Henry David Thoreau said it best: “Simplicity, simplicity, simplicity!” Despite the universal acknowledgement that his words are both wise and sound, we continue to flip him the bird with our actions. Keep It Simple, Stupid.
It genuinely applies to all areas of life:
Don’t overcomplicate things! Especially when it comes to proposals and sales
pitches, we frequently forget the tried-and-true advice: “Features Tell,
Benefits Sell.” Repeatedly, this adage has been proven over the centuries. So
by now, you would think it’s so obvious that everyone practices
it. However, this is NOT the case at all.
Why do so many of us still try to sell based
on the features of our products and services rather than their benefits???
Sales techniques require careful thought and
analysis. It seems trivial and self-evident to state that selling is a process
that involves a buyer, a seller, and a transaction. So, why do many of
us frequently forget that simple formula? There are countless books,
articles, tapes, and training efforts on sales techniques, but it boils down to
meeting the needs of the client.
I recently experienced two vastly different
proposal approaches that perfectly demonstrate my point.
One: I needed a new estate lawyer. The first
person I considered hiring started our meeting by explaining that he did not
charge for the initial meeting because he wanted to clearly understand my needs
and explain how and at what price he could meet them. He then listened and gave
a great presentation on how he would handle my needs. I hired him without
seeking alternatives because he understood what I wanted and showed me how he
would deliver that. Many professionals including accountants, investment
advisors, and even real estate brokers have similar approaches.
Two: I was seeking a marketing consultant. I
placed an ad on Craig’s List and received many responses from people who were
seemingly qualified. However, many showed traits that excluded them from
further consideration:
They wanted to sell
packaged services without any understanding of client needs and goals.
Frequently, they didn’t even read the introductory material that was sent to
them.
They provided little
information on why or how their efforts would be successful or
beneficial to me. One actually wrote that there was no long-term pay off for
their services.
They highlighted their
product’s presumed strengths rather than focusing on how it would meet my
needs.
The juxtaposition of these experiences shed
light on some simple strategies that may help you improve your own
approach:
Listen. Take the time to understand what the client needs and wants. Do you both understand the difference between the two and how to balance them? For example, is the budget only big enough to execute the programs necessary for success? Or are there excess funds that will allow for add-ons? (Also, avoid pitches that ask for a budget and then offer low bids just to secure business. Saving money doesn’t help if goals aren’t met.)
Know your strengths. What skills and
programs do you have to answer client needs? Creative, technical, and
programming needs/skills are quite different. What do you bring to the table and
how will those unique qualities ensure the client’s success?
Set trackable goals. How will you measure
results and progress? You need an end goal so that you can show results. What
is the startup period? Are you trying to improve sales, communication, or branding?
Tangible progress is key.
Be direct, honest and polite. Transparency and manners
go a long way. Additionally, make sure to provide clients with your email
address and phone number on every document. You may think this is trivial or
obvious, but I can’t tell you how many resumes I’ve been sent that lack this
basic information.
Provide proof for your
claims.
Cite examples of relevant success. It both builds your image and gives clients confidence
in hiring you. I automatically reject suppliers who cannot provide references
or quantitative expectations for their program.
Find connection. Consider what may seem
like external variables: Demographics, gender, culture, economy, and geography
may be more important than you think. I am from Chicago and Yankee fans
frequently build an instant rapport with me by trashing my White Sox.
The bottom line: Keep
it simple, short, and to-the-point. Avoid the fluff. No one wants to walk away
feeling confused about what is being offered. Clients want to know what you do,
how you can help them specifically, and at what price. “Simplicity, simplicity,
simplicity!”
“I’m not playing anymore!” A phrase most often yelled by a child (or an adult) who isn’t winning. We all know these people: they aren’t happy unless they’re in first place, they own ALL the Monopoly properties, and the other team is crying. We’re taught not to be sore losers, but we often forget to acknowledge the negative effects of being a poor winner—especially when it comes to the cut-throat world of economics where everyone is striving to create the best decisions at any cost. Learn why beating your competition isn’t everything.
