CASH IS KING, LONG LIVE THE KING!

 

 

Today’s title is an obvious parody on the old phrase, “The king is dead. Long live the king!” It dates to thirteenth century England. It conveyed the immediate transfer of power between a deceased monarch and the heir to the throne. More relevant to our purposes, it signified the continuity of sovereignty, or the supreme authority.

Future articles will explore where cash comes from, and where it goes, two critically important issues for every small business. For now, I will discuss the more basic question of why cash is cash king in today’s business world.

First, allow me to quote the experts. A 2005 study titled Small Business: Causes of Bankruptcy by Don B. Bradley III and Chris Cowdery of the University of Central Arkansas explained the supreme importance of cash rather succinctly:

“A lack of cash flow is often the biggest failure indicator. A lack of cash flow could cause a business to fall behind on wage payments, rent, and insurance and loan payments. A lack of cash flow also could inhibit the company’s ability to reinvest for future profits such as the ordering of products or supplies and marketing execution. When a company is borrowing to pay off past debts, it is usually a sign of disaster to come.”

They also said, “A significant shortage of cash flow limits the company’s ability to respond to outside threats. This is critical for fledgling businesses since new threats seem to appear every day.”

The only thing you can be certain of in business is that things will never turn out exactly as you planned. Adequate cash allows businesses to survive extended periods when sales, profits and cash flow are running behind plan, whatever the cause. Every business requires some level of cash to serve as a buffer against this uncertainty.

You could say cash provides sleep insurance. Constantly worrying whether a large customer will pay their invoice in time to meet Friday’s payroll, or whether you will have to turn away sales during your busiest season because you cannot stock sufficient inventory to meet demand is too often part of a businessperson’s everyday thought process.

Adequate cash levels are especially vital during the initial start-up period of a business. However, while the risks and challenges change as a business grows and matures, cash is supreme during any stage of a company’s life cycle.

For example, imagine that a 120-year-old company generated $1.2 billion in net losses. My immediate reaction is they certainly won’t be around to celebrate their 125th anniversary. That company is Alcoa. They lost $74 million in 2008 and a staggering $1.1 billion in 2009. Yet, Alcoa is still the world’s third largest producer of aluminum, and still trades on the New York Stock Exchange.

How is surviving such staggering losses possible? It was possible because during the same two years Alcoa generated $2.6 billion of positive cash flow from operations. As the old adage goes, “You can survive almost anything if you just have enough cash.” Businesses close their doors when they run out of cash to pay vendors and employees, period!

Here is an even more dramatic and current example of why cash is king.

AMR Corporation, the parent company of American Airlines, filed for bankruptcy protection in November 2011. During the previous 15 quarters, the company accumulated over $4.9 billion in net losses. Yet industry experts seem confident the company will successfully emerge from bankruptcy. Why? AMR has over $4.3 billion in cash on its balance sheet.

Far too often, the immediate response to a cash crisis is to tighten up on expenses, cut something back, to make do with less! That may be an appropriate tactic, especially if you have not scrutinized expenses closely in the past, or do not have a good handle on your cost structure.

However, cutting back is not the only tactic.

Next week I will begin a discussion of how cash flow generated (or used) by any business is the net result of the inter-action and proper management of three related cycles. They are the revenue, expense and capital cycles.

Until then, long live the king!

© 2011 by Dale R. Schmeltzle

 CFO America: Your Cash Flow Optimization experts

You Can Have Any Color You Want, As Long As You Want Black (Part 2)

Today I conclude the article on product driven versus market driven companies. I began by discussing the cultural differences between the two. Product driven companies concentrate on achieving and maintaining technical superiority. Market driven companies devote resources to brand development and customer communications.

Companies and industries sometimes attempt to adapt their marketing strategy in response to changing competition and other market forces. For example, conditions slowly but dramatically changed for the entire American automotive industry over the next 50 years. Detroit’s response to the 1973 oil embargo was a textbook case of a failed attempt to adapt. Faced with the first ever non-wartime limit on the availability of cheap gasoline, the American consumer suddenly became very conscious of gas mileage.

