Put yourself in the mind of the customer: give them what they want and don't make them pay for it...right away.
Many businesses define the value of a customer by long-term or lifetime value—a formula calculated by estimating the profits generated by that customer into perpetuity (discounted back to the present). Most customers, however, have a different perspective. They define value as the difference between the highest price they would be willing to pay and the actual price. In economics, this is sometimes referred to as consumer surplus.
The trick is to find a long-term value proposition that works for both you and the customer. Unfortunately, many companies lose sight of the fact that if they don’t provide customer value in the short term, they will never have the opportunity to provide customer value in the long term, because the customer won’t come back.
We were reminded of the importance of customer value in two recent interactions with vendors:
1. We chose a new vendor to build and manage our website. As soon as we informed the account reps of our decision, they began to suggest additional services and advice the company could provide—at no additional cost—which made us feel good about the substantial investment we were making in them.
2. We chose another vendor for some personal photography. The photographer quickly offered us an additional "bonus" product. But when we reconsidered the initial purchase and opted for a slightly lower-cost option, the rep told us we were now $200 under the amount needed to qualify for the "bonus." Feeling slightly misled, we opted for another vendor and ended up spending twice the amount we originally agreed to.
Businesses that do create customer value in the short-term, like our website vendor, for example, will always have the option to choose how to create value in the long term, by rising prices, reducing the cost-to-serve, increasing volume (i.e., selling more), or even choosing not to serve that customer. All of these options can increase profitability.
What’s more, we’ve found that if you "wow" a customer once or twice early on, with a great product or great service, they will purchase from you with more confidence in the future. This, of course, results in less price sensitivity, which can drive higher profits.
It’s a simple concept, but one that management teams frequently overlook. By thinking about customer value from your customers’ perspective—even if it means losing some short-term battles—your customers will reward you in the long term. And if they don’t, you can always walk away.
http://www.inc.com/karl-and-bill/how-to-hook-a-life-time-customer.html
11/17/11
10 steps for dealing with criticism
Takeaway: Criticism
can be tough to handle, especially for analytically inclined IT pros.
Alan Norton offers some advice for weathering critical remarks.
I have noted during my career that IT engineers often
respond negatively to criticism. There are a number of reasons for this.
We may be trying to hide our insecurities and lack of knowledge,
especially if we’re inexperienced. We may only hear the message as
negative. We may fail to engage the wonderful thinking processes we have
been gifted with. Or we may just be too lazy to consider constructive
criticism. Ironically, put the same IT engineers in a conference room
and they have no problem criticizing your systems design. To
test your sensitivity to criticism, ask yourself how receptive you were
to the critical words of your immediate supervisor during your last
performance appraisal.I am not going to tell you that dealing with criticism is easy. On the contrary. Analytical thinkers are convinced that their way is the only way. I have seen it all too often in my own family when a discussion amongst the analytical thinkers soon becomes contentious. But it doesn’t have to be that way. Follow these 10 steps to get a better grip on the unwanted and unsolicited critical words hurled in your direction.
Step 1: Consider the possibility that you might be wrong “Truly it is an evil to be full of faults; but it is a still greater evil to be full of them and to be unwilling to recognize them, since that is to add the further fault of a voluntary illusion.” — Blaise Pascal
Before you can accept and properly deal with criticism, you must admit the fact that there is always room for improvement and that you are not perfect. Only the perfect can disregard all criticism. I may not know you, but I do know that you are not perfect. It follows that you have seen, and will continue to see, your fair share of criticism - so please read on.Think wrong before you are wrong.
Step 2: Consider the other point of view
“Don’t criticize what you don’t understand, son. You never walked in that man’s shoes.” — Elvis Presley
Through experiences, we gain wisdom. Since it is impossible to
experience everything life has to offer, consider each person as a
repository of unique experiences and lessons learned just waiting for
you to mine. If you do not understand the criticism, consider the
possibility that the events experienced by the criticizer may have given
him or her wisdom that you do not possess. With the right attitude,
your own point of view might be changed for the better.Regard, but don’t discard.
Step 3: Consider the source
“We hate to have some people give us advice because we know how badly they need it themselves.” –Anonymous
It is human nature to consider most criticism as derogatory. Before jumping to conclusions, though, you should consider who is
giving the “advice.” It is easy to misunderstand the nature of the
criticizer. Analytical thinkers, for example, are wired to recognize
invalid arguments, mistakes, and bad information. It’s what they do, so
you shouldn’t be too surprised when they offer you their “helpful
advice.”Pay attention to criticism from your friends and loved-ones. Recognize those who will not be offering constructive criticism before you waste one gigasecond of brain time. Some people, by their very nature, offer unhelpful advice or criticism. It’s wise to recognize that fact and accept that there is little that you can do to change their behavior.
Separate those who indicate from those who pontificate.
Step 4: Listen
“If we were supposed to talk more than we listen, we would have two mouths and one ear.” — Mark Twain
It is also human nature to dismiss criticism and let it go in one ear
and out the other. It is so much easier than having to try to
understand the “critical” point being made. Listen to or read the
comment containing the criticism carefully. I often have to reread a
paragraph before understanding the point trying to be conveyed. “Listen”
with more than your ears. Important information can be derived from the
tone of the words and the body language of the criticizer. And it’s
much harder with oral communication. You need to listen and respond
quickly by thinking on your feet, and you can do that only when you give
the speaker your full and undivided attention.Listen also to your gut. It will tell you when criticism has touched a raw nerve.
Step 5: Don’t respond emotionally
“Against criticism a man can neither protest nor defend himself; he
must act in spite of it, and then it will gradually yield to him.” — Johann Wolfgang von Goethe
Regardless of whether the criticism is valid, a defensive attitude is
unprofessional and irresponsible. You may not like the “helpful advice”
that has been handed to you. We all too often want to respond
to criticism with a knee-jerk defensive attitude or with a verbal attack
of the criticizer. Lashing out with an angry emotional response like,
“You are a clueless buffoon” may help you feel better, but it’s unwise —
especially if said to your boss. Defensive, angry emotional responses
are almost always regretted later when the heat of the moment has
passed. After all, professionals who are secure in their abilities let
their work do the talking for them.There is a reason why your parents told you to count to 10 before responding. The time allows us to engage the brain and respond thoughtfully instead of emotionally. Thomas Jefferson once said, “When angry, count ten before you speak; if very angry, a hundred.”
Reflect, but don’t deflect.
Step 6: Throw out derogatory criticism
“If I care to listen to every criticism, let alone act on them, then
this shop may as well be closed for all other businesses. I have learned
to do my best, and if the end result is good then I do not care for any
criticism, but if the end result is not good, then even the praise of
ten angels would not make the difference.” — Abraham Lincoln
There are two basic types of criticism, constructive and derogatory.
Before you can respond correctly to criticism, you must separate
criticism with merit from criticism of no value. Only the obviously
malicious statements should go into the “derogatory” bucket in this
step.Criticism from these behavioral types can almost always be put into the “derogatory” bucket:
- Armchair Archie — Second guesses after the event
- Back Seat Bertie — Not responsible but offers “helpful” tips anyway
- Bamboozle Bambi — Snows them with a blizzard of meaningless words
- Complicated Cuthbert — Offers solutions that are more complex than a Rube Goldberg machine
- Conformist Concetta — Critical of eccentric behavior outside the “norm”
- Hopeless Harry — The eternal pessimist
- Obvious Olivia — Points out the obvious
- Omniscient Oscar — The know-it-all who tells you wonderful, irrelevant facts
- Pernicious Percival — Intentionally tries to do harm with criticism
- Repetitious Repete — Repeats criticism already expressed, typically in a forum
- Silly Sally- - Offers ridiculous solutions
- Wrong Way Willie — Always points you in the wrong direction
Step 7: Recognize constructive criticism
“Every human being is entitled to courtesy and consideration. Constructive criticism is not only to be expected but sought.” — Margaret Chase Smith
It is not as easy to recognize constructive critical statements about
you or your work as you may think. Communication is complex, and your
sensitivities and prejudices work against the proper deciphering of the
message.Six types of messages can be messages of constructive criticism (Table A).
Table A
Types of constructive criticism.
As you can see, the intended message can be very different from the message received. Constructive criticism is or is not in the eye of the beholder. If you do not recognize constructive criticism for what it is, you will most likely discard it.
Step 8: Acknowledge and accept the truth
“Every truth passes through three stages before it is recognized. In
the first it is ridiculed, in the second it is opposed, in the third it
is regarded as self evident.” — Arthur Schopenhauer
You may properly recognize constructive criticism, but without
acknowledging and accepting the truth in the message, you will almost
certainly ignore it. Sometimes the truth hurts, but that does not
necessarily make it invective.Concede the painful truth before the truth becomes painful.
Step 9: Act on constructive criticism
“Criticism always follows worthwhile action. The opposite is seldom true.” — Torley Wong
If you follow the above steps but do not act, you have wasted an
opportunity — and you might be on a collision course with disaster. You
may need to swallow your pride and change your plans. Yes, it is true;
even the best of us are wrong at times, and it takes mature people
comfortable in their own skin to admit when they are wrong.Act but don’t react.
Step 10: Learn from criticism
“Don’t mind criticism. If it is untrue, disregard it; if unfair, keep
from irritation; if it is ignorant, smile; if it is justified it is not
criticism, learn from it.” — Anonymous
We can all learn from criticism, even when it is not well
intentioned. You may not be able to use constructive criticism to change
work that has already been completed but you can certainly use it in
the future. The next time a similar situation arises you can avoid the
behavior that spawned the original criticism.Learning from criticism is better than learning from failure.
The bottom line
“Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things.” — Winston ChurchillSince IT is full of analytical thinkers, it’s important to learn how to best dish out and respond to criticism. Make sure your unsolicited words are helpful before engaging the language center of the brain and consider carefully, before speaking, how the message will be received. Ambiguous or unclear criticism will almost never be received well.
Failure to respond correctly to constructive criticism can be costly. Engineers of all types should note that failure occurs all too often at the most important step, step 1. All steps are important, but when engineers and managers fail to consider the possibility that their intended course of action might be wrong, the remaining nine steps become moot. From the Titanic to the Space Shuttles Challenger and Columbia, warnings have been given, and ignored, leading to loss of life. Software engineering errors also cost lives and are estimated to cost $60 billion annually in the U.S. alone.
Responding to criticism in a professional manner will reduce the possibility of any hurt feelings among you and your peers. Criticism may be a bitter pill to swallow, but necessary for growth beyond one’s own preconception of self. A world without criticism might be more comfortable, but it would also be less fulfilling and a lot more dangerous.
http://www.techrepublic.com/blog/10things/10-steps-for-dealing-with-criticism/2834
11/16/11
Don't Let Your Customers Bully You
If you're a pushover, you'll completely lose a customer's respect.
Follow these six steps to diffusing customer anger without caving in.
My recent column Top 5 Ways Big Customers Screw With Small Vendors points out that some buyers see sellers—that means you—as scapegoats. Buyers use the fact they needn't work with you on a daily basis as an excuse to vent their frustration by exploding at you
Sometimes such customer-explosions are be triggered by something that you, or your company, did that wasn't to the buyer's liking. And sometimes the abuse seems to simply comes out of nowhere. Regardless, what's important isn't where it comes from, but rather how you deal with it.
Unfortunately, many sellers deal with this kind of behavior in exactly the wrong way. They sit there and take it, then meekly apologize.
That's the absolute worst thing you can do.
The moment you let a customer bully you, you've completely lost that customer's respect. Worse, you've set yourself up for a relationship of further bullying and abuse.
Here's a simple six-step recipe for defusing this situation.
Just this weekend, I came across a perfect example of how to counter bullying in Steve Jobs's biography. Jobs was probably one of the worst bullies in the corporate world, often reducing people to tears. However, when Jobs yelled at his chief designer, the chief designer reacted very differently than did most people. He yelled right back.
Guess who kept Jobs's respect?
Along the same lines, I once worked for a bully who'd pick out a staff member at every meeting to yell at and berate. The one staff member who wasn't treated this way was a woman who, when he tried it on her the first time, threw a pencil at him and told him to "stop acting like an a------."
In short, when you placate, you're just proving to the bully that you're weak and stupid. The bully figures that if you had something valuable to offer, you wouldn't take the guff.
By contrast, when you lay down the law and demand the respect due a professional, you're creating the credibility that the bully needs to see before he begins to trust that you can do the job.
http://www.inc.com/geoffrey-james/defuse-exploding-customers-without-being-bullied.html
My recent column Top 5 Ways Big Customers Screw With Small Vendors points out that some buyers see sellers—that means you—as scapegoats. Buyers use the fact they needn't work with you on a daily basis as an excuse to vent their frustration by exploding at you
Sometimes such customer-explosions are be triggered by something that you, or your company, did that wasn't to the buyer's liking. And sometimes the abuse seems to simply comes out of nowhere. Regardless, what's important isn't where it comes from, but rather how you deal with it.
Unfortunately, many sellers deal with this kind of behavior in exactly the wrong way. They sit there and take it, then meekly apologize.
That's the absolute worst thing you can do.
The moment you let a customer bully you, you've completely lost that customer's respect. Worse, you've set yourself up for a relationship of further bullying and abuse.
Here's a simple six-step recipe for defusing this situation.
- STEP #1: Keep your pipeline full. Bullies smell fear. The best way to be fearless, when you're selling, is never to rely entirely on a single customer to make your revenue numbers. If you know you've got plenty of buyers in waiting, you always have the option of simply walking out and moving on.
- STEP #2: Raise your own intensity level. When the customer begins to explode, you've got to get onto the same level in order to create rapport. You don't have to yell, but your voice must be firm and authoritative. If the conversation is face-to-face, you have to keep it eye-to-eye. Wear a serious expression that communicates clearly that you don't appreciate being yelled at and don't intend to be intimidated.
- STEP #3: Call the customer's bluff. You're a professional, not a doormat. State clearly that you're willing to help resolve the problem, but you're not going to be yelled at. Don't mince words. Demand respect. Make it absolutely clear that your help is dependent upon the customer's ability to behave in a civil manner.
- STEP #4: If the customer does not comply, end the conversation. Do this politely but firmly. State that you'll be glad to help once the customer is willing to treat you with the respect that you deserve. Make sure the customer knows how to contact you. Then leave. Never take abuse. No job is worth it.
