In the days of the old west, cattle were branded with a red hot piece of iron to let other ranchers know which cattle belonged to which ranch. A seasoned rancher could, at a glance, read the brand.
We have now become more sophisticated, and less excited about brand awareness, but it is still important. If a customer sees your meme/logo, and hears your product name 7 times, they are more likely to buy.
However, this is just a door opener. Your ads MUST seek action NOW. If you are trying to build brand awareness, it doesn't always translate into sales.
A good example and a bad example. Coca Cola used to produce magical ads, in days gone by. "Have a Coke and a smile" is an example of a great tagline. You instantly associate drinking a Coke with smiling. Since everyone wants to smile, everyone should want to buy a Coke.
However, they have now started to try to advertise to idiots with their "Coke Zero" ads. These advertisements use two bumbling idiots, that are supposed to be brand managers that are so stupid that they can't tell the difference between Coke and Coke Zero. What is the message? Coke is for idiots.
When you create an ad, do a mockup, and ask ten people, "What does this mean to you?" If their answer doesn't involve some method of "I want to buy that...NOW!" then it's not a good ad.
You want to create urgency, value, and a solution within each ad, so that the buyer will want to buy now, and buy your product.
Do not ask an employee (that is dependent upon their livelihood on not upsetting you) to give you an objective opinion. Instead, ask random people their opinion, and make it simple to do so.
"Just doing a marketing test...what does this ad say to you?"
Keep it simple, make it fun, and make it imperative that they buy now, and your ad will be successful. (Track it, and make sure that it pulls results.)
Saturday, April 30, 2011
Friday, April 29, 2011
Force of will
An entrepreneur must have the "Force of Will" to succeed. That means doing what other people won't, waking up when others are sleeping, working when others are partying, and treading that fine line between having the customer like us...and asking for the sale.
When you do what others won't, you will get the rewards that others don't.
I am reminded of the scene in "The Usual Suspects" when Kevin Spacey is talking about Keyser Soze. He was talking about when Soze's enemies invaded his home, and held his wife and kids captive. They thought that they could force Keyser to bow to their wishes. But they didn't understand "Force of Will". Keyser killed his wife, kids, and all but one of the invaders, leaving one to go back and tell his boss that they must leave or he would hunt them down and kill them, their families, their neighbors, and everyone that knew them back to three generations. http://www.youtube.com/watch?v=BgkBpWc8ngI
I'm not saying that is a correct methodology for conflict resolution, but our "Force of Will" should be as strong (if not as violent), as this.
Are you tired? Keep on working. Are you discouraged? Keep on selling? Would it be easier to stop? Don't. Never give up. Never stop. Never take the easy way out, if the hard way is the only way to accomplish your task.
When you do that, you will begin to realize that being an entrepreneur is more than just opening a store...it is changing your life into something totally different.
Are you ready for the challenge?
When you do what others won't, you will get the rewards that others don't.
I am reminded of the scene in "The Usual Suspects" when Kevin Spacey is talking about Keyser Soze. He was talking about when Soze's enemies invaded his home, and held his wife and kids captive. They thought that they could force Keyser to bow to their wishes. But they didn't understand "Force of Will". Keyser killed his wife, kids, and all but one of the invaders, leaving one to go back and tell his boss that they must leave or he would hunt them down and kill them, their families, their neighbors, and everyone that knew them back to three generations. http://www.youtube.com/watch?v=BgkBpWc8ngI
I'm not saying that is a correct methodology for conflict resolution, but our "Force of Will" should be as strong (if not as violent), as this.
Are you tired? Keep on working. Are you discouraged? Keep on selling? Would it be easier to stop? Don't. Never give up. Never stop. Never take the easy way out, if the hard way is the only way to accomplish your task.
When you do that, you will begin to realize that being an entrepreneur is more than just opening a store...it is changing your life into something totally different.
Are you ready for the challenge?
Wednesday, April 27, 2011
BE LIMITLESS! :-)
In life you can only ever be scared, when you believe in limits.
You can only ever feel lonely, when you stop doing things.
...You can only ever become bored, when you no longer follow your heart.
And you can only ever get overwhelmed, when you think the illusions are real.
Whew! Who knew it could be so easy to get back on track?
~The Universe
In life you can only ever be scared, when you believe in limits.
You can only ever feel lonely, when you stop doing things.
...You can only ever become bored, when you no longer follow your heart.
And you can only ever get overwhelmed, when you think the illusions are real.
Whew! Who knew it could be so easy to get back on track?
~The Universe
Tuesday, April 26, 2011
What exactly IS a Brainstorm Capital Group teleconference? It is a chance for a Subject Matter Expert (S.M.E.) to share their expertise with entrepreneurs and business owners.
Why is this better than just sitting down with your accountant or lawyer? Because there will be other business owners there, they will have questions that you might not think of, and the answers might just relate to you. Also, because you are having a teleconference with other entrepreneurs, the energy will be pulsing, and you will learn things that you could not possibly learn in a one on one with your information professional. (Also, it's free, did I mention that before?)
If you are a Subject Matter Expert, why wouldn't you want to shine in front of a group of high powered entrepreneurs. You might just pick up new clients, and the experience will boost your resume and credibility.
So, if you are a business owner, this is a great opportunity to pick someone elses' brain and learn from the best.
If you are a Subject Matter Expert (S.M.E.), this is a great opportunity to take your profession to the next level.
Monday, April 25, 2011
Creativity
A lot of business owners are looking for an inspiration for a new product idea, marketing plan, or simply a new design. They just feel that they aren't creative, and don't know how to be inspired. Here are a few easy tips.
