We Have Meet The Enemy & He Is Us, Dealing with Entrenched Policies & Procedures (Part 2)

On Monday, I introduced the topic of inefficient and outdated policies, processes and procedures using the cartoon character Pogo, and the mid-twentieth inventor and cartoonist Rube Goldberg.

After coining a new acronym (RGP3s) and describing some common characteristics, I ended with the obvious question, what is a manger to do about them?

First, be open to the possibility of their existence in your organization. Every company has some areas that need improvement. You cannot assume that something is “best practices” simply because it worked in the past. If a department is unable to keep up with current workloads, there are only two possible reasons. Either they are understaffed, or they are operating at less than peak efficiency. Adding staff adds costs. Improving efficiencies is likely a cheaper and perhaps faster alternative.

All successful organizations eventually reach a size where managers are not expected to be familiar with the application of every policy, process and procedure. Even if they are, RGP3s can be virtually invisible to the familiar (or complacent) eye. That suggests one of two possible approaches.

The first approach is to constantly challenge and encourage employees to identify efficiency improvement opportunities. Maintain an open and direct line of communication through brief but regular interaction. Actively solicit employee input and implement at least one idea every month. Publicly reward accepted suggestions in ways they value. That may mean an employee of the month plaque in the lobby, a front row parking spot or an AMEX gift card.

Unfortunately, relying solely on employees’ willingness to point out flaws has a major limitation, human nature! People seem to have a tendency to accept most things as they are. Furthermore, asking questions and challenging the status quo may be viewed as career limiting in some corporate cultures. That is not to suggest people are by nature lazy or apathetic. It’s just how things are.

The second approach is to bring in a fresh pair of eyes. A while back, I shared a story about an experience in a new job. On my second day, I was reviewing a lengthy payment report when I spotted something unexpected. About every 20 pages or so, there was an entry with a negative amount. Based on my still limited understanding, there was no reason for negative numbers. To make a long story short, I had stumbled across an internal control weakness that allowed certain items to be paid twice.

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

In closing, let me clarify what constitutes a “fresh pair of eyes”. It may mean a consultant. This outside resource could be an expert in your field, or someone well versed in common business practices and operations. An auditor or independant CPA with other clients in your industry may be a valuable resource, especially if the area of concern is one they review as part of their evaluation of internal controls.

In my example, a fresh pair of eyes merely meant introducing a new employee into the mix.

Either way, the path to improved efficiencies in your business may be as simple as finding someone unburdened by the “But we’ve always done it that way” mentality.

That mindset, Mr. Pogo, is the real enemy.

© 2012 by Dale R. Schmeltzle

We Have Meet The Enemy & He Is Us, Dealing with Entrenched Policies & Procedures (Part 1)

Students of American pop culture will recognize the title of today’s post as a quote from Pogo, the swamp dwelling possum in the classic comic strip of the same name. I use it to introduce a discussion of an all-too-common business phenomenon.

Owners and managers are often their own worst enemies when it comes to recognizing what I call Rube Goldberg policies, processes, and procedures (RGP3 for short).

What exactly are “Rube Goldberg” policies, processes, and procedures? Rube Goldberg was a twentieth century cartoonist, famous for inventing complex devises to accomplish the simplest of tasks. He was the inspiration for the 1960s game Mouse Trap.

Michael Hammer gave a perfect example of a modern day business mousetrap in Reengineering Work: Don’t Automate, Obliterate. A company required that the “corner desk” approve all overseas invoices. The policy had been in place for many years. It turns out it originated back when many customers were French, and when an employee who was fluent in French occupied that desk. However, the employee had long-since left, and fluency in a foreign language was not a requirement for assignment to the desk.

In other words, the original value of the policy was lost long ago. All that remained of the legacy were unnecessary costs and shipping delays.

This example exhibits several common characteristics of RGP3s. Those characteristics may include:

  • They are overly complex for their intended purpose.
  • They involve outdated technology.
  • They are not integrated with other systems.
  • They involve manual input of paper records.
  • They are labor-intensive.
  • They are non-scalable and unable to keep up with demand.
  • They are poorly documented.
  • They have been in effect for as long as anyone can remember.

In other words, they are inherently inefficient and outdated.

Yet with all these negative attributes, RGP3s seem to enjoy a sort of sacrosanct protection. Decision makers are reluctant to identify, let alone change them. Perhaps like an old pair of shoes or a childhood tradition we cling to in adulthood, we take comfort in our inability to remember life without them, even if we outgrew them long ago.

Although my RGP3 experience is mainly in finance and accounting, I am certain they exist in all areas of company operations including production, distribution and customer service.