- STEP #5: Apologize appropriately for the problem. Once you've demanded and received civil behavior—then and only then—apologize for the inconvenience that the problem might have caused the customer. Make a commitment to resolve the problem.
- STEP #6: Work on the problem. Now that you've established that you're not the customer's punching bag, go ahead and work the customer's issue. Needless to say, you'll need to do a superlative job resolving the problem. But you were going to do that anyway, right?
Just this weekend, I came across a perfect example of how to counter bullying in Steve Jobs's biography. Jobs was probably one of the worst bullies in the corporate world, often reducing people to tears. However, when Jobs yelled at his chief designer, the chief designer reacted very differently than did most people. He yelled right back.
Guess who kept Jobs's respect?
Along the same lines, I once worked for a bully who'd pick out a staff member at every meeting to yell at and berate. The one staff member who wasn't treated this way was a woman who, when he tried it on her the first time, threw a pencil at him and told him to "stop acting like an a------."
In short, when you placate, you're just proving to the bully that you're weak and stupid. The bully figures that if you had something valuable to offer, you wouldn't take the guff.
By contrast, when you lay down the law and demand the respect due a professional, you're creating the credibility that the bully needs to see before he begins to trust that you can do the job.
http://www.inc.com/geoffrey-james/defuse-exploding-customers-without-being-bullied.html
11/9/11
5 Ways to Keep Your Biggest Customer
Before you slash prices, check out these strategies for keeping your best customers happy and loyal.
Contrary to popular belief, a big customer that buys a lot of product from you is not necessarily a good thing. Big companies have a habit of pigeonholing smaller firms into being suppliers of commodity products.
That way, they can play you off against your competition in order to push prices down. They don't care whether you make any money on the deal because they can just switch to another vendor should the price drop drive you out of the business.
The good news? There are five ways to defend yourself against this kind of pricing game.
Strategy #1: Differentiate Yourself. If your firm offers a needed product or service that no other company can provide, then it’s impossible for the big company to play you off against your competitors. To create that differentiation, you position your offering so that whatever is unique about it becomes a "must have" for that customer. I once lost a sale of a million-dollar publishing system because the competitor convinced the customer that they needed the ability to set type around the shape of a handprint, something that the customer had never done before and would never do in the future.
Strategy #2: Provide Expertise. If you or your firm can offer expertise that the customer needs in order to fulfill their goals, you can be strategic to them, even if you’re a commodity supplier. For example, a company that sells glue for manufacturing consumer electronics might have world-class expertise in volume manufacturing that, if shared with their customer, would make them more profitable. That expertise is then periodically "lent" to the customer in order to reduce their manufacturing costs, thereby making an ongoing relationship valuable to the customer.
Strategy #3: Create a High Replacement Cost. If it would cost the customer a prohibitive amount to replace your firm's products and services, they're far less likely to replace you with another competitor. What's important here is that you create the high replacement cost AFTER you've made the sale, because prior to the sale, the big customer (if they're at all self-aware) are likely to see the replacement cost as liability and thus be less likely to buy from you in the first place.
Strategy #4: Really Know the Account. If you can get yourself involved in the inner workings of the customer account and become part of their strategic planning, they'll begin to see you as a consultant rather than a mere supplier. For example, IBM sometimes assigns an employee as a general IT consultant inside Fortune 100 firms. In addition to being a sales representative, that employee is mandated to act as an independent IT resource acts as a clearing house for any problems that occur with IBM's offerings.
Strategy #5: Generate Reverse Credibility. This one is tricky, because credibility usually flows from the larger company to the smaller one. (e.g. "Our customer list includes GM and Oracle!") However, if a smaller firm has a market reputation that helps the larger firm create credibility in a new market, the larger firm will may see the relationship as strategic. Example: the Taiwanese computer manufacturer Acer used to publicly tout its' relationship with boutique studio FrogDesign in order to seem more "cool" in the consumer PC space.
http://www.inc.com/geoffrey-james/5-ways-to-keep-your-biggest-customer.html
Contrary to popular belief, a big customer that buys a lot of product from you is not necessarily a good thing. Big companies have a habit of pigeonholing smaller firms into being suppliers of commodity products.
That way, they can play you off against your competition in order to push prices down. They don't care whether you make any money on the deal because they can just switch to another vendor should the price drop drive you out of the business.
The good news? There are five ways to defend yourself against this kind of pricing game.
Strategy #1: Differentiate Yourself. If your firm offers a needed product or service that no other company can provide, then it’s impossible for the big company to play you off against your competitors. To create that differentiation, you position your offering so that whatever is unique about it becomes a "must have" for that customer. I once lost a sale of a million-dollar publishing system because the competitor convinced the customer that they needed the ability to set type around the shape of a handprint, something that the customer had never done before and would never do in the future.
Strategy #2: Provide Expertise. If you or your firm can offer expertise that the customer needs in order to fulfill their goals, you can be strategic to them, even if you’re a commodity supplier. For example, a company that sells glue for manufacturing consumer electronics might have world-class expertise in volume manufacturing that, if shared with their customer, would make them more profitable. That expertise is then periodically "lent" to the customer in order to reduce their manufacturing costs, thereby making an ongoing relationship valuable to the customer.
Strategy #3: Create a High Replacement Cost. If it would cost the customer a prohibitive amount to replace your firm's products and services, they're far less likely to replace you with another competitor. What's important here is that you create the high replacement cost AFTER you've made the sale, because prior to the sale, the big customer (if they're at all self-aware) are likely to see the replacement cost as liability and thus be less likely to buy from you in the first place.
Strategy #4: Really Know the Account. If you can get yourself involved in the inner workings of the customer account and become part of their strategic planning, they'll begin to see you as a consultant rather than a mere supplier. For example, IBM sometimes assigns an employee as a general IT consultant inside Fortune 100 firms. In addition to being a sales representative, that employee is mandated to act as an independent IT resource acts as a clearing house for any problems that occur with IBM's offerings.
Strategy #5: Generate Reverse Credibility. This one is tricky, because credibility usually flows from the larger company to the smaller one. (e.g. "Our customer list includes GM and Oracle!") However, if a smaller firm has a market reputation that helps the larger firm create credibility in a new market, the larger firm will may see the relationship as strategic. Example: the Taiwanese computer manufacturer Acer used to publicly tout its' relationship with boutique studio FrogDesign in order to seem more "cool" in the consumer PC space.
http://www.inc.com/geoffrey-james/5-ways-to-keep-your-biggest-customer.html
10/29/11
Learning Pyramid
Average Retention Rates
5% Lecture
10% Reading
20% Audio-Visual
30% Demonstration
50% Discussion Group
75% Practice by Doing
90% Teach Others/Immediate Use
5% Lecture
10% Reading
20% Audio-Visual
30% Demonstration
50% Discussion Group
75% Practice by Doing
90% Teach Others/Immediate Use
10/28/11
Steve Jobs Quotes
Steve Jobs funniest joke was said at the D5 conference.
'Apple is like a ship with a hole in the bottom, leaking water and my job is to get the ship pointed in the right direction' Steve Jobs
You need a lot of passion for what you're doing because its so hard. Without passion, any rational person would give up.
So if you're not having fun doing it, if you don't absolutely love it, you're going to give up.
And that's what happens to most people, actually.
If you look at the ones that ended up being successful in the eyes of society, often times its the ones who love what they do, so they could persevere when it got really tough.
And the ones that didn't love it, quit. Because they're sane, right?
Who would put up with this stuff if you don't love it?
So its a lot of hard work and its a lot of worrying constantly.
If you don't love it, you're going to fail.
'Apple is like a ship with a hole in the bottom, leaking water and my job is to get the ship pointed in the right direction' Steve Jobs
You need a lot of passion for what you're doing because its so hard. Without passion, any rational person would give up.
So if you're not having fun doing it, if you don't absolutely love it, you're going to give up.
And that's what happens to most people, actually.
If you look at the ones that ended up being successful in the eyes of society, often times its the ones who love what they do, so they could persevere when it got really tough.
And the ones that didn't love it, quit. Because they're sane, right?
Who would put up with this stuff if you don't love it?
So its a lot of hard work and its a lot of worrying constantly.
If you don't love it, you're going to fail.
10/25/11
Trade Up Like Steve Jobs
How Beryl Companies CEO Paul Spiegelman took a cue from Apple to charge more for his call center services.
When Steve Jobs and Steve Wozniak founded Apple Computer in 1976, they decided to embark on a premium pricing strategy in an otherwise commoditized industry. Jobs focused on differentiating the Apple product, making the mundane into something more. The rest is history—a $347 billion company with profit margin of more than 21 percent in the most recent fiscal year.
Smaller businesses can make the same choice. Here’s how. As CEO of Beryl, a company that handles hospital interactions with patients (like people calling for physician appointments or clinical advice), we charge more for our product than our competitors. In fact, we are as much as 40 percent more expensive than the rest of our competition. And, we don’t apologize for that.
You may wonder how we pull that off. After all, when you strip away everything else, Beryl is in the call center business, which is known for low margin and high attrition, and often seen as a commodity. Yet we achieve profitability five to six times higher than our competitors, and we sustain it year after year. We invest in our employees and our company "culture," so our staff enjoys what they do and where they work, and, as a result, deliver better, more hands-on service.
Premium pricing isn't about profitability for the sake of profitability. What allows us to charge more is the fact that we offer our hospital customers a better way to maintain relationships with patients, if they choose to pay for it. Here are five tips explaining how we implemented our premium pricing strategy and how you can, too:
1. Articulate your value
It’s up to you to communicate why your product or service costs more. Apple customers pay for unique design, and peace of mind from security concerns. At Beryl, they pay for our culture and customer service. We act as an extension of local health systems, and we assure clients the best people represent their brand. We invest heavily in a community of fun because happy people provide better service. We also invest in recruiting and training people with empathy and compassion, something that is very important in health care.
2. Align your offering to their core objectives.
If you want customers to pay more, it is important to connect your product or service to their most critical strategic initiatives. At Beryl, we do more than just conduct phone calls on behalf of our hospital customers. We also gather real-time data that helps them better understand their customers—patients—and build their business. This is even more essential now that hospital reimbursement for Medicare is tied to the patient experience. Apple did this by reinventing the computer into a device that combined a computer, phone, and music player.
3. Elevate the conversation beyond the product or service you sell.
By attaching your mission to a more global topic, you have the opportunity to connect with clients on a more strategic level. One of The Beryl Companies, The Beryl Institute, generates research and dialogue about one of the most important topics in health care, the patient experience. Similarly, when people commit to the Apple brand, they aren't just buying a computer or a music player or a mobile phone. They are buying into a desire to "Think different," and stay on the cutting edge of technology.
4. Put a price on everything.
If you are more expensive, you should be able to put a price on what your customers receive for their extra expenditure. For example, since Beryl’s calls cost customers $1 more than our competitors do, we're sure to explain that extra dollar: $.20 for better data, $.15 for more extensive training, $.10 for recruiting better people, etc. This helps the customer understand why our business charges more. If your customer cares about the premium features you offer, they'll continue to choose you over the competition. Apple conveys the value of its higher prices by being first to market with new features. The iPhone's debut caught competitors off-guard. The "apps" interface was a superior experience, and its novelty allowed Apple to price it accordingly.
5. Stick to your decision.
Once you become a premium provider, you must commit to it if you intend to maintain your pricing. Sometimes that means turning away potential clients who value low prices over quality services. Negotiating down your price is a slippery slope. Notice that Apple only cuts the price of its products once the next generation is introduced. At Beryl, it is tempting for us to price some of our new services more competitively in order to gain entry into the market. However, we realize that once we go down that path, we can't go back.
Not everyone wants to drive a Cadillac. Not every customer will choose to pay more. No wonder some businesses compete solely on price. But, if your business has a sustainable competitive advantage, like Apple's ownership of creativity and design, or Beryl's impeccable customer service, take a bold step forward and ask the market to place a higher value on it.
When Steve Jobs and Steve Wozniak founded Apple Computer in 1976, they decided to embark on a premium pricing strategy in an otherwise commoditized industry. Jobs focused on differentiating the Apple product, making the mundane into something more. The rest is history—a $347 billion company with profit margin of more than 21 percent in the most recent fiscal year.
Smaller businesses can make the same choice. Here’s how. As CEO of Beryl, a company that handles hospital interactions with patients (like people calling for physician appointments or clinical advice), we charge more for our product than our competitors. In fact, we are as much as 40 percent more expensive than the rest of our competition. And, we don’t apologize for that.
You may wonder how we pull that off. After all, when you strip away everything else, Beryl is in the call center business, which is known for low margin and high attrition, and often seen as a commodity. Yet we achieve profitability five to six times higher than our competitors, and we sustain it year after year. We invest in our employees and our company "culture," so our staff enjoys what they do and where they work, and, as a result, deliver better, more hands-on service.
Premium pricing isn't about profitability for the sake of profitability. What allows us to charge more is the fact that we offer our hospital customers a better way to maintain relationships with patients, if they choose to pay for it. Here are five tips explaining how we implemented our premium pricing strategy and how you can, too:
1. Articulate your value
It’s up to you to communicate why your product or service costs more. Apple customers pay for unique design, and peace of mind from security concerns. At Beryl, they pay for our culture and customer service. We act as an extension of local health systems, and we assure clients the best people represent their brand. We invest heavily in a community of fun because happy people provide better service. We also invest in recruiting and training people with empathy and compassion, something that is very important in health care.
2. Align your offering to their core objectives.
If you want customers to pay more, it is important to connect your product or service to their most critical strategic initiatives. At Beryl, we do more than just conduct phone calls on behalf of our hospital customers. We also gather real-time data that helps them better understand their customers—patients—and build their business. This is even more essential now that hospital reimbursement for Medicare is tied to the patient experience. Apple did this by reinventing the computer into a device that combined a computer, phone, and music player.
3. Elevate the conversation beyond the product or service you sell.
By attaching your mission to a more global topic, you have the opportunity to connect with clients on a more strategic level. One of The Beryl Companies, The Beryl Institute, generates research and dialogue about one of the most important topics in health care, the patient experience. Similarly, when people commit to the Apple brand, they aren't just buying a computer or a music player or a mobile phone. They are buying into a desire to "Think different," and stay on the cutting edge of technology.