1) Know your schedule: If you are a morning person, and you feel most alive/inspired/awake early in the morning, this is your time. Try waking up a little earlier and writing down a few thoughts that are NOT what you would usually think about. Creativity is nothing more than thought paths that we haven't taken before, and noticing the journey.
2) Let your subconscious do the heavy lifting. Joe White, a serial entrepreneur in Colorado, used to write down the top ten things that he wanted to do the next day just before he would go to bed. Then, while he was sleeping, his subconscious would start working on the list. When he woke up, before he got out of bed, he would just start jotting down his thoughts and ideas. He was one of the most organized people I have ever known, and he did more before 9:00 than most people did all day.
3) Read things you have never read before. Go to www.stumbleupon.com, enter your interests, and stumble away viewing sites that are wildly eclectic and totally different from anything you have ever seen before. Some will make you think, others will make you quickly click on the "stumble" button, leading you to new adventures.
4) Make a planned attempt to be creative. Use the "reticular activator" section of your brain to help you find answers that you hadn't even thought of before. (Think back to the last time that you bought a car. What color? What make and model? When you did that, did you suddenly notice all of the other cars that were just like yours? That is the "reticular activator" noticing new things, and suddenly finding them everywhere. It is one of the brains most powerful...and under-appreciated tools that allows you to notice things and be creative.) In other words, write down what you are looking to achieve, and suddenly...you will find it. If you don't know what you are looking for, you will never even come close to finding it.
5) Don't cherry pick ideas. If you do this diligently, you will generate 50 ideas that are terrible, for every good one. However, that good one might be a million dollar idea. Write them down, expand them, go into different applications of the idea, expand on those, write down their different applications, and expand on those, and then set it aside for a few days. What you will find, when you come back to it, is that the first idea probably stunk, but the tangential ideas that came out of the first one were better, and became better with each tangential turn. Don't be afraid to take the bunny trails when you are brainstorming, but record the journey, and revisit. Use your subconscious and the reticular activator to really ramp up the process.
6) Write when you are asleep. I will suddenly wake up at 4:00 in the morning, have a brilliant thought, and before I fully wake, I will write it down...and then go back to bed. When I am fully awake, I can then explore this fresh new idea, that was unemcumbered by common sense and logic. It had the freshness of a dream. Use the tools above to flesh it out, and explore the possibilities.
7) Find an idea partner that you can bounce these off of. A good brainstorming session will create ideas that are better than what you can create by yourself, and will lead you to action. (Ideas without action are just dreams. Ideas with action...change the world.)
8) Once you have written out your ideas in full, ask yourself, "What need does it fill?" "Find a need...fill a need" (Robots). If your application doesn't fill a need, then it is useless as a business application. However, don't throw it away, find a need that it DOES fill. Some of the greatest inventions didn't fill existing needs, but created something so fresh that the need became apparent after it had been invented. (VCR's, DVD's, Personal computers, cars, railroads, fire....)
9) Articulate the idea into a sentence. If you can't articulate it into one sentence, rethink it. The greatest ideas can be shared easily and expressed simply.
10) If you have developed your idea into a complete business application, now you need to bring it to market. That is where you need the Capital and Expertise of Brainstorm Capital Group to help you take it to the next level.
1) Know your schedule: If you are a morning person, and you feel most alive/inspired/awake early in the morning, this is your time. Try waking up a little earlier and writing down a few thoughts that are NOT what you would usually think about. Creativity is nothing more than thought paths that we haven't taken before, and noticing the journey.
2) Let your subconscious do the heavy lifting. Joe White, a serial entrepreneur in Colorado, used to write down the top ten things that he wanted to do the next day just before he would go to bed. Then, while he was sleeping, his subconscious would start working on the list. When he woke up, before he got out of bed, he would just start jotting down his thoughts and ideas. He was one of the most organized people I have ever known, and he did more before 9:00 than most people did all day.
3) Read things you have never read before. Go to www.stumbleupon.com, enter your interests, and stumble away viewing sites that are wildly eclectic and totally different from anything you have ever seen before. Some will make you think, others will make you quickly click on the "stumble" button, leading you to new adventures.
4) Make a planned attempt to be creative. Use the "reticular activator" section of your brain to help you find answers that you hadn't even thought of before. (Think back to the last time that you bought a car. What color? What make and model? When you did that, did you suddenly notice all of the other cars that were just like yours? That is the "reticular activator" noticing new things, and suddenly finding them everywhere. It is one of the brains most powerful...and under-appreciated tools that allows you to notice things and be creative.) In other words, write down what you are looking to achieve, and suddenly...you will find it. If you don't know what you are looking for, you will never even come close to finding it.
5) Don't cherry pick ideas. If you do this diligently, you will generate 50 ideas that are terrible, for every good one. However, that good one might be a million dollar idea. Write them down, expand them, go into different applications of the idea, expand on those, write down their different applications, and expand on those, and then set it aside for a few days. What you will find, when you come back to it, is that the first idea probably stunk, but the tangential ideas that came out of the first one were better, and became better with each tangential turn. Don't be afraid to take the bunny trails when you are brainstorming, but record the journey, and revisit. Use your subconscious and the reticular activator to really ramp up the process.
6) Write when you are asleep. I will suddenly wake up at 4:00 in the morning, have a brilliant thought, and before I fully wake, I will write it down...and then go back to bed. When I am fully awake, I can then explore this fresh new idea, that was unemcumbered by common sense and logic. It had the freshness of a dream. Use the tools above to flesh it out, and explore the possibilities.
7) Find an idea partner that you can bounce these off of. A good brainstorming session will create ideas that are better than what you can create by yourself, and will lead you to action. (Ideas without action are just dreams. Ideas with action...change the world.)
