Upon Further Review

Cfl
Maybe compact fluorescent bulbs aren’t such a great idea after all.  I had barely hit the "publish" button for Wednesday’s blog on saving money by using CFLs when I came across an article by Elizabeth Weise in USA Today about some of the problems associated with them.

According to Weise, only 11% of consumers have at least one CFL in their homes.  Some of the drawbacks?

  • Some people remember the first generation of the bulbs which put out a strangely-colored light.  While they still only give off light that’s about 80% as true as natural sunlight.  Bulb manufacturers are working on the problem.
  • The don’t start up at full brightness.  It can take up to a minute for them to reach full output.
  • They don’t like hot or cold.  Below 30 degrees, they take even longer to heat up.  High temperatures cut into bulb life.  Putting them into enclosed fixtures can cut their useful life by as much as two thirds.  Even so, a CFL that lasts 3,000 hours compared to its normal 10,000 is still a big improvement over an incandescent that lasts only 750-1,000 hours.
  • To get higher wattage in a CFL, the bulb has to be bigger.  A lamp that can take a smaller 60 watt bulb may not be able to hold a 120.
  • A lot of the CFL bulbs wont work with a dimmer or in a three-way fixture.  They make noise, they burn out quickly, and they may not dim.
  • There are some concerns about disposing of CFLs which contain mercury.  You don’t have to call the EPA, but you should wear plastic gloves to pick up the pieces of a broken bulb.  It may contain from 1 to 5 milligrams of mercury, compared to the 400 milligrams of mercury used in older thermometers.  There is no national program to dispose of used CFLs, but there are local programs in some areas.

So, what’s the bottom line, Mr. Wizard?  I’d say my earlier suggestion to replace incandescents with CFLs still applies.  Their short-comings are minor compared to the amount of electricity (money) you can save.  Unless you routinely keep your store temperature below 30 degrees, or above 80, you shouldn’t have a problem.  Besides, if you keep your store temperature below freezing, you’re already saving plenty of energy.  Let’s not get carried away.

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Your Email ADDRESS Sends a Message Too

Thanks to Matt Norcia at the Retail Contrarian for posting on something that I’ve been thinking about for a while.  It’s your email address.  You have a nice business location, professionally printed stationary and business cards, an easy-to-remember phone number, and a generic email address. 

You may have signed up for email on AOL or Google when email just wasn’t that big a deal and just haven’t bothered to change it.  Maybe you’ve given it out to so many people that you don’t want to change it for fear of losing those contacts.  That’s something that’s easy to fix.  As Matt points out, there’s really no reason to be joe@aol.com when you already own a domain name.

If you already have a web page, your service provider most likely includes a free email address in the package.  All you have to do is set it up.

If you don’t have a web site, you should at least register an appropriate domain name, even if you’re not ready to put up a site right now.  Domain registration is very inexpensive, just $10.00 per year at Yahoo Small Business.  Prices and service vary by provider, so shop around to get the best deal.  But a word of caution, don’t trust your domain name, email, or web site to someone who may not be around next week.  A bargain’s not a bargain if all your stuff suddenly disappears.  A good rule of thumb would be, if you’ve never heard of them, you should probably shy away.  Domains are being gobbled up at a remarkable pace.  You should lock up a good address now, even if you don’t plan to use it for a while.

You can even register a free domain, including email address at Microsoft Office Live.  You’re somewhat limited in what you can do, but if your main interest is just a professional-sounding email address, MS Office Live might be just the ticket.  And, you lock up your domain name at no cost.  There has been some criticism of the Office Live free plan because it’s not easy to transfer your domain to another provider if you decide to upgrade your site, but it can be done.