However, we need to stop focusing on crushing the
competition and concentrate, instead, on creating more win-win scenarios. When
developing the best business strategies for your company, you might think it’s
imperative to get rid of any and all opposition, but competition makes us
better. When an athlete has a strong opponent to go up against, you better
believe they’re going to train harder and longer and, ultimately, get stronger.
With the right mindset, we can learn things from competitors and they will push
us to excel.
How can you
adopt a “Win-Win” mindset in order to generate better results overall?
Understand
That Sharing Does Not Equal Losing.
The tendency is to think that it’s always a zero-sum
game, meaning that there can be only one winner and everyone else must,
therefore, be a loser. But, this outlook makes it impossible to create
sustainable business models. Rather than looking to create win-lose situations,
it’s much more beneficial to find ways to “grow the pie,” as they say.
Costco is a great example of this: They provide a
package deal, which doesn’t add to their bottom line, but still provides the
consumer with benefits that enhance their shopping experience. Other examples
include dinner or airline packages, which include add-ons that make customers
feel like they’re getting more for their dollar, but simultaneously don’t
actually raise the business’ production cost. They key here, however, is to
make sure that your free offerings are desirable. The goal is to increase value
for everyone.
Rethink
“Compromise.”
Too many people, falsely, assume that a compromise
means they’ve lost or that they’re being forced to forfeit something. In
actuality, compromising usually makes you stronger. By listening to the needs
and understanding the goals of your partners (both personal and business), you
build and strengthen the relationship.
When you are willing to consider another party’s
interests, they will, in turn, be more open to catering to your own. In
particular, you might discuss things like price, service, quality, and
reliability. Different transactions hold varying expectations (i.e. to someone
stuck in the rain, availability is more important than price or even the quality
of an umbrella while quality is a crucial factor to someone purchasing a car). Finding where to give and take will help
create an improved outcome for all. In the end, communication is essential to
producing win-win outcomes.
Recognize That
Success Does Not Equal the Failure of Others.
How many profitable barbershops, Italian restaurants,
and grocery stores exist in your neighborhood? Enough said.
Be Open to a
New End Goal.
We often go into situations with a precise vision and
set expectations, but this limits potential. If we’re able to keep an open mind
and test different ideas (i.e. pricing, delivery time, production style, etc.),
we might discover a scenario which strays from our original idea, but
ultimately achieves better results for all parties involved. This requires open
communication between suppliers, colleagues, customers, and even competition.
It also means being open to feedback. Look, listen,
and analyze. Face it: you don’t always know what’s best and the insights of
others may be the missing link to improved productivity and the key to creating
the best business model for your company.
Accept That
Failure Is Part Of Success.
It’s
often said that if you aren’t making mistakes, you aren’t trying hard enough. It’s
safe to say that the experiences of these innovators illustrate this point:
Thomas Edison, one of the greatest inventors of all time, had 10,000 failed trials with his light bulb.
Stephen Spielberg, famed movie director, went solo after being rejected three times from the University of California.
Bill Gates and Mark Zuckerberg, both college-dropouts, went on to… well, you already know.
So: Try. Fail. Learn. Improve. Losing is where we
grow. Too often, winning provides a sense of false security. Accept that
there’s always going to be someone striving to do what you do better than you
do it. And then keep pushing yourself to be your own very best.
Once we accept that success isn’t built on the failure
of others, we open ourselves to a multitude of opportunities. Consider
different perspectives, encourage innovation, and accept the inevitability of
mistakes. You might be surprised at how beneficial it is (and how good it
feels) to win and watch others win simultaneously.
Pricing products or services used to be simple and straightforward. Production and distribution techniques have changed dramatically and become more efficient. This has resulted in great value and pricing opportunities for huge retailers like Costco and Amazon. Online store price changes occur instantaneously, with immediate visibility and accessibility to consumers. There is more diversity in consumer pricing behavior today. The high-end consumer who buys $1,000 shoes in better department stores visits merchants like T.J. Maxx and Amazon to shop for unbranded commodities at a 20-40% discount. Here are some effective pricing strategy ideas to consider for even small businesses:
Analyze
bundling and unbundling.