8) Once you have written out your ideas in full, ask yourself, "What need does it fill?" "Find a need...fill a need" (Robots). If your application doesn't fill a need, then it is useless as a business application. However, don't throw it away, find a need that it DOES fill. Some of the greatest inventions didn't fill existing needs, but created something so fresh that the need became apparent after it had been invented. (VCR's, DVD's, Personal computers, cars, railroads, fire....)
9) Articulate the idea into a sentence. If you can't articulate it into one sentence, rethink it. The greatest ideas can be shared easily and expressed simply.
10) If you have developed your idea into a complete business application, now you need to bring it to market. That is where you need the Capital and Expertise of Brainstorm Capital Group to help you take it to the next level.
Sunday, April 24, 2011
Do you need a partner to get started?
A lot of entrepreneurs are confused about starting a business. They have a great idea, but they don't know the next step. They think that they need something, but they don't know what they need. In frustration, they bring in a partner. Typically, they bring in the wrong type of partner.
A business partnership should be like a potluck dinner. Only invite people that bring something to the table that you need.
1) Capital: If they have capital, they are always welcome. You need capital to start the business, get it running, and pay overhead while you are getting up to speed. You need to be very careful to make sure that you don't give up too much control. Consult a professional to make sure that you know the parameters of a proper venture capital arrangement. (I recommend Pete Lorins of Brainstorm Capital Group).
2) Expertise: If you have never started a business, you want to have someone that has some expertise to help you avoid the pitfalls. If you have never run a particular TYPE of business, make sure that you bring in someone that knows that industry, if that is what they are bringing to the table. If you bring in someone that doesn't know anything to help you run your business, you are setting yourself up for failure.
3) Integrity: Can you trust them? The best way to insure that you are protected is to have the legal documentation to protect you, your invention, or investment. If you think that you don't need to worry about such things, remember the fate of Nikola Tesla, the inventor of electricity generation, and the richest man in the world. Wait a second-he died penniless. Ooops, he didn't protect himself. Don't set yourself up for failure. Make sure that you have the legal documentation to not get ripped off. See the story of Nikola Tesla here:
4) Marketing: You could have a partner that has no money, no ideas, and no expertise in running the business...but they can sell. If you can sell, all of the little problems solve themselves. The best way to know if someone can sell is to see if they have sold in the past. Have they sold your type of product? Is it similar, and can they use the same techniques. (A person that sells on tv, might be terrible at selling via seminars, or directing a sales force.) Get the right marketing skill sets.
If you have a partner that has: Capital, Expertise, Integrity, and Marketing knowledge they can help you move your business from a vague idea...to reality. The reality can be exciting.
A business partnership should be like a potluck dinner. Only invite people that bring something to the table that you need.
1) Capital: If they have capital, they are always welcome. You need capital to start the business, get it running, and pay overhead while you are getting up to speed. You need to be very careful to make sure that you don't give up too much control. Consult a professional to make sure that you know the parameters of a proper venture capital arrangement. (I recommend Pete Lorins of Brainstorm Capital Group).
2) Expertise: If you have never started a business, you want to have someone that has some expertise to help you avoid the pitfalls. If you have never run a particular TYPE of business, make sure that you bring in someone that knows that industry, if that is what they are bringing to the table. If you bring in someone that doesn't know anything to help you run your business, you are setting yourself up for failure.
3) Integrity: Can you trust them? The best way to insure that you are protected is to have the legal documentation to protect you, your invention, or investment. If you think that you don't need to worry about such things, remember the fate of Nikola Tesla, the inventor of electricity generation, and the richest man in the world. Wait a second-he died penniless. Ooops, he didn't protect himself. Don't set yourself up for failure. Make sure that you have the legal documentation to not get ripped off. See the story of Nikola Tesla here:
4) Marketing: You could have a partner that has no money, no ideas, and no expertise in running the business...but they can sell. If you can sell, all of the little problems solve themselves. The best way to know if someone can sell is to see if they have sold in the past. Have they sold your type of product? Is it similar, and can they use the same techniques. (A person that sells on tv, might be terrible at selling via seminars, or directing a sales force.) Get the right marketing skill sets.
If you have a partner that has: Capital, Expertise, Integrity, and Marketing knowledge they can help you move your business from a vague idea...to reality. The reality can be exciting.
Saturday, April 23, 2011
You pay for the rent, even when the store is closed.
A long time ago, I owned a dry cleaner. I was open from 8 AM until 6 PM. Monday through Friday. A friend told me a profound truth. I was paying for the rent even when I was closed. I had unused capacity because I wasn't using the store, or the equipment after operating hours.
I hired a man to wash restaurant linens while I was closed, and my profits soared. Why? Because my fixed costs were already covered. My costs of the equipment had already been paid, I was receiving Incremental revenue. (See my previous post about incremental revenue: http://power2negotiate.blogspot.com/2011/04/incremental-revenue.html)
What is your unused capacity? Do you have equipment that is not being used? Do your employees have downtime that you could use to generate revenue? Do you have a parking lot that you could use to host a promotion for your business? What do you have that you can use to generate additional revenue each month?
Make a list of your resources. This list does not have to be done immediately, only when you want to have additional massive profits. However, be thorough and list things that you might not "own" but are perceived as owning. (Maybe you license software and have access to use it for purposes other than your main business function? If you have designers, can you outsource design jobs to them so that they are constantly busy? If you have marketers that are knocking on doors, can you have them hand out fliers that promote your business AND couple that with a coupon of another business so that you create value for BOTH businesses? If you have people calling in, or visiting your web site, can you have banner ads on your web site that direct them to complimentary businesses? Or offer them links to coupons so that they can buy more products?
