekends -- is terrible. Most of the time we use them for a few weeks or months of the year. They cost money to buy. There are annual upkeep, maintenance, condo fees and taxes.

How much has the house risen in value since you bought it? How much do you expect it to rise? A home probably has to rise by maybe 7% a year, on average, to cover the costs. Sure, keep it if you want to and can afford to. But if you are looking for a quick financial win, this is one.

3. Put $5,000 into an individual retirement account or Roth IRA tax shelter

If you're over 50, put in $6,000. And make sure your spouse does too. IRAs are a great deal. A regular IRA works much like a 401(k) -- your contribution cuts your taxable income, and grows tax-free inside the shelter, but it's taxable income when you take it out. In a Roth, you contribute after-tax dollars, but then it's tax-free forever.

In the past, these were limited to those making less than, roughly, $100,000 to $160,000 a year, but as of this year there's a special deal. Anyone can contribute to a Roth, by contributing to a traditional IRA and then converting it to a Roth. You can also convert your IRA savings from previous years (Note: there will be tax to pay).

4. Pay off your credit-card debt

Haven't you heard? If you're still carrying a balance each month, this is a quick win. Eat macaroni and cheese for three months if you have to, but pay off those balances. You're probably paying at least 15% interest. You may be paying a lot more. You'd have to earn maybe 17% before tax on an investment just to keep pace. Boring? Nobody's making 17% these days. So pay off your credit-card debt and brag to all your friends that you just beat Wall Street.

5. Fire your banker

This isn't just good financial sense -- it's fun, too. If you're like most people, you're probably paying hundreds of dollars a year in account service fees, ATM charges for access to your own money and the like.

Banks need to sock you with these fees to pay for all their overpriced and useless overhead, like the expensive marketing campaigns and the executives. Fire them all. Chances are you have a local community bank, savings and loan, or credit union that will do the job of looking after your cash for a lot less. It's Uncle Sam, not the institution, that guarantees your money anyway.

6. Get your tax refund early

How? By not overpaying your taxes in the first place. Every year, millions of people cheer when they get a check back from Uncle Sam. But that just means they paid too much withholding tax during the year. So Uncle Sam got an interest-free loan. Good for him, not so good for you.

Go to your employer's payroll department and file a new W-4 form and raise your number of allowances. You'll see extra money in your paycheck straight away.

The average tax rebate is nearly $3,000, according to the Internal Revenue Service. The average credit-card balance? Also about $3,000, according the Federal Reserve. Borrowing from a bank at 15% and lending the money to Uncle Sam for free is no way to run your finances.

7. Buy inflation-protected bonds

Treasury inflation-protected securities, or TIPS, aren't sexy. They won't make you rich. But they're guaranteed -- twice over.

They're issued by the U.S. government, so they are guaranteed against default. And they are protected against inflation because coupons and principal will adjust to reflect it. Right now a long-term TIPS bond will guarantee you an interest rate of about 1.8% a year above inflation. (Note: Hold them in a tax-sheltered account as they are highly susceptible to taxes).

Dull, maybe. But a sure thing.

8. Buy a bread machine

You want a certain winner? If a $50 breadmaker saves you, say, $7 a week on buying bread, that's $350 year. The easiest dough you'll make. Modern breadmakers are, well, a piece of cake to operate. The return on investment: 600% in year one and 700% after that.

Wall Street's best year ever? Just 74%, in 1915. Ha. Amateurs.

9. Play hardball with your insurance company

Call competitors and ask them to quote you prices for your current house and auto policies. You'll be amazed at the differences. Prices for the same policy can vary as much as 50% between carriers. And there's little rhyme or reason to it.

While you're about it, ask about raising your deductibles too. This can be a quick win: Raising your deductible by $500 to $1,000 can cut hundreds off your annual premiums.

10. Get a freebie from a bank

Why not? You bailed them out. I'm not just talking about stopping in for a free lollipop or cup of coffee (though my local Bank of America brews an OK cup).

Sign up for a credit card with a big bonus -- like a free air ticket or weekend hotel stay. Use the card enough to qualify. Then cancel the card.

No, it's not quite that easy. You have to double-check the fine print first. You'll sit on hold for half an hour when you try to cancel. And if you did this too often it might affect your credit score. But where else can you get a free (or nearly free) air ticket?

http://finance.yahoo.com/retirement/article/110423/10-money-moves-that-will-always-pay-off?mod=retire-planning

The harder you work, the luckier you get. Gary Player

Digital devices deprive brain of needed downtime

It's 1 p.m. on a Thursday and Dianne Bates, 40, juggles three screens. She listens to a few songs on her iPod, then taps out a quick e-mail on her iPhone and turns her attention to the high-definition television.

Just another day at the gym.

