As I was walking my dog yesterday morning, an attractively decorated semitrailer rolled past us. On the side of the trailer, three life-sized pictures were framed in a sky-blue background. Each picture was an attention-getting scene of rich, wood windows or doors. "Kolbe Windows and Doors" was written next to these scenes. The vibrancy of the scenes kept my eyes riveted on the truck as it rolled past, leading me to fully absorb the message it conveyed. I instantly received a strong, positive impression about Kolbe and its products. Whoever applied those scenes to that trailer did a beautiful job, and, in the process, accomplished Kolbe's goal of communicating its message via the trailer.
Thinking about this trailer, my mind skipped back to seeing three vehicles in the Best Buy parking lot, all of which had the Geek Squad logo displayed in a prominent position. I remembered noticing the vehicles. Of course, the marketer in me remarked how Geek Squad is an excellent name. In addition to getting your attention, the name accurately gives you the intended communication. However, the consumer in me noticed the logo because it was clear and easy-to-read. These factors contributed to the logo’s standing out, getting my attention, and reinforcing the Geek Squad image in my mind.
While my dog and I walked back to the house, I mulled over the importance of those who apply these scenes and logos. Although I suspect many of us do not give this importance much thought, the clarity of these applications on a vehicle and their design determine the effectiveness of the communication. If the work is sloppy rather than being crisp, the communication is interrupted. In fact, the communication even may be negative rather than positive. We all expect this work to be done well, but do we truly appreciate its impact?
That applies to screen printing and embroidering on clothing as well.
I am fortunate to work with a screen printing and embroider company, Paw Prints, which does excellent work and goes the extra mile for clients. Recently, I asked the owner, Sue, to embroider shirts with my Monarch Tree Publishing logo on them. I told her there was no rush. Today, she unexpectedly handed me two shirts with the logo embroidered. "You'll notice that I had to adjust the font for Monarch Tree," she said. "Your original was too thin to embroider. So I played around with it and found a similar font that does embroider well. Let me know what you think of these."
I was surprised and impressed. The embroidery is attractive and beautiful. Just as with the Kolbe trailer, the embroidery on the shirts gets attention and communicates the message. The person who created and applied the scenes to that trailer, the person who designed and applied the Geek Squad logo, and Sue all have excellence in common.
With that in mind, I called Sue to express my appreciation for her work. She is an important person on my marketing team. Her initiative to fix the font before it is a problem and her focus on excellence make my marketing effective. I know that we all are very busy, and noticing the work of these important people sometimes slips by us. Has this slipped by you? Have you shown your appreciation to these important people on your marketing team lately?
If not, do it today.
Tuesday, July 29, 2008
Tuesday, July 15, 2008
The Cost of Basing Your Business on Price
This morning I heard of more price corrections from the airlines. "Airlines are looking for every way they can to monetize," the expert stated. "They have to. This is about survival. We may not like this, but we should embrace it so that we have airlines for travel."
The report went on to say that the days of $59 flights to Florida for the weekends are over. The airlines are even tacking on an extra fee for frequent fliers who will now pay anywhere from $25 to $60. The first checked bag now costs $15 and the second $10.
For years low-priced airline tickets have enticed passengers to travel. Airlines have offered frequent flier miles which reward customers with free flights after so many miles. That was a good idea for encouraging repeat customers. Recently, however, the airlines morphed that idea into a promotional effort by giving away enough frequent flier miles for a round trip with the purchase of certain products. T-Mobile had one such offer at Thanksgiving last year. If you signed up for a two year contract with T-Mobile, you received enough frequent flier miles for a round trip flight. With programs such as that, the airlines bastardized a good repeat customer idea into a price-dropping promotion. The airlines also have drastically discounted fares during certain times of the year. Whenever they have needed revenue, the airlines have offered special fares. In fact, their preferred method to stimulate business has always been to drop price.