One of the best examples that I know of unused resources being tapped is the advertising space over urinals in sports bars. I wouldn't ordinarily think of the space over a urinal as where I would want my product to be placed...but you have the customers undivided attention.
If someone can sell advertising space over a urinal, what unused production capabilities do you have in YOUR business?
Here is a list of some ideas:
1) Advertisements on your phone while people are on hold. Make it fun, enjoyable, and offer savings.
2) Put high profit margin items near the cash register, so that as people are buying, they can add an impulse item without thinking of it. (Think crying kids and candy bars at all times.)
3) Can you run double shifts, or have extended hours and create more revenue? (Also be aware that you have to have an adult that is responsible to watch the store. You don't have to do it yourself, but you are always responsible.)
4) Can you do a promotion once a month, to bring new people into the store, and create return business?
5) Are you advertising over your urinals?
Every hour of the day is a potential revenue builder. Every square feet of space that you own/rent is a potential revenue source. If you don't have your items on display, can you rent advertising space to someone else.
In summary, think of what you have, and what you are perceived as having. Make a list, be crazy, and maximize returns.
I hired a man to wash restaurant linens while I was closed, and my profits soared. Why? Because my fixed costs were already covered. My costs of the equipment had already been paid, I was receiving Incremental revenue. (See my previous post about incremental revenue: http://power2negotiate.blogspot.com/2011/04/incremental-revenue.html)
What is your unused capacity? Do you have equipment that is not being used? Do your employees have downtime that you could use to generate revenue? Do you have a parking lot that you could use to host a promotion for your business? What do you have that you can use to generate additional revenue each month?
Make a list of your resources. This list does not have to be done immediately, only when you want to have additional massive profits. However, be thorough and list things that you might not "own" but are perceived as owning. (Maybe you license software and have access to use it for purposes other than your main business function? If you have designers, can you outsource design jobs to them so that they are constantly busy? If you have marketers that are knocking on doors, can you have them hand out fliers that promote your business AND couple that with a coupon of another business so that you create value for BOTH businesses? If you have people calling in, or visiting your web site, can you have banner ads on your web site that direct them to complimentary businesses? Or offer them links to coupons so that they can buy more products?
One of the best examples that I know of unused resources being tapped is the advertising space over urinals in sports bars. I wouldn't ordinarily think of the space over a urinal as where I would want my product to be placed...but you have the customers undivided attention.
If someone can sell advertising space over a urinal, what unused production capabilities do you have in YOUR business?
Here is a list of some ideas:
1) Advertisements on your phone while people are on hold. Make it fun, enjoyable, and offer savings.
2) Put high profit margin items near the cash register, so that as people are buying, they can add an impulse item without thinking of it. (Think crying kids and candy bars at all times.)
3) Can you run double shifts, or have extended hours and create more revenue? (Also be aware that you have to have an adult that is responsible to watch the store. You don't have to do it yourself, but you are always responsible.)
4) Can you do a promotion once a month, to bring new people into the store, and create return business?
5) Are you advertising over your urinals?
Every hour of the day is a potential revenue builder. Every square feet of space that you own/rent is a potential revenue source. If you don't have your items on display, can you rent advertising space to someone else.
In summary, think of what you have, and what you are perceived as having. Make a list, be crazy, and maximize returns.
Tie downs make the sale
A tie down is one of the most powerful tools that you can use in sales. What exactly IS a tie down. A tie down asks the client to agree to a statement, and say "yes". Here is an example.
"It's a gorgeous day, isn't it?"
Of course it's a beautiful day. They will nod their head, or say "yes", just to be social. While they are doing that, they have allowed you access to their decision making process. You are now in control. As soon as you have gotten them to say "yes" once, you can do it again. Continue the process, and after you have gotten them to say yes to the little things, they will soon say yes to your product.
Here are some examples of the progression of tie downs in a conversation.
"This is a beautiful car, Isn't it?"
"This car would get great gas mileage and save you money, wouldn't it?"
"If you are looking for the best value, saving money at the gas pump saves you money each day, doesn't it?"
"Saving money each day, is more important than the initial purchase price, isn't it?"
"You want to save money, don't you?"
What you have just done, is get the customer to agree that a car that has good gas mileage is more valuable than a car that gets bad gas mileage, and that they should look for the everyday savings. By having them agree, either verbally or non-verbally, to each statement, you are leading them down a path to the sale.
The tie down asks, explicitly, for agreement on each statement. This can sometimes be seen as aggressive. It might even stop the sale.
Another technique is the "Inverted tie down". The inverted tie down puts the tie down at the front of the question, and is much more conversational.
"Isn't it a beautiful car?" By establishing a non-threatening style with the inverted tie downs, it is much easier to convert over to tie downs to close the sale.
Practice them regularly to establish agreement. When you have mastered them among your family and friends, now use them on customers, and watch your sales soar.
"It's a gorgeous day, isn't it?"
Of course it's a beautiful day. They will nod their head, or say "yes", just to be social. While they are doing that, they have allowed you access to their decision making process. You are now in control. As soon as you have gotten them to say "yes" once, you can do it again. Continue the process, and after you have gotten them to say yes to the little things, they will soon say yes to your product.
Here are some examples of the progression of tie downs in a conversation.
"This is a beautiful car, Isn't it?"
"This car would get great gas mileage and save you money, wouldn't it?"
"If you are looking for the best value, saving money at the gas pump saves you money each day, doesn't it?"
"Saving money each day, is more important than the initial purchase price, isn't it?"
