Recession Tips (from Colin Mills)

A useful set of Recession Tips comes from Colin Mills at The FD Centre.

Many of our clients at the Directors' Centre do not have their own FD - they can't afford one, at least not full-time. Companies like the FD Centre may well be the answer as they provide part-time FDs for businesses.

Take a look at their website to get a feel for what they do and how they do it.

RELEVANT LINKS
Recession Tips from Colin Mills
The FD Centre
Directors' Centre

The Great Facebook Experiment

Our time is up. One month on I said I would get back to you with the results.

"WHY DID RC LOOK AT FACEBOOK...? There are a few answers but in brief:
1) At least half of my audiences (6-7,000pa) are under 40y old (and I am not) and are v small businesses...
2)We run marketing/delegate acquisition programmes for some of our sponsors and clients and wanted to see if this was another/alternative channel to use... (vs google adwords, Ecademy...)
3) We want to explore/experiment ourselves (my office not just me!) before we disregard it out of hand.

We had several measures of success (delegates to Barclays events... potential speaking bookings... consultancy discussions) but our main objective was to prove FB's value (or not) for ourselves."


GENERAL SUMMARY
It has been great to find a whole bunch of old school friends It has been great to get to understand how FB works. The volume of activity is very high but not very focused or relevant. Great to have another outlet for the blog.

BUSINESS SUMMARY
We have not sent out a single additional invoice as a result of our FB activity. Without a half-decent search facility, people will never find you unless they have been specifically pointed towards you. Question: What does your FB activity (and that of your 'friends') say about you? LinkedIn has been far more useful even if the interface isn't desperately user-friendly.

Question: Is it crucial to the success of our business?
Answer: No

Stop Being So Boring! Boring! Boring! - Now!"

Sorry about this rant but...


"YOU AND YOUR PRODUCT ARE SO RUN-OF-THE-MILL, MEDIOCRE, AVERAGE, DULL AND BORING. YOU ARE A FOLLOWER, A LAGGARD, A COPIER WITHOUT AN ORIGINAL IDEA, THOUGHT, PROCESS, PRODUCT, SERVICE OR WAY OF DOING STUFF IN YOUR MIDDLE-OF-THE-ROAD, 'JUST LIKE THE REST OF THEM' COMPANY.

BORING! BORING! BORING!

WHY SHOULD I BOTHER TO BUY FROM YOU WHEN I CAN BUY FROM ONE OF YOUR COMPETITORS (WHO WILL BE CHEAPER OR FASTER OR FRIENDLIER OR SMILIER OR HIGHER TECH OR WHATEVER)?

BORING! BORING! BORING!

WHY SHOULD PEOPLE TALK ABOUT YOU OR YOUR PRODUCT OR YOUR SERVICE? I CAN'T THINK OF A SINGLE REASON. CAN YOU?"

What are you going to do about it?




RELEVANT LINKS
Bright Marketing - why should people bother to buy from you? - blog entry about the book
Barclays Let's Talk... events - for businesses employing less than 10 employees.

The Ultimate Celebrity Endorsement - FREE - BlackBerry : how the time have changed

I spoke last week at the Telegraph Business Club/Business Scene London Connections event at the Royal Lancaster Hotel. One of the event sponsors was BlackBerry (who I will be working with on another project shortly). An underlying theme of my presentation was that of word-of-mouth.

A quick look up on google for BlackBerry and you come to the great BBC headline Obama Allowed to Keep Blackberry. According to one article Obama's endorsement would have cost in the order 50,000,000 dollars to pay for.

Quotes like "I’m still clinging to my BlackBerry,” Obama said Wednesday in an interview with CNBC and The New York Times. "They’re going to pry it out of my hands." are literally priceless.

A few observations that link to my previous threads...

- Deliver a legendary product and people will become attached/emotional about them... they will tell others... they will share the secret... they will become raving fans... they will endorse your product.

- The wonder of celebrity endorsement especially if it has NOT been paid for... IS worth its weight in gold

- Great products and services have buzz: simple yet complex, conspicuous in use, personal use, relatively expensive.

- Great products tick my RSO list - they are Remarkable (astounding and worth make a comment about); they are Simple and Obvious to use, explain show, discuss.