At the time, Japanese and European companies dominated the market for fuel-efficient sub-compacts. American manufacturers’ knee-jerk response was to jump headfirst into a market they had ignored until recently. They stepped up production of the notoriously undependable Ford Pinto (voted the worst car of all time), the Chevrolet Vega and the AMC Gremlin.

Detroit’s failure took a personal toll on an entire generation of consumers. My first car was a red, white and blue Pinto. It was a cornucopia of expensive mechanical problems, unrelenting frustration on a 94-inch wheelbase. I sold it just before a massive recall for an exploding gas tank problem that would eventually cost Ford millions of dollars in legal settlements.

My next car, a Toyota, sparked a love affair with foreign cars that continues today. It was 30 years before I bought another Ford, a pickup truck for my son. It took almost as long for American manufacturers to overcome the image of producing inferior cars. It remains to be seen whether they will ever regain the world market share they once enjoyed.

How have things changed since I bought that damn Pinto?

A national chain of men’s discount stores advertised, “An educated consumer is our best customer.” For a product driven company in 2011, an educated consumer might be more aptly described as their worst nightmare. Service industry executive and strategic planning expert Michael O’Loughlin recently summarized the reason. He said, “Thanks to the Internet, the consumer has come to believe that no concessions are ever necessary. They expect unlimited choices in meeting their needs.”

Potential customers are only a few clicks away from a myriad of rival goods and services. A consumer with a smartphone can compare competitors’ prices on the spot. Any business, even the smallest local operation, ignores those powerful market realities at their own peril. Broadening your product line or services can help fend off competition by better addressing market needs, and improve customer retention in the process.

The men’s store chain recently filed for Chapter 7 bankruptcy. One analyst said they had failed to keep up with the increasingly competitive off-priced clothing market.

My final point is that few successful companies employ an entirely one-sided strategy. They operate along a moving spectrum on which there are few absolutes, and no strategy guaranteed to bring success or failure.

Consider Ford one last time. Product limitations notwithstanding, they still managed to sell over 15 million units between 1908 and 1927. At one point, half of all the cars in the world were Model T’s. That production record stood until the Volkswagen Beetle finally surpassed it in 1972.

The correct strategy for your business is the one that is executable within the constraints of your cost structure and marketing budget, and that produces the highest net cash flow given all the relevant factors at work in your market and your competition.

I began this article with an old quote. I end with another. A marketing adage says, “You have to sell from your own wagon.” It refers to a bygone era when merchants plied their trade by pushing handcarts up and down urban streets. The adage may be true. However, today you get to decide how big your wagon is, and what products or services it carries.

Go forth and sell!

 © 2011 by Dale R. Schmeltzle

You Can Have Any Color You Want, As Long As You Want Black (Part 1)

This week, I get to incorporate two of my favorite topics, history and old cars, into a two-part article. My title is one of Henry Ford’s most quoted statements. He actually said, “Any customer can have a car painted any color that he wants so long as it is black”.

He said it in 1909, ironically at a time when black was not available. The Model T originally came in grey, green, blue and red. He did not implement his all black policy until 1914. However, He could have accurately said customers can have any model they want so long as it is a 2-door. But his quote sounds better, so I’m throwing journalistic accuracy to the wind and going with it!

I use it to introduce my real subject, product driven versus market driven companies. Henry obviously believed in a product driven strategy.

My first goal is simply to understand the difference between the two strategies and the corporate cultures that define them at the most basic level.

If you were involved in Ford’s marketing efforts back then, your job was to convince potential buyers they needed a black Model T, period! Your marketing approach was something like, “Here is what I have to sell, and this is why you need it.”

Contrast that to a market driven strategy that asks, “What do you need, and how can I best meet that need?”

The cultural differences between product and market driven companies run deep. Product driven companies will spend relatively more resources on product development. Their primary goal is to achieve and maintain technical superiority. In extreme examples, they believe their products are so good they simply sell themselves. Engineers will always outrank marketing in the corporate pecking order.

Market driven companies will devote more resources to brand their company and products, and on customer communications. Technical superiority is secondary to understanding customer needs and anticipating market changes. Product development is less mission critical than advertising, since the marketing department rules the roost.