"You want to save money, don't you?"
What you have just done, is get the customer to agree that a car that has good gas mileage is more valuable than a car that gets bad gas mileage, and that they should look for the everyday savings. By having them agree, either verbally or non-verbally, to each statement, you are leading them down a path to the sale.
The tie down asks, explicitly, for agreement on each statement. This can sometimes be seen as aggressive. It might even stop the sale.
Another technique is the "Inverted tie down". The inverted tie down puts the tie down at the front of the question, and is much more conversational.
"Isn't it a beautiful car?" By establishing a non-threatening style with the inverted tie downs, it is much easier to convert over to tie downs to close the sale.
Practice them regularly to establish agreement. When you have mastered them among your family and friends, now use them on customers, and watch your sales soar.
Coupons are free money
A lot of businesses use coupons to lure guests to their stores, or to increase sales. Other businesses complain that they lose money with coupons. The business owners that complain aren't doing it correctly.
A coupon is an incentive for new customers to use your business. However, you never structure a coupon to get just a basic item. You use coupons to encourage multiple sales. (A "2 for 1" coupon where they buy one pizza, and get the second one free means that the customer just spent $20, instead of $10.) A coupon where you give away a free meal, just for showing up, might get people in the door, but it costs you money.
In a previous article, I wrote about incremental revenue. http://power2negotiate.blogspot.com/ In this post I want to talk about how to use coupons effectively.
1) A coupon should bring people to your store. If it doesn't accomplish that, it is a failure.
2) A coupon should bundle products and services so that you increase revenue. (Giving away a free taco is NOT a coupon, it is suicide.)
3) A coupon should demand immediate action. This is not an attempt to establish "awareness" but to buy. (I don't need to put expiration dates on a coupon. I need all coupons to be profit centers, every time, and for every occasion.)
4) A coupon should bundle high profit margin items with low profit margin items to increase revenue...and increase profit. ("Buy a meal, get a free beer", "Buy two, get the next one free", "Free dessert with every family meal", "Buy three pizzas, get free breadsticks") By increasing the per head (dollars spent per customer) you are exponentially increasing the profit margin, and profits.
5) You MUST know your costs. What are your fixed costs? What are your incremental costs per unit? What is your shipping costs? What is your cost per sale to a new customer? What is your cost per sale to an established customer?
6) Your coupon must be an orphan. This means that it must NOT steal profits from the rest of your business, but must add profits by itself. If it does not, a coupon could put you out of business.
7) BUNDLE, BUNDLE, BUNDLE each service with another product/service to increase revenue. Always be thinking of giving a discount on the ADDITIONAL purchase, rather than the INITIAL purchase. $20 of revenue is better than $10 of revenue.
8) Take action NOW! Each coupon should have such an attractive offer that it brings people in the door.
If you use coupons correctly, each coupon will generate additional revenue...and be profitable. If you do it incorrectly, you will lose money on each sale, but you will make up for it in volume.
A coupon is an incentive for new customers to use your business. However, you never structure a coupon to get just a basic item. You use coupons to encourage multiple sales. (A "2 for 1" coupon where they buy one pizza, and get the second one free means that the customer just spent $20, instead of $10.) A coupon where you give away a free meal, just for showing up, might get people in the door, but it costs you money.
In a previous article, I wrote about incremental revenue. http://power2negotiate.blogspot.com/ In this post I want to talk about how to use coupons effectively.
1) A coupon should bring people to your store. If it doesn't accomplish that, it is a failure.
2) A coupon should bundle products and services so that you increase revenue. (Giving away a free taco is NOT a coupon, it is suicide.)
3) A coupon should demand immediate action. This is not an attempt to establish "awareness" but to buy. (I don't need to put expiration dates on a coupon. I need all coupons to be profit centers, every time, and for every occasion.)
4) A coupon should bundle high profit margin items with low profit margin items to increase revenue...and increase profit. ("Buy a meal, get a free beer", "Buy two, get the next one free", "Free dessert with every family meal", "Buy three pizzas, get free breadsticks") By increasing the per head (dollars spent per customer) you are exponentially increasing the profit margin, and profits.
5) You MUST know your costs. What are your fixed costs? What are your incremental costs per unit? What is your shipping costs? What is your cost per sale to a new customer? What is your cost per sale to an established customer?
6) Your coupon must be an orphan. This means that it must NOT steal profits from the rest of your business, but must add profits by itself. If it does not, a coupon could put you out of business.
7) BUNDLE, BUNDLE, BUNDLE each service with another product/service to increase revenue. Always be thinking of giving a discount on the ADDITIONAL purchase, rather than the INITIAL purchase. $20 of revenue is better than $10 of revenue.
8) Take action NOW! Each coupon should have such an attractive offer that it brings people in the door.
If you use coupons correctly, each coupon will generate additional revenue...and be profitable. If you do it incorrectly, you will lose money on each sale, but you will make up for it in volume.
Incremental Revenue
In a previous post, I mentioned incremental revenue opportunities. http://power2negotiate.blogspot.com/2011/04/business-plan-versus-mantra.html.
What IS an incremental revenue opportunity. If I can use a ubiquitous example, "Do you want fries with that?" is the definition of an incremental revenue opportunity.
It is simply doing a side sell, or an upsell to an existing customer. They are already purchasing, and, at the point of purchase, you persuade them to add an additional product or service to the purchase, increasing profit.
What are your costs for doing this?
Absolutely zero? You have already PAID the advertising costs to get the client into your store/site/office. You have already PAID all of your rent/fixed costs/overhead to run your business. You have already completed the hardest part, getting them to purchase the first item. Now, all you have to do it have them increase the sale.