So what is a manger to do about them? More about that on Friday.

Until then, have a great week.

© 2012 by Dale R. Schmeltzle

Too Foolish To Fail

The big buzz on Wall Street is today’s planned IPO of Facebook. I hope it will reverse the recent downward trend (11 of the 12 last trading days were losers). Several months ago, a partner and I were discussing Mark Zuckerberg in the context of starting a new business. That discussion lead to a two-part post, which in honor of his IPO, I repeat in its entirety today.

My partner and I concluded that Mark’s phenomenal success with Facebook is the direct result of three “rookie” mistakes, none of which we would have made.

Those mistakes were:

  1. He was not the first to arrive at the social networking party. Rather than come up with an original idea, he improved on other people’s ideas. That never works. Either get to the market first or stay home, right?
  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 each of his mistakes in more detail. It turns out there is historical precedence to support his seemingly illogical behavior in committing Mistake #1.

For example, historians credit German engineer Karl Benz with inventing the automobile. He patented the first gasoline engine powered vehicle in 1885. That was 11 years before a thirty-year-old “techie” at the Edison Illuminating Company began experimenting with his Ford Quadricycle.

Henry Ford’s primary contribution to the automotive industry was to apply “best practices” manufacturing processes including interchangeable parts and a moving assembly line. By combining cost saving efficiencies with a social philosophy that included paying factory workers $5 per day (double the going wage), he transformed the automobile from an expensive curio for the idle rich to an affordable source of transportation for the masses.

Ford put his vision into words. He said, “I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”

With the benefit of 115 years of hindsight, it is clear his value proposition actually created a market where none previously existed. He sold 15 million Model Ts over its nineteen-year production run.  At one point, half of the cars in the world were “Tin Lizzies.” True to his value statement, he was eventually able to reduce the selling price to $290, a 65% reduction from its introductory price.

O.K., Mark, I’ll concede your first mistake was not a mistake after all. Astute late comers can still profit by improving on an inventor’s ideas and capitalizing on missed opportunities.

What about waiting too long to cash out?

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!

You proved all of your distracters wrong! Good luck in your IPO Mark.

 © 2012 by Dale R. Schmeltzle

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

Reducing Fear and Uncertainty, Part 3

This week, I have been talking about the important marketing topic of decreasing consumer fear and uncertainty to increase sales. I conclude the series today with a discussion of introductory offers and giving away free service.

  1. Customers want to know approximately how much they should expect to spend in advance, without having to keep an anxious eye on the clock. This is often an issue for lawyers, CPAs and other highly compensated professionals who generally charge hourly rates. If this situation applies to your business, structure an introductory offer. For example, as an attorney with a billing rate of $250 per hour, you might offer to incorporate a new business, obtain all required permits and tax identification numbers and organize their corporate records for $499 including an initial consultation. If the project is completed within two hours, you earned your standard rate. If not, the introductory offer still works if you provide subsequent services using your regular fee schedule. You may also land full-price referrals because of your introductory offer.
  • As you complete assignments, you will likely find ways to reduce time and costs, lowering your breakeven point in the process.
  • The introductory price is independent of who performs the work. You can further reduce your costs if you can delegate portions of the assignment to your staff or outsource to lower-cost vendors.
  • For example, if you are a personal wealth manager, offer a free analysis of a prospect’s retirement investments. That is an important part of your main service. Your hope is obviously that some prospects will be so impressed with your knowledge and advice (or so unhappy with their current manager) that they will retain you to manage their portfolio. Other examples of providing a free service include a carpet cleaner who offers to clean one room free of charge, or an alarm company conducting a free home security analysis.
  • Jewelry stores illustrate an example of attracting customers with auxiliary services. They often provide free ring cleanings or replacement batteries for watches. With the highest gross profit margins in retail, very few prospects have to make additional full-price purchases in order to make the free service a successful strategy.
  1. My final suggestion under the topic of reducing fear and uncertainty to increase sales is an extension of the previous one. It is admittedly controversial. The idea is to provide free service in the hope of gaining new customers for full-price services. However, what you are giving away is neither the “2-cent sample” variety of the previous idea, nor the deluxe version of your service. It is somewhere in-between, probably closer to the former than the latter. Your free offering should be either a limited version of your primary service, or a less expensive auxiliary service.

I conclude the discussion of reducing fear and uncertainty to increase sales by reminding you of Monday’s quote by Mr. Ziglar. The next time you deal with an unhappy customer, take it as an opportunity to learn more about their needs while reducing their perception of risk. Remember also that helping them address their needs and concerns is critical to the ultimate success of every business.