My second point is that if you are going to sell a limited product or service line, you need to be very good at it. Ford was fanatical about producing cheap, dependable cars. He managed to reduce the original $850 sticker price to $290 by the 1920s. At that price, he owned the working family automotive market. He was so confident that the cars’ features and low cost could generate sufficient sales that he did no corporate advertising from 1917 to 1923.

Unfortunately, being first to market with a technically superior product offered at an affordable price is no guarantee of long-term success. As Ford Motor Company subsequently learned, competitors (increasingly on a global basis) have a long history of unseating early market leaders who grow complacent about ever-changing customer needs and wants.

Being a product driven company is certainly easier if you exercise some degree of control in your relevant market, and if consumer tastes are stable and predictable. Perhaps Ford was lulled into a false sense of security by assuming past market conditions, under which they flourished for decades, would continue indefinitely.

Car buyers in the 1920s were unsophisticated by today’s standards. They could not have imaged, let alone demanded the range of choices, options and features currently available. Ford was not the first company to replace dangerous hand cranks with electric starters. Cadillac beat them to market by seven years. However, when the world’s largest car manufacturer finally made the change in 1919, consumers and the rest of the industry fell in line. Ford defined the new standard, not Cadillac.

I will conclude this article on Friday, when I write about how companies sometimes attempt to adapt their strategies to changing market conditions.

Until then, best wishes for a joyous Thanksgiving holiday.

 

© 2011 by Dale R. Schmeltzle

Curiosity was Framed, Ignorance Killed the Cat

My first job after public accounting was as Director of Internal Audit for a large regional insurance company. Given free range to determine my own assignments, I immediately launched a review of the claims processing operation. As Willie Sutton would say, “That’s where the money is.”

Back then, mainframe computers housed in cold rooms that took up an entire floor were the order of the day. Reports printed on large “green-bar” paper with perforated edges, bound together between heavy cardboard covers using bendable wires.

On my second day on the job, I was flipping through a report of claim payments. It listed basic information like policy and claim number, payee, amount, dates and so forth. The report probably had 50 to 60 claims per page, and was several hundred pages long.

I spotted something strange. About every 15 or 20 pages, a claim would show a negative payment. Based on my understanding of the system, there was no logical explanation for negative numbers. I started asking questions, lots of questions!

To make a long story short, I had stumbled across an internal control weakness that allowed certain claims to be paid twice. As best I can recall, I found about $125,000 of duplicates. That was not a lot of money to a billion dollar company, even in 1978 dollars. Still, with an annual salary of $22,000, I cost-justified my first five years’ compensation the second day on the job.

My point in recalling this story is not to take you with me on a boring stroll down memory lane. OK, that is part of it, but a very small part.

My point is that other people who had worked with the claim report every day had undoubtedly noticed negative amounts before, yet had failed to follow through with a few simple questions. If they had, they might have closed the control weakness years earlier. Why?

I offer two words: human nature.

People seem to have a natural tendency to accept most things as they are. Asking questions and challenging the status quo is actually considered rude in many cultures. Sadly, it is career limiting in many corporate environments. Relax and remember what happen to the mythical cat! I heard it was a mid-level manager in a Fortune 500 company somewhere on the east coast.

That is not to suggest people are by nature lazy, apathetic or any other negative adjective. It’s just how things are.

Contrast that to Thomas Edison, who said he rarely picked up an object without wondering how he could make it better. I call that the curiosity factor. Either you have the curiosity factor, or you don’t. It cannot be taught or learned, and is seldom spoken of. Yet in many professions (including internal auditing), it is probably the single best predictor of ultimate success.

Every business desperately needs someone who will leap headfirst into operations or finances with a dedication approaching a Pit bull on a pork chop. If that is not you, go hire someone with the curiosity factor.

You will be amazed at what valuable business opportunities are waiting to be discovered just below the surface.

 

© 2011 by Dale R. Schmeltzle

Customer Service #101: Buddy, Can You Spare a Sandwich?