As Ms. Bates multitasks, she is also churning her legs in fast loops on an elliptical machine in a downtown fitness center. She is in good company. In gyms and elsewhere, people use phones and other electronic devices to get work done — and as a reliable antidote to boredom.

Cellphones, which in the last few years have become full-fledged computers with high-speed Internet connections, let people relieve the tedium of exercising, the grocery store line, stoplights or lulls in the dinner conversation.

The technology makes the tiniest windows of time entertaining, and potentially productive. But scientists point to an unanticipated side effect: when people keep their brains busy with digital input, they are forfeiting downtime that could allow them to better learn and remember information, or come up with new ideas.

Ms. Bates, for example, might be clearer-headed if she went for a run outside, away from her devices, research suggests.

At the University of California, San Francisco, scientists have found that when rats have a new experience, like exploring an unfamiliar area, their brains show new patterns of activity. But only when the rats take a break from their exploration do they process those patterns in a way that seems to create a persistent memory of the experience.

The researchers suspect that the findings also apply to how humans learn.

“Almost certainly, downtime lets the brain go over experiences it's had, solidify them and turn them into permanent long-term memories,” said Loren Frank, assistant professor in the department of physiology at the university, where he specializes in learning and memory. He said he believed that when the brain was constantly stimulated, “you prevent this learning process.”

At the University of Michigan, a study found that people learned significantly better after a walk in nature than after a walk in a dense urban environment, suggesting that processing a barrage of information leaves people fatigued.

Even though people feel entertained, even relaxed, when they multitask while exercising, or pass a moment at the bus stop by catching a quick video clip, they might be taxing their brains, scientists say.

“People think they're refreshing themselves, but they're fatiguing themselves,” said Marc Berman, a University of Michigan neuroscientist.

Regardless, there is now a whole industry of mobile software developers competing to help people scratch the entertainment itch. Flurry, a company that tracks the use of apps, has found that mobile games are typically played for 6.3 minutes, but that many are played for much shorter intervals. One popular game that involves stacking blocks gets played for 2.2 minutes on average.

Today's game makers are trying to fill small bits of free time, said Sebastien de Halleux, a co-founder of PlayFish, a game company owned by the industry giant Electronic Arts.

“Instead of having long relaxing breaks, like taking two hours for lunch, we have a lot of these micro-moments,” he said. Game makers like Electronic Arts, he added, “have reinvented the game experience to fit into micro-moments.”

Many business people, of course, have good reason to be constantly checking their phones. But this can take a mental toll. Henry Chen, 26, a self-employed auto mechanic in San Francisco, has mixed feelings about his BlackBerry habits.

“I check it a lot, whenever there is downtime,” Mr. Chen said. Moments earlier, he was texting with a friend while he stood in line at a bagel shop; he stopped only when the woman behind the counter interrupted him to ask for his order.

Mr. Chen, who recently started his business, doesn't want to miss a potential customer. Yet he says that since he upgraded his phone a year ago to a feature-rich BlackBerry, he can feel stressed out by what he described as internal pressure to constantly stay in contact.

“It's become a demand. Not necessarily a demand of the customer, but a demand of my head,” he said. “I told my girlfriend that I'm more tired since I got this thing.”

In the parking lot outside the bagel shop, others were filling up moments with their phones. While Eddie Umadhay, 59, a construction inspector, sat in his car waiting for his wife to grocery shop, he deleted old e-mail while listening to news on the radio. On a bench outside a coffee house, Ossie Gabriel, 44, a nurse practitioner, waited for a friend and checked e-mail “to kill time.”

Crossing the street from the grocery store to his car, David Alvarado pushed his 2-year-old daughter in a cart filled with shopping bags, his phone pressed to his ear.

He was talking to a colleague about work scheduling, noting that he wanted to steal a moment to make the call between paying for the groceries and driving.

“I wanted to take advantage of the little gap,” said Mr. Alvarado, 30, a facilities manager at a community center.

For many such people, the little digital asides come on top of heavy use of computers during the day. Take Ms. Bates, the exercising multitasker at the expansive Bakar Fitness and Recreation Center. She wakes up and peeks at her iPhone before she gets out of bed. At her job in advertising, she spends all day in front of her laptop.

But, far from wanting a break from screens when she exercises, she says she couldn't possibly spend 55 minutes on the elliptical machine without “lots of things to do.” This includes relentless channel surfing.

“I switch constantly,” she said. “I can't stand commercials. I have to flip around unless I'm watching ‘Project Runway' or something I'm really into.”

Some researchers say that whatever downside there is to not resting the brain, it pales in comparison to the benefits technology can bring in motivating people to sweat.

“Exercise needs to be part of our lives in the sedentary world we're immersed in. Anything that helps us move is beneficial,” said John J. Ratey, associate clinical professor of psychiatry at the Harvard Medical School and author of “Spark: The Revolutionary New Science of Exercise and the Brain.”

