Opportunity: Advertising and Marketing

This is lucky number thirteen in our series based on Challenges of the
Future: The Rebirth of Small Independent Retail in America
, a 64 page white paper by Jack Stanyon, underwritten by the George H. Baum
Community Charitable Trust, the Illinois Retail Merchants Association, and the
National Retail Federation Foundation.  We’ve covered all of the trends Stanyon identified, today we look at the first of the "Challenges". 

I wish he had referred to these as "opportunities" rather than "challenges" because they really are opportunities for you to build your business.  I hope you agree.

Challenge #1

The changing nature
and effectiveness of marketing and advertising.

“Today, especially for small independents, trying to be all
things to all people represents the absence of strategy.” You number one goal must be to differentiate
yourself, to stand out from the crowd. But
how do you do that? According to management consultant Peter Drucker, it has to
begin with knowing your customer, knowing your competition, and knowing your
environment. That means you have to
listen.

Yesterday, we discussed having your own board of
directors. That’s one form of
listening. There are many others.

Quoting Stanyon again: “Successful businesses are those that
execute consistently on their differentiated value propositions. They have a point of view. They stand for something.”

Rather than being about the product, you must be about the
customer. For example, if you’re in the
sewing business, your focus must be on sewers, not on sewing machines. If you’re in the vacuum business, focus on
customers who want clean homes, not on vacuum cleaners. If you’re in the ceiling fan business, focus
on consumers who want to improve the looks and comfort of their homes. You get the idea.

 Traditional methods of marketing and advertising are losing
their effectiveness, being replaced by more effective, less expensive
alternatives.  (See Say Goodbye to the Mass Market.) Full-page ads are out—targeted
email is in. TV spots are out—blogs are
in.

Getting customer information. Last week we wrote about the availability of
point-of-sale systems to the independent retailer. Systems that were once only available to the
Wal*Marts and Targets of the world are now available to everyone. The ability to target your marketing to only
customers who have bought “x” in the past is just one thing that will make you
stand out from the crowd.

Advertising. While
the cost of traditional advertising continues to rise, its effectiveness is on
the decline. Today’s busy consumers use
VCR and TIVO to watch their favorite TV programs on their schedule, not the
networks’. In the process, they
fast-forward past the commercials, saving precious time. One of the things that they do with their
saved time is check their email and surf the Internet.That’s where they should find you.  When they search Google for your type of business, are you listed?  Have you signed up for the free coupon service that they offer?  Today, these things are critical.

This is actually good news for the independent retailer
because today’s communications methods are more targeted to specific
audiences. Cable networks like HGTV can
be used to target a very specific group of consumers at a much lower cost than
traditional broadcast media. Other
forms of targeted promotion include custom publishing, email, blogs, Internet
search advertising, and event sponsorships. Of course, word-of-mouth is the most cost effective method of all.

Stanyon interviewed a consultant who said, “When I speak to
groups of small independents, I ask two questions. The first, can you give me the name and
contact information for your 100 most profitable customers last year? Usually about 10 percent raise their
hand. And then I ask of the 10 percent,
what did you do for those customers? Have you thanked them? Those are the
people who love you….They want recognition.”

In-store events and sponsorship of outside events are
particularly effective ways to build business. If you can partner on these events with other, non-competing businesses,
you can share expenses, reduce the cost, and have an opportunity to talk to
more people. Your participation in
community groups like the Chamber of Commerce, or in community activities not
only gives you the satisfaction of giving something back, it also identifies
you and your business as important assets in your market and helps you build
referral business.

No national chain is going to be able to do
target marketing as well as you can. One
of the things that helps big chains get bigger is the efficiency of doing
things on a huge scale.  Run an ad
campaign that reaches millions of viewers and wait for the sales to roll
in. But, out of those millions of viewers,
a huge percentage will go the kitchen or the bathroom, many more will flip to
another channel, and of those who do see it, most won’t be interested.

You, on the other hand, if you’ve maintained a good database
of your best customers, can send out 100 postcards to your 100 best
customers. You know what they’ve bought
in the past. You know what additional
items they might want or need. They know
you. If you do it right, your 100
postcards will reach 100 people who are at least interested in what you have to
say. They may not buy now, but you’ve
kept the relationship going and they are very likely to buy again
sometime. Better yet, they might just
know someone that they can refer to you.

We’re at a rare moment in time. Changes in society and especially in
technology have tipped the scales in your favor. If you pick your niche, listen to your
customers, and target your marketing, your opportunities are virtually
unlimited.

 

 

Who’s On Your Board of Directors?