I had an experience last week I feel compelled to share. It was Friday night, the end of a long week. After fighting construction traffic for 45 minutes, I stopped at a national fast-food chain. I ordered three sandwiches. Mind you, I didn’t order drinks, chips or dessert, just three sandwiches. The bill came to $27.14. Since I didn’t have much cash on me, I handed the salesclerk a credit card. I was informed their “system” only allowed credit card charges up to $20.

Since I have previously  bought takeout from this chain many times without encountering this problem, I’m not certain whether it is a new corporate policy, a misguided rule imposed only by this franchise, or if the employee was simply mistaken.

Regardless of the reason, it points out a common business failure. The problem is creating unnecessary obstacles for people who might otherwise become loyal customers.

I have written many times that competition is based on price, product or service. Those are your only three choices.

Perhaps spurred by the current slow economy, price competition is clearly the most promoted basis of competition. It is especially prevalent in the food service industry. Witness Applebee’s “Two eat for $20” or Pizza Hut’s “$10 any pizza, any size, any toppings” campaigns, just to cite two.

Low prices are completely objective, easily communicated and quickly adjusted as necessary. Unfortunately, while coupons, discounts and sales may bring more customers through your door, they always cut into your gross profit. You simply cannot consistently sell a product or provide a service for less than your cost and survive!

Price competition also presents a more immediate challenge. In a high-tech world where any customer with a Smartphone can quickly determine if your competition is offering a better price, the strategy is certainly no guarantee of marketing success. The risk is escalated if low-price guarantees are common in your business. Furthermore, if someone purchases only because you are the cheapest available option, he or she is unlikely to develop any customer loyalty unless you are always the low-price provider. Few businesses are large enough or profitable enough to be in that enviable market position.

Competing mainly on product also carries risks. Even if you think your product or service is unique, the reality is there are probably countless options that are close enough to serve as a substitute for customer needs. A classic example is the difference between a Lexus and a comparably equipped Toyota that sells for thousands of dollars less. Product competition is also complicated by the widespread availability of on-line shopping and free shipping.

That leaves service as the only basis of competition on which your business can truly distinguish itself. It is also the only one that doesn’t have to increase your operating costs, or cut gross profits. A friendly smile and prompt, courteous service cost nothing! More importantly, superior service cannot be instantly matched by the competitor up the street.

Superior service encompasses the entire customer experience, starting with the moment they enter your facility or contact you. It continues until the product or service produces the level of satisfaction the consumer expected. It includes point-of-sales services such as allowing credit cards, answering questions, gift-wrapping and perhaps even walking packages to their car. It also includes after-sale services like satisfaction guarantees, generous refund policies and warranty service.

What’s the lesson here? Ask yourself two questions. First, are your policies and procedures primarily designed to make your life easier, or to increase customer satisfaction? Secondly, are your employees adequately trained in those policies and procedures, and are they consistently delivering a customer experience that will keep shoppers returning year after year?

I’ll end with a quote from Mark Cuban, billionaire owner of the Dallas Mavericks. He summarizing the essence of Customer Service # 101 with this, “Make your product easier to buy than your competition, or you will find your customer buying from them, not you.”

© 2011 by Dale R. Schmeltzle

What do Football and Chicken Wings Have in Common?

Today’s title sounds suspiciously like the opening line of a bad joke. Maybe a little later. Actually, it was inspired by last night’s start of the 2011 – 2012 NFL season. Green Bay defeated the Saints in a 42 to 34 nail biter. Therefore, I thought it was appropriate to start today’s blog with a football reference. Here it is!

Did you ever wonder why GMC is the “official truck” of the National Football League? It is not as if they haul injured players off the field on Sierra Hybrids. If they did, can we assume the trucks would be using Castrol, the “official motor oil” of the NFL?

An even bigger question might be why Wingstop is the “official chicken wing” of the Dallas Cowboys. For that matter, do the Cowboys really need an official chicken wing and if so, do they taste better than unofficial wings? I am guessing the nutritional value is about the same. Wingstop is not wondering about those questions. Executive Vice President Andy Howard reported Sunday sales for the 2010 season were up 15 percent in spite of the Cowboys’ disappointing 6 and 10 record.