What to do When Life Hands You Lemmings

Apple introduced the Macintosh personal computer in a third quarter television commercial during Super Bowl XLIII in January 1984. Playing off a George Orwell 1984 theme, it featured rows of uniformed, colorless drones. They sat mesmerized, watching as Big Brother dribbled propaganda on a large movie screen. Suddenly, a female runner chased by storm troopers entered the room. She hurled a sledgehammer against the screen, which explodes. The commercial ended with the statement, “You’ll see why 1984 won’t be like 1984.”

That commercial has been voted the best Super Bowl commercial of all time. Always stick with what works, right?

The following year, Apple decided to use Super Bowl XIX to introduce Macintosh Office. This commercial featured a long line of blindfolded business people marching across a dusty, forbidding terrain. Their only source of guidance is their hand on the shoulder of the person in front of them. One-by-one, they walk off a cliff. It has been dubbed the “Lemmings commercial” and is widely considered the worse commercial in Super Bowl history. Apple did not advertise during the Super Bowl for the next 14 years.

Have you ever had a Lemmings-like marketing experience, one whose cost was exceeded only by its complete failure to accomplish its intended purpose? Sadly, I have! I spent $10,000 developing a traditional website in the hope it would soon have my phone “ringing off the hook” with eager prospects. The vendor guaranteed a “top 3” ranking for the phrase “fractional CFO.” While it accomplished that goal, I am still waiting for the phone to ring! Very few people search that phrase, largely because they do not know what it means.

I gained three things from my personal Lemmings experience. Allow me to now swallow my pride and share the lessons learned.

1. Cut your losses!

Ego has no place in rational business decisions. Admit your mistakes, save what is left of your limited marketing budget and move on! I compounded my mistake by continuing to pay the vendor $60 a month to host the site. They provided no marketing support, no analytical data or anything to justify an additional fee. I eventually moved the site to JustHost.com, a vendor that for a low annual fee provides unlimited email and website hosting. Since I already had an account, I saved $720 per year.

2. Reevaluate your marketing goals and the tactics to achieve them.

My initial hope (it was far too naive to qualify as a goal) was that if I simply created a website, my target market would flock to it and contact me. I now realize it is unlikely businesses will retain executive management consultants solely from online relationships. That is not to say that the website cannot serve a valuable role in my marketing strategy. However, it cannot serve as the primary strategy for new business production. One of my goals is now to move promising online relationships offline. In other words, to make personal connections over a cup of coffee or phone calls. I also learned the need to help educate the business community on the existence, purpose and value of fractional CFOs. My tactics include extensive networking and event-based marketing.

3. Salvage some value from your missteps.

I grew up playing in my family’s auto recycling business (o.k., junkyard if my brother is reading this). I learned the importance of salvaging maximum value from every opportunity. In the case of my misspent marketing funds, I have uploaded the site’s video (half of its cost) to YouTube, where it may increase my Internet footprint and contribute toward my goal of consumer education. As previously mentioned, I also transferred the website to another hosting service. While this may or may not help increase brand awareness and establish my expertise, it is now essentially free!

Let me close with some simple but very practical advice. To err is human. To learn from your mistakes is good business!

© 2011 by Dale R. Schmeltzle

Bull Horns in Cyberspace, Part 1

Last Friday CFO America’s blog began with the question, “If a tree falls in the forest and no one hears it, does it make a noise?” It concluded by assuring readers that falling tress always make noise. That got me thinking about things we can do to make noise, or rather what we can do to attract attention to our blogs. It also caused me to reflect on some of the mistakes I have made over the past six months (listen to me, the battle-hardened veteran) as a blogger.

Today I will present Part 1 of a two-part article on this topic. Here are my thoughts for today:

1. Pick a schedule and stick to it! The correct blogging frequency is whatever best helps you connect with your target audience. For some blogs that may be daily, for others once a month. Unfortunately, this is not a variable that invites experimentation. Fortunately, it is not so much a question of having the optimal blogging frequency. Simply commit to a schedule and tell your readers when to expect new posts. While most bloggers enjoy writing, too great a frequency can be grueling. I blog every Monday, Wednesday and Friday morning, something I have done faithfully except for a handful of holidays. As you gain followers, do not confuse or disappoint them by not keeping your commitment. Here are a few thoughts to help ease the burden of your commitment.

  • Consider using guest writers periodically. That way your readers are treated to different areas of expertise and points of view. It is also a great way to support your friends and network contacts. Hopefully, they will reciprocate and share some of your articles on their website, further extending your reach through cyberspace.
  • Instead of your usual topics or content, occasionally supplement your original writing by sharing (with appropriate attribution) relevant quotes, historical notes, articles and tips written by others. You might also ask readers to suggest topics.
  • Do not give up too quickly. As I said on Friday, Fred Campos of FunCitySocialMedia believes it takes about 100 posts before you begin to build a following. Many bloggers become discouraged and give up before reaching that milestone.