4. Put a price on everything.
If you are more expensive, you should be able to put a price on what your customers receive for their extra expenditure. For example, since Beryl’s calls cost customers $1 more than our competitors do, we're sure to explain that extra dollar: $.20 for better data, $.15 for more extensive training, $.10 for recruiting better people, etc. This helps the customer understand why our business charges more. If your customer cares about the premium features you offer, they'll continue to choose you over the competition. Apple conveys the value of its higher prices by being first to market with new features. The iPhone's debut caught competitors off-guard. The "apps" interface was a superior experience, and its novelty allowed Apple to price it accordingly.
5. Stick to your decision.
Once you become a premium provider, you must commit to it if you intend to maintain your pricing. Sometimes that means turning away potential clients who value low prices over quality services. Negotiating down your price is a slippery slope. Notice that Apple only cuts the price of its products once the next generation is introduced. At Beryl, it is tempting for us to price some of our new services more competitively in order to gain entry into the market. However, we realize that once we go down that path, we can't go back.
Not everyone wants to drive a Cadillac. Not every customer will choose to pay more. No wonder some businesses compete solely on price. But, if your business has a sustainable competitive advantage, like Apple's ownership of creativity and design, or Beryl's impeccable customer service, take a bold step forward and ask the market to place a higher value on it.
10/24/11
Quotes
Quotes
-Charity degrades those who receive it and hardens those who dispense it. (Bariness Amandine Lucile Dupin or George Sand)
-One part of knowledge consists in being ignorant of such things that are not worthy of being known. (Crates)
-You can not legislate the poor into prosperity, by legislating wealth away from the wealthy. You can not multiply wealth by dividing it. (Adrian Rogers 1931)
-Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible (Unknown)
-If you don't seize the moment, the moment passes and someone else seizes it.
-Energy and persistence conquer all things. Benjamin Franklin
-The fact is, that to do anything in the world worth doing, we must not stand back shivering and thinking of the cold and danger, but jump in and scramble through as well as we can. Robert Cushing
-If we do not plant knowledge when young, it will give us no shade when we are old. Lord Chesterfield
-He that will not reflect is a ruined man. Asian Proverb
-Be not afraid of growing slowly; be afraid only of standing still. Chinese Proverb
-Try not to become a man of success but a man of value. Albert Einstein
-Every artist was first an amateur. Ralph Waldo Emerson
-The more difficulties one has to encounter, within and without, the more significant and the higher in inspiration his life will be. Horace Bushnell
-Winning isn't everything, but wanting to win is. Vince Lombardi
-Thomas Edison dreamed of a lamp that could be operated by electricity, began where he stood to put his dream into action, and despite more than ten thousand failures, he stood by that dream until he made it a physical reality.
Practical dreamers do not quit. Napoleon Hill
-Those who believe they are exclusively in the right are generally those who achieve something. Aldous Huxley
-Genius begins great works; labor alone finishes them. Joseph Joubert
-Effort only fully releases its reward after a person refuses to quit. Napoleon Hill
-People sometimes attribute my success to my genius; all the genius I know anything about is hard work. Alexander Hamilton
-In prosperity, our friends know us; in adversity, we know our friends. John Churton Collins
-A wise man adapts himself to circumstances as water shapes itself to the vessel that contains it. Chinese Proverb
-What is defeat? Nothing but education; nothing but the first steps to something better. Proverb
-The middle course is the best. Cleobulus
-By associating with wise people you will become wise yourself. Menander
-The more a man knows, the more he forgives. Catherine the Great
-If we are facing in the right direction, all we have to do is keep on walking. Zen Proverb
-When I want to read a novel, I write one. Benjamin Disraeli
-You have enemies? Good. That means you've stood up for something, sometime in your life Winston Churchill
-Never say more than is necessary. Richard Brinsley Sheridan
-You must be the change you wish to see in the world. Mahatma Ghandi
-That which does not kill you makes you stronger. Neitzsche
-I demolish my bridges behind me...then there is no choice but to move forward. Firdtjof Nansen
-Happiness does not depend on outward things, but on the way we see them. Leo Tolstoy
-The shortest way to do many things is to do only one thing at a time. Richard Cech
-We don't live in a world of reality, we live in a world of perceptions. Gerald J. Simmons
-Everybody dies, but not everyone lives.
-Money is a strange business. People who haven't got it aim it strongly. People who have are full of troubles. Ayrton Senna
-I have no idols. I admire work, dedication and competence. Ayrton Senna
-On a given day, a given circumstance, you think you have a limit. And you then go for this limit and you touch this limit, and you think, 'Okay, this is the limit.' As soon as you touch this limit, something happens and you suddenly can go a little bit further. With your mind power, your determination, your instinct, and the experience as well, you can fly very high. Ayrton Senna
-And suddenly I realised that I was no longer driving the car consciously. I was driving it by a kind of instinct, only I was in a different dimension. Ayrton Senna
-Wealthy men can't live in an island that is encircled by poverty. We all breathe the same air. We must give a chance to everyone, at least a basic chance. Ayrton Senna
-I believe in the ability of focusing strongly in something, then you are able to extract even more out of it. It's been like this all my life, and it's been only a question of improving it, and learning more and more and there is almost no end. As you go through you just keep finding more and more. It's very interesting, it's fascinating. Ayrton Senna
-We are made of emotions. We are all looking for emotions, basically. It's only a question of finding the way to experience them. Ayrton Senna
-It's important that the drivers stay together, because in difficult moments we have each other. If we are not together the financial and political interests of the organisers and constructors come to the fore. Ayrton Senna
-If something is hard, it will take two days. If its impossible, it will take another day. Jim Justice (The Justice Group)
-If you can't get it done in 24 hours, you're going to have to work nights. Jim Justice (The Justice Group)
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. (Henry Ford)
He who has the gold makes the rules (The Golden Rule)
We have no government armed in power capable of contending with human
passions unbridled by morality and religion. Our Constitution was made
only for a religious and moral people. It is wholly inadequate for the
government of any other. (John Adams)
Please feel free to critize the quality of my work but do not dare doubt my honesty and integrity. That are and have have been more important to me than winning races. Whan I put on the fia shirt and sit in the stewarts room I feel such a responsibility that I woulnt be biased even if my son would be racing. Enjoy the race. This is a wonderful sport. (Emanual superio)
I’ve learned that two people can look at the exact same thing and see something totally different.
I’ve learned that you cannot make someone love you, all you can do is be someone who can be loved. (Anon)
"When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist." (Dom Helder Camara)
"Work like you don’t need the money, love like you’ve never been hurt, and dance like no one is watching." (Satchel Paige)
"Tension is who you think you should be. Relaxation is who you are." (Chinese Proverb)
"To Speak or NOT to Speak
If it is not truthful and not helpful don't say it
If it is Truthful and not helpful don't say it.
If it is Not truthful and helpful don't say it
If it is both Truthful and Helpful ...Wait for the right time" (Buddhist Quote)
"If you’re going through hell, keep going!" (Winston Churchill)
"The greatest freedom of all - is not having the fear of losing" (Unknown)
"Failure is not in falling down, it's in not getting up again" (Unknown)
"You cannot teach a man anything, you can only help him learn it within himself." (Galileo )
"The only thing necessary for evil to triumph.....is for good men to do nothing." (Winston Churchill)
The Paradoxical Commandments!
People are illogical, unreasonable and self-centered. Love them anyway.
If you do good, people will accuse you of selfish, ulterior motives. Do good anyway.
If you are successful, you win false friends and true enemies. Succeed anyway.
The good you do today will be forgotten tomorrow. Do good anyway.
Honesty and frankness make you vulnerable. Be honest and frank anyway.
The biggest persons with the biggest ideas can be shot down by the smallest persons with the smallest minds. Think big anyway.
People favor underdogs but follow only top dogs. Fight for a few underdogs anyway.
What you spend years building may be destroyed overnight. Build anyway.
People really need help, but may attack you if you do help them. Help them anyway.
Give the world the best you have and you'll get kicked in the teeth. Give the world the best you have anyway.
"Courage is the art of being the only one who knows you're scared to death." (Harold Wilson)
"Press On!
Nothing can take the place of perseverance.
Talent will not. Nothing is more common than unsuccessful men with talent.
Genius will not. Unrewarded genius is almost a proverb.
Education will not. The world is full of educated derelicts.
Persistance and determination alone are omnipotent.
This slogan "Press On" has solved, always will solve, the problems of the human race." (Calvin Coolidge, 30th U.S. President)
"May you live a thousand years, and I a thousand less one day, that I might never know the world without you." (Hungarian Proverb)
"Character is doing the right thing when nobody is looking." (J. C. Watts)
"The only thing I know, is that I know nothing." (Socrates)
"This is my simple religion. There is no need for temples; no need for complicated philosophy. Our own brain, our own heart is our temple; the philosophy is kindness." (The Dalai Lama)
"Life is like a finger, pointing to the Moon. If you look at the finger... you will miss all the heavenly glory." (Enter the Dragon, Bruce Lee tells his pupil)
"When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible, but in the end, they always fall - think of it, ALWAYS." (Mahatma Gandhi)
"The man who moved a mountain is the one who started taking away the small stones." (Old Chinese Proverb)
"I am still learning." (Michelangelo)
"You can tell a great deal about a society by the way they treat their elderly, their prisoners and their pets." (Unknown)
"To life's simple pleasures, and its finer things: may we always have the wisdom to appreciate all of the former, and the means to afford a few of the latter." (Laura L. Hirschfeld)
Only those who risk going too far can possibly know how far they can really go." (T.S. Eliot)
"An extraordinary person is just an ordinary person doing the right thing." (Unknown)
"The meaning of life is to find your gift, the purpose of life is to give it away." (Joy J. Golliver)
Ask yourself always: how can this be done better? (GC Lichtenberg)
One of the most important things in families, both for children and spouses, is never to close off possibilities. (Hazel Hawke)
"If you love something... set it free.
If it returns... you never lost it.
If it disappears and never comes back.
It was never yours to begin with." (Anon)
"When prosperity comes, do not use all of it." (Confucius (551-479 BC))
"Of all things which wisdom provides to make life entirely happy, much the greatest is the possession of friendship." (Epicurus (341-270 BC))
"If we lose kindness and affection from our life, we have lost all that gives it charm." (Marcus Tulius Cicero (106-53 BC))
"True friendship is a plant of slow growth, and must undergo and withstand the shocks of adversity before it is entitled to the appellation." (George Washington)
"See everything. Overlook a great deal. Improve a little." (Pope John XXIII)
"If you weep because the sun has set, your own tears will never let you see the stars." (Hindu Proverb)
"However true love is, true friendship is rarer." (Unknown)
"The one thing we can give and still keep is our word." (Unknown)
".....Don't try to keep up with the Joneses, bring them down to your level - it's much cheaper ..." (Quentin Crisp)
"No one can make you feel inferior without your consent." (Eleanor Roosevelt)
"There are two things to aim at in life: First, to get what you want; and, after that, to enjoy it. Only the wisest of mankind achieve the second." (Logan Pearsall Smith)
"We are what we think. All that we are arises with our thoughts. With our thoughts, we make the world." (Buddha)
"Live with great expectations and great things will happen." (Art Fettig)
"As soon as you trust yourself, you will know how to live." (Goethe)
"When you run out of red, use blue!" (Pablo Picasso on flexibility and imagination)
"All children behave as well as they are treated." (Jan Hunt)
Thats what life is, a bunch of dreams, and you do what you can to try to make them happen. (Jeb Corliss - Professional Base Jumper - Squirell suit guy)
There are no limits, only the one you place on yourself. (Jeb Corliss - Professional Base Jumper - Squirell suit guy)
Your life is the way it is today because of you own actions and the decisions you have made.
Money does not change a person. It reveals who they really are.
"Take a lesson from the music industry and don't spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that."
"He dropped me off, and he was like, 'Go! Live your life. I'm very proud of you.' And, 'Have a great time!'" she revealed. (Jack Nicholoson said to Lorraine Nicholson, Daughter)
"Well, he always tells me to look people in the eye and tell the truth and that's what I sort of tried to bring to this role," she said. (Jack Nicholoson said to Lorraine Nicholson, Daughter)
Children don't always listen, but they always watch.
-Charity degrades those who receive it and hardens those who dispense it. (Bariness Amandine Lucile Dupin or George Sand)
-One part of knowledge consists in being ignorant of such things that are not worthy of being known. (Crates)
-You can not legislate the poor into prosperity, by legislating wealth away from the wealthy. You can not multiply wealth by dividing it. (Adrian Rogers 1931)
-Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible (Unknown)
-If you don't seize the moment, the moment passes and someone else seizes it.
-Energy and persistence conquer all things. Benjamin Franklin
-The fact is, that to do anything in the world worth doing, we must not stand back shivering and thinking of the cold and danger, but jump in and scramble through as well as we can. Robert Cushing
-If we do not plant knowledge when young, it will give us no shade when we are old. Lord Chesterfield
-He that will not reflect is a ruined man. Asian Proverb
-Be not afraid of growing slowly; be afraid only of standing still. Chinese Proverb
-Try not to become a man of success but a man of value. Albert Einstein
-Every artist was first an amateur. Ralph Waldo Emerson
-The more difficulties one has to encounter, within and without, the more significant and the higher in inspiration his life will be. Horace Bushnell
-Winning isn't everything, but wanting to win is. Vince Lombardi
-Thomas Edison dreamed of a lamp that could be operated by electricity, began where he stood to put his dream into action, and despite more than ten thousand failures, he stood by that dream until he made it a physical reality.
Practical dreamers do not quit. Napoleon Hill
-Those who believe they are exclusively in the right are generally those who achieve something. Aldous Huxley
-Genius begins great works; labor alone finishes them. Joseph Joubert
-Effort only fully releases its reward after a person refuses to quit. Napoleon Hill
-People sometimes attribute my success to my genius; all the genius I know anything about is hard work. Alexander Hamilton
-In prosperity, our friends know us; in adversity, we know our friends. John Churton Collins
-A wise man adapts himself to circumstances as water shapes itself to the vessel that contains it. Chinese Proverb
-What is defeat? Nothing but education; nothing but the first steps to something better. Proverb
-The middle course is the best. Cleobulus
-By associating with wise people you will become wise yourself. Menander
-The more a man knows, the more he forgives. Catherine the Great
-If we are facing in the right direction, all we have to do is keep on walking. Zen Proverb
-When I want to read a novel, I write one. Benjamin Disraeli
-You have enemies? Good. That means you've stood up for something, sometime in your life Winston Churchill
-Never say more than is necessary. Richard Brinsley Sheridan
-You must be the change you wish to see in the world. Mahatma Ghandi
-That which does not kill you makes you stronger. Neitzsche
-I demolish my bridges behind me...then there is no choice but to move forward. Firdtjof Nansen
-Happiness does not depend on outward things, but on the way we see them. Leo Tolstoy
-The shortest way to do many things is to do only one thing at a time. Richard Cech
-We don't live in a world of reality, we live in a world of perceptions. Gerald J. Simmons
-Everybody dies, but not everyone lives.