Endorsement marketing is common in the insurance industry. For example, Hartford Insurance Company teamed up with the AARP to become the endorsed auto and home insurer to the AARP’s reported 40 million members. The AARP also offers life insurance products through New York Life, and long-term care products through Genworth Financial Group.

I am not suggesting you attempt to negotiate a deal with the NFL or a million-member national organization. Start small, on a state or local level. Identify organizations whose members use your products or services. Associations are usually eager to earn income from sources other than their membership. For the cost of an associate membership, an advertisement in their quarterly newsletter or a booth at their annual convention, you can probably find trade associations and similar groups willing to designate your company as the official supplier for your product or service. That in turn provides access to their membership directory, and perhaps speaking engagements.

  • A rule of thumb in the insurance industry is these marketing costs should not exceed two percent of anticipated revenue.
  • The best place to find organizations is your state capital where many will be headquartered.
  • If you are not prepared to market on a statewide basis, find out if there are local or regional chapters.

Do not overlook educational institutions and fraternal organizations as a source of endorsement sales. I knew a small business that was the preferred supplier of screen-printed and embroidered shirts for 50,000 students at Texas A&M University. How much is that endorsement worth? For the 2010 “Maroon Out” football game against Nebraska, one of many annual events the tradition-loving Aggies commemorate with shirts (I have paid for a closet full of them in recent years), the University’s student body, alumni and supporters reportedly bought over 55,000 shirts. My unofficial source tells me the supplier was paid $3.50 apiece.

Again, start small. You are more likely to land a profitable endorsement from a local high school sports team or a Parent-Teacher Association than from a major university. I also knew a one-shop sporting goods store that sold letter jackets for several large high schools. If you have raised a teenager in recent years, you know how expensive these customized items can be.

Let me end with one last football story.

The Seven Dwarfs were marching through the forest one day when they fell in a deep, dark ravine. Snow White, who was following along, peered over the edge and called out to the dwarfs. From the depths of the dark hole a voice returned, “The Cleveland Browns are Super Bowl contenders.” 

Snow White said to herself, “Thank God! At least Dopey survived!”

Would You Like a Beer With That Latté?

Alan Zell, author and retail marketing expert said, “Every business needs more business. That is an accepted fact. The unaccepted fact is that most businesses don’t use all the opportunities available that will bring them additional business. When one looks for additional business, the primary goal should center around getting second sales. What are second sales and why are they important? Second sales are add-on sales, repeat sales and sale by referral. They are important because they are much less expensive to get than first sales.”

I wrote about second sales, or up selling as it is more commonly referred to, last week. Today I will present two more ways to squeeze additional revenue out of your existing customer base. Allow me to begin with an actual example.

If you are a pet owner, you are aware of a powerful strategy veterinary clinics employ to drive sales and increase profits. That strategy is boarding facilities. Think about your experiences boarding pets. Chances are you also have them washed and groomed, and probably address checkups, shots and other recurring medical needs. Of the $65 average daily bill when boarding our Rottweiler, over half is for services other than boarding. I willing pay the $65 because it meets another important need. It buys the added assurance that if anything happens to my 12-year-old dog, she will be well taken care of until I return.

The point is that in addition to being profit centers in their own right, boarding facilities attract customers and generate revenue for other areas of veterinary services.

Ask yourself, “What is an equivalent up selling strategy for my business?” To be successful, it should be either complementary or counter-cyclical to your primary business. Here is an example of each strategy.

Complementary strategy: Starbucks announced a textbook example of a complementary marketing strategy in 2010. They began test marketing beer and wine sales at several Seattle locations. Designed to supplement a product line that holds diminishing customer appeal after the morning rush hour, alcohol goes on sale at 4:00 PM. Starbucks also announced their Starbucks VIA® Ready Brew coffee in 2010. It comes in four flavors, and is available online and through grocery stores and other retail channels. Not surprisingly, it was widely reported in 2011 that Starbucks has replaced Burger King as the nation’s third largest restaurant chain, a major accomplishment for a “non-burger and fries” chain.