When the principal way that you stimulate business is to drop price, you are creating several problems. One is that the revenue flowing in will not be enough to cover expenses, especially when the prices of materials, supplies, and/or labor suddenly increase. Even in times when expenses seem relatively stable, dropping prices reduces revenue, leaving your business vulnerable both in the short and the long term by robbing Peter to pay Paul. Eventually, you will have to pay Peter in some fashion. For years, the airlines have dropped prices and marginally stayed alive, often through mergers and acquisitions. This solution just puts two problems together, robbing Peter a bit longer while often delaying Paul's payment. With the rising price of fuel, Peter has come calling on the airlines.
Throughout all this, customers are being taught to wait for the next price drop before they book their flights. The airlines have inadvertently schooled customers to buy only "bargain" rates, never full price. A customer always asks for the discount and searches for the "cheapest" fare because that is the only way the airlines have distinguished their businesses. None of them promote a unique selling proposition. They only promote price.
This sole emphasis on price has brought airlines to a third problem. They are encouraging people who should not be customers of the airlines to use their services. I heard you mentally gasp at that statement because many of us think that everyone should be our customer. That's not true. Some people should not be our customers. When you base your business stimulation on price, you are dealing with some people who should not be your customers. They are not really able to afford your services. For the health of your business, you certainly cannot afford to deal with them because you cannot make enough revenue from them to keep your bottom line healthy. They are not profitable customers.
Doing business with enough of these people will land your business right where the airlines are today: They may end your business. The cost of basing your business on price is a high one. To do this successfully, you must have the right mix of products and/or services and a high degree of control on expenses. The airlines don't. Do you?
The report went on to say that the days of $59 flights to Florida for the weekends are over. The airlines are even tacking on an extra fee for frequent fliers who will now pay anywhere from $25 to $60. The first checked bag now costs $15 and the second $10.
For years low-priced airline tickets have enticed passengers to travel. Airlines have offered frequent flier miles which reward customers with free flights after so many miles. That was a good idea for encouraging repeat customers. Recently, however, the airlines morphed that idea into a promotional effort by giving away enough frequent flier miles for a round trip with the purchase of certain products. T-Mobile had one such offer at Thanksgiving last year. If you signed up for a two year contract with T-Mobile, you received enough frequent flier miles for a round trip flight. With programs such as that, the airlines bastardized a good repeat customer idea into a price-dropping promotion. The airlines also have drastically discounted fares during certain times of the year. Whenever they have needed revenue, the airlines have offered special fares. In fact, their preferred method to stimulate business has always been to drop price.
When the principal way that you stimulate business is to drop price, you are creating several problems. One is that the revenue flowing in will not be enough to cover expenses, especially when the prices of materials, supplies, and/or labor suddenly increase. Even in times when expenses seem relatively stable, dropping prices reduces revenue, leaving your business vulnerable both in the short and the long term by robbing Peter to pay Paul. Eventually, you will have to pay Peter in some fashion. For years, the airlines have dropped prices and marginally stayed alive, often through mergers and acquisitions. This solution just puts two problems together, robbing Peter a bit longer while often delaying Paul's payment. With the rising price of fuel, Peter has come calling on the airlines.
Throughout all this, customers are being taught to wait for the next price drop before they book their flights. The airlines have inadvertently schooled customers to buy only "bargain" rates, never full price. A customer always asks for the discount and searches for the "cheapest" fare because that is the only way the airlines have distinguished their businesses. None of them promote a unique selling proposition. They only promote price.
This sole emphasis on price has brought airlines to a third problem. They are encouraging people who should not be customers of the airlines to use their services. I heard you mentally gasp at that statement because many of us think that everyone should be our customer. That's not true. Some people should not be our customers. When you base your business stimulation on price, you are dealing with some people who should not be your customers. They are not really able to afford your services. For the health of your business, you certainly cannot afford to deal with them because you cannot make enough revenue from them to keep your bottom line healthy. They are not profitable customers.
Doing business with enough of these people will land your business right where the airlines are today: They may end your business. The cost of basing your business on price is a high one. To do this successfully, you must have the right mix of products and/or services and a high degree of control on expenses. The airlines don't. Do you?
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