But all things being equal, Mr. Ratey said, he would prefer to see people do their workouts away from their devices: “There is more bang for your buck doing it outside, for your mood and working memory.”

Of the 70 cardio machines on the main floor at Bakar Fitness, 67 have televisions attached. Most of them also have iPod docks and displays showing workout performance, and a few have games, like a rope-climbing machine that shows an animated character climbing the rope while the live human does so too.

A few months ago, the cable TV went out and some patrons were apoplectic. “It was an uproar. People said: ‘That's what we're paying for,' ” said Leeane Jensen, 28, the fitness manager.

At least one exerciser has a different take. Two stories up from the main floor, Peter Colley, 23, churns away on one of the several dozen elliptical machines without a TV. Instead, they are bathed in sunlight, looking out onto the pool and palm trees.

“I look at the wind on the trees. I watch the swimmers go back and forth,” Mr. Colley said. “I usually come here to clear my head.”

http://www.goupstate.com/article/20100825/znyt01/8253001?p=all&tc=pgall

Tips on Handling Customer Complaints

Act Fast
Handle a complaint as soon as it happens. If you let a customer hang up the phone without clearing up his or her complaint, he or she will feel ignored and will be more likely to complain about you to others. You don’t want unhappy customers talking with anyone other than you.

Listen Carefully
Resist the temptation to debate an unhappy customer. Just let them talk. Allowing a customer to voice his or her complaint will alleviate the tension and move you toward a better resolution. Some people just want a chance to vent.

Choose a Point Person
Ask an employee who was not involved in the initial conflict to step in and handle a sticky customer service matter. Ideally, a manager with the authority to resolve the dispute is the best person to tap.

Think Before You Speak
Be careful of the language you use, and watch your tone of voice. Say what you can do, not what you can’t do. For example, don't say "We can't honor this coupon before it's expired.” Instead, say, "Can we give you a coupon or credit for a future purchase"?

Be Flexible
It’s easy to bend the rules and let a customer return an item past your policy of 60 days. It’s hard to police every complaint about you that crops up on the Web. If you can make an exception for an unhappy customer, you may find that the short-term cost yields long-term dividends.

http://www.inc.com/ss/ask-inc-tips-handling-customer-complaints#0

8/9/10

10 Direct Mail Secrets

For the past decade, many business owners have regarded direct mail as the ugly stepsister of print or broadcast advertising. Loud, misleading and cluttered pieces mailed anonymously to millions of prospects only served to reinforce this perception.

Today, however, some of the most innovative and effective advertising is delivered through the mail, and more and more business owners are finding the rewards of direct mail are great if their campaigns are designed with a discerning eye and a realistic strategy in mind. Looking for some tips to help you create a direct mail campaign that brings in results without breaking the bank? Here are 10 smart tactics, culled from my 15 years as a direct mail professional:

1. Develop a visual sense for what works and what doesn't. You have an abundance of learning materials right inside your mailbox. The next time you go through your mail, take a minute to examine what's there, what catches your attention, what attracts you and what repels you. Do you have examples of previous campaigns you've sent out? Or pieces from your competitors that you can learn from? "Junk mail" has a unique style--learn to recognize it and think about how you can create the opposite.

2. Don't insult your prospects' intelligence by using cheesy tag lines or see-and-say visuals. Believe it or not, "FREE MONEY" doesn't attract much attention in the inundated world of today's consumers. So avoid using bold with italics, ALL CAPS, and multiple exclamation points (!!!!), as these are the clichéd visual cues of junk mail.

And try to be innovative in what you do show. Make a point of avoiding see-and-say graphics, which are too elementary to involve and activate the brain of a potential customer. For instance, let's say you were sending out a postcard for your lawn-care service that reads "Lawn-Mowing Service" and the photo or illustration depicts a company employee mowing a lawn. (See: picture of employee mowing lawn. Say: "Lawn-Mowing Service.") Boring! Instead, be more creative.

The key here is to entice your audience to complete a story in their minds of how your product or service solves a problem they have. In the example above, you might show the uniformed employee mowing the lawn but have the caption read "Honey, did you mow the lawn today?" "Yeah, it's a tough job, but someone had to do it." That way, the audience has to figure out the picture. They might complete the riddle like this: "Why is this guy taking credit for mowing the lawn? Because he hired this lawn-mowing service and got the job done. Maybe I could relegate my lawn-mowing responsibility like this guy did." Involving your audience lengthens the time they take to look at your mail piece and improves the odds they'll take in the information they need to make a decision for your business. Humor can also play a great part in these visual stories.

