Monthly Archives: August 2012

How pinching pennies can make you penniless

As the economy continues to be sluggish, many people and companies are tightening their wallets and trying to shave every penny they can off their expenses.  While this makes sense on the surface, it can have damaging long-term effects.

I’ll share my personal history to illustrate this.  For several years, I’ve had quite a lot of debt.  About $10k in credit card debt, and another $50k in unpaid student loans.  Much of this debt was incurred as I struggled to find gainful employment out of college; and later, when I was laid off and was out of work for a few months.  To try to get out of this situation, I responded by trying to cut any and all expenses I could: reduce the heat and A/C, cut out all eating out, reduce entertainment to nil, etc.

I expected that if I reduced my expenses, the result would be more money available to pay off debts and greater stability.  Unfortunately, it didn’t work out that way.  Every time I started making headway, some mysterious emergency would come and wipe out my progress.  My cars broke down.  My son had accidents or got sick.  Unexpected problems arose.

Only recently, when I stopped focusing on money problems, debt and cutting, did things start to turn around.  I focused on earning more.  Bringing in more income, rather than reduce outflow.  I quickly found new opportunities to earn extra monet.  The bills settled down, emergencies stopped coming up, and I’m finally starting to pay off those debts.

I’ve witnessed the same phenomena in business.  When I worked for a wholesaler in the foodservice industry, I would inevitably run across cheapskates who haggled me down as much as they could to get a better price.  The worst ones had 5-10 separate vendors, and shopped around on every item.

Instead of getting rich, however, most of them went out of business or struggled just to keep their doors open.  They spent so much time trying to stop money from going out, that they never focused on bringing more money in.  None of the several vendors showed any loyalty to these customers, as they barely made any money themselves.  When the account went even slightly past due, they were cut off.

A better approach is to pick one or 2 vendors and partner with them.  Find the vendor that has the best combination of price, service and knowledge of their business (and yours) and give them all of the business.  They will take care of you.  They will give you creative ideas.  They will help you get the word out.  They will promote your business using their social media, word of mouth and other channels.  We’ve just started doing this with our vendors, and we are already seeing positive results.

More importantly, don’t skimp on your marketing budget.  While you shouldn’t continually throw money out without results, you shouldn’t cut marketing completely either.  The big advantage of social, online and email marketing isn’t so much in the cost as it is in the ability to track results.  Pay attention to which messages and specials get responses and sales.  Then, back up your online messages with print and hard copy promotional materials that repeat that message.  Some people still don’t use social media or respond to online marketing.  However, by using online marketing strategies first, you can eliminate a lot of the trial and error involved with finding a marketing message that works.  Then, you can use your hard copy pieces more efficiently to really bring in the income.

Happy hunting!

Jim

AFS

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Knowledge is Power… and Money

The old saying that knowledge is power is true, but it also applies to sales.

Ten years ago, when I first entered into sales, a good account would have maybe two or three competitors vying for their business.  In this environment, the trick was to get the customer or prospect to like you, have a good product and present good ideas.  Typically, you could make a decent profit and subsequently, a decent commission check, just by being there.

Now, with the Internet, buyers have unprecedented access to options.  If I’m selling a commodity item, I no longer have to compete with 1 or 2 competitors, but potentially thousands.  A buyer can go online, type their product into a search engine, and find a dozen offers at dirt cheap prices.  While people still buy from people they like, a customer won’t like you much when they find out they can get the exact same item online for 40% cheaper.

The secret is knowledge.  What do you know that can help that customer?  What options should they consider?  How can your expertise help them make more money or save them money in the long run?  Your knowledge is the key to taking the sale from a commodity, dollars-and-cents negotiation (which you will eventually lose, every time) to a relationship-building, money-making sale.

In my business of custom print, people can certainly go online and order their marketing pieces, business cards, etc. from bargain basement online printers.  They probably can get it cheaper, too.  But do they know all of the options available?  Do they know which options work well for their application?  Which options really make an impact, and which options merely add to the cost?

I’m the expert.  I know printing.  By providing them with advice, options and using my experience and expertise, I save them time and money.  More importantly, the end result will be a professional product that will deliver the most bang for their buck.
As a sales or marketing professional, don’t be an order taker.  Don’t be a vanilla, low-price dealer.  There is always someone else out there who will do it cheaper.  With the Internet, buyers have virtually unlimited access vendors to purchase their product.  But if you are the expert, and you help them navigate the options to the best solution for THEM, they’ll respect you and continue to do business with you.  Be a professional.

As a buyer, don’t fall into the trap of cheaper-is-always-better.  Are you really getting the best value for your purchase?  Does service count?  Will that online vendor with a phone tree 9 button-pressing options deep, who is located halfway across the country be there if something goes wrong (especially if you’ve wringed every last penny out of the cost)?  Support your professional salesmen.  The good ones will always be there for you.

Make a personal connection today

Normally, I work 40-45 hours a week at my day job, and another 30 hours a week or so at my church, delivering spiritual counseling. As you can imagine, my time with my family comes at a heavy premium.

This week I’ve been off from my work with my church, enjoying some much-needed R&R and time with my kids.  Yesterday, while I was playing with my son in the pool in our apartment complex, I noticed another kid playing by himself, while his mother sat in a lounge chair, texting for several minutes.  After playing with my son for several more minutes, I again noticed the mother, who was now reading a book.

The entire half hour we were there, I think she said maybe 2 sentences to her son.  She divided her time between her phone and her book.  At first, it made me sad that she thought so little of the time she had with her son that she didn’t feel the need or desire to play or interact with him.  On the other hand, it reaffirmed the gratitude that I felt for the time I did have with my son.  I haven’t always felt this way; nor have I truly appreciated the gifts that I do have.

In our society, we are so inundated with communication from TV, magazines, text messages, email and elsewhere that we tend to zone out a bit.  Personal, one-on-one communication is becoming a lost art.  Several years ago, I was at a restaurant on Friday night.  I noticed a group of 5 people at a table.  What struck me was, every one of them was talking on a cell phone.  There were five friends out together on a Friday night, yet none of them were really there!  And that was before texting and email were readily available on smartphones.  Now, it’s common to see people completely oblivious to the outside world; faces transfixed at a screen about 2 feet in front of their eyes, frantically tapping out messages.

Take some time today to physically talk to someone; as in, stand in front of them and communicate.  Put down the phone, ipad, etc.  Shut of the TV and computer.  Close your magazine or 50 Shades of Grey (or other book).  Have an actual, human, face-to-face interaction with someone.  Play with your kids.  Enjoy someone else’s company.  If you find it difficult to do, don’t worry.  Instead, see it as a sign that you need to practice this much more often.

As Farris Bueller once said, “life moves pretty fast.  If you don’t stop and look around once in a while, you could miss it.”