Last week my wife and I had dinner with our financial advisor.  We, along with eight other client couples met at a local restaurant.  There were two reasons for the dinner.  One was to thank us for our business and the second was to get our advise on how to improve the host’s customer service.  He called us his "board of directors". 

It’s an ingenious idea.  Who knows better how to improve customer service than the customers themselves?  Doug received several suggestions that he promised to incorporate in his business. 

How could you apply this idea to your business?  Think about the way that corporations operate.  They all have a board of directors to advise the company’s management.   I looked up Wal*Mart’s board of directors, and found that they have:

  • The CEO of the company
  • A member of the Walton family
  • 2 retired Wal*Mart executives
  • The retired CEO of Coca Cola
  • The retired CEO of an Hispanic media conglomerate
  • A retired professor of business administration
  • A banker
  • 2 Venture capitalists
  • A human resources consultant
  • A former member of the Clinton cabinet.

Each of these people brings expertise to the company that might not be available internally.

Why not have your own board?  It could be made up of some of your best customers.  You might add your banker, someone who works in advertising, or other retailers.  Use your imagination.  People like to help and to be recognized as someone with a valuable opinion.  For the cost of a nice dinner you could get some incredibly helpful ideas.

Way back in 1937, Napolean Hill introduced the idea of a personal board of directors in the classic business book Think and Grow Rich.  He called it the Master Mind Group.  He said there were two characteristics of this Master Mind Group;

"The economic feature is obvious. Economic advantages may be created
by any person who surrounds himself with the advice, counsel, and
personal cooperation of a group of men (or women) who are willing to lend him
wholehearted aid, in a spirit of PERFECT HARMONY. This form of
cooperative alliance has been the basis of nearly every great fortune.
Your understanding of this great truth may definitely determine your
financial status.
 
 
 

"The psychic phase of the Master Mind principle is much more
abstract, much more difficult to comprehend, because it has reference
to the spiritual forces with which the human race, as a whole, is not
well acquainted. You may catch a significant suggestion from this
statement: "No two minds ever come together without, thereby, creating
a third,invisible, intangible force which may be likened to a third mind."

Even though Hill’s book was written nearly seventy years ago and was based on work he did many years before that, it remains a consistent best seller even today. 

How often you meet with your "board" is up to you.  You might have one formal get-together each year with a nice dinner, and a more informal lunch-time meeting twice each year or even quarterly.  Some members may lose interest which isn’t necessarily a bad thing because that gives you an opportunity to bring in new ideas from time to time.

You’re in competition with companies that have their own boards, shouldn’t you have one too?

Hiring Decisions

In a recent post, Sara Fitts writes on the hiring process and offers seven tips to follow.

"Know why you need the position you are filling." 

This is an excellent time to review all of your personnel needs.  Just because you’re replacing someone doesn’t mean that the new person has to have exactly the same duties.  Could a new person take some of the load off your shoulders?  Are there some skills that your company is lacking that you might find in a new hire?

"Identify 5-10 characteristics that you must have in the person you hire for this position."

This could be the most important point of all.  Product knowledge can be learned.  Procedures can be learned.  But, personality is pretty much a given. 

There’s an old saying, "You can’t fix stupid."  You also can’t change who a person is.  If a new hire’s personality clashes with everyone else’s, you will have an unhappy, unproductive workplace.  You, and your team, spend a lot of time at work.  When you make your list, be sure you include things like enthusiasm, energy, sense of humor, or any other personal qualities that will make sure your new team member fits in.   You, your new hire, and your current staff will be happier and more productive if you do.

"Write the job description-and list every detail involved."

There’s a time and a place for surprises, but after you’ve hired someone is no time to find out that they can’t (or won’t) do something that you just assumed was part of the deal.  If it’s in writing, and if it’s discussed up front, then there won’t be any misunderstandings later.

"Post the vacancy broadly enough to get a good sample of talent." 

The local classified section isn’t the only place to find good people anymore.  If fact, it may be the worst place to find people.  Internet job sites are a good place to look.  Also, don’t forget your customers, your friends, and your business associates.  The vast majority of job openings are filled without ever placing an ad.

"Interview all candidates in the same day if possible." 

This one may not be possible, but it is easier to compare applicants if there’s not a big gap in your interviewing process.  No matter how long the process takes, make a lot of notes. 

"Make your hiring decision as if your life depended on it-because the wrong person in the position can make your life miserable"

This one goes without saying.

"Evaluate performance on a regular basis."