3. Don't assume your audience knows everything. An educated consumer is one that's more willing to make a purchase. Your headline should draw attention to your body copy, which is your most powerful selling tool. Ignore what people say about how no one reads anymore--if compelled by a good headline and provoking imagery, a potential customer will want more information immediately. Directing them to a website or phone number is asking a lot of your audience, so instead, include essential information right on the mail piece. When writing copy, start from the beginning, be direct, and include as much information as you can in five sentences or less. Chances are, the reader is scanning, so use words that are easy to understand but are descriptive enough to accurately communicate your message.

4. Use what you know. If you know your customers inside and out, by all means, use that information in your mail piece. Meeting your potential customers where they are is a great way to attain trust quickly. Become familiar with your market so you can be specific about your mailing list. Consider demographics like gender, age, income, climate, leisure activities and more when deciding where to mail each piece. The more you use information that's been hard-earned in years past, the better your response rates will be.

5. "You Won't Believe This Amazing Offer!" At least that part's true, when it comes to your prospects--people are much more skeptical these days. So do something completely unusual with your direct mail piece: Tell the truth. Exposing your weaknesses make your strengths seem even greater, and (yes, believe it) creates a sense of honesty and trust. Consider this example: A flooring company boasts "the best styles at the best prices." While the claim sounds attractive, it doesn't have the same believability (thus response-eliciting) factor as a piece that claims "the same styles at the best prices." Creating a trustworthy message allows consumers to set positive expectations, rather than refuting any false ones they might be reading. And when potential customers set expectations, you can bet they're ready to take a risk on your business.

6. Ask and you shall receive. Know exactly what action you want your mail piece to elicit, and then ask for it. Then ask again. This is known as the call-to-action in the world of direct mail, and it's the consumers' cue for getting what they want. If there's no call-to-action, your direct mail piece is just creating brand recognition. Is there a number to call? Don't just list the number--ask them to make the call. Is there a website to visit? A response mail required? Ask, suggest and entice your audience to respond to your piece. Make the information accessible, easy to read and effective--which may mean making some changes in the office, whether that's a designated phone line or a more memorable web address.

7. Consider the medium. What will your message be delivered on? Postcards are an effective medium for most products, because they cut down a barrier (the envelope) between the consumer and the message. However, some direct mail is more appropriate when crafted as a letter, especially those that involve high-dollar sales and financial services.

Think carefully about your product and your message before making a decision about the medium. No matter what format you choose, consider the paper your message will be printed on. Inexpensive paper communicates something very different from high-quality paper. If you're selling anything that's considered expensive, high-quality or custom, nice paper will communicate that message much more effectively than something inexpensive. On the other hand, the type of paper you choose makes little difference when you're selling items that are inexpensive, sold at bulk rates or discounted. Deciding what's best for your direct mail piece will improve your response rates exponentially.

8. Use color wisely. Color will always catch more attention than black and white, but when it comes to color, more is not necessarily better. Additional colors may cost more money to produce--and too many colors can create a piece that's confusing and cluttered--so it's important to find what's best for your project.

Begin by choosing one or two main colors and one or two supporting colors based on the feelings they elicit: Warm colors are exciting and energizing; cool colors are relaxing and refreshing. Bright colors speak loudly; dull colors suggest quietly. Think about your product, corporate image and your audience when choosing color. Metallic colors are a great option for one- or two-color jobs.

And check with your printer to see what's available that might make your piece stand out for a small--or no--increase in price. Consider colored paper, as well as using a color as a field (covering a large shape area) and reversing out the text (that means showing white text on a colored background). These techniques will help you make the most of your budget and color choices for maximum impact.

9. Personalize your pieces. You've seen them: "[your name here], you've got to check out this deal!" Personalization can enhance a consumer's inclination to read your direct mail piece by creating a sense of familiarity. It also emphasizes their importance to your business. For example, are you more likely to open an envelope that says "Current Resident" or "[Your Name]"? Most likely, you'll feel important to the second business and choose to open that mail first.

When it comes to personalizing a direct mail piece, there are a lot of options, ranging from addressing it to a specific consumer or including their name in the letter portion to printing their name in the art area on the actual postcard or letter. Some of these options can get pricey, so if you think it's appropriate for your mailer, talk with your printer about your personalization options so you'll know what options fit your budget.

10. Determine the best way to mail it. When it comes to mailing your direct mail pieces, you have options regarding the postage you purchase. Think about your customers and the value of your product, as well as time sensitivity. Will "presort" (formerly bulk rate) arrive in time? Do your potential customers care about first-class postage or not? Are you eligible to receive special, not-for-profit postage rates? And don't forget to consider the type of postage for your direct mail piece. You can choose to use first-class or presort stamps, or you can print the first-class or presort postage directly on the mail pieces (this is known as the indicia). In pieces that are highly personalized and official-looking, a stamp can enhance response rates because consumers infer a human touch. On postcards, indicias work just as well as stamps and don't cost anything to apply to the mail piece.

http://www.entrepreneur.com/article/79016

Learning to Discount All Those Juicy Discount Offers

Sometime this fall, Target (NYSE: TGT - News) will begin offering a 5% discount to customers who use its credit card for their purchases at the chain. So is this a good deal—or not?