-Money is a strange business. People who haven't got it aim it strongly. People who have are full of troubles. Ayrton Senna
-I have no idols. I admire work, dedication and competence. Ayrton Senna
-On a given day, a given circumstance, you think you have a limit. And you then go for this limit and you touch this limit, and you think, 'Okay, this is the limit.' As soon as you touch this limit, something happens and you suddenly can go a little bit further. With your mind power, your determination, your instinct, and the experience as well, you can fly very high. Ayrton Senna
-And suddenly I realised that I was no longer driving the car consciously. I was driving it by a kind of instinct, only I was in a different dimension. Ayrton Senna
-Wealthy men can't live in an island that is encircled by poverty. We all breathe the same air. We must give a chance to everyone, at least a basic chance. Ayrton Senna
-I believe in the ability of focusing strongly in something, then you are able to extract even more out of it. It's been like this all my life, and it's been only a question of improving it, and learning more and more and there is almost no end. As you go through you just keep finding more and more. It's very interesting, it's fascinating. Ayrton Senna
-We are made of emotions. We are all looking for emotions, basically. It's only a question of finding the way to experience them. Ayrton Senna
-It's important that the drivers stay together, because in difficult moments we have each other. If we are not together the financial and political interests of the organisers and constructors come to the fore. Ayrton Senna
-If something is hard, it will take two days. If its impossible, it will take another day. Jim Justice (The Justice Group)
-If you can't get it done in 24 hours, you're going to have to work nights. Jim Justice (The Justice Group)
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. (Henry Ford)
He who has the gold makes the rules (The Golden Rule)
We have no government armed in power capable of contending with human
passions unbridled by morality and religion. Our Constitution was made
only for a religious and moral people. It is wholly inadequate for the
government of any other. (John Adams)
Please feel free to critize the quality of my work but do not dare doubt my honesty and integrity. That are and have have been more important to me than winning races. Whan I put on the fia shirt and sit in the stewarts room I feel such a responsibility that I woulnt be biased even if my son would be racing. Enjoy the race. This is a wonderful sport. (Emanual superio)
I’ve learned that two people can look at the exact same thing and see something totally different.
I’ve learned that you cannot make someone love you, all you can do is be someone who can be loved. (Anon)
"When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist." (Dom Helder Camara)
"Work like you don’t need the money, love like you’ve never been hurt, and dance like no one is watching." (Satchel Paige)
"Tension is who you think you should be. Relaxation is who you are." (Chinese Proverb)
"To Speak or NOT to Speak
If it is not truthful and not helpful don't say it
If it is Truthful and not helpful don't say it.
If it is Not truthful and helpful don't say it
If it is both Truthful and Helpful ...Wait for the right time" (Buddhist Quote)
"If you’re going through hell, keep going!" (Winston Churchill)
"The greatest freedom of all - is not having the fear of losing" (Unknown)
"Failure is not in falling down, it's in not getting up again" (Unknown)
"You cannot teach a man anything, you can only help him learn it within himself." (Galileo )
"The only thing necessary for evil to triumph.....is for good men to do nothing." (Winston Churchill)
The Paradoxical Commandments!
People are illogical, unreasonable and self-centered. Love them anyway.
If you do good, people will accuse you of selfish, ulterior motives. Do good anyway.
If you are successful, you win false friends and true enemies. Succeed anyway.
The good you do today will be forgotten tomorrow. Do good anyway.
Honesty and frankness make you vulnerable. Be honest and frank anyway.
The biggest persons with the biggest ideas can be shot down by the smallest persons with the smallest minds. Think big anyway.
People favor underdogs but follow only top dogs. Fight for a few underdogs anyway.
What you spend years building may be destroyed overnight. Build anyway.
People really need help, but may attack you if you do help them. Help them anyway.
Give the world the best you have and you'll get kicked in the teeth. Give the world the best you have anyway.
"Courage is the art of being the only one who knows you're scared to death." (Harold Wilson)
"Press On!
Nothing can take the place of perseverance.
Talent will not. Nothing is more common than unsuccessful men with talent.
Genius will not. Unrewarded genius is almost a proverb.
Education will not. The world is full of educated derelicts.
Persistance and determination alone are omnipotent.
This slogan "Press On" has solved, always will solve, the problems of the human race." (Calvin Coolidge, 30th U.S. President)
"May you live a thousand years, and I a thousand less one day, that I might never know the world without you." (Hungarian Proverb)
"Character is doing the right thing when nobody is looking." (J. C. Watts)
"The only thing I know, is that I know nothing." (Socrates)
"This is my simple religion. There is no need for temples; no need for complicated philosophy. Our own brain, our own heart is our temple; the philosophy is kindness." (The Dalai Lama)
"Life is like a finger, pointing to the Moon. If you look at the finger... you will miss all the heavenly glory." (Enter the Dragon, Bruce Lee tells his pupil)
"When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible, but in the end, they always fall - think of it, ALWAYS." (Mahatma Gandhi)
"The man who moved a mountain is the one who started taking away the small stones." (Old Chinese Proverb)
"I am still learning." (Michelangelo)
"You can tell a great deal about a society by the way they treat their elderly, their prisoners and their pets." (Unknown)
"To life's simple pleasures, and its finer things: may we always have the wisdom to appreciate all of the former, and the means to afford a few of the latter." (Laura L. Hirschfeld)
Only those who risk going too far can possibly know how far they can really go." (T.S. Eliot)
"An extraordinary person is just an ordinary person doing the right thing." (Unknown)
"The meaning of life is to find your gift, the purpose of life is to give it away." (Joy J. Golliver)
Ask yourself always: how can this be done better? (GC Lichtenberg)
One of the most important things in families, both for children and spouses, is never to close off possibilities. (Hazel Hawke)
"If you love something... set it free.
If it returns... you never lost it.
If it disappears and never comes back.
It was never yours to begin with." (Anon)
"When prosperity comes, do not use all of it." (Confucius (551-479 BC))
"Of all things which wisdom provides to make life entirely happy, much the greatest is the possession of friendship." (Epicurus (341-270 BC))
"If we lose kindness and affection from our life, we have lost all that gives it charm." (Marcus Tulius Cicero (106-53 BC))
"True friendship is a plant of slow growth, and must undergo and withstand the shocks of adversity before it is entitled to the appellation." (George Washington)
"See everything. Overlook a great deal. Improve a little." (Pope John XXIII)
"If you weep because the sun has set, your own tears will never let you see the stars." (Hindu Proverb)
"However true love is, true friendship is rarer." (Unknown)
"The one thing we can give and still keep is our word." (Unknown)
".....Don't try to keep up with the Joneses, bring them down to your level - it's much cheaper ..." (Quentin Crisp)
"No one can make you feel inferior without your consent." (Eleanor Roosevelt)
"There are two things to aim at in life: First, to get what you want; and, after that, to enjoy it. Only the wisest of mankind achieve the second." (Logan Pearsall Smith)
"We are what we think. All that we are arises with our thoughts. With our thoughts, we make the world." (Buddha)
"Live with great expectations and great things will happen." (Art Fettig)
"As soon as you trust yourself, you will know how to live." (Goethe)
"When you run out of red, use blue!" (Pablo Picasso on flexibility and imagination)
"All children behave as well as they are treated." (Jan Hunt)
Thats what life is, a bunch of dreams, and you do what you can to try to make them happen. (Jeb Corliss - Professional Base Jumper - Squirell suit guy)
There are no limits, only the one you place on yourself. (Jeb Corliss - Professional Base Jumper - Squirell suit guy)
Your life is the way it is today because of you own actions and the decisions you have made.
Money does not change a person. It reveals who they really are.
"Take a lesson from the music industry and don't spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that."
"He dropped me off, and he was like, 'Go! Live your life. I'm very proud of you.' And, 'Have a great time!'" she revealed. (Jack Nicholoson said to Lorraine Nicholson, Daughter)
"Well, he always tells me to look people in the eye and tell the truth and that's what I sort of tried to bring to this role," she said. (Jack Nicholoson said to Lorraine Nicholson, Daughter)
Children don't always listen, but they always watch.
10/19/11
Goal Setting Starts at the Top and Cascades Down to the Employees
Setting and cascading goals throughout the organization is vital to achieving company objectives. Before you can expect employees to set goals, however, you'll need to set company goals.
When defining goals, you’ll want to make sure they meet the SMART criteria:
Specific: A specific goal has a much greater chance of being accomplished than a general goal.
Measurable: Establish concrete criteria for measuring progress toward the attainment of each goal you set.
Attainable: It should be a stretch to reach the goal, but not so much so that it’s out of reach.
Realistic: What it takes to do to achieve the goal should be within the availability of resources, knowledge and time.
Timely: The goals should have a clearly defined time-frame including a target completion date.
Using the SMART criteria above, you should determine 3-5 goals that are tied to success measures of the company. Oftentimes they are financial, business development, process development or customer satisfaction measures. Once the Company Goals are determined, they should be communicated throughout the Company. Using a company-wide venue (all company meeting, webcast, e-mail, etc.) to share the goals will ensure that all employees hear the same consistent message. Once communicated, these goals become the framework that shape departmental and individual goals. Hence the goals are cascaded as Company Goals to Departmental Goals to Individual Goals. Setting goals at the department and employee level ensures that the day-to-day work is tied to the overall success of the company. Connecting the goals to the Performance Management Process, whereby you can assess an employee’s attainment vs. their goals on a quarterly, semi-annual, or annual basis will further enforce employee goals and get you further down the road towards attaining your company goals.
Check-in on the goals a few times throughout the year. It doesn’t have to be a formal process… just a quick conversation to review the goals to make sure they still make sense. As business and company conditions change, be sure to review the goals to make any adjustments accordingly.
When defining goals, you’ll want to make sure they meet the SMART criteria:
Specific: A specific goal has a much greater chance of being accomplished than a general goal.
Measurable: Establish concrete criteria for measuring progress toward the attainment of each goal you set.
Attainable: It should be a stretch to reach the goal, but not so much so that it’s out of reach.
Realistic: What it takes to do to achieve the goal should be within the availability of resources, knowledge and time.
Timely: The goals should have a clearly defined time-frame including a target completion date.
Using the SMART criteria above, you should determine 3-5 goals that are tied to success measures of the company. Oftentimes they are financial, business development, process development or customer satisfaction measures. Once the Company Goals are determined, they should be communicated throughout the Company. Using a company-wide venue (all company meeting, webcast, e-mail, etc.) to share the goals will ensure that all employees hear the same consistent message. Once communicated, these goals become the framework that shape departmental and individual goals. Hence the goals are cascaded as Company Goals to Departmental Goals to Individual Goals. Setting goals at the department and employee level ensures that the day-to-day work is tied to the overall success of the company. Connecting the goals to the Performance Management Process, whereby you can assess an employee’s attainment vs. their goals on a quarterly, semi-annual, or annual basis will further enforce employee goals and get you further down the road towards attaining your company goals.
Check-in on the goals a few times throughout the year. It doesn’t have to be a formal process… just a quick conversation to review the goals to make sure they still make sense. As business and company conditions change, be sure to review the goals to make any adjustments accordingly.
Two Words Matter -- Make Them Count!
As the boss, you don't get much applause on a day-to-day basis. Unless you've hired a circle of yes men to sing your praises, life as an entrepreneur means receiving very little recognition for something you do very well. “Thank you” are two words you're just not accustomed to hearing often.
If you're like me, you don't need constant pats on the back to keep running your business and always reaching for the next big goal. But your staff probably isn't like you. The thrill of reaching (and exceeding) goals with limited resources isn't what keeps them coming in every day. It's those two little words that can make the difference between employees walking out the door or staying a little late to go above and beyond.
The truth is that recognizing your employees for all the contributions they make to your company is one of the most important tasks you can do every day. Simple, sincere “thank yous” are one of the most valuable retention methods you have at your disposal, and they don't cost a thing.
According to a 2007 Florida State University study, 40% of employees leave their jobs due to “bad bosses,” not the desire to switch industries, grow in their careers, or earn more money. You're probably thinking that not recognizing employee achievement does not necessarily a bad boss make, especially if you've watched Horrible Bosses. But the number-2 reason people ditch their bad bosses is the result of supervisors who “failed to give them credit when due.”
I don't know about you, but in this tough economy when workers nationwide are doing so much extra work without additional compensation, my company can't afford to replace talented employees simply because my managers and I aren't taking the time to acknowledge our employees' dedication and achievements. So I start with thank you and then make it stick by making it personal. Handwritten notes recognizing extra-effort, anniversaries and birthdays go a long way. You’ll know it when you start to see them pop up on your employees’ desks and bulletin boards – proudly posted for their coworkers to see.
If you have or are thinking about a formal recognition program that includes additional cash incentives – try personalizing those as well. You will get far more bang for your gratitude buck by making it memorable. Let’s face it -- if you give your employee a $500 bonus, $350 will end up paying for groceries, bills or other ordinary expenses. But what if instead, you knew your employee loved Kenny Chesney and ordered a limo and front row seats for her and her spouse to Chesney’s new concert? Suddenly you’ve done more than say thanks – you’ve created a memory that shows you know and care about her. As your mother once said – it’s the thought that counts. A thoughtful, personal “thank you” will have a lasting lift that will garner a greater level of loyalty.
Don’t stop there. You can also personalize team “thank yous” in a cost-effective way. Your customer care team doing a great job? Bring in breakfast – or better yet, make them breakfast! It is a great way to start the day and by serving them you are clearly demonstrating that you care.
Again, increasing morale and productivity doesn't have to cost an arm and a leg. At SurePayroll, we say thanks in a number of ways like:
• handwriting personal notes.
• sharing letters of praise with the entire company.