2. Keep posts short, preferably under 600 words. I say this for three reasons.

  • First, readers are looking for “McNuggets” of actionable information, not the English translation of War and Peace.
  • Secondly, the average American adult reads 250 to 300 words per minute. Numerous studies suggest that over 65% of visitors spend less than 2 minutes on a website. Therefore, an entry longer than 600 words will not be read in its entirety, if at all. I should add that the average time spent on CFO America’s blog is three minutes and nine seconds, an unusually long time, but one for which I am grateful!
  • I began blogging by posting excerpts from my book, Highly Visible Marketing, 115 Low-cost Ways to Avoid Market Obscurity. By making blog entries too long, I undoubtedly lost readers before the end of long articles. More importantly, I also ran through my previously written material too quickly. Save some your creative material for another day! A better alternative to lengthy articles is to split them into multiple parts, posting them in consecutive entries. I begin with a brief review of what was discussed in the previous blog, and end by telling readers what to expect in the next entry.

Let me now practice what I preach by ending for today. On Friday, I will present Part 2 of On Bull Horns in Cyberspace. It will discuss suggestions for defining your style and promoting your blog through other social media tools.

Until Friday, please continue to provide valuable feedback and share this information with your friends, coworkers and other associates. Why not add a comment below before leaving today?

 

 

Generating Repeat Sales-Part 2

I introduced Monday’s post on generating repeat sales with a quote by William Edwards Deming. He said, “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.” A slight variation of that important principle is to harvest sales out of customers who have moved, even if they moved outside of your service area. Allow me to explain.

America has been a country on the move ever since it was founded by people who all crossed at least one ocean to get here. The U.S. Census Bureau reports that the national mover rate was 12.5% in 2009. According
to their Geographical Mobility: 2009 study, 37.1 million people changed residences in the U.S. that year. Of those, 67.3% stayed within the same county, 17.2% moved to a different county in the same state, 12.6% moved to a different state, and 2.9% moved to the U.S. from abroad.

Furthermore, the National Association of Realtors reported in January 2011 that the previous month’s existing home sales (including single-family, townhomes, condominiums and co-ops) was a seasonally adjusted
annual rate of 5.9 million. Experts tell us that the demographics of people moving, buying and selling houses are heavily influenced by age, occupation and income levels. The young, professionals and high-income earners are among the most likely candidates.

These statistics are troubling if you provide landscaping, pest control, cleaning, HVAC maintenance or a host of other home-based, recurring services. It does not require much data extrapolation to see that if you lose 10% or 12% of your customers every year to moves (possibly more if your market is concentrated in young, high-income professionals) you will soon be in big trouble. Even if you are able to replace customers who
migrate outside of your service area, consulting firm Lee Resources International, Inc. reports that attracting a new customer costs five times as much as keeping an existing one.

Here are some thoughts and suggestions to generate continued sales from your mobile customers.

  • Offer movers a meaningful incentive to transfer your services to their new home. A free month, a 10% discount on your standard rates or a similar promotion will prove cheaper and have a higher success rate in
    maintaining your customer base than finding new customers.
  • The mirror image of this idea is to offer customers who are moving an incentive to provide a referral to the new homeowner. However, several potential issues make it less likely to generate sales. First, it usually does not apply to customers living in non-owner occupied homes such as apartment complexes. Furthermore, assuming their home has already sold (a significant assumption in the current real estate market), your old customers probably do not know the new owners. Furthermore, homeowners will not be motivated by additional discounts off your services if they are moving out of the area. Offer the original homeowner a gift card from a national restaurant chain or retailer if the new homeowner becomes your customer because of their referral.
  • Alternatively, send the new homeowner a promotional offer touting the fact that you are familiar with their home and neighborhood since you provided service for the previous owner.

Finally, Welcome Wagon’s website lists ample reasons to target new homeowners and tenants, even if you did not provide services to the previous occupant. They point out that new homeowners spend 20 times more than established residents. That includes $102 billion on move-related products. Most importantly, they have no existing buying loyalties in their new community, and are seeking information about products and services they will need.

Once again, the need to educate the consumer presents a key marketing and growth opportunity for the observant businessperson.

Improving Those Email Statistics

I am in the process of completing and preparing for a series of free seminars called “What’s Your Story”? It deals with ways of communicating a consistent marketing message and brand to multiple audiences at little or no out-of-pocket cost. In the presentation, I use email marketing to illustrate why you need to use multiple communication channels to reach your entire target market.