Just about every discount offer raises the same question, since it is genuinely difficult to assess what a fair price really is. In most cases, discounts are intended to entice us to spend more, not less. Target says, for instance, that it hopes its offer will prompt its "better and best" customers to buy more at its stores, boosting its sales.

Therein lies my conundrum: My family buys most of its groceries at SuperTarget, and we spent close to $5,000 at the chain's discount stores in 2009. So the offer would save us money—close to $250 a year—and I might be able to avoid trips to other stores.

Switching cards, however, would mean giving up the benefits of our travel-rewards card, which we estimate are worth $80 to $100 a year on our Target purchases. It also requires carrying around another credit card, paying another bill and—worse—trying to resist the temptation to buy extra, unnecessary stuff because of the discount.

While saving money is important, many discount offers have a darker side. Here are some of the ways we get lulled into thinking we are getting a good deal when we may not be:

• Membership has its delusions. In a 2007 paper on membership fees such as those charged by Costco (NasdaqGS: COST - News), Harvard Business School professor Michael I. Norton and Columbia Business School professor Leonard Lee found that consumers equated the fees with especially low prices, even when the prices weren't all that great. Assuming they were getting great deals, shoppers tended to stock up, spending more than they planned and buying "enough pasta to outlive a nuclear winter," according to the professors.

When we pay for something in advance, we want to get the full value. So those who subscribe to Amazon.com 's (NasdaqGS: AMZN - News) Amazon Prime service, paying $79 for a year's worth of two-day shipping, are more likely to spend more on the website, just as we might pig out at an all-you-can-eat buffet.

• Loyalty is expensive. My own wallet is full of loyalty cards—Chico's (NYSE: CHS - News), Barnes & Noble (NYSE: BKS - News) and Staples (NasdaqGS: SPLS - News), to name a few—all intended to reward high-volume customers. The average consumer belongs to six such programs, says Joseph Nunes, a marketing professor at the University of Southern California's Marshall School of Business. Once we belong, we are likely to spend more to qualify for a coupon or earn cash back—and then forget to spend it.

"All loyalty programs count on a certain percentage of consumers not redeeming," Prof. Nunes notes. In addition, he says, "once you get closer and closer to a reward, you want it more and more" and may spend more to get it.

• Free is seductive. Various studies have found that many people will respond more positively to an offer that appears free, even if it really isn't. For example, consumers prefer a product that costs $5 and includes free shipping to an item that costs $2.50 and requires $2.50 to ship.

"When something is free, we have an overly excited reaction," says Dan Ariely, a Duke University behavioral economics professor and author of "The Upside of Irrationality." He marvels, for instance, at how long people will stand in line at Ben & Jerry's on free cone day. But he asks, "How much time would you spend in line to get $1.75?"

In fairness, it is hard to compare an ice-cream cone and cold, hard cash. A couple of years ago, Prof. Ariely asked about 50 people who were buying a car at a dealership what they would buy if they didn't purchase a car. Most didn't have an answer—and none of them saw the cost of the car as equivalent to, say, a tuition bill or multiple vacations.

Prof. Ariely says people should get more comfortable comparing apples and oranges—that is, an impulse purchase with something they truly value. Learning to weigh trade-offs is a good start to becoming a smart shopper.

So is making an extra trip to hunt for specials. Marketing professors Stephen Hoch, at the Wharton School, and Edward Fox, at Southern Methodist University, studied "cherry pickers," people who did most of their grocery shopping at one store, but then went to a second store the same day to take advantage of specials, such as soft drinks on sale. Even factoring in the extra time spent shopping, they found that cherry pickers actually can save big money.

Weighing the hassle involved also is important, of course, whether you are switching credit cards, surfing the Web for discounts or clipping coupons. When it comes to the Target card, I'm not yet convinced that the extra savings are worth the trouble.

http://finance.yahoo.com/banking-budgeting/article/110229/learning-to-discount-all-those-juicy-discount-offers

But Will It Make You Happy?

She had so much.

A two-bedroom apartment. Two cars. Enough wedding china to serve two dozen people.

Yet Tammy Strobel wasn't happy. Working as a project manager with an investment management firm in Davis, Calif., and making about $40,000 a year, she was, as she put it, caught in the "work-spend treadmill."

So one day she stepped off.