To coin a phrase, “Do
you sell it your way or our way?” Bundling — if done
correctly — can both improve a product offering and satisfy the
customer, such as selling complete meals or LEGO sets. Bundling can also
be a way to increase profit by adding elements such as high margin warranties
to low margin items like electronics. Bundling can also enhance sales and value,
such as offering extra services in places like fitness centers or nail salons.
Unbundling has also
become popular. Spirit Airlines offers no-frills fares and charges for every
service to maintain perceived low prices. Generic brands represent another
form of unbundling by charging lower prices in exchange for lesser branding.
Pricing
psychology can also dramatically affect your image.
After you have worked long and hard to develop a rational and effective pricing strategy consumer can react strongly to psychological presentations. These can include practices such as: pricing at “$9.95” (instead of $10.00), eliminating the actual dollar sign, unmonitored purchase limits, offering some items for free, selling two for $9.95, or changing colors and font sizes.
Varying Prices
can increase volume and Increase Profits.
One of the most
successful efforts by sports teams and airlines is variable pricing. The
simplest thing is they have ranges in seat prices by location, game or time. The
biggest change is in varying prices by time, seasonality, or holiday, to
develop revenue in off peak periods. While these examples can utilize
sophisticated and expensive computer models, the most noted model is very
simple. Specifically, the early bird special in Florida has been around as long
as I can remember.
“Free” is not
a dirty word
The
concept of “Freemium” is more than a business model. It’s also a pricing
strategy. Offer a free product or service, then offer ‘pay-to-upgrade’
features, and you have a Freemium strategy. Remember that companies like
Google and Facebook were built on free offerings for entry, followed by a host
of upgrades and “for pay” services. Ancillary aspects of the Freemium
strategy include samples, blogs, demonstrations, contributions to charities,
etc. — these can all create awareness and build long term volume at little or
no initial cost. An older variation is to basically “give away razors and
printers” to sell the “blades and ink.”
Consumers
Love Promotions
Contrary
to some popular opinion, “promotion” is not a dirty word and the use of
promotions is not synonymous with diluting the value of your brand. You have
many opportunities to find new ways to increase volume today, including pop up
shops, selling through Amazon or Wal-Mart marketplace, seasonal programs, and
bundling.
Manage your
Product Mix
Essential
to the process of effective pricing is to understand the entirety of your
product mix. Getting people into the store with loss leaders is a proven
strategy. Seasonal retailers use promotions like “back-to-school” or national
holidays to drive traffic to the store (or website), where customers will load
up on the non-sale items. Most important have the items customers want in stock
and avoid items or products that don’t sell like odd colors, sizes or
contents
Consider Service
and Quality After the Sale
Many customers will opt to stay with a company in large
part because of the quality their service after the sale. Some other factors that can affect price decisions are quality,
availability, selection, return polices, and guarantees. When you have a small
business, you have the flexibility to look your customer in the eye and take
that extra step to make sure your customer is happy. A key example is that restaurants
and retail stores can suffer major declines if customers have to wait too long.
Use Efficiencies
of Logistics, Sourcing and Distribution
Another aspect of effective pricing strategy that can provide major competitive advantages has to do with logistics, sourcing and distribution efficiencies. These may be used to reduce costs for you and prices for your customers. For example, Amazon is able to employ such efficiencies to operate on a 15-20 percent margin while traditional retailers have to work on 40-50 percent margins. Similarly, shipping times, delivery methods, using direct shipping, etc., can affect pricing and profits
Final Words
Entrepreneurs who recognize that traditional pricing models no longer apply in today’s world of business will be better able to price their goods and services appropriately in this “Brave New World.” Effective pricing strategies vary widely depending upon the factors we have discussed. The most important suggestion from this blog is to consider alternative pricing tactics and consider the entire pricing package. You must aggressively manage and innovate your entire pricing package rather than simply reacting to short-term changes in the market or competitive pressures.
