A few months ago, I was quite surprised after I finished my lunch at a restaurant that I regularly frequent. In anticipation of paying the bill, I dug in my purse for what the waitresses there called my “punch” card. Noticing my actions, the waitress intervened. “Don’t bother with your punch card,” she said. “We don’t take them anymore.”
Shocked, I exclaimed, “You don’t! Why not?|”
“Our new owners thought that they were too expensive. Instead, we are giving away two free meals each day in a drawing of the names of those customers who ate here on that day.”
“Wrong move,” I replied to the waitress.
The new owners had looked at the punch card and seen only the expense of the free meals which were given away after twelve punches. They had not considered the revenue gained from those twelve meals. They had not noticed how the punch cards prompted customers to stop by more frequently and, quite possibly, to opt for that restaurant instead of a competitor. They had not realized how these punch cards developed their customers.
The effectiveness of the card was quite evident on normally slow days for lunch at restaurants, Monday and Tuesday. Those days were double-punch days, and business was always brisk.
During the ensuing months, the business at that restaurant dropped. On Mondays and Tuesdays, I often saw few customers. Yes, that was partly due to outside economic pressures. However, when the economy gets tough, a business relies more than ever on its return customers. This restaurant had just dropped its incentive for customers to return. By doing so, some customers may have been upset, and most customers lost their prompt to have lunch there.
Deliberately turning away customers is not profitable. Doing so in troubled economic times is a double whammy; the business lost revenue which it could have had except for its own actions. Unfortunately, this is a typical reaction of businesspeople. When times are tough, they look to cut expenses. From a cost-cutting standpoint, this makes sense. From a revenue-generating standpoint, however, certain expenses are directly related to revenue.
Often, businesspeople don't stop to think about this relationship. They feel comfortable defining expenses while they find revenue to be more elusive. They know what their expenses will be, but they hope for their revenue goal. To achieve that hope, they market their business. At least, let’s assume that they do.
If you consider all the activities of a business, those that fall under the umbrella of marketing, including advertising and selling, are the revenue-generating ones. The rest, while quite necessary for the operation of the business, are expenses. In order to generate more revenue, you must focus on the revenue-generating activities of marketing. That means you must view the money spent on marketing differently.
This reminds me of a story that Robert Kiyosaki, author of Rich Dad Poor Dad, tells. He attended race card driving school, and one of the most difficult lessons that he found to learn was to accelerate out of problem rather than to apply the brakes. He learned to take just the opposite action that he would have done driving on the street. The same thinking applies to spending on marketing. To generate more revenue, accelerate your marketing activities; don’t decrease them.
Monday, June 30, 2008
Sunday, June 8, 2008
One Doesn’t Necessarily Exclude the Other
As postal rates have been increasing, I have found myself with a growing aversion to mailing. Call me cheap, but when stamps hit $.41, I encountered price resistance within my head to mailing. Once the price of a stamp passed the $.40 mark, my mind leaped ahead and tagged mailing an envelope as half a dollar. Of course, this is not accurate, but it is my perception and, thus, my reality.
My price resistance to postage has prompted me to turn to e-mail. This is a savings in more ways than money. By e-mailing, I save paper, becoming more green, and I save time, offering me the opportunity to do something else. Since finding someone who does not have an e-mail address is rare today, e-mail has become a more versatile and acceptable option than it was a few years ago. Thus, I have taken the replacement of e-mail for mail into areas that I heretofore would never have considered.
One of these areas is contracts. Now, I .pdf contracts and attach them to a brief e-mail message. I also .pdf invoices and e-mail them. A couple of Insights ago, I mentioned how I am using e-mail sale messages to promote Monarch Tree Publishing’s books and CDs. These are all good examples of how I have become open to e-mail as an alternative to mail. Whenever I think of communicating, I now weigh whether I can accomplish my goal with e-mail.