Inspired by books and blog entries about living simply, Ms. Strobel and her husband, Logan Smith, both 31, began donating some of their belongings to charity. As the months passed, out went stacks of sweaters, shoes, books, pots and pans, even the television after a trial separation during which it was relegated to a closet. Eventually, they got rid of their cars, too. Emboldened by a Web site that challenges consumers to live with just 100 personal items, Ms. Strobel winnowed down her wardrobe and toiletries to precisely that number.

Her mother called her crazy.

Today, three years after Ms. Strobel and Mr. Smith began downsizing, they live in Portland, Ore., in a spare, 400-square-foot studio with a nice-sized kitchen. Mr. Smith is completing a doctorate in physiology; Ms. Strobel happily works from home as a Web designer and freelance writer. She owns four plates, three pairs of shoes and two pots. With Mr. Smith in his final weeks of school, Ms. Strobel's income of about $24,000 a year covers their bills. They are still car-free but have bikes. One other thing they no longer have: $30,000 of debt.

Ms. Strobel's mother is impressed. Now the couple have money to travel and to contribute to the education funds of nieces and nephews. And because their debt is paid off, Ms. Strobel works fewer hours, giving her time to be outdoors, and to volunteer, which she does about four hours a week for a nonprofit outreach program called Living Yoga.

"The idea that you need to go bigger to be happy is false," she says. "I really believe that the acquisition of material goods doesn't bring about happiness."

While Ms. Strobel and her husband overhauled their spending habits before the recession, legions of other consumers have since had to reconsider their own lifestyles, bringing a major shift in the nation's consumption patterns.

"We're moving from a conspicuous consumption — which is 'buy without regard' — to a calculated consumption," says Marshal Cohen, an analyst at the NPD Group, the retailing research and consulting firm.

Amid weak job and housing markets, consumers are saving more and spending less than they have in decades, and industry professionals expect that trend to continue. Consumers saved 6.4 percent of their after-tax income in June, according to a new government report. Before the recession, the rate was 1 to 2 percent for many years. In June, consumer spending and personal incomes were essentially flat compared with May, suggesting that the American economy, as dependent as it is on shoppers opening their wallets and purses, isn't likely to rebound anytime soon.

On the bright side, the practices that consumers have adopted in response to the economic crisis ultimately could — as a raft of new research suggests — make them happier. New studies of consumption and happiness show, for instance, that people are happier when they spend money on experiences instead of material objects, when they relish what they plan to buy long before they buy it, and when they stop trying to outdo the Joneses.

If consumers end up sticking with their newfound spending habits, some tactics that retailers and marketers began deploying during the recession could become lasting business strategies. Among those strategies are proffering merchandise that makes being at home more entertaining and trying to make consumers feel special by giving them access to exclusive events and more personal customer service.

While the current round of stinginess may simply be a response to the economic downturn, some analysts say consumers may also be permanently adjusting their spending based on what they've discovered about what truly makes them happy or fulfilled.

"This actually is a topic that hasn't been researched very much until recently," says Elizabeth W. Dunn, an associate professor in the psychology department at the University of British Columbia, who is at the forefront of research on consumption and happiness. "There's massive literature on income and happiness. It's amazing how little there is on how to spend your money."

Conspicuous consumption has been an object of fascination going back at least as far as 1899, when the economist Thorstein Veblen published "The Theory of the Leisure Class," a book that analyzed, in part, how people spent their money in order to demonstrate their social status.

And it's been a truism for eons that extra cash always makes life a little easier. Studies over the last few decades have shown that money, up to a certain point, makes people happier because it lets them meet basic needs. The latest round of research is, for lack of a better term, all about emotional efficiency: how to reap the most happiness for your dollar.

So just where does happiness reside for consumers? Scholars and researchers haven't determined whether Armani will put a bigger smile on your face than Dolce & Gabbana. But they have found that our types of purchases, their size and frequency, and even the timing of the spending all affect long-term happiness.

One major finding is that spending money for an experience — concert tickets, French lessons, sushi-rolling classes, a hotel room in Monaco — produces longer-lasting satisfaction than spending money on plain old stuff.

"It's better to go on a vacation than buy a new couch' is basically the idea," says Professor Dunn, summing up research by two fellow psychologists, Leaf Van Boven and Thomas Gilovich. Her own take on the subject is in a paper she wrote with colleagues at Harvard and the University of Virginia: "If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right." (The Journal of Consumer Psychology plans to publish it in a coming issue.)

Thomas DeLeire, an associate professor of public affairs, population, health and economics at the University of Wisconsin in Madison, recently published research examining nine major categories of consumption. He discovered that the only category to be positively related to happiness was leisure: vacations, entertainment, sports and equipment like golf clubs and fishing poles.

Using data from a study by the National Institute on Aging, Professor DeLeire compared the happiness derived from different levels of spending to the happiness people get from being married. (Studies have shown that marriage increases happiness.)