You should be able to tell fairly quickly if the new person is working out.  Do yourself, and the new hire, a favor and cut your losses if things aren’t working out.  If it turns out to be a good fit, review often to catch little problems before they turn into major issues.

Veterans’ Day

Americanflagcircle200_2
On November 11, 1918 an armistice went into effect between
the Allied nations and Germany,
ending what was then called the Great War, “the war to end all wars”. Today we know it as World War I.

One year later, President Woodrow
Wilson proclaimed November 11 to be Armistice Day saying “the reflections of
Armistice Day will be filled with solemn pride in the heroism of those who died
in the country’s service and with gratitude for the victory.”

In 1954, after World War II and the
Korean conflict, Congress changed the name to Veterans’ Day, a day to honor
American veterans of all wars. In 1968,
as part of the Uniform Holidays Act, Congress made Veterans’ Day one of the
“Monday holidays” but so many states continued to celebrate it on November 11
that in 1975 it was moved back.

Sadly, the day seems to have lost some of its significance, in spite of the fact that so many of our young people are in harm’s way today.  Hopefully all of us will take some time this weekend to think about the sacrifices that have been made and are being made today to protect our freedom. 

Thank you to all our veterans!

Semper Fi

Marines
November 10 is recognized as the birthday of the United States Marine Corps.  You may be surprised to know that the Marine Corps is actually older than the United States itself.   The Marine Corps was born on November 10, 1775 when the Continental Congress authorized Robert

    Mullan, proprietor of the Tun Tavern in Philadelphia to raise two battalions of Marines.  Since that time the Tun Tavern has been recognized as the birthplace of the United States Marine Corps.

There is an interesting history of the Tun Tavern here.  Or, visit the Marine Corp web site.

Keep an Eye on Your Trees

Just when you thought you had enough to worry about, USA Today is

reporting that Chip_n_dale_1thieves in California are stealing nuts!  With the high price of walnuts and almonds, thieves are stripping trees of their valuable fruit when no one’s looking.

According the the article, "The recent nut heists appear well-organized and sophisticated."

Point of Sale Systems

Chances are that when you voted yesterday, you might have
had your first experience with electronic voting. Touch-screen voting devices are replacing the
old punch card system in many areas. The
system wasn’t without its problems, but since many of the machines were being
used for the first time, it doesn’t look like the problems were all that
bad. There’s no question that the days
of the paper ballot are numbered.

In retail, the hand-written receipt is also nearing
extinction.
One of the things that Receiptlet
the big boxes get big is the electronic point-of-sale system. I imagine that Sam Walton probably used a
receipt pad and a cigar box and kept the inventory in his head in his original
five and ten cent store in Bentonville, but those days are long gone.

 The good news is that the type of systems that used to cost
hundreds of thousands of dollars are available today to even the smallest
business. Systems are available from big
names like Microsoft and Intuit, and from smaller companies, many who
specialize in software for particular industries.

If you haven’t taken the plunge yet, here are some
suggestions from cnet.com.

Think beyond the cash
register.
While an off-the-shelf
package may save you money up front, you really want a system that will help
you run every aspect of your business including sales, inventory, payroll, and
customer relationship management.

 Remote access may
help.
You don’t want everything tied
to a single terminal.

 Make sure your system
is flexible and expandable
. Using
your laptop as an additional check-out terminal can keep you from losing sales
during busy periods.

 Decide on wireless
handheld or a touch screen.
There
are a variety of data entry options. Your choice may vary depending on how you do business.

 Pay attention to
support.
When you have your entire
business computerized, the computer had better work!

 Look for detailed
reporting.
What are your needs? Can a package system do what you need? Ask a lot of questions and don’t buy anything
until you’re satisfied with the answers.

 The first point is probably the most important. If you’re going to spend the money and take
the time to set up an electronic system, (and you will spend a lot of time
getting it set up) you’re going to want it to do everything for you that it
can. A system that records sales but
doesn’t adjust your inventory isn’t going to save you much time. An ideal system will scan the item, enter the
sale, record the customer information, and print a receipt.

Then it should update your inventory records, record serial
number information for warranty, and let you know when it’s time to reorder the
item. It should talk to your accounting
software, making necessary changes automatically. If you pay commission, those records should
also be updated by your system. Full
payroll functionality is an added plus.

 Finally, your system should give you the information you need
in reports that make sense for your business. For example, Microsoft has two point-of-sale packages, one cleverly
called Microsoft Point of Sale and the other called Microsoft Retail Management
System
. Where Point of Sale offers a set
of standard reports, Retail Management System allows you to design customized
reports. MRMS has other features that you may find important.