I have been a BB user for a number of years... The BlackBerry has it all! So do Martin guitars, Global knives, Aga stoves...

So, what about your business:

- do you provide legendary, remarkable service (or dull, boring , mediocre)?

- do people talk about you product? Can you find a way to encourage them?

- does your product have buzz?
- is it remarkable, simple and obvious?






OUCH - this was written in March 2009 - "I have been a BB user for a number of years... The BlackBerry has it all! So do Martin guitars, Global knives, Aga stoves..." How the times have changed....

Price Optimise for Your Best Customers

According to Pennsylvania State University management science professor Gary Lilien...

"Most businesses depend on three basic groups of customers:

1. “value buyers”, who will pay extra for service and support;
   
2. “price buyers”, who just want the bare-bones product at a low price; and
   
3. “pigs”, those who want all the services and the lowest price.
   

During a recession, most companies can’t afford the pigs, so now is the time to move them into one of the other two categories.

Read the article Price Optimise for Your Best Customers by Karen Steen

RELEVANT LINKS
Price Optimise for Your Best Customers by Karen Steen

Pricing and Negotiation in a Recession tactic #2) Reduce cost to yourself and #3)

Sometimes Tactic 1, increasing Return on Investment doesn't work (previous blog entry); clients can't see the benefit (slightly more cost for a proportionately greater benefit) or they are committed to slashing budgets.

In that case you have a number of other choices.

Tactic 2) reduce your costs disproportionately.

If you reduce costs of delivery more than you reduce the price to the client then you increase profit margin % for yourself.

This is a rather selfish approach and so you should combine improvements in efficiency with this method rather than just rip-off your client.

Tactic 3) charge out separately for variable and fixed costs

By charging out separate, visible rates for fixed and for variable costs then you can match any price changes to the actual cost of delivery


example: one price for carpet fitting (fixed price) plus one price for type of carpet (variable unit price).

This is good way to show the client where you are cutting costs and how and where they can make savings.

BUT... negotiating on price and stripping down the price in these ways is a slippery slope.

Remember to make your negotiation conditional... In other words "We can do this if you will do that...".

Remember what people buy...

... usually they don't buy what you think you sell: many accountants think they sell accurate year-end accounts but clients buy a low tax bill or peace of mind that the Inland Revenue can't get us. How do you value/itemise that benefit in the customer's mind???

Pricing and Negotiation in a Recession Tactic #1 Added Value

If you are trying to put prices up (and it is a recession) then here's a method to follow.



Tactic #1) Negotiate on 'value added'

eg talking to the client you might say...

"Last year you received £x of profit as result of working with us and the fee was £y.

"This year is the year of added value and we have found ways to generate £x + 20% of profit for you and the new fee will only be £y + 10%... so you are getting even more profit for your investment."

This is not as daft as it sounds but you have to ask for the price rise (and justify it) to get it.

Try it!

"The largest networking event in London this year"

From The Daily Telegraph Business Club...

"Come and join Business Club on Thursday evening at the largest networking event in London this year.

The speaker is business expert and ‘entrepreneurship guru’ Robert Craven, explaining how to survive and thrive in the recession with his presentation ‘Beating the Credit Crunch’.

There will be plenty of opportunities to network and a goody bag to go home with! See you on the 12th March at 6.30pm at the Royal Lancaster Hotel, Lancaster Gate, W2 2TY. You can register and find out more online. »"

RELEVANT LINKS
12th March event

Beating the Credit Crunch - book

Selling - Two is not Enough

In an earlier blog I stated the obvious...

To sell..., you need to find...
1) people who have a problem that you/your product/service can sort... and..
2) who you have a way of identifying and communicating with... and...
3) who have the ability/pockets/willingness to pay you to sort out their problem.

You need all three! Two is not enough..

So let's give some examples.

re No. 1 'you need to find people who have a problem that you/your product/service can sort...'
- most small businesses have a perfect solution but don't know what problem they are sorting. The old elevator pitch comes to mind... why should people bother to buy your product? What problem are you solving?