Counter-cyclical strategy: Installing holiday lighting is big business in my town. Contractors spend most of November and early December installing lights. They spend January removing, repairing and storing lights for the summer. What do the installers do the rest of the year? I frequently see their trucks around town. I have also met several installers over the years. Everyone had a lawn maintenance or landscaping business that not coincidentally keeps them busy from March through October.

Finally, consider the capital investment (inventory, new equipment, sales training etc.) required for your new products or services, and the payback period expected before the strategy generates a positive cash flow.

© 2011 by Dale R. Schmeltzle

Too Foolish To Fail – Part 2

On Friday, I began a two-part post on Mark Zuckerberg’s three mistakes in starting Facebook. Mistake # 1 was not coming up with an original idea, but merely improving on other people’s ideas. It turns out that was not a mistake after all.

Today, I will analyze his other mistakes, namely:

2. He waited too long to “cash out.” He should have jumped at the first opportunity to raise some serious “beer money” like a normal college kid. If only he had, he would be a millionaire today!

3. He failed to exercise basic common sense! Anyone smart enough to get into Harvard should know that a dream of launching a worldwide business to redefine a major facet of society is destined to break your heart. Homer Simpson said it best, “Trying is the first step toward failure!”

Let’s analyze these missteps.

I am frequently surprised at the short-term vision baby boomers adopt in their business planning. I often encounter entrepreneurs who hope to build a successful business and “cash out” in five years or less.

This view is a distraction from your value proposition, the very reason you went into business in the first place. Think about it. Customers are at best indifferent to your retirement plans. Would you pick a new dentist if you knew she planned to sell her practice in two years?

It also introduces a bias that will slant business decisions in favor of maximizing short-term cash flows at the expense of building long-term value. For example, owners will forego investments in customer service and product design if payoffs extend beyond their timeline. This situation is analogous to watching a runner round the bases as you chase a fly ball. There are already plenty of opportunities to falter in business without unnecessary distractions. Do not take your eye off the ball!

It seems counterintuitive that a college student, given the opportunity to finance what would have been a carefree life style, would follow a business plan that extended beyond the next frat party. To his credit, now 27-year-old Mark Zuckerberg has resisted the temptation to monetize his 24% stake in Facebook for 7 years. Instead, he has continued to lead the company according to his vision.

It is hard to argue with his success. Earlier this year, Goldman Sachs valued the private company at $50 billion. Mark kept his eye on the ball, even when faced with what would have been an irresistible temptation for us mere mortals. Cashing out four or five years ago would have cost him billions.

You were right, Zuck. My partner and I were….we were….well any way, you were right. Gloating is so not cool, Mark!

That brings me to his third mistake. Mark should have listened to the voices in his head that are quick to point out all the reasons why his grand plans would surely fail.

Abraham Lincoln once described a general who was unwilling to make decisions under pressure as “acting like a duck that had been hit on the head.” Fear of failure is a powerful motivator. It causes some of us to avoid decision making altogether.

Decision making is a cognitive process involving logic, reasoning and problem solving skills. Unfortunately, each of us enters that process with certain preconceived biases. We are often quick to listen to any voice that supports them. It is normal to exhibit a reluctance to move off those biases, even if faced with new facts, circumstances or opportunities. Therefore, the safe decision (i.e., to spend our career as a corporate wage slave rather than launch a new venture) is often the default decision.

Samuel Clemmons once said, “It’s not what you don’t know that will get you in trouble. It’s what you know for sure that just ain’t so.”

To his credit, Mark Zuckerberg did not let what he did not know about launching a business get in the way of his success. His vision was inspiring; his execution was courageous.

In the final analysis, my partner and I could take a lesson from him. So can you!

 © 2011 by Dale R. Schmeltzle

SLIDESHARE, HOW DO I LOVE THEE? (PART 3)

Earlier this week, I began a three-part series on SlideShare, a free online slide hosting service. Part 1 discussed the first three of ten important things you should know about SlideShare, its demographics and norms. Part 2 explained how to embed YouTube videos and how to access SlideShare remotely. As promised, I have saved the best for last.

Here are today’s suggestions.