 In addition to the two Microsoft packages, Intuit’s
QuickBooks
is also very popular. An
advantage of either the Microsoft or QuickBooks packages is that they can be
purchased from a local retailer who can provide the necessary set-up assistance
and support. If you also need the
hardware to build your system, Intuit has partnered with Dell for a complete
package. Microsoft has a similar
partnership with H-P. Local vendors usually
offer packages of hardware and software which can be set up to suit your needs.

 So, what’s it going to cost? MS Point of Sale and QuickBooks alone have a street price in the $500.00
area for just the software. MS Retail
Management System costs about $300.00-$400.00 more. The Microsoft/H-P software/hardware package
starts at around $2,200. A
Dell/QuickBooks bundle is slightly higher. A vendor here in St. Louis offers a complete hardware/software package with  Microsoft RMS,
on-line training, completely loaded with Tacony and Baby Lock catalogs for
about $5,000. Obviously, your price will
vary depending on your needs.Cigar_box_2

One thing is certain, while some retailers may wish they’d
gone with a better package, you seldom hear anyone say that they’re sorry they
gave up the pad and the cigar box. 

Sewing Makes a Comeback

I’m passing this link along mainly for our sewing dealers, but I think there’s a good lesson here for all of us.  The Pittsburg Post Gazette reports that sewing machine sales are on the upswing.  To paraphrase Mark Twain, reports of the death of the sewing business have been greatly exaggerated.  The growth in high-end computerized machines in the past few years has been nothing short of fantastic.

According to the article, the television show "Project Runway" has really given sewing a boost recently.  With the networks, both cable and broadcast, scrambling to come up with new and different programming, who knows what’s next? 

Dealers tell us that the recent "Megan Mulally Show" featuring Kyle Krichbaum and his Riccar Brilliance vacuum (see Priceless Publicity) has increased their sales, in some cases dramatically. 

The important thing is that we all be aware of what’s going on around us.  If you sell sewing products, and if you weren’t aware of Project Runway, you missed a selling opportunity.

The moral of the story is that you just don’t know when your next
opportunity is going to come along.  Be alert and ready to act.

Don’t Forget to Vote

Here at Tacony Corporation, we know that our customers are the best business people on the planet, but according to Inc.com, you’re also the best citizens.  In a recent Wells Fargo Gallup survey of 600 business owners, 89 percent said that they plan to vote tomorrow.  Nearly three quarters said "they believe Tuesday’s outcome will have a direct impact on the economic climate for small businesses nationwide." 

Like most Americans, the major concerns of business owners are energy prices followed by healthcare coverage, business taxes and general economic conditions.  The war on terror and the situation in Iraq were also concerns.

As the Iraqis are learning, democracy isn’t easy.  We’re very fortunate to live in a country where we don’t get shot at when we go to vote.  In spite of that, many of our fellow Americans fail to exercise their right/responsibility to vote.

Complaining about the government is right up there with baseball as a favorite American pastime.  If you don’t vote, you really shouldn’t complain.  This poll shows that independent business owners understand that and take civic responsibility as seriously as fiscal responsibility.

Way to go!!

Small Business Myths

In this past Sunday’s Napa Valley Register, writer Beth Pratt exposes 8 myths about starting and running a small business. 

1. Over 95% of small businesses fail.  In the 1990s there was a report that said 95% of all new restaurants fail.  Somehow, like the old "telephone" game, this statistic somehow got applied to all small businesses.  According to the Small Business Administration 2/3 of new small businesses survive at least two years.  Over 1/2 survive at least four. 

2. The government will give you cash to start a business. The SBA will guarantee a loan, but the government isn’t in the business of making loans.

3.  My favorite.  Small business owners are rich and get to take it easy.  No comment needed.

4.  I’m a good cook so I should start a restaurant. Feel free to insert any specialty in place of the word "cook" and any type of business in place of "restaurant".  As we all know, there’s a big difference between doing any other type of work and running a business.

5.  Failure is bad.  Most successful business owners will tell you that they failed many times before they became successful.

6.  Small business owners, with few employees, don’t really have to worry about federal and state labor laws.  As you know, it just isn’t so.  In fact, lacking human resource and legal departments, small business owners may have more to worry about than their larger counterparts.  This is one you’d better take seriously.

7.  You need a lot of money to start a business. It depends on the business, but getting the money is usually not an obstacle to getting started.

8. Money will fall out of the sky if you have a great idea. Money’s never easy to come by, but hard work and persistence are usually more important than the idea.  Edison had lots of great ideas, but he had to work awfully hard to make any of them successful.