To quote the old marketing adage... 'when someone is buying a drill from you, they are really buying holes...'

example: most 'technicians' are obsessed with what they make/offer (rather than what people are buying)... most website take about 'what we do' and not about 'what you get'... (what's left AFTER you've gone)

example: the manufacturer of a 'special' bicycle clip that no-one really wants (nor is interested in) - it solves no problem that an ordinary bicycle clip already sorts!

re No. 2 'you need to find people you have a way of identifying and communicating with...'

By definition, if you can't find the people to sell to then you are stuffed.

example: my local graphics artist friend who is not willing to even look for new customers "We don't like to do marketing... people should know who we are... we just wait for them to bang on our door." They deserve to go bust (and I have told her so!)!

re No. 3 'you need to find people who have the ability/pockets/willingness to pay you/someone to sort out their problem.'

There is no point selling to people who cannot afford your product (or are not willing to pay). Find a mechanism to filter them out... We call this getting rid of the tyre-kickers.

examples: posh, new (empty) restaurant in town; posh, new (empty) hotel; also near me are a pretentious art gallery..., an interior designer..., a vintage guitar specialist... all of whom are failing to find people willing to pay their prices. Crikey.

So it ain't as simple as

1) find a short supply product/service

2) charge premium prices.

People have got to want what you sell and want to buy it.

Think about what you do...

1) Do you sell something that clearly solves a problem?

2) Do you have a way of identifying and communicating with your potential customers?

3) Do they have the willingness and ability to pay?

Free Stuff and Selling

Everyone screams "free" while we are advised to sell for "premium prices". So, how does that work? Go back to Economics 101 and they called it "supply and demand". Talk to a ticket tout after a concert they know about supply and demand!

High Demand and Low Supply = High Prices

Low Demand and High Supply = Low Prices

But....

infinite supply means that prices head towards zero...!

If there's unlimited supply then the prices crashes (ultimately to zero).

If the product/service is in limited supply (ie it is scarce) then the price rises (if it is in demand).

Moral of the story (in a world of sweeping generalisations)...?

Don't try to sell stuff that is in unlimited supply and/or where the price of manufacture is nearly zero

eg lots of stuff on the net

eg most of what is on most people's Ipods (What would most young people pay to download the MP3 of Led Zepp 2??? I think most people swap their portable hard drives and pay zilch...)

Try to sell stuff that is in limited supply... eg tickets to see Led Zeppelin. (Name your price!)

AND while I am on the subject... you also need to ...

1) find people who have a problem that you/your product/service can sort... and...

2) who you have a way of identifying and communicating with... and...

3) have the ability/pockets/willingness to pay you to sort out their problem.

You need all three! two is not enough..

Too many people are selling stuff that is not in limited supply... or rather they commoditise what they do... try to make it look like everyone else so we end up going for the cheap option.

Rip-Off Pricing for Organic Food

"Rip-off pricing" (or do they mean 'premium pricing') is alive and well. Read Why Organic Prices are Being Covered Up in the Daily Mail (3rc March)

"Evidence of the rip-off prices supermarkets charge for organic produce is being covered up by the pro-organic lobby. The Soil Association has withdrawn publication of a study which found that the big chains charged more than twice as much as organic farm shops for some items.

"The survey, produced for the Soil Association's magazine, found that compared to farm shops, Tesco charged 63 per cent more on average for organic products, Sainsbury's 59 per cent more and Waitrose 38 per cent more. The average price of a basket of seven vegetables was £13.38, against £8.75 for farm shops - a mark-up of 53 per cent. For some items the gap was even greater. Organic beef mince was £3.85 a kilo in farm shops but £8.98 in supermarkets - 133 per cent more."

Read the whole article at Why Organic Prices are Being Covered Up in the Daily Mail...

'Beating The Credit Crunch' book - Launch Day

Today is the official launch day for the 'Beating the Credit Crunch' book.

Go to the Beating the Credit Crunch webpage to read more.

Available from Lulu.com (paperback or pdf) or direct from The Directors' Centre (where it is cheaper - £10.00 incl UK P&P on limited stocks). RRP: £20.00

Download the Introduction and Contents pages now - download

RELEVANT LINKS
the Beating the Credit Crunch webpage
Download the Introduction and Contents pages now - download