"A $20,000 increase in spending on leisure was roughly equivalent to the happiness boost one gets from marriage," he said, adding that spending on leisure activities appeared to make people less lonely and increased their interactions with others.

According to retailers and analysts, consumers have gravitated more toward experiences than possessions over the last couple of years, opting to use their extra cash for nights at home with family, watching movies and playing games — or for "staycations" in the backyard. Many retailing professionals think this is not a fad, but rather "the new normal."

"I think many of these changes are permanent changes," says Jennifer Black, president of the retailing research company Jennifer Black & Associates and a member of the Governor's Council of Economic Advisors in Oregon. "I think people are realizing they don't need what they had. They're more interested in creating memories."

She largely attributes this to baby boomers' continuing concerns about the job market and their ability to send their children to college. While they will still spend, they will spend less, she said, having reset their priorities.

While it is unlikely that most consumers will downsize as much as Ms. Strobel did, many have been, well, happily surprised by the pleasures of living a little more simply. The Boston Consulting Group said in a June report that recession anxiety had prompted a "back-to-basics movement," with things like home and family increasing in importance over the last two years, while things like luxury and status have declined.

"There's been an emotional rebirth connected to acquiring things that's really come out of this recession," says Wendy Liebmann, chief executive of WSL Strategic Retail, a marketing consulting firm that works with manufacturers and retailers. "We hear people talking about the desire not to lose that — that connection, the moment, the family, the experience."

Current research suggests that, unlike consumption of material goods, spending on leisure and services typically strengthens social bonds, which in turn helps amplify happiness. (Academics are already in broad agreement that there is a strong correlation between the quality of people's relationships and their happiness; hence, anything that promotes stronger social bonds has a good chance of making us feel all warm and fuzzy.)

And the creation of complex, sophisticated relationships is a rare thing in the world. As Professor Dunn and her colleagues Daniel T. Gilbert and Timothy D. Wilson point out in their forthcoming paper, only termites, naked mole rats and certain insects like ants and bees construct social networks as complex as those of human beings. In that elite little club, humans are the only ones who shop.

AT the height of the recession in 2008, Wal-Mart Stores (NYSE: WMT - News) realized that consumers were "cocooning" — vacationing in their yards, eating more dinners at home, organizing family game nights. So it responded by grouping items in its stores that would turn any den into an at-home movie theater or transform a backyard into a slice of the Catskills. Wal-Mart wasn't just selling barbecues and board games. It was selling experiences.

"We spend a lot of time listening to our customers," says Amy Lester, a spokeswoman for Wal-Mart, "and know that they have a set amount to spend and need to juggle to meet that amount."

One reason that paying for experiences gives us longer-lasting happiness is that we can reminisce about them, researchers say. That's true for even the most middling of experiences. That trip to Rome during which you waited in endless lines, broke your camera and argued with your spouse will typically be airbrushed with "rosy recollection," says Sonja Lyubomirsky, a psychology professor at the University of California, Riverside.

Professor Lyubomirsky has a grant from the National Institute of Mental Health to conduct research on the possibility of permanently increasing happiness. "Trips aren't all perfect," she notes, "but we remember them as perfect."

Another reason that scholars contend that experiences provide a bigger pop than things is that they can't be absorbed in one gulp — it takes more time to adapt to them and engage with them than it does to put on a new leather jacket or turn on that shiny flat-screen TV.

"We buy a new house, we get accustomed to it," says Professor Lyubomirsky, who studies what psychologists call "hedonic adaptation," a phenomenon in which people quickly become used to changes, great or terrible, in order to maintain a stable level of happiness.

Over time, that means the buzz from a new purchase is pushed toward the emotional norm.

"We stop getting pleasure from it," she says.

And then, of course, we buy new things.

When Ed Diener, a psychology professor at the University of Illinois and a former president of the International Positive Psychology Association — which promotes the study of what lets people lead fulfilling lives — was house-hunting with his wife, they saw several homes with features they liked.

But unlike couples who choose a house because of its open floor plan, fancy kitchens, great light, or spacious bedrooms, Professor Diener arrived at his decision after considering hedonic-adaptation research.

"One home was close to hiking trails, making going hiking very easy," he said in an e-mail. "Thinking about the research, I argued that the hiking trails could be a factor contributing to our happiness, and we should worry less about things like how pretty the kitchen floor is or whether the sinks are fancy. We bought the home near the hiking trail and it has been great, and we haven't tired of this feature because we take a walk four or five days a week."

Scholars have discovered that one way consumers combat hedonic adaptation is to buy many small pleasures instead of one big one. Instead of a new Jaguar, Professor Lyubomirsky advises, buy a massage once a week, have lots of fresh flowers delivered and make phone calls to friends in Europe. Instead of a two-week long vacation, take a few three-day weekends.

"We do adapt to the little things," she says, "but because there's so many, it will take longer."

Before credit cards and cellphones enabled consumers to have almost anything they wanted at any time, the experience of shopping was richer, says Ms. Liebmann of WSL Strategic Retail. "You saved for it, you anticipated it," she says.

In other words, waiting for something and working hard to get it made it feel more valuable and more stimulating.

In fact, scholars have found that anticipation increases happiness. Considering buying an iPad? You might want to think about it as long as possible before taking one home. Likewise about a Caribbean escape: you'll get more pleasure if you book a flight in advance than if you book it at the last minute.

Once upon a time, with roots that go back to medieval marketplaces featuring stalls that functioned as stores, shopping offered a way to connect socially, as Ms. Liebmann and others have pointed out. But over the last decade, retailing came to be about one thing: unbridled acquisition, epitomized by big-box stores where the mantra was "stack 'em high and let 'em fly" and online transactions that required no social interaction at all — you didn't even have to leave your home.

The recession, however, may force retailers to become reacquainted with shopping's historical roots.

"I think there's a real opportunity in retail to be able to romance the experience again," says Ms. Liebmann. "Retailers are going to have to work very hard to create that emotional feeling again. And it can't just be 'Here's another thing to buy.' It has to have a real sense of experience to it."

Industry professionals say they have difficulty identifying any retailer that is managing to do this well today, with one notable exception: Apple (NasdaqGS: AAPL - News), which offers an interactive retail experience, including classes.

Marie Driscoll, head of the retailing group at Standard & Poor's, says chains have to adapt to new consumer preferences by offering better service, special events and access to designers. Analysts at the Boston Consulting Group advise that companies offer more affordable indulgences, like video games that provide an at-home workout for far less than the cost of a gym membership.

Mr. Cohen of the NPD Group says some companies are doing this. Best Buy (NYSE: BBY - News) is promoting its Geek Squad, promising shoppers before they buy that complicated electronic thingamajig that its employees will hold their hands through the installation process and beyond.

"Nowadays with the economic climate, customers definitely are going for a quality experience," says Nick DeVita, a home entertainment adviser with the Geek Squad. "If they're going to spend their money, they want to make sure it's for the right thing, the right service."

With competition for consumer dollars fiercer than it's been in decades, retailers have had to make the shopping experience more compelling. Mr. Cohen says automakers are offering 30-day test drives, while some clothing stores are promising free personal shoppers. Malls are providing day care while parents shop. Even on the Web, retailers are connecting on customers on Facebook, Twitter and Foursquare, hoping to win their loyalty by offering discounts and invitations to special events.

For the last four years, Roko Belic, a Los Angeles filmmaker, has been traveling the world making a documentary called "Happy." Since beginning work on the film, he has moved to a beach in Malibu from his house in the San Francisco suburbs.

San Francisco was nice, but he couldn't surf there.

"I moved to a trailer park," says Mr. Belic, "which is the first real community that I've lived in in my life." Now he surfs three or four times a week. "It definitely has made me happier," he says. "The things we are trained to think make us happy, like having a new car every couple of years and buying the latest fashions, don't make us happy."

Mr. Belic says his documentary shows that "the one single trait that's common among every single person who is happy is strong relationships."

Buying luxury goods, conversely, tends to be an endless cycle of one-upmanship, in which the neighbors have a fancy new car and — bingo! — now you want one, too, scholars say. A study published in June in Psychological Science by Ms. Dunn and others found that wealth interfered with people's ability to savor positive emotions and experiences, because having an embarrassment of riches reduced the ability to reap enjoyment from life's smaller everyday pleasures, like eating a chocolate bar.

Alternatively, spending money on an event, like camping or a wine tasting with friends, leaves people less likely to compare their experiences with those of others — and, therefore, happier.

Of course, some fashion lovers beg to differ. For many people, clothes will never be more than utilitarian. But for a certain segment of the population, clothes are an art form, a means of self-expression, a way for families to pass down memories through generations. For them, studies concluding that people eventually stop deriving pleasure from material things don't ring true.

"No way," says Hayley Corwick, who writes the popular fashion blog Madison Avenue Spy. "I could pull out things from my closet that I bought when I was 17 that I still love."

She rejects the idea that happiness has to be an either-or proposition. Some days, you want a trip, she says; other days, you want a Tom Ford handbag.

Ms. Strobel — our heroine who moved into the 400-square foot apartment — is now an advocate of simple living, writing in her spare time about her own life choices at Rowdykittens.com.

"My lifestyle now would not be possible if I still had a huge two-bedroom apartment filled to the gills with stuff, two cars, and 30 grand in debt," she says.

"Give away some of your stuff," she advises. "See how it feels."

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