The added revenue is "free money" with only your cost of goods assigned to it. It has NO overhead costs, advertising costs, or commission costs, because it is an incremental sale.
My family had an RV park. During the winter, we would have more guests than sites. So, we would park the additional campers around our house, hook them up to our electric and water, and let them stay there for a few months.
I HATED it. I couldn't open my window for fear of seeing a retiree looking back at me. I complained to my Aunt Betty.
She explained, "Reed, we don't have any additional costs for those campers. That is VACATION money." When she explained it that way, it made sense.
You want to encourage your employees to always ask, "Do you want fries with that?" with EVERY purchase, because the profit percentage on incremental revenue is tremendous. If your employees are not asking for the additional sale, you are losing money. You are losing VACATION money.
What IS an incremental revenue opportunity. If I can use a ubiquitous example, "Do you want fries with that?" is the definition of an incremental revenue opportunity.
It is simply doing a side sell, or an upsell to an existing customer. They are already purchasing, and, at the point of purchase, you persuade them to add an additional product or service to the purchase, increasing profit.
What are your costs for doing this?
Absolutely zero? You have already PAID the advertising costs to get the client into your store/site/office. You have already PAID all of your rent/fixed costs/overhead to run your business. You have already completed the hardest part, getting them to purchase the first item. Now, all you have to do it have them increase the sale.
The added revenue is "free money" with only your cost of goods assigned to it. It has NO overhead costs, advertising costs, or commission costs, because it is an incremental sale.
My family had an RV park. During the winter, we would have more guests than sites. So, we would park the additional campers around our house, hook them up to our electric and water, and let them stay there for a few months.
I HATED it. I couldn't open my window for fear of seeing a retiree looking back at me. I complained to my Aunt Betty.
She explained, "Reed, we don't have any additional costs for those campers. That is VACATION money." When she explained it that way, it made sense.
You want to encourage your employees to always ask, "Do you want fries with that?" with EVERY purchase, because the profit percentage on incremental revenue is tremendous. If your employees are not asking for the additional sale, you are losing money. You are losing VACATION money.
Business plan versus mantra
A lot of new entrepreneurs believe that they MUST have a "Business Plan". They think that a business plan is the answer to all of their problems, and that it must be followed religiously.
Unfortunately, they are wrong.
You DO need to have your plans written down, and it would be nice if they were in detail, but you must be free to modify...on the fly, or die.
My family moved from Michigan to Florida in 1971 and established an RV park. At the time, people had huge cars, and would tow their travel trailers on vacation all across the country. The conditions were perfect for this type of RV park.
We built the park, and then the world changed.
In 1972 there was a Mid-East oil embargo. Gas prices went up 100% in less than a year, and there were gas shortages around the world. An unprecedented change in the world changed our business plan. We modified our plan by servicing retirees that wanted to bring their RV's to Florida, and spend the winter here as snowbirds. Suddenly, we weren't a park catering to Disney guests, but a long term destination park. After a few lean years, we grew the business from 40 sites to 450 sites, and during the winter months we consistently ran at 110% capacity. (More on incremental revenue opportunities on a later post.)
In other words, when your business changes, you MUST be willing to modify, on the fly, or die.
Your business plan should be able to be expressed in a single sentence. I call it a motto. You MUST have a business plan that you can explain in one sentence...or less. If you can't articulate your business in one sentence, how will anyone else be able to understand it...or want your products?
For example: SLAID Centers, "Affordable legal services for every need".
Brainstorm Capital Group: "Expertise, capital, and ventures to help you arrive at the best business solutions."
Enterprise Rent a Car: "We drive you there".
If you can simplify your business motto into a sentence and have it be so powerful that people will remember it forever, they might just try you.
You are looking for a shot. An opportunity to get their business, and then wow them with world class service.
Don't be afraid to revise your business motto, because change happens, and you must change with it. You must be able to modify, on the fly, or die.
Unfortunately, they are wrong.
You DO need to have your plans written down, and it would be nice if they were in detail, but you must be free to modify...on the fly, or die.
My family moved from Michigan to Florida in 1971 and established an RV park. At the time, people had huge cars, and would tow their travel trailers on vacation all across the country. The conditions were perfect for this type of RV park.
We built the park, and then the world changed.
In 1972 there was a Mid-East oil embargo. Gas prices went up 100% in less than a year, and there were gas shortages around the world. An unprecedented change in the world changed our business plan. We modified our plan by servicing retirees that wanted to bring their RV's to Florida, and spend the winter here as snowbirds. Suddenly, we weren't a park catering to Disney guests, but a long term destination park. After a few lean years, we grew the business from 40 sites to 450 sites, and during the winter months we consistently ran at 110% capacity. (More on incremental revenue opportunities on a later post.)
In other words, when your business changes, you MUST be willing to modify, on the fly, or die.
Your business plan should be able to be expressed in a single sentence. I call it a motto. You MUST have a business plan that you can explain in one sentence...or less. If you can't articulate your business in one sentence, how will anyone else be able to understand it...or want your products?
For example: SLAID Centers, "Affordable legal services for every need".
Brainstorm Capital Group: "Expertise, capital, and ventures to help you arrive at the best business solutions."
Enterprise Rent a Car: "We drive you there".
If you can simplify your business motto into a sentence and have it be so powerful that people will remember it forever, they might just try you.
You are looking for a shot. An opportunity to get their business, and then wow them with world class service.
Don't be afraid to revise your business motto, because change happens, and you must change with it. You must be able to modify, on the fly, or die.