9. SlideShare provides truly excellent support through LinkedIn, Twitter and Facebook. I have promoted several files through my LinkedIn groups. I have twice received emails saying, “XYZ file is being talked about on LinkedIn more than anything else on SlideShare right now. So we’ve put it on the homepage of SlideShare.net (in the “Hot on LinkedIn” section).” In both cases, view counts increased dramatically, if briefly.

Another benefit of tweeting SlideShare files is the potential of promoting your brand on a worldwide basis through Paper.li. It takes Twitter streams and extracts links to news stories and videos. It then determines which stories are relevant based on criteria the user establishes. It creates themed pages based on specific topics using hashtags. Paper.li subscribers distribute their daily or weekly publication as a unique newspaper, written from a perspective of what is of interest on the Web that day. Every Twitter user is therefore a potential editor. Their followers (including CFO America on several occasions) serve as unpaid journalists. To view a sample of Paper.li, read The CFO America Daily at http://paper.li/CFOAmerica/1300800014.

10. Finally, the number one reason for my love affair with SlideShare is what I call the “60 minute Twitter boost” phenomena. To experience it for yourself, open your file on the “My Uploads” tab and click on the Twitter icon. The following tweet will appear, “Check out this SlideShare document: The Title of Your SlideShare Document” along with a shortened URL. Modify the tweet with a few appropriate hash tags. Without fail, the file experiences a marked increase in views and downloads for about an hour. In my experience, views have jumped up to 35 times their daily average. I have tweeted friends’ documents with identical results. The boost trails off quickly, and totally evaporates within 24 hours. However, it can be extended with multiple tweets over the course of a day. Use different hash tags for each tweet.

In closing, I offer my apologies to Victorian era poet Elizabeth Barrett Browning for the shameless exploitation of her classic poem. Imagine how quickly it would have gone “viral” if only Ms. Browning had the same access to SlideShare.net that you and I now enjoy.

Go forth and share!

You are Invited to my Party

Small business coach and author Robert Gerrish said, “For many, one of the greatest moments in business is the joy of attracting a new customer or client. In such circumstances, it is easy to get so caught up in the excitement that we forget to spend time on realizing the value of one of our business’s best assets, our existing client base.” For example, you may have heard banks criticized for offering free checking to new customers while charging existing customers for the same service.

As Mr. Gerrish suggests, all too often promotions only target new prospects. Show your appreciation of existing customers by holding promotions and events designed exclusively for them.

  • A special after-hours personal shopping event or trunk show, complete with entertainment, refreshments and “invitation only” discounts is an example. If your products typically require sizing or fitting (such as clothes), allowing a two day presale can create additional excitement. Customers select their purchases in advance, which you hold until the actual sale. This procedure also requires customers to visit your facility at least twice.
  • The luxury day spa I spoke of earlier invited my wife and I (did I mention she is one of their most loyal customers) to an art exhibit by a nationally recognized concert pianist. The event also included a wine tasting.

Another way to demonstrate your appreciation for existing customers, suppliers and employees is to hold an open house or reception. This is a great way to display your operations. It will also strengthen relationships between customers and staff that have not met. If your facilities do not include a suitable physical location, host it at your home, a nearby restaurant or under a tent on the front lawn. Moreover, while your open house or reception must be memorable, it does not have to be expensive. Class is not measured in dollars.

  • You may find network contacts are willing to help cater the event, print programs and menus, provide entertainment or other useful services at substantial discounts in order to promote their products and services to your customer base. Always take full advantage of your network and be ready to reciprocate by supporting and promoting their events.
  • Avoid scheduling functions on weekends or when likely to conflict with numerous holiday events. Use all of the communications tools and options previously discussed to ensure good attendance. There is nothing more discouraging than hosting a party when no one shows up.

A final caution about special event promotions is that in order to be truly special, you cannot hold them too often. Any promotional tool that is used too frequently runs the risk of creating customer expectations that will cause them to avoid full price purchases in anticipation of a sale or event that may never happen.

Next week, I will present an exciting 3-part series on my ongoing love affair with SlideShare.net. It picks up where a June series on this topic left off. I think you will enjoy it. Until then, stay safe and enjoy your weekend. You earned it!

 © 2011 by Dale R. Schmeltzle

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