• personalizing quarterly recognition and gift certificates for outstanding employee contributions.
• catering lunches and providing desk-side delivery of snacks such as ice cream, popcorn or candy bars during our busiest payroll-processing days. Sometimes I do the serving!
• celebrating employees at an annual awards ceremony thanking employees for their hard work and honoring the best new mistake.
Like the golden rule – know your customers, you should know your employees. Words matter – especially simple words like thank you. To help retain employees, boost morale, and inspire innovation add that personal touch to your “thank you” and make it matter even more!
http://www.inc.com/michael-alter/two-words-matter-%E2%80%93-make-them-count!.html
If you're like me, you don't need constant pats on the back to keep running your business and always reaching for the next big goal. But your staff probably isn't like you. The thrill of reaching (and exceeding) goals with limited resources isn't what keeps them coming in every day. It's those two little words that can make the difference between employees walking out the door or staying a little late to go above and beyond.
The truth is that recognizing your employees for all the contributions they make to your company is one of the most important tasks you can do every day. Simple, sincere “thank yous” are one of the most valuable retention methods you have at your disposal, and they don't cost a thing.
According to a 2007 Florida State University study, 40% of employees leave their jobs due to “bad bosses,” not the desire to switch industries, grow in their careers, or earn more money. You're probably thinking that not recognizing employee achievement does not necessarily a bad boss make, especially if you've watched Horrible Bosses. But the number-2 reason people ditch their bad bosses is the result of supervisors who “failed to give them credit when due.”
I don't know about you, but in this tough economy when workers nationwide are doing so much extra work without additional compensation, my company can't afford to replace talented employees simply because my managers and I aren't taking the time to acknowledge our employees' dedication and achievements. So I start with thank you and then make it stick by making it personal. Handwritten notes recognizing extra-effort, anniversaries and birthdays go a long way. You’ll know it when you start to see them pop up on your employees’ desks and bulletin boards – proudly posted for their coworkers to see.
If you have or are thinking about a formal recognition program that includes additional cash incentives – try personalizing those as well. You will get far more bang for your gratitude buck by making it memorable. Let’s face it -- if you give your employee a $500 bonus, $350 will end up paying for groceries, bills or other ordinary expenses. But what if instead, you knew your employee loved Kenny Chesney and ordered a limo and front row seats for her and her spouse to Chesney’s new concert? Suddenly you’ve done more than say thanks – you’ve created a memory that shows you know and care about her. As your mother once said – it’s the thought that counts. A thoughtful, personal “thank you” will have a lasting lift that will garner a greater level of loyalty.
Don’t stop there. You can also personalize team “thank yous” in a cost-effective way. Your customer care team doing a great job? Bring in breakfast – or better yet, make them breakfast! It is a great way to start the day and by serving them you are clearly demonstrating that you care.
Again, increasing morale and productivity doesn't have to cost an arm and a leg. At SurePayroll, we say thanks in a number of ways like:
• handwriting personal notes.
• sharing letters of praise with the entire company.
• personalizing quarterly recognition and gift certificates for outstanding employee contributions.
• catering lunches and providing desk-side delivery of snacks such as ice cream, popcorn or candy bars during our busiest payroll-processing days. Sometimes I do the serving!
• celebrating employees at an annual awards ceremony thanking employees for their hard work and honoring the best new mistake.
Like the golden rule – know your customers, you should know your employees. Words matter – especially simple words like thank you. To help retain employees, boost morale, and inspire innovation add that personal touch to your “thank you” and make it matter even more!
http://www.inc.com/michael-alter/two-words-matter-%E2%80%93-make-them-count!.html
10/11/11
How to get Cold Call Results
No one likes cold calling. But are you missing an opportunity to increase your bottom line AND have some fun?
Cold calling and telephone prospecting are not a favorite activity for the majority of us. In fact, most will avoid the task – which is fine, as long as you have other powerful marketing tactics in place. Certainly with the development of social media we have other means to market our wares, but many business models still benefit from the power of good old-fashioned cold calling.
Many sales experts now dispute the effectiveness of cold calling but I’ve worked with quite a few successful business owners who credit this daunting process for much of their sales success. And certainly the large majority of highly successful network marketers turn to their call lists when revenues need a boost. Network marketing organizations suggest cold calling as the primary means to build your business, but it’s not always that simple.
The sad truth is that most people give up on their commitment to the process after a single “no”. Cold calling is filled with rejection and anticipation of conflict, but does it have to be interpreted in this way? Is a “no” really a personal rejection? I don’t think so; after all doesn’t a person have to know something about you to reject you personally? When the recipient of your phone call says no, they are referring to your offer, not you.
Still, it can be a tough pill to swallow so why not make it a team effort, a friendly competition and a positive experience? That’s what this creative entrepreneur does to keep her sales team happy and her business thriving.
Dawn Gluskin, Founder and CEO of Florida based Soltec Electronics, actually likes cold calling. She views it as a competitive sport and shares her enthusiasm with her staff of four sales reps. “Not many people, even sales reps, look forward to cold calling,” Dawn acknowledges. “So we created the Cold Call Power Hour at Soltec. Why not make it fun and learn from the process?”
Twice a week Dawn and her sales team meet in the Soltec sales room manned with phones and call lists. No email access, no incoming calls to disrupt the process; only a determined attitude and an hour of getting into the cold calling groove.
“Hearing one another’s approach is very helpful and seeing top sales people get 'rejected' or encounter someone with an unfriendly attitude helps the less experienced reps see it happens to everyone,” says Gluskin. “We just keep going, build momentum and enjoy the results.”
Each of Soltec’s team members come to the Power Hour with a focus. “Don’t just pick up the phone and make random calls,” suggests Gluskin. “Create a targeted list of people who haven’t bought in six months, people in a specific geographic area or a certain type of business. This approach assists you in staying focused and creating a groove,” she says.
Dawn and her team see great results from their twice weekly Cold Calling Power Hour events. They even keep a chart in the conference room to show their new accounts and create a friendly competition. “We alwayshttp://www.blogger.com/img/blank.gif get at least one strong lead and one of our reps even made a sale right on the phone during a recent Power Hour,” Dawn says. Participation is mandatory and it’s a date that everyone keeps. Certainly, the results reflect this dedication. Soltec Electronics has enjoyed a sizeable increase in sales since implementing the Power Hour process.
Of course, as a solopreneur, you don’t necessarily have a team of sales reps – or a conference room for that matter. BUT, you do have peers who are faced with the same aversion to telephone prospecting. Why not begin a weekly Power Hour of your own? Gather a small group of soloists and support one another in getting in the groove and getting results!
http://www.inc.com/marla-tabaka/how-to-get-cold-call-results.html
Cold calling and telephone prospecting are not a favorite activity for the majority of us. In fact, most will avoid the task – which is fine, as long as you have other powerful marketing tactics in place. Certainly with the development of social media we have other means to market our wares, but many business models still benefit from the power of good old-fashioned cold calling.
Many sales experts now dispute the effectiveness of cold calling but I’ve worked with quite a few successful business owners who credit this daunting process for much of their sales success. And certainly the large majority of highly successful network marketers turn to their call lists when revenues need a boost. Network marketing organizations suggest cold calling as the primary means to build your business, but it’s not always that simple.
The sad truth is that most people give up on their commitment to the process after a single “no”. Cold calling is filled with rejection and anticipation of conflict, but does it have to be interpreted in this way? Is a “no” really a personal rejection? I don’t think so; after all doesn’t a person have to know something about you to reject you personally? When the recipient of your phone call says no, they are referring to your offer, not you.
Still, it can be a tough pill to swallow so why not make it a team effort, a friendly competition and a positive experience? That’s what this creative entrepreneur does to keep her sales team happy and her business thriving.
Dawn Gluskin, Founder and CEO of Florida based Soltec Electronics, actually likes cold calling. She views it as a competitive sport and shares her enthusiasm with her staff of four sales reps. “Not many people, even sales reps, look forward to cold calling,” Dawn acknowledges. “So we created the Cold Call Power Hour at Soltec. Why not make it fun and learn from the process?”
Twice a week Dawn and her sales team meet in the Soltec sales room manned with phones and call lists. No email access, no incoming calls to disrupt the process; only a determined attitude and an hour of getting into the cold calling groove.
“Hearing one another’s approach is very helpful and seeing top sales people get 'rejected' or encounter someone with an unfriendly attitude helps the less experienced reps see it happens to everyone,” says Gluskin. “We just keep going, build momentum and enjoy the results.”
Each of Soltec’s team members come to the Power Hour with a focus. “Don’t just pick up the phone and make random calls,” suggests Gluskin. “Create a targeted list of people who haven’t bought in six months, people in a specific geographic area or a certain type of business. This approach assists you in staying focused and creating a groove,” she says.
Dawn and her team see great results from their twice weekly Cold Calling Power Hour events. They even keep a chart in the conference room to show their new accounts and create a friendly competition. “We alwayshttp://www.blogger.com/img/blank.gif get at least one strong lead and one of our reps even made a sale right on the phone during a recent Power Hour,” Dawn says. Participation is mandatory and it’s a date that everyone keeps. Certainly, the results reflect this dedication. Soltec Electronics has enjoyed a sizeable increase in sales since implementing the Power Hour process.
Of course, as a solopreneur, you don’t necessarily have a team of sales reps – or a conference room for that matter. BUT, you do have peers who are faced with the same aversion to telephone prospecting. Why not begin a weekly Power Hour of your own? Gather a small group of soloists and support one another in getting in the groove and getting results!
http://www.inc.com/marla-tabaka/how-to-get-cold-call-results.html
General Stanley McChrystal: Plywood Leadership
How are flimsy pieces of wood like the employees in your organization? The man who led coalition forces in Afghanistan explains why "plywood is a state of mind."
It's rare to see someone get worked up about plywood. Much less a four-star general.
But plywood, yes, those simple sheets of pressed-together timber used to cover floorboards and broken windows, is a particular topic of passion for Gen. Stanley McChrystal, the retired U.S. Army general who served as commander of all U.S. and NATO forces in Afghanistan.
What gives?
"I'll let you in on the secret of plywood," McChrystal said to an audience of about 400 at the 2011 Inc. 500|5000 conference in Washington, D.C. "I lived in a room of it for more than four years. What we did in Afghanistan was we used our spaces to shape our culture."
The "plywood palace," as McChrystal has dubbed the multi-story makeshift office he and others inhabited, was built entirely out of two-by-fours and plywood. And that served their hearts and minds well.
"The beauty is we made this thing when you came in you didn't have to wipe your boots," he said. "When you're in there…you weren't in there thinking 'oh I'm in a nice cushy office, this is great.' You were thinking the guy out in the field had it better."
But his love of plywood runs deeper than dirt on boots. He explained:
Plywood's got a zen-like element to it, at least it does to me. cause when you thinkabout plywood—hopefully you spend a lot of time thinking about plywood—the sheets of plywood are just thin little sort of lousy lumber. You could take your hands and break any one of them. By themselves, they don't have a lot of utility. But when you glue em together suddenly it's stong, it's versitle. If you glue a lot of them together, it's expensive. But if you think about it, compare it to your organization. We build organizations out of normal people. We try to hire the best people, but guess what? We get normal people. Hopes and fears, strengths and weaknesses, problems. By themselves, they're like that piece of plywood; any one of them can break pretty easily. But if they're glued together, then I think they become something special.
To effectively lead a team of real people, you need to press and glue those plywood people together, and make something really strong, McChrystal said.
"And I think leadership is the glue," he said.
"That's why I believe—you can quote this," he said. "Plywood is a state of mind."
http://www.inc.com/articles/201110/stanley-mcchrystal-plywood-leadership.html
It's rare to see someone get worked up about plywood. Much less a four-star general.
But plywood, yes, those simple sheets of pressed-together timber used to cover floorboards and broken windows, is a particular topic of passion for Gen. Stanley McChrystal, the retired U.S. Army general who served as commander of all U.S. and NATO forces in Afghanistan.
What gives?
"I'll let you in on the secret of plywood," McChrystal said to an audience of about 400 at the 2011 Inc. 500|5000 conference in Washington, D.C. "I lived in a room of it for more than four years. What we did in Afghanistan was we used our spaces to shape our culture."
The "plywood palace," as McChrystal has dubbed the multi-story makeshift office he and others inhabited, was built entirely out of two-by-fours and plywood. And that served their hearts and minds well.
"The beauty is we made this thing when you came in you didn't have to wipe your boots," he said. "When you're in there…you weren't in there thinking 'oh I'm in a nice cushy office, this is great.' You were thinking the guy out in the field had it better."
But his love of plywood runs deeper than dirt on boots. He explained:
Plywood's got a zen-like element to it, at least it does to me. cause when you thinkabout plywood—hopefully you spend a lot of time thinking about plywood—the sheets of plywood are just thin little sort of lousy lumber. You could take your hands and break any one of them. By themselves, they don't have a lot of utility. But when you glue em together suddenly it's stong, it's versitle. If you glue a lot of them together, it's expensive. But if you think about it, compare it to your organization. We build organizations out of normal people. We try to hire the best people, but guess what? We get normal people. Hopes and fears, strengths and weaknesses, problems. By themselves, they're like that piece of plywood; any one of them can break pretty easily. But if they're glued together, then I think they become something special.
To effectively lead a team of real people, you need to press and glue those plywood people together, and make something really strong, McChrystal said.
"And I think leadership is the glue," he said.
"That's why I believe—you can quote this," he said. "Plywood is a state of mind."
http://www.inc.com/articles/201110/stanley-mcchrystal-plywood-leadership.html
How to Beat the Defensive Pricing Game
Are your competitors lowering prices? Here's how to beat them at their own game.
It’s a familiar story: A company begins to use defensive pricing when a competitor has reduced its market share. The competitor lowers prices. The other firm counters with further reduced figures. A back-and-forth contest develops with each player upping the ante, like a poker game.
In this economy, a price war’s greatest danger is lowering yourself right out of business. This game can pose such danger that some small businesses take action. For example, Kennesaw, Georgia-based Flip Flop Shop founder Brian Curin will pull a franchisee’s license if a store engages in defensive pricing. Once they hang a sale sign next to a pair of those beach-ready kicks, costumers will always expect it.
“I don’t think people realize how quick a consumer habit can form,” Curin says. “Once they’ve got that discount ticket in their hand – that golden ticket to get something cheaper – once you give that, it’s really hard to get your consumer base to pay full price.”