Email has at least one major advantage over many other channels. It is very easy to study statistics and trends in things like open rates and click through rates. One of the major vendors tracks open rates by about 30 industry categories. The highest is only 27%. That means that an average email campaign can expect that fewer than three out of every 10 people who receive the email are going to open it. More importantly, recognize that the largest part of your target market will never make it on to your distribution list.

Your email needs to be above average! It is critically important to squeeze the best possible results out of your email marketing efforts. Experiment with things like how the timing and subject line of your email effects the statistics. I read an interesting post called The 4 Words That Will Get Your Email Opened by Sean Platt of the copyblogger.com. It said that in his experience, the most effective subject line for virtually any type of email marketing distribution was simply “You Are Not Alone.” Platt’s theory is this headline appeals to a universal human need to know there is someone who shares our common experiences and is willing to help solve our problems. Interesting theory Sean. I may experiment with that one myself!

There is another theory (unproven in my mind) that people will work harder to maintain what they already have than to gain something they need. You can test this hypothesis by tailoring your subject lines accordingly. For example, a marketing newsletter might be promoted from the perspective of how to maintain existing customers. A human resources discussion could be presented in terms of how to motivate and retain valuable employees. The same thought applies to event marketing.

As email has matured as a communications media, people have become more discerning not only in what they open but also in giving out email addresses. Do not abuse or waste an engraved invitation to their inbox. Allow me a simple analogy to illustrate the point. Whatever subject line you choose, remember that it is only an invitation to your electronic party. Like a real party, you still need to deliver “the goods” that your guests are expecting when they arrive. The expected goods are either valuable information or a chance to save money on your products and services. If you fail to deliver, they are unlikely to attend another party.

As you are writing copy for an email newsletter, article marketing, blogging, and so on, also keep in mind that the average reader is very busy and perhaps somewhat impatient. They are not searching for an online English translation of Tolstoy’s War and Peace. They are looking for interesting, concise articles and information that provide relevant content in a reader-friendly format. Tailor your writing style to match that profile for maximum opens. Again, this also applies to event marketing.

Finally, you might be tempted to save the cost of an email service and simply send a mass distribution to all your contacts in Microsoft Outlook. A reason not to do that is that email services offer spam-checking software that will identify potential problems in your wording and structure. Make corrections accordingly and avoid being trapped in recipients’ spam filters. Instead of sending emails with Outlook, visit MailChimp.com. They allow you to send emails to 2,000 recipients free.

Have a safe weekend. I want you back here bright and early Monday morning.

Internet Marketing for Small Business-Part 1

Businesses have long used the Internet as a one-way communication channel to inform and educate customers about their products, prices, locations and hours. One-way communication is no longer sufficient, even for small businesses.

Here are some ideas to expand the traditional and limited marketing role of the Internet for your business without exceeding your budget limitations.

To increase sales and improve service, businesses should offer interactive capabilities for customers to place orders, make inquiries, request bids, and download product catalogs and service manuals. Many businesses now use the Internet to allow patients and clients to book or change their own appointments. It can be a very useful tool to help reduce lost revenue by sending an email or text message to confirm scheduled appointments. Online customer access need not be a cost prohibitive luxury viable only for “big box” retailers and national catalog companies. Multiple studies confirm it is a necessity for many types of small businesses. For example:

  • In an October 18, 2010 article titled A Cheery Holiday Forecast, Thad Rueter of the Internet Retailer reported on the results of a survey by The National Retail Federation. The survey found 44% of consumers ages 18 and above planned to shop online during the 2010 Christmas season. Of consumers who earned at least $50,000, 55% would shop online. Perhaps more telling of emerging trends, 27% of U.S. consumers who own a smartphone were expected to use it to research and buy products.
  • An article titled 8 Ways Fullservice Operators Can Build Sales was published by the National Restaurant Association in their 2010 Restaurant Industry Outlook Forecast. It reported that 41% of consumers sur­veyed said they choose new restaurants because of e-mail promotions. Close to 30% said they would likely opt to receive e-mail notification of daily specials. Another 56% visit restaurant websites, 54% view restaurant menus, 54% use the Internet to learn about restaurants they have not patronized while 25% have made reservations online.

If your business uses or is considering using gift cards, look at Panera Bread and McAlister’s Deli websites. Both offer the ability to sell, recharge and check card balances online, a real customer convenience. Providing printable coupons online is an even easier customer benefit you can offer.

On Friday, I will discuss email marketing and surveys as a marketing tool for your business.

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