Other companies appear to be headed in the same direction. Have you noticed that your junk snail mail has decreased? Mine has. Conversely, my spam and junk e-mail have grown dramatically. I suspect that you have noticed this, too. We now grapple with the annoyance of junk e-mail rather than junk snail mail.
As junk e-mails increase, we are left with the challenge of using our e-mail communications wisely. When communicating via e-mail, we must know the person being contacted. We must have that person’s permission to send him or her an e-mail. If this is a first-time contact, we must send a personal introductory e-mail. We must be extremely considerate and responsible about contacting someone via e-mail. This is critical not only to get past the spam filters but also to have your message opened and read by the receiver.
I’m not saying this to discourage you from using e-mail. As I stated earlier, I am using it more than ever. If you use it well , you may keep in touch very easily and quickly with e-mail, just as I do with these Insights. I highly recommend using e-mail more than ever and in more ways than you have ever done.
On the other hand, recently I have gone back to snail mail for some very direct, highly targeted communications. A couple of days ago, I found it interesting to read in an e-mail from another marketer that she was making a similar effort. She said that she had found contacting a highly targeted list of customers via mail gave her greater results in filling her seminars. I, too, have found a high response rate to my targeted snail mails.
That brings me to the point of this Insight. When new technologies are developed, we have a tendency to drop the old and use solely the new. We could easily not use snail mail at all and make all communications via e-mail. As I and the marketer that I mentioned have both found, this may not be wise. There is a uniqueness to a snail mail piece personally addressed in your handwriting that stands out. The person receiving your mailed piece subconsciously recognizes your extra effort and appreciates it. Perhaps that is why these snail mails get good response. Perhaps with the decreased junk snail mail, your personalized letter has less competition. Perhaps the recipient likes the personal attention of a person snail mail letter. Whatever the reason, personalized, highly targeted snail mail works, as does e-mail.
One doesn’t necessarily exclude the other. Use both and use them wisely.
Monday, June 2, 2008
Reacting to Your Customers' Wants
Let's face it. As with many auto makers today, Chrysler's vehicles are not the most fuel efficient. Since Chrysler's inventory cannot easily be changed to be more fuel efficient, the company has a problem. With increasing pressure on consumers due to rising gas prices, vehicle owners are very concerned about how much they are paying to get from here to there. Combine these vehicle owners' concerns with Chrysler's lack of fuel-efficient vehicles, and Chrysler has an even bigger problem.
How is Chrysler addressing this problem?
The company is reacting to customers' wants. The customer wants lower gas prices, and Chrysler is giving it to them. At this point, you may be saying, "Wait a minute. What the consumer really wants is to pay less for the overall gas bill." While that may be true, Chrysler does not have the ability change the fuel efficiency of its vehicles and offer an overall lower gas bill today. What Chrysler can offer is to cap the price that customers pay for a gallon of gas. That offer addresses customers' concerns by stabilizing the price they will pay for gas. It creates an intersection of what Chrysler can offer and what the customer wants. Wisely recognizing this intersection, the company turned a stable price for a gallon of gas, $2.99, into its latest promotion.
This could be a costly venture for Chrysler. Depending on how high gas prices rise, Chrysler is committing to covering hundreds, perhaps over a thousand, dollars per vehicle per year. To Chrysler, that may seem a small price to pay to get sales today. Hopefully, their guess as to how high gas prices will go is correct, or they could be taking on more than they anticipated.
Either way, Chrysler is reacting to what customers want. Their customers want to pay less for gas, and that is what Chrysler is offering them.
We can take a lesson from Chrysler. We can learn to react to our customers' wants. We can wisely make this a regular practice rather than only employ it in a crisis situation such as Chrysler finds itself in today. Are you doing this? Do you react to your customers wants? Do you adjust your offerings to pressures that your customer is feeling? What are the pressures on your customer today? How do these pressures affect your customers' dealings with your business?
To find out, talk to your customer.
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