Friday, April 22, 2011
Fear
Robert Kyosocki once said, "If you do the thing that you fear the most, you will have conquered your fear." As an entrepreneur, fear is a constant companion. You are fearful that you won't sell any of your product, or run out of money, or be sued by a deadbeat, or....
You will never be able to avoid risk, however, if you can manage risk intelligently, you can minimize the risk and make it acceptable.
What are some of the ways that an entrepreneur can manage risks?
1) Incorporate: If you own a sole proprietorship, all that you now own, or will own in the future, can be taken away in a lawsuit. Unfortunately, there are a lot of people that are professional victims that are just looking to sue someone, and because we do not have a "loser pays" legal system, they do so at no risk. How do you manage those risks? Incorporate. If someone sues, and wins, all that they can do is to take the corporate assets, not your personal assets.
2) Insurance: Do you have a "key man" or woman that your business depends on to be profitable? What would happen if they died? What would happen if they got an offer at a different job? (Can you say, "Lebron James"?) Key man insurance is expensive, but it gives you a buffer to survive and move on if a key employee is no longer there. At the same time, if you have a key employee, and you are not paying them well, do not be amazed if they leave at the first opportunity. One of the ways to manage this is to give them a piece of the company. You do not do this out of altruism, but because it makes good business sense.
3) Investment (Research and Development): A lot of companies work like crazy to develop new technologies and have the latest and greatest product...and then stop innovating. In our technologically advanced culture, a new technology will be cutting edge for weeks. It will be innovative for months, and it will have a life span of 18 months...if you are lucky. If you are developing new technologies, you must be constantly adapting, revising, and coming up with new products/services that are "cool". If you don't you risk being a "buggy whip" manufacturer with a great product...but no demand.
4) Instant results marketing: One of the ways to lower your risks in marketing is to only pay for results. For instance, If your advertising budget is 10% of gross sales, and you want to increase sales, offer a 10% discount off purchases, if they buy using a coupon. You only pay for results WHEN the sale is made. OR, you use consultants, and you ONLY pay when they make a sale. By using production results (or commissions) you are only paying when you receive money. If you are using dinosaur marketing techniques, you pay for the possibility that someone will notice the ad, remember, contact you, and purchase. If you use Instant results marketing, you pay the commission AS you are paid, and not before. This lowers risk.
5) Bundling services/products: Instead of offering to sell your services piecemeal, offer to bundle services so that your customers pay for a larger purchase, increasing your revenue, by giving them a discount over buying the separate pieces individually. (Buy a case of Mountain Dew, for $150, rather than purchasing one Mountain Dew for $1.50. The per unit cost is lower individually, but by selling a greater volume, you increase your revenue. Assuming that they will continue to purchase your product.)
In short, if you are able to reduce your risk of failure, you will increase your chances of success, with all other variables being constant. Manage your fear, and you will manage your success.
You will never be able to avoid risk, however, if you can manage risk intelligently, you can minimize the risk and make it acceptable.
What are some of the ways that an entrepreneur can manage risks?
1) Incorporate: If you own a sole proprietorship, all that you now own, or will own in the future, can be taken away in a lawsuit. Unfortunately, there are a lot of people that are professional victims that are just looking to sue someone, and because we do not have a "loser pays" legal system, they do so at no risk. How do you manage those risks? Incorporate. If someone sues, and wins, all that they can do is to take the corporate assets, not your personal assets.
2) Insurance: Do you have a "key man" or woman that your business depends on to be profitable? What would happen if they died? What would happen if they got an offer at a different job? (Can you say, "Lebron James"?) Key man insurance is expensive, but it gives you a buffer to survive and move on if a key employee is no longer there. At the same time, if you have a key employee, and you are not paying them well, do not be amazed if they leave at the first opportunity. One of the ways to manage this is to give them a piece of the company. You do not do this out of altruism, but because it makes good business sense.
3) Investment (Research and Development): A lot of companies work like crazy to develop new technologies and have the latest and greatest product...and then stop innovating. In our technologically advanced culture, a new technology will be cutting edge for weeks. It will be innovative for months, and it will have a life span of 18 months...if you are lucky. If you are developing new technologies, you must be constantly adapting, revising, and coming up with new products/services that are "cool". If you don't you risk being a "buggy whip" manufacturer with a great product...but no demand.
4) Instant results marketing: One of the ways to lower your risks in marketing is to only pay for results. For instance, If your advertising budget is 10% of gross sales, and you want to increase sales, offer a 10% discount off purchases, if they buy using a coupon. You only pay for results WHEN the sale is made. OR, you use consultants, and you ONLY pay when they make a sale. By using production results (or commissions) you are only paying when you receive money. If you are using dinosaur marketing techniques, you pay for the possibility that someone will notice the ad, remember, contact you, and purchase. If you use Instant results marketing, you pay the commission AS you are paid, and not before. This lowers risk.
5) Bundling services/products: Instead of offering to sell your services piecemeal, offer to bundle services so that your customers pay for a larger purchase, increasing your revenue, by giving them a discount over buying the separate pieces individually. (Buy a case of Mountain Dew, for $150, rather than purchasing one Mountain Dew for $1.50. The per unit cost is lower individually, but by selling a greater volume, you increase your revenue. Assuming that they will continue to purchase your product.)
In short, if you are able to reduce your risk of failure, you will increase your chances of success, with all other variables being constant. Manage your fear, and you will manage your success.
Establishing rapport quickly
One of the secrets to negotiating is effective communicating. However, if someone feels that they are being interrogated, they will not reveal anything about what they want. The easiest way to begin a negotiation is to start with sharing a little bit about yourself, and then revealing a little more, and a little more, and then let the other person talk. I use open and closed ended questions to precisely find their objections and motivations.