Here, experts reveal 3 basic strategies for avoiding defensive pricing, while still remaining competitive.
Re-evaluate and improve your business model. But if you’re considering defensive pricing, it means some part of your business model contains a flaw, says Leonard Lodish, a professor at the University of Pennsylvania’s Wharton School. “It’s an indication that you don’t have enough of a perception of being better than your competition that you can use to go forward,” he says.
Review each step of your supply chain from beginning to end. Something has caused your customers to grow dissatisfied. Perhaps you need increased marketing or a new ad campaign. Or it could be a problem with customer service at the store.
To find the problem, you might use an in-store customer survey, or check out your online reviews. “You need to find what people are saying about you,” Lodish says.
Cut costs where the competition can't. When you reduce prices, you decrease profits and shrink margins. Right away, this decreases any significant opportunity for growth or innovation. It also means you might have trouble with this month’s rent. A business needs deep pockets to win at defensive pricing, says Ari Ginsberg, a New York University management professor.
“But if you’re dealing with another competitor that has equally deep pockets, then they can play the same game as you. And then you’re screwed because you lost money, but you didn’t necessarily gain the market share,” Ginsberg says.
He says should examine whether you can cut costs where your competitor can’t, but avoid sacrificing quality. An inferior product will just drive customers to that competitor.
“If customers have a bad experience, and they’re used to having a good experience, especially these days, they’ll go everywhere to complain about. And then it’s going to take a long time, and a very heavy investment in marketing, to gain their trust back,” Ginsberg says.
You might also consider raising the cost of a complementary good or service. Take a gas station for example. If it engages in a price war, lowering gas prices, the owner might raise the price of slushees or cold drinks, says Charles H. Green, the Small Business Finance Institute’s executive director. The increased price for slushees and cold drinks boosts revenues, negating some of that profit lost in the price war.
Go low, but not for everyone and everything. Lowering all your prices without desecration makes little since. You might make the reduced price available for only a limited time. Or maybe only a select clientele – new customers perhaps – will receive this special pricing. You will need to balance this carefully though. If you show favoritism toward new customers, your old ones will soon grow restless.
You should also know your limits from the outset. At MonoMotors, an office supplies e-retailer, owner Isaac de la Fuente knows how far he’ll bend in a price game.
“We have competitors that will lower their price by a $1. And then we’ll lower our price by a $1. We have a philosophy of that we know our margins. We play that game … up to a certain margin,” de la Fuente says.
http://www.inc.com/guides/201110/how-to-beat-the-defensive-pricing-game.html
It’s a familiar story: A company begins to use defensive pricing when a competitor has reduced its market share. The competitor lowers prices. The other firm counters with further reduced figures. A back-and-forth contest develops with each player upping the ante, like a poker game.
In this economy, a price war’s greatest danger is lowering yourself right out of business. This game can pose such danger that some small businesses take action. For example, Kennesaw, Georgia-based Flip Flop Shop founder Brian Curin will pull a franchisee’s license if a store engages in defensive pricing. Once they hang a sale sign next to a pair of those beach-ready kicks, costumers will always expect it.
“I don’t think people realize how quick a consumer habit can form,” Curin says. “Once they’ve got that discount ticket in their hand – that golden ticket to get something cheaper – once you give that, it’s really hard to get your consumer base to pay full price.”
Here, experts reveal 3 basic strategies for avoiding defensive pricing, while still remaining competitive.
Re-evaluate and improve your business model. But if you’re considering defensive pricing, it means some part of your business model contains a flaw, says Leonard Lodish, a professor at the University of Pennsylvania’s Wharton School. “It’s an indication that you don’t have enough of a perception of being better than your competition that you can use to go forward,” he says.
Review each step of your supply chain from beginning to end. Something has caused your customers to grow dissatisfied. Perhaps you need increased marketing or a new ad campaign. Or it could be a problem with customer service at the store.
To find the problem, you might use an in-store customer survey, or check out your online reviews. “You need to find what people are saying about you,” Lodish says.
Cut costs where the competition can't. When you reduce prices, you decrease profits and shrink margins. Right away, this decreases any significant opportunity for growth or innovation. It also means you might have trouble with this month’s rent. A business needs deep pockets to win at defensive pricing, says Ari Ginsberg, a New York University management professor.
“But if you’re dealing with another competitor that has equally deep pockets, then they can play the same game as you. And then you’re screwed because you lost money, but you didn’t necessarily gain the market share,” Ginsberg says.
He says should examine whether you can cut costs where your competitor can’t, but avoid sacrificing quality. An inferior product will just drive customers to that competitor.
“If customers have a bad experience, and they’re used to having a good experience, especially these days, they’ll go everywhere to complain about. And then it’s going to take a long time, and a very heavy investment in marketing, to gain their trust back,” Ginsberg says.
You might also consider raising the cost of a complementary good or service. Take a gas station for example. If it engages in a price war, lowering gas prices, the owner might raise the price of slushees or cold drinks, says Charles H. Green, the Small Business Finance Institute’s executive director. The increased price for slushees and cold drinks boosts revenues, negating some of that profit lost in the price war.
Go low, but not for everyone and everything. Lowering all your prices without desecration makes little since. You might make the reduced price available for only a limited time. Or maybe only a select clientele – new customers perhaps – will receive this special pricing. You will need to balance this carefully though. If you show favoritism toward new customers, your old ones will soon grow restless.
You should also know your limits from the outset. At MonoMotors, an office supplies e-retailer, owner Isaac de la Fuente knows how far he’ll bend in a price game.
“We have competitors that will lower their price by a $1. And then we’ll lower our price by a $1. We have a philosophy of that we know our margins. We play that game … up to a certain margin,” de la Fuente says.
http://www.inc.com/guides/201110/how-to-beat-the-defensive-pricing-game.html
9/7/11
The Math Behind Your Company Valuation
What you need to know to increase the value of your business for a financial buyer
Have you ever wondered what a business like yours would sell for?
It's a fair question, but focusing on your valuation is a little bit like a hypertensive person focusing on his or her blood pressure report. To really understand the number–and to move it up or down–you have to understand the calculation.
Financial buyers (I'll save strategic buyers for another column) acquiring a company will usually do some math to figure out what they are willing to pay today for the rights to your business's future profits.
We've all made a similar calculation. For example, you may have decided in the past to invest $100 in a bond that offers 5 percent interest per year; that is, you decided to spend $100 on something that would be worth $105 a year later.
To see how this math affects the value of your business, imagine you have a company that you expect to generate $100,000 in pre-tax profit next year. Buyers looking for a 15 percent return on their money in one year would pay $86,957 ($100,000 divided by 1.15) today for $100,000 a year from now.
When valuing a business, financial buyers will typically value not only the next year's profit, but all expected profits in the foreseeable future. For every year into the future that buyers must wait to get their profits, they will "discount" the future profit you are projecting by the rate of return they expect.
For example, if you project your company will generate $100,000 of profit per year for the next 10 years (sort of a silly example because no company generates exactly $100,000 a year for ten straight years and then nothing in the eleventh year but I'll use it for simplicity), financial buyers would "discount" the $100,000 by 15 percent for each year they have to wait for their money:
Therefore, an investor looking for a 15 percent return on his or her money would pay $501,878 (in MBA parlance, this is called "net present value") today for a business that he or she expects to generate $100,000 a year for the next 10 years.
The price an investor is willing to pay for an asset relates to how risky he or she perceives the future stream of profits to be: the riskier the investment, the higher the return an investor will demand. Today, investors can put their money into relatively safe bonds and get a few percentage points of return, or they can buy a balanced portfolio of big-company stocks and expect perhaps a seven or eight percent return over time.
But when buying one relatively risky business rather than a balanced portfolio, investors will expect a much higher return on their money. For illustrative purposes, imagine an investor is looking for a 50 percent return for buying your business because he or she deems your future stream of profits to be very risky (or the likelihood of you meeting the targets very uncertain). The following table illustrates the effect a 50 percent discount rate has on the value of a business projecting $100,000 in profits per year:
The same business projected to generate $100,000 for the next 10 years is worth less than half as much when, due to perceived risk, the investor demands a return of 50 percent instead of 15 percent.
To understand the relationship between growth potential and value, imagine that, instead of generating a flat $100,000 in profit for the next 10 years, you expect profits to grow by 20 percent each year in the future. The table below illustrates how a financial buyer, looking for a 15 percent return on his or her investment, might value this company.
Note that the only change between this example and the one using a 15 percent return on investment is the projected growth rate. The business expecting a 20 percent growth rate over the next 10 years is worth more than double the business that expects its revenue to remain flat.
In the end, as a business owner, you have three levers to manipulate in order to increase the value of your business for a financial buyer: how much profit you expect to make in the future, the rate of growth of your profit each year, and the degree of risk associated with your future profit stream.
http://www.inc.com/articles/201109/the-math-behind-your-company-valuation.html
Have you ever wondered what a business like yours would sell for?
It's a fair question, but focusing on your valuation is a little bit like a hypertensive person focusing on his or her blood pressure report. To really understand the number–and to move it up or down–you have to understand the calculation.
Financial buyers (I'll save strategic buyers for another column) acquiring a company will usually do some math to figure out what they are willing to pay today for the rights to your business's future profits.
We've all made a similar calculation. For example, you may have decided in the past to invest $100 in a bond that offers 5 percent interest per year; that is, you decided to spend $100 on something that would be worth $105 a year later.
To see how this math affects the value of your business, imagine you have a company that you expect to generate $100,000 in pre-tax profit next year. Buyers looking for a 15 percent return on their money in one year would pay $86,957 ($100,000 divided by 1.15) today for $100,000 a year from now.
When valuing a business, financial buyers will typically value not only the next year's profit, but all expected profits in the foreseeable future. For every year into the future that buyers must wait to get their profits, they will "discount" the future profit you are projecting by the rate of return they expect.
For example, if you project your company will generate $100,000 of profit per year for the next 10 years (sort of a silly example because no company generates exactly $100,000 a year for ten straight years and then nothing in the eleventh year but I'll use it for simplicity), financial buyers would "discount" the $100,000 by 15 percent for each year they have to wait for their money:
| End of year | Pre-tax profit | 15% discount |
| 1 | $100,000 | $86,957 |
| 2 | $100,000 | $75,614 |
| 3 | $100,000 | $65,752 |
| 4 | $100,000 | $57,175 |
| 5 | $100,000 | $49,718 |
| 6 | $100,000 | $43,233 |
| 7 | $100,000 | $37,594 |
| 8 | $100,000 | $32,690 |
| 9 | $100,000 | $28,426 |
| 10 | $100,000 | $24,719 |
| Net present value | $501,878 |
Therefore, an investor looking for a 15 percent return on his or her money would pay $501,878 (in MBA parlance, this is called "net present value") today for a business that he or she expects to generate $100,000 a year for the next 10 years.
The price an investor is willing to pay for an asset relates to how risky he or she perceives the future stream of profits to be: the riskier the investment, the higher the return an investor will demand. Today, investors can put their money into relatively safe bonds and get a few percentage points of return, or they can buy a balanced portfolio of big-company stocks and expect perhaps a seven or eight percent return over time.
But when buying one relatively risky business rather than a balanced portfolio, investors will expect a much higher return on their money. For illustrative purposes, imagine an investor is looking for a 50 percent return for buying your business because he or she deems your future stream of profits to be very risky (or the likelihood of you meeting the targets very uncertain). The following table illustrates the effect a 50 percent discount rate has on the value of a business projecting $100,000 in profits per year:
| End of year | Pre-tax profit | 50% discount |
| 1 | $100,000 | $66,667 |
| 2 | $100,000 | $44,444 |
| 3 | $100,000 | $29,630 |
| 4 | $100,000 | $19,753 |
| 5 | $100,000 | $13,169 |
| 6 | $100,000 | $8,779 |
| 7 | $100,000 | $5,853 |
| 8 | $100,000 | $3,902 |
| 9 | $100,000 | $2,601 |
| 10 | $100,000 | $1,734 |
| Net present value | | $196,532 |
The same business projected to generate $100,000 for the next 10 years is worth less than half as much when, due to perceived risk, the investor demands a return of 50 percent instead of 15 percent.
To understand the relationship between growth potential and value, imagine that, instead of generating a flat $100,000 in profit for the next 10 years, you expect profits to grow by 20 percent each year in the future. The table below illustrates how a financial buyer, looking for a 15 percent return on his or her investment, might value this company.
| End of year | Pre-tax profit growing at 20% per year | 15% discount |
| 1 | $120,000 | $104,348 |
| 2 | $144,000 | $108,885 |
| 3 | $172,800 | $113,619 |
| 4 | $207,360 | $118,559 |
| 5 | $248,832 | $123,714 |
| 6 | $298,598 | $129,092 |
| 7 | $358,318 | $134,705 |
| 8 | $429,982 | $140,562 |
| 9 | $515,978 | $146,673 |
| 10 | $619,174 | $153,050 |
| Net present value | | $1,273,207 |
Note that the only change between this example and the one using a 15 percent return on investment is the projected growth rate. The business expecting a 20 percent growth rate over the next 10 years is worth more than double the business that expects its revenue to remain flat.
In the end, as a business owner, you have three levers to manipulate in order to increase the value of your business for a financial buyer: how much profit you expect to make in the future, the rate of growth of your profit each year, and the degree of risk associated with your future profit stream.
http://www.inc.com/articles/201109/the-math-behind-your-company-valuation.html
9/3/11
The best "out of office email "ever written
You know the worst thing about going on vacation? Writing your out-of-office email message. It's always one of the last things on the to-do list along with buying mini-toothpaste, and it's definitely the least fun.
Do you leave contact information? Do you overstate or undersell said contact information's emergency purposes? Do you point people to a poor, helpless co-worker in your absence who will probably resent you the entire time you're gone? These and many other questions (like, is saying where you're going TMI?) plague me the night before I'm headed out of town.
Thankfully, Gizmodo has provided us neurotics with the perfect specimen of an out-of-office email message. They found a vacation auto-reply of a guy named Josh Kopelman, that will now serve as my model for all future away messages—give or take a few key details. Josh's stroke of genius in full:
I am currently out of the office on vacation.