I’d love to hear your examples of how managing pricing has enlarged your perspective without harming your brand. You can find me at Bshlensky@startupconnection.net or 914-632-6977
Dr. Bert Shlensky earned a PhD from the Sloan School of Management at M.I.T., mentored a few thousand clients at Score and his own practice, grew sure Fit products from $ 50 million dollars to 150 million in sales including $ 60 million of direct internet sales, was President of WestPoint Pepperell’s apparel fabrics business and headed the $400 million Culet shirt group. In short, he knows what works and can help you lead your company to greater profitability and success. StartupConnection.net provides small business owners real solutions to real problems. Contact us today!
Operations is finally getting its rightful place in small business strategy. Automation, technology, customer needs, and the sharing economy are becoming vital components of the branding and marketing process. In order to achieve marketing success through operations, here are some examples:
In sports, analytics can be used to improve the individual impact of player skills. Defensive shifts in baseball, the three-point play in basketball, and increased passing in football are fundamental changes that have been accelerated by analytics.
When selling on the internet first started, delivery and security were thought to be major barriers. Today, customer service and delivery in 1-2 days are generally standard. In addition, the internet has proven that eliminating stages of the sales process (like those used in brick and mortar stores) can dramatically reduce costs and prices.
Creativity, differentiation, and advertising have been the focus of traditional marketing and branding programs. However, issues like value, service, quality, and culture are producing better results. Compare the focus of many brands in department stores, versus Amazon and other leading online sites. I argue that online retailers succeed partly because of the lack of technological skills among many traditional marketing professionals.
Here are some ways to improve marketing success through operations:
1. Digital Branding and the Internet – If you research anything about business today, it’s obvious that Apple, Google, and Amazon are three of the most important sales and communication vehicles. Nearly everyone uses their phone and/or laptop to research and buy products and services. However, the digital efforts in many companies are still buried in departments like accounting or marketing. I argue that digital activities and marketing need a special place in organizations and should be a major part of marketing programs. For example, digital activities need to be an integral part of efforts like emails, websites, sales, marketing, social media, logistics, and customer service (and should be treated that way.)
2. Excellence – There is an ongoing debate about pursuing excellence versus change just for the sake of change. This topic is affected by several issues and we need to understand how problems can require different solutions. Businesses are subject to radical change, so they need to build mechanisms into their processes. While we will face more uncertainty and instability, we need to focus on changing and simplifying processes to reduce the risks. Strategies like pivoting, developing and testing/measuring/adapting need to be built into our organizations.
3. Service – Service, image, and culture are frequently the biggest (and often least expensive) ways for small companies to develop a brand and differentiate themselves. Some suggestions:
Focus on your target market, segment, and your ideal customer.
Be polite, listen, and then act based on what you have learned.
Become a trusted resource to your prospects by providing information that will help them make a good choice.
Build an email list and send informative mailings on a regular basis.
Keep in touch with potential and existing customers.
4. Company Culture – Creating and maintaining a positive company culture is a critical component in achieving excellence and establishing a great brand. A great strategy without a supportive culture will undoubtedly fail. I’ve seen it happen too many times.
Open systems are becoming a critical aspect of great cultures and they often reject bureaucracy, authority, and hierarchy. Open systems encourage participation, diversity, new rules, and to some extent, chaos.
There is no better example of this than the Golden State Warriors, who just won their third NBA title in four years. Much of the attention is given to their super stars, but if you look behind that, you see how the entire organization (including the training staff, coaching staff, medical staff) are all united to create excellence and a unified culture.
5. Prioritizing with the 80-20 Rule – Prioritizing can produce dramatic results. In particular, focusing on strengths and eliminating weaknesses has dual benefits. For example, I have a client who has the best product in the industry, but charges a little more money. She has achieved success by moderating some prices, but mostly in developing messages that explain her quality difference.
In the modern business realm, it has been proven time and time again that 80% of business revenues are generated by just 20% of our customers. Yet we all continue to waste time, money, and inventory dollars on customers that bring in a lower return. This tendency also frequently adds confusion and complexity.
By focusing on the products that you know your customers want, you’re making them feel much more confident (especially when you’re selling online.) Instead of finding new ways to market products that simply aren’t selling, you may be better off to shift over to what is selling. If you give people what they’re searching for, they’ll buy. If you don’t, they won’t. It’s that simple.