What are open ended and closed ended questions? An open ended question is one with no easy answer.
"Can you tell me a little bit about your situation?"
"How do you feel about that?"
"What are you looking to accomplish with this sale?"
"What would make you happy with this sale?"
As you start asking these questions, and you must listen sincerely, the other person will be amazed that you want to listen, and they will start telling you everything you wanted to know...and more. The open ended question gathers a LOT of information. It will be free ranging, and go off in unexpected tangents. Your job here is to herd cats...by asking the closed ended question to clarify their response.
Here are some closed ended questions:
Open: "Tell me about your situation?" Response: "I lost my job, and can't make the mortgage payments, I am wanting to sell so that I don't hurt my credit in a foreclosure."
Closed: "So you're worried about a foreclosure hurting your credit?" (We have moved away from the price, and are focusing on the foreclosure hazards, and the deleterious effects on their credit. The closed ended question can be answered in a single word or sentence.
If the seller starts going in the wrong direction, use the closed ended questions to get them back on track. You can interrupt...IF you are doing it to understand them better.
"Pardon me, I just want to make sure I understand, So you are saying that you are most concerned with avoiding a foreclosure?" This question gets them back on track, and steers them in the direction that you want them to go.
Although it seems rude to interrupt, you are actually engaging in intense listening, and if you also use mirroring techniques the seller will be amazed that you understand them so well, and will want to open up.
Practice this with friends and family, and you will be amazed at the results. You will find that people want to tell you everything, and that is ok...if you can control the direction of the conversation.
These intense listening skills are powerful, and must be used with caution. If they are used without integrity, they can really take advantage of other people, so make sure that you let people know up front exactly what you want to do; help them solve their problem, in a mutually advantageous manner.
Open and closed ended questions work with almost any person, but you must be aware that there are cultural differences around the world, and if you can modify your listening skills to cultural norms, it will work with anyone.
What are open ended and closed ended questions? An open ended question is one with no easy answer.
"Can you tell me a little bit about your situation?"
"How do you feel about that?"
"What are you looking to accomplish with this sale?"
"What would make you happy with this sale?"
As you start asking these questions, and you must listen sincerely, the other person will be amazed that you want to listen, and they will start telling you everything you wanted to know...and more. The open ended question gathers a LOT of information. It will be free ranging, and go off in unexpected tangents. Your job here is to herd cats...by asking the closed ended question to clarify their response.
Here are some closed ended questions:
Open: "Tell me about your situation?" Response: "I lost my job, and can't make the mortgage payments, I am wanting to sell so that I don't hurt my credit in a foreclosure."
Closed: "So you're worried about a foreclosure hurting your credit?" (We have moved away from the price, and are focusing on the foreclosure hazards, and the deleterious effects on their credit. The closed ended question can be answered in a single word or sentence.
If the seller starts going in the wrong direction, use the closed ended questions to get them back on track. You can interrupt...IF you are doing it to understand them better.
"Pardon me, I just want to make sure I understand, So you are saying that you are most concerned with avoiding a foreclosure?" This question gets them back on track, and steers them in the direction that you want them to go.
Although it seems rude to interrupt, you are actually engaging in intense listening, and if you also use mirroring techniques the seller will be amazed that you understand them so well, and will want to open up.
Practice this with friends and family, and you will be amazed at the results. You will find that people want to tell you everything, and that is ok...if you can control the direction of the conversation.
These intense listening skills are powerful, and must be used with caution. If they are used without integrity, they can really take advantage of other people, so make sure that you let people know up front exactly what you want to do; help them solve their problem, in a mutually advantageous manner.
Open and closed ended questions work with almost any person, but you must be aware that there are cultural differences around the world, and if you can modify your listening skills to cultural norms, it will work with anyone.
Negotiating with the Dreadful alternative
When you are seeking to buy, or sell, anything, use the power of the "Dreadful Alternative" as your partner.
What is the "Dreadful Alternative"? Imagine that you are looking to buy a house. As you are starting to talk, ask a few questions:
1) If I don't buy it, what are you going to do? (If they have been trying to sell it for a long time, they are already afraid of not being able to sell it.)
2) If you have to move to another house, and make double payments, how long could you afford to make them before it SEVERELY affected your life style.
3) If you can't make the double payments, would you lose the house in foreclosure and have your credit destroyed?
By asking questions, you are having the seller tell you the answer. If I tell them, it might be a lie, if they tell me, it's always the truth (at least according to them.)
By using the dreadful alternative as your partner in negotiating, you are replacing the price (hope of gain) with the fear of loss. The fear of loss always wins. Because they are the ones stating the fear, it is always the truth. Our next blog will go into detail on some of the techniques to use to maximize the power of the dreadful alternative.
What is the "Dreadful Alternative"? Imagine that you are looking to buy a house. As you are starting to talk, ask a few questions:
1) If I don't buy it, what are you going to do? (If they have been trying to sell it for a long time, they are already afraid of not being able to sell it.)
2) If you have to move to another house, and make double payments, how long could you afford to make them before it SEVERELY affected your life style.
3) If you can't make the double payments, would you lose the house in foreclosure and have your credit destroyed?
By asking questions, you are having the seller tell you the answer. If I tell them, it might be a lie, if they tell me, it's always the truth (at least according to them.)
By using the dreadful alternative as your partner in negotiating, you are replacing the price (hope of gain) with the fear of loss. The fear of loss always wins. Because they are the ones stating the fear, it is always the truth. Our next blog will go into detail on some of the techniques to use to maximize the power of the dreadful alternative.
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