I know I’m supposed to say that I’ll have limited access to email and won’t be able to respond until I return — but that’s not true. My blackberry will be with me and I can respond if I need to. And I recognize that I’ll probably need to interrupt my vacation from time to time to deal with something urgent.
That said, I promised my wife that I am going to try to disconnect, get away and enjoy our vacation as much as possible. So, I’m going to experiment with something new. I’m going to leave the decision in your hands:
Otherwise, I’ll respond when I return…
Warm regards,
Josh
Let's examine what Josh has done. First he's humanized the auto-reply robot message. Second he's implied that not only would you be interrupting his vacation if you reach out to him, but you'd also be upsetting his wife, which somehow feels much worse. Thirdly, he's created an email account that forces users to write the words "interrupt your vacation" in order to follow through with the disturbance, just in case someone has forgotten what they're about to do. Josh, you are a psychological mastermind. Hat's off.
http://shine.yahoo.com/channel/life/the-best-out-of-office-email-ever-written-2538155/
Do you leave contact information? Do you overstate or undersell said contact information's emergency purposes? Do you point people to a poor, helpless co-worker in your absence who will probably resent you the entire time you're gone? These and many other questions (like, is saying where you're going TMI?) plague me the night before I'm headed out of town.
Thankfully, Gizmodo has provided us neurotics with the perfect specimen of an out-of-office email message. They found a vacation auto-reply of a guy named Josh Kopelman, that will now serve as my model for all future away messages—give or take a few key details. Josh's stroke of genius in full:
I am currently out of the office on vacation.
I know I’m supposed to say that I’ll have limited access to email and won’t be able to respond until I return — but that’s not true. My blackberry will be with me and I can respond if I need to. And I recognize that I’ll probably need to interrupt my vacation from time to time to deal with something urgent.
That said, I promised my wife that I am going to try to disconnect, get away and enjoy our vacation as much as possible. So, I’m going to experiment with something new. I’m going to leave the decision in your hands:
- If your email truly is urgent and you need a response while I’m on vacation, please resend it to interruptyourvacation@[redacted].com and I’ll try to respond to it promptly.
- If you think someone else at [the company] might be able to help you, feel free to email my assistant, and she’ll try to point you in the right direction.
Otherwise, I’ll respond when I return…
Warm regards,
Josh
Let's examine what Josh has done. First he's humanized the auto-reply robot message. Second he's implied that not only would you be interrupting his vacation if you reach out to him, but you'd also be upsetting his wife, which somehow feels much worse. Thirdly, he's created an email account that forces users to write the words "interrupt your vacation" in order to follow through with the disturbance, just in case someone has forgotten what they're about to do. Josh, you are a psychological mastermind. Hat's off.
http://shine.yahoo.com/channel/life/the-best-out-of-office-email-ever-written-2538155/
8/31/11
When to Open a Second Location
If you build it, will they come? Here are the criteria you should meet if you're considering opening a second location.
After several steady years of operation and a progressively growing customer base, your first retail store is a hit, and you think you're ready to open up another one.
But don't rush in too quickly; not every second location is guaranteed the same success as the first. In fact, an existing location's current profitability has absolutely no bearing on the success of a second store. On ther other hand, companies with fairly small revenues—even unprofitable companies—have still managed to successfully expand.
So with that in mind, if your first location doesn't need to be über-successful, when is the right time for a business to consider another location? While there's no perfect time, there are a number of key variables that will ultimately decide whether or not the new venture will succeed.
1. Your existing location is running smoothly.
While the existing store doesn't need items flying off shelves it certainly helps.
"You want to have the operation fairly well-running, because companies trying to expand, especially when it's out of normal range—in other words, if you're opening up in another city—is one of the three or four main causes of a company going under," says Randy Moon, consultant and co-owner at RMoon Consulting, based in Dallas. "So it is a big decision."
The reason for ensuring a healthy first location before considering another is an issue of security. Opening a second location is much more involved than simply "expanding" the first store.
"You really have to look at the second location as a first location," says Mark Loos, consultant at Consulting Services Methodology in Laguna Hills, California. "It's got to be able to stand on its own. A lot of people don't look at what it takes to actually find the employees to support the location, the right insurance provisions, what kind of zoning they're going into, there are still a lot of things that are unknowns."
Loos recommends using the template from the first business to write a completely new business plan for your second location, but carefully checking each item to see if there could be any potential crossover—maybe you can use the same insurance company for both locations—to save more money. Otherwise, keep the books between the two locations separate or else you risk cannibalizing your existing business.
Dig Deeper: The Perils of Expansion
2. You have sufficient cash flow.
"Every small businessman is best off to use his own cash flow and to stay away from other people's money as much as possible," says entrepreneur and business consultant Adam Hartung, based out of Chicago. "There's a lot of places to go get other people's money. People go to banks, they go to [angel investors] like me, but when you do that, what's really hard for most owner-operators to realize is the rate of return that other people want."
Investors will typically ask for a 40 percent rate of return, but even if you manage to pay them back in full, they still own 40 percent of your company. Most banks, on the other hand, will only ask for 10 percent return on a loan.
"Obviously if you can get a loan [from a bank], and if something goes wrong, you file for bankruptcy," Moon says. "But you give up ownership and you're going to have the bank breathing down your throat."
"If you leverage to a bank, they're going to be looking at your accounts receivable, what you have in the way of debt collections, all the things tied to specific financial statements that are audit-able," says Loos. "So you have less room to play in that respect."
Loos recommends avoiding the banks "especially in today's times of over-conservative evaluations of loans," and instead recommends finding an angel investor, or someone who cares less about guidelines and payback and more about growing the business.
"Angels tend to put more skin in the game because they have more risk, but they also get a higher payout, Loos says. "But they also complement your risk strategy because as you move into a new location, you really don't know whether or not that location's going to achieve what it needs to achieve."
3. There's a current market trend.
"Let's say you have a business, and let's say you love tuning pianos. You're passionate about it, you love it, you're really good at it, but there's no big trend to it," says Hartung. "Opening up your second piano tuning shop just because you love it isn't going to matter because there's no trend driving people in the direction you're trying to go."
Whether or not you're passionate about your business, it's important to be realistic about the chances of a second store actually succeeding. The way to discover whether or not your business will prosper is to observe the market, research your competitors, and analyze the mood.
"If the market is headed in a particular way and what you're doing is fulfilling a market need, then you need to move quickly so that you can be able to establish your position," says Hartung. "When the trend is going in the right direction, you want to take advantage of that trend."
To figure out what the competitors in your market are doing—Are they investing in new trends or search terms?—check out Quantcast, Compete, or Spyfu. These services provide access to real numbers about important market data, including the number of monthly visitors for most websites, search terms that generate the most traffic, and advertising spending numbers.
4. You have a reliable person to run the second location.
Since opening a second location is actually more like starting up an entirely new business, Loos believes it's important that the owner is present during the early stages of the second location to help it launch.
"It's more beneficial for [the owner] to be at the new location because you want to start to identify what the challenges are early on, and if he can spot those, then he can take action to correct those," Loos says. "Having the new owner there really instills a sense that there's some importance for the success of that second location, and I think the new employees there also feel that as well."
Of course, Loos notes, "it depends whether or not you need to have local knowledge." If the business would benefit from someone who knows the area, the owner might consider handing off managing duties to a hire from within the new region.
"Great success happens when you adapt to the local market," Hartung says. "Depending on what you're doing, moving a few blocks away could have a local variation, moving the next town over could have a local variation."
If the second location is far from or inherently different than the existing store, then it's beneficial to gain as much local "tribal" knowledge as possible. However, if there's no radical change in demographics between locations, it's wise to let the owner guide the second shop's maiden voyage.
"Nobody's going to care about that new business like you," Moon says. "You're not going to be making money [at the second location] for the first six or seven months, and to entrust anybody to have the desire and drive that you have to make it successful, I think, is much riskier."
5. There's a region with unfulfilled demand for your product.
If you decide to open in an already-competitive region right off the bat, you have one of two choices: Hold your turf and try to drive the competition out of business, or move one or two towns over, get your old customers to come visit, and attract new local customers.
"You want to fish where the fish are—that's trends—but if you walk up to the pier and there's 700 guys shoulder-to-shoulder throwing a line out there, you'd may wonder if that's really where you want to go out to throw your line," Hartung says. "Or maybe you should try to find some fish somewhere else."
As head of development for the restaurant business of Pepsi Co., Hartung led the initiative for Pizza Hut's Home Delivery service. He was tempted to take the battle to Domino's Pizza, go into their areas and beat them at their own home delivery game, but he thought better of it.
"We opened 600 stores and they were all wildly profitable, and part of the reason was I just wouldn't open anything where [Domino's founder] Tom Monahan already had stores," Hartung says. "If Tom Monahan had already opened 15 or 20 Domino's, we could not compete. The guys that ran Pizza Hut couldn't believe this, and I'd say, 'Yeah, you can't.'"
Unless your company plans to be a radical "game changer," it's best to avoid opening a second location in areas of heavy competition. Instead, do some research, find a region that fits your geographic and demographic criteria, and find somewhere with few competitors so you have room to grow.
"It's wise to avoid competition, especially in the infancy, until you've grown to a number of locations and you're starting to grow economies of scale," says Loos.
Dig Deeper: 10 Tips On How To Research Your Competition
http://www.inc.com/guides/201108/when-to-open-a-second-location.html
After several steady years of operation and a progressively growing customer base, your first retail store is a hit, and you think you're ready to open up another one.
But don't rush in too quickly; not every second location is guaranteed the same success as the first. In fact, an existing location's current profitability has absolutely no bearing on the success of a second store. On ther other hand, companies with fairly small revenues—even unprofitable companies—have still managed to successfully expand.
So with that in mind, if your first location doesn't need to be über-successful, when is the right time for a business to consider another location? While there's no perfect time, there are a number of key variables that will ultimately decide whether or not the new venture will succeed.
1. Your existing location is running smoothly.
While the existing store doesn't need items flying off shelves it certainly helps.
"You want to have the operation fairly well-running, because companies trying to expand, especially when it's out of normal range—in other words, if you're opening up in another city—is one of the three or four main causes of a company going under," says Randy Moon, consultant and co-owner at RMoon Consulting, based in Dallas. "So it is a big decision."
The reason for ensuring a healthy first location before considering another is an issue of security. Opening a second location is much more involved than simply "expanding" the first store.
"You really have to look at the second location as a first location," says Mark Loos, consultant at Consulting Services Methodology in Laguna Hills, California. "It's got to be able to stand on its own. A lot of people don't look at what it takes to actually find the employees to support the location, the right insurance provisions, what kind of zoning they're going into, there are still a lot of things that are unknowns."
Loos recommends using the template from the first business to write a completely new business plan for your second location, but carefully checking each item to see if there could be any potential crossover—maybe you can use the same insurance company for both locations—to save more money. Otherwise, keep the books between the two locations separate or else you risk cannibalizing your existing business.
Dig Deeper: The Perils of Expansion
2. You have sufficient cash flow.
"Every small businessman is best off to use his own cash flow and to stay away from other people's money as much as possible," says entrepreneur and business consultant Adam Hartung, based out of Chicago. "There's a lot of places to go get other people's money. People go to banks, they go to [angel investors] like me, but when you do that, what's really hard for most owner-operators to realize is the rate of return that other people want."
Investors will typically ask for a 40 percent rate of return, but even if you manage to pay them back in full, they still own 40 percent of your company. Most banks, on the other hand, will only ask for 10 percent return on a loan.
"Obviously if you can get a loan [from a bank], and if something goes wrong, you file for bankruptcy," Moon says. "But you give up ownership and you're going to have the bank breathing down your throat."
"If you leverage to a bank, they're going to be looking at your accounts receivable, what you have in the way of debt collections, all the things tied to specific financial statements that are audit-able," says Loos. "So you have less room to play in that respect."
Loos recommends avoiding the banks "especially in today's times of over-conservative evaluations of loans," and instead recommends finding an angel investor, or someone who cares less about guidelines and payback and more about growing the business.
"Angels tend to put more skin in the game because they have more risk, but they also get a higher payout, Loos says. "But they also complement your risk strategy because as you move into a new location, you really don't know whether or not that location's going to achieve what it needs to achieve."
3. There's a current market trend.
"Let's say you have a business, and let's say you love tuning pianos. You're passionate about it, you love it, you're really good at it, but there's no big trend to it," says Hartung. "Opening up your second piano tuning shop just because you love it isn't going to matter because there's no trend driving people in the direction you're trying to go."
Whether or not you're passionate about your business, it's important to be realistic about the chances of a second store actually succeeding. The way to discover whether or not your business will prosper is to observe the market, research your competitors, and analyze the mood.
"If the market is headed in a particular way and what you're doing is fulfilling a market need, then you need to move quickly so that you can be able to establish your position," says Hartung. "When the trend is going in the right direction, you want to take advantage of that trend."
To figure out what the competitors in your market are doing—Are they investing in new trends or search terms?—check out Quantcast, Compete, or Spyfu. These services provide access to real numbers about important market data, including the number of monthly visitors for most websites, search terms that generate the most traffic, and advertising spending numbers.
4. You have a reliable person to run the second location.
Since opening a second location is actually more like starting up an entirely new business, Loos believes it's important that the owner is present during the early stages of the second location to help it launch.
"It's more beneficial for [the owner] to be at the new location because you want to start to identify what the challenges are early on, and if he can spot those, then he can take action to correct those," Loos says. "Having the new owner there really instills a sense that there's some importance for the success of that second location, and I think the new employees there also feel that as well."
Of course, Loos notes, "it depends whether or not you need to have local knowledge." If the business would benefit from someone who knows the area, the owner might consider handing off managing duties to a hire from within the new region.
"Great success happens when you adapt to the local market," Hartung says. "Depending on what you're doing, moving a few blocks away could have a local variation, moving the next town over could have a local variation."
If the second location is far from or inherently different than the existing store, then it's beneficial to gain as much local "tribal" knowledge as possible. However, if there's no radical change in demographics between locations, it's wise to let the owner guide the second shop's maiden voyage.
"Nobody's going to care about that new business like you," Moon says. "You're not going to be making money [at the second location] for the first six or seven months, and to entrust anybody to have the desire and drive that you have to make it successful, I think, is much riskier."
5. There's a region with unfulfilled demand for your product.
If you decide to open in an already-competitive region right off the bat, you have one of two choices: Hold your turf and try to drive the competition out of business, or move one or two towns over, get your old customers to come visit, and attract new local customers.