In summary, operations, and logistics should be viewed as a critical opportunity to improve sales, profit and competitive positioning. While there are some technical aspects to this, it is the thought process and integration of the key components that will lead to success.
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at M.I.T. He served as the President of WestPoint Pepperell’s apparel fabrics business and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select start-up and small businesses.
SEO is frequently touted as an effective marketing tool for small business. I receive 3-5 e-mails per week from companies that provide SEO, promising things like first page placement, with inexpensive and quick results. SEO can be highly effective, especially within a comprehensive program. Is SEO overrated for small businesses? I think these claims should at least be reviewed.
SEO is frequently marketed as a silver bullet. However, it is only a piece in the puzzle of a total marketing program. Integrating programs with social media platforms, like LinkedIn, Facebook, and Twitter require continued posting and new efforts. In particular, key factors such as differentiation, innovation, and attention require additional effort. Also, the pursuit of SEO algorithms can detract from the innovation and differentiation of the project.
SEO is not as easy as advertised, and like most things, it must be done well. This includes developing content, key words, links, marketing phrases, and pitches, in addition to continued maintenance, measurement, and modification.
It is not cheap – SEO consultants frequently charge $1000-$3000 per month. If you do it yourself, SEO requires significant time spent in branding and writing.
It takes time – SEO consultants generally say it takes 3-6months to even start showing results
Almost by definition, the big guys win. SEO placement is governed by clicks, and the more you naturally get, the more likely you are to get hits.
Another concern is the math – It is generally agreed that you need to focus on high placement, as first place in a search accounts for about 60% of clicks (and the first page 90-95% of clicks). Between 2013 and 2018, Google revenues have increased from $55 million to an estimated $140 million, which has two implications. First, paid search must work for many advertisers, because it is growing so fast. Second, paid search is increasingly taking up first page listings (which makes SEO that much more difficult.)
SEO advocates frequently ignore providing documentation of economics and results in determining when is SEO overrated. In contrast, Google goes out of its way to provide free analysis of clicks, conversions, and pathways to success.
Nevertheless, there are ways to benefit from using SEO:
The most important way is to have an integrated program, including social media, website development, and other marketing tools (like email, targeting, networking, and paid searches). Facebook, Twitter, LinkedIn, Google Plus, Pinterest, and industry sites should all be considered.
I frankly believe that networking and targeting can be the most productive techniques, because they engage interested clients. Getting email addresses and posting are key tools to make SEO more effective.
Focus on getting content and processes right. For example, spelling and inappropriate language can kill a campaign. It is always better to be polite and positive.
Evaluate your effort and measure your results, and change tools when you see success or failure.
Always consider how you are reaching your potential client and being interesting to them.
Don’t be afraid to test and experiment. In particular, if you are using outside resources, be sure to develop clear goals and measures for success.
SEO can be more effective for local postings, especially for service enterprises like repairs and restaurants.
In short, SEO and social media can produce great results. However, they must be done well, they must be part of a total marketing program.
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business, and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select start-up and small businesses.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
Operations is finally getting its rightful place in small business strategy. Automation, technology, customer needs, and the sharing economy are becoming vital components of the branding and marketing process. In order to achieve marketing success through operations, here are some examples:
2. Excellence – There is an ongoing debate about pursuing excellence versus change just for the sake of change. This topic is affected by several issues and we need to understand how problems can require different solutions. Businesses are subject to radical change, so they need to build mechanisms into their processes. While we will face more uncertainty and instability, we need to focus on changing and simplifying processes to reduce the risks. Strategies like pivoting, developing and testing/measuring/adapting need to be built into our organizations.
Open systems are becoming a critical aspect of great cultures and they often reject bureaucracy, authority, and hierarchy. Open systems encourage participation, diversity, new rules, and to some extent, chaos.
SEO is frequently touted as an effective marketing tool for small business. I receive 3-5 e-mails per week from companies that provide SEO, promising things like first page placement, with inexpensive and quick results. SEO can be highly effective, especially within a comprehensive program. Is SEO overrated for small businesses? I think these claims should at least be reviewed.
It is not cheap – SEO consultants frequently charge $1000-$3000 per month. If you do it yourself, SEO requires significant time spent in branding and writing.