"You want to fish where the fish are—that's trends—but if you walk up to the pier and there's 700 guys shoulder-to-shoulder throwing a line out there, you'd may wonder if that's really where you want to go out to throw your line," Hartung says. "Or maybe you should try to find some fish somewhere else."
As head of development for the restaurant business of Pepsi Co., Hartung led the initiative for Pizza Hut's Home Delivery service. He was tempted to take the battle to Domino's Pizza, go into their areas and beat them at their own home delivery game, but he thought better of it.
"We opened 600 stores and they were all wildly profitable, and part of the reason was I just wouldn't open anything where [Domino's founder] Tom Monahan already had stores," Hartung says. "If Tom Monahan had already opened 15 or 20 Domino's, we could not compete. The guys that ran Pizza Hut couldn't believe this, and I'd say, 'Yeah, you can't.'"
Unless your company plans to be a radical "game changer," it's best to avoid opening a second location in areas of heavy competition. Instead, do some research, find a region that fits your geographic and demographic criteria, and find somewhere with few competitors so you have room to grow.
"It's wise to avoid competition, especially in the infancy, until you've grown to a number of locations and you're starting to grow economies of scale," says Loos.
Dig Deeper: 10 Tips On How To Research Your Competition
http://www.inc.com/guides/201108/when-to-open-a-second-location.html
8/22/11
5 Ways to Grow Your Business
Turn your customers into salespeople.
Customer referrals can be an effective way to tap into your current customer base and explore new revenue streams. Roku, a Saratoga, California-based company that makes a device that allows users to stream media to their televisions, understands this concept. Last year, the company introduced a refer-a-friend campaign where, for every friend you refer, your friend gets the lowest price on a Roku player and you get a free month of Netflix. "We knew we had an engaged customer base that was passionate about the product, and we wanted to tap into that," Lomit Patel, Roku's senior director of direct marketing, told Inc. magazine.
Learn how to delegate.
"As organizations grow increasingly complex, duties and responsibilities across the workforce can become less well defined," writes Robert Heller in How to Delegate. "Often it seems as though everyone is doing everyone else's job. Delegation is the manager’s key to efficiency, and benefits all." In other words, in order to scale the business, a CEO needs to learn how to delegate so he or she can focus on the company's bigger picture issues.
Develop new products.
Innovative companies understand that in order to grow, they must continue to develop new products and services. "No executive today is unaware of the strategic need for winning new products," writes Robert G. Cooper in his book, Product Leadership: Creating and Launching Superior New Products. "And so the pressure is on virtually every leadership team to deliver great new products. The new corporate motto is 'innovate or die.'"
Penetrate new markets.
The Obama administration has advocated for small businesses to push into global markets, and has set the goal of doubling U.S. exports by 2014. Today, only about one percent of small businesses export overseas. One of the biggest challenges for small companies wanting to export is communication, says Marc Meyer, a professor of entrepreneurship at Northeastern University. This is especially true in emerging markets like China where little is known about marketing and consumer culture. "These countries are fundamentally different from Western Europe and you need to go there and do your homework—learning the local selling culture, how your product will be sold and merchandised," he says.
Learn how to automate.
If too much of your time is being spent on tasks that could be automated, it pays to figure out a technological solution. Technology can empower your organization, helping you improve efficiencies and even expand operations," says Mike Gorsage, a partner and technology practice leader for Tatum. "But to use that technology well, you must balance your needs with the realities of how you do business. That means understanding not only which technology to invest in, but also how it will affect your operations and how to maximize your returns on that investment." —Eric Markowitz
http://www.inc.com/ss/5-ways-to-grow-your-business
Customer referrals can be an effective way to tap into your current customer base and explore new revenue streams. Roku, a Saratoga, California-based company that makes a device that allows users to stream media to their televisions, understands this concept. Last year, the company introduced a refer-a-friend campaign where, for every friend you refer, your friend gets the lowest price on a Roku player and you get a free month of Netflix. "We knew we had an engaged customer base that was passionate about the product, and we wanted to tap into that," Lomit Patel, Roku's senior director of direct marketing, told Inc. magazine.
Learn how to delegate.
"As organizations grow increasingly complex, duties and responsibilities across the workforce can become less well defined," writes Robert Heller in How to Delegate. "Often it seems as though everyone is doing everyone else's job. Delegation is the manager’s key to efficiency, and benefits all." In other words, in order to scale the business, a CEO needs to learn how to delegate so he or she can focus on the company's bigger picture issues.
Develop new products.
Innovative companies understand that in order to grow, they must continue to develop new products and services. "No executive today is unaware of the strategic need for winning new products," writes Robert G. Cooper in his book, Product Leadership: Creating and Launching Superior New Products. "And so the pressure is on virtually every leadership team to deliver great new products. The new corporate motto is 'innovate or die.'"
Penetrate new markets.
The Obama administration has advocated for small businesses to push into global markets, and has set the goal of doubling U.S. exports by 2014. Today, only about one percent of small businesses export overseas. One of the biggest challenges for small companies wanting to export is communication, says Marc Meyer, a professor of entrepreneurship at Northeastern University. This is especially true in emerging markets like China where little is known about marketing and consumer culture. "These countries are fundamentally different from Western Europe and you need to go there and do your homework—learning the local selling culture, how your product will be sold and merchandised," he says.
Learn how to automate.
If too much of your time is being spent on tasks that could be automated, it pays to figure out a technological solution. Technology can empower your organization, helping you improve efficiencies and even expand operations," says Mike Gorsage, a partner and technology practice leader for Tatum. "But to use that technology well, you must balance your needs with the realities of how you do business. That means understanding not only which technology to invest in, but also how it will affect your operations and how to maximize your returns on that investment." —Eric Markowitz
http://www.inc.com/ss/5-ways-to-grow-your-business
Entrepreneurs Most Valuable Learning Experiences
One of the reasons I love my job is having access to so many customers who are bright entrepreneurs. When you treat your customers like the gifted business people they are, you’ll be surprised how much they can teach you.
A few weeks ago I was curious to see what SurePayroll customers consider their most valuable learning experiences. For years, I’ve said the best learning tool is making mistakes — I even give one lucky employee an award for the year's best new mistake every year. After sending a survey about their most valuable learning experiences, I learned quite a bit from their real-life stories and what their experiences have taught them.
Many of their learning experiences fall into three main categories, ranging from practical office tactics to the philosophy of running their businesses.
1. Effective employee management is a must.
One of my customers summed it up nicely: “I have been in business for over 35 years, and I’m not sure any one experience is the most important. But one thing is for sure: Hiring the right people is critical to anyone's success.” I’ve learned over years that hiring is one of the most difficult aspects of running the show and that the overwhelming majority of my customers agree.
And they’ve also learned that part of having the right people is firing the wrong people, and doing so quickly. That may sound cold, but it’s a reality business owners need to face. A few customers discussed how they struggled in their first few years because they didn’t want to be the small business owner who fired people. Or they weren’t checking candidates’ backgrounds and references properly.
Once the right employees are on board, you have to communicate the vision of your company and make sure they’re aligned with it. And as tough as it sounds, you’re going to have to give your employees breathing room to do some things their way, and to make the occasional mistake. You can trust me that when employees aren’t belittled for making mistakes, it’s good for your business. But you don’t have to take my word for it — many of my customers feel the same way.
Employees want to work somewhere they feel welcome and appreciated – and like they can be themselves. As another customer said, “We all spend so much time at work, it is important to make it a fun environment. When people feel good, their work performance improves. It’s a win-win situation.”
2. Sales and marketing won’t take care of themselves.
Ralph Waldo Emerson is famous for a lot of good reasons, but he couldn’t be more wrong when he wrote “Build a better mousetrap and the world will beat a path to your door.” My customers agree that your mousetrap won’t sell itself.
Many SurePayroll customers started their own businesses because they loved what they were doing, and wanted to concentrate on it full-time and be their own bosses. Then they found out people weren’t beating paths to their doors, even though they offered top-notch products or services. They needed to spread the word via marketing and acquire new business by spending time on sales.
One of my customers learned this by accident, quite literally. After an injury took him out of commission from his carpentry, he needed to hire a replacement for six weeks. That’s when he discovered his strength wasn’t just in his carpentry but in promoting his business. He wrote that “There were plenty of competent carpenters willing and able to take my place as lead site carpenter. I focused my efforts on sales and marketing. Sales picked up significantly. My net income doubled in the span of a year and grew by 50% more the next year.”
Taking on sales and marketing yourself might not be the answer. If you want to stay focused on your trade, let someone else take care of it. The joy of owning your own business is that you can focus on your strengths and outsource your weaknesses, whether that means relying on services or hiring competent employees.
Even the carpenter-turned-salesman would have done it differently: “The next logical step in that duplication would have been to replace myself in my sales and marketing duties, too. Remember, the duplication of effort can be applied to all people in all positions performing all tasks. My end goal could have been to become CEO where all lower level tasks were delegated to highly qualified employees.”
3. You’re your own boss—and your own teacher.
Yes, hiring experts can help you grow your business, but at the end of the day, you’re the one who has to keep learning. As my customers can attest to, education covers everything from gaining new skills to realizing your limitations.
What’s the best place to begin your education? One customer offered a great starting place: “Read. Sounds simple, but it is one of the most important things a business owner can do to improve his or her business. While it is great to have a mentor, and I have many, books are portals to some of the brightest minds from our past and present.”
In addition to traditional education like reading and business school, many customers stressed the importance of on-the-job learning — taking on projects that require them to become experts. One customer wrote, “I had a client ask me to work on a project that required me to do educate myself about the details and the best way to accomplish the task. Rather than tell them, ‘No, I do not have those particular skills,’ I tell them, ‘I will look into it and give it a try.’ So far my clients have been pleased with the results, and I continue to learn and expand the services I can provide.”
Unfortunately, sometimes you learn the hard way. A few customers got caught up in the whirlwind housing market a few years ago before the crash, losing hundreds of thousands of dollars on their office space and housing purchases. Learning not to succumb to pressure is a hard pill to swallow, but an invaluable one.
http://www.inc.com/michael-alter/my-customers-3-most-valuable-learning-experiences.html
A few weeks ago I was curious to see what SurePayroll customers consider their most valuable learning experiences. For years, I’ve said the best learning tool is making mistakes — I even give one lucky employee an award for the year's best new mistake every year. After sending a survey about their most valuable learning experiences, I learned quite a bit from their real-life stories and what their experiences have taught them.
Many of their learning experiences fall into three main categories, ranging from practical office tactics to the philosophy of running their businesses.
1. Effective employee management is a must.
One of my customers summed it up nicely: “I have been in business for over 35 years, and I’m not sure any one experience is the most important. But one thing is for sure: Hiring the right people is critical to anyone's success.” I’ve learned over years that hiring is one of the most difficult aspects of running the show and that the overwhelming majority of my customers agree.
And they’ve also learned that part of having the right people is firing the wrong people, and doing so quickly. That may sound cold, but it’s a reality business owners need to face. A few customers discussed how they struggled in their first few years because they didn’t want to be the small business owner who fired people. Or they weren’t checking candidates’ backgrounds and references properly.
Once the right employees are on board, you have to communicate the vision of your company and make sure they’re aligned with it. And as tough as it sounds, you’re going to have to give your employees breathing room to do some things their way, and to make the occasional mistake. You can trust me that when employees aren’t belittled for making mistakes, it’s good for your business. But you don’t have to take my word for it — many of my customers feel the same way.
Employees want to work somewhere they feel welcome and appreciated – and like they can be themselves. As another customer said, “We all spend so much time at work, it is important to make it a fun environment. When people feel good, their work performance improves. It’s a win-win situation.”
2. Sales and marketing won’t take care of themselves.
Ralph Waldo Emerson is famous for a lot of good reasons, but he couldn’t be more wrong when he wrote “Build a better mousetrap and the world will beat a path to your door.” My customers agree that your mousetrap won’t sell itself.
Many SurePayroll customers started their own businesses because they loved what they were doing, and wanted to concentrate on it full-time and be their own bosses. Then they found out people weren’t beating paths to their doors, even though they offered top-notch products or services. They needed to spread the word via marketing and acquire new business by spending time on sales.
One of my customers learned this by accident, quite literally. After an injury took him out of commission from his carpentry, he needed to hire a replacement for six weeks. That’s when he discovered his strength wasn’t just in his carpentry but in promoting his business. He wrote that “There were plenty of competent carpenters willing and able to take my place as lead site carpenter. I focused my efforts on sales and marketing. Sales picked up significantly. My net income doubled in the span of a year and grew by 50% more the next year.”
Taking on sales and marketing yourself might not be the answer. If you want to stay focused on your trade, let someone else take care of it. The joy of owning your own business is that you can focus on your strengths and outsource your weaknesses, whether that means relying on services or hiring competent employees.
Even the carpenter-turned-salesman would have done it differently: “The next logical step in that duplication would have been to replace myself in my sales and marketing duties, too. Remember, the duplication of effort can be applied to all people in all positions performing all tasks. My end goal could have been to become CEO where all lower level tasks were delegated to highly qualified employees.”
3. You’re your own boss—and your own teacher.
Yes, hiring experts can help you grow your business, but at the end of the day, you’re the one who has to keep learning. As my customers can attest to, education covers everything from gaining new skills to realizing your limitations.
What’s the best place to begin your education? One customer offered a great starting place: “Read. Sounds simple, but it is one of the most important things a business owner can do to improve his or her business. While it is great to have a mentor, and I have many, books are portals to some of the brightest minds from our past and present.”
In addition to traditional education like reading and business school, many customers stressed the importance of on-the-job learning — taking on projects that require them to become experts. One customer wrote, “I had a client ask me to work on a project that required me to do educate myself about the details and the best way to accomplish the task. Rather than tell them, ‘No, I do not have those particular skills,’ I tell them, ‘I will look into it and give it a try.’ So far my clients have been pleased with the results, and I continue to learn and expand the services I can provide.”
Unfortunately, sometimes you learn the hard way. A few customers got caught up in the whirlwind housing market a few years ago before the crash, losing hundreds of thousands of dollars on their office space and housing purchases. Learning not to succumb to pressure is a hard pill to swallow, but an invaluable one.
http://www.inc.com/michael-alter/my-customers-3-most-valuable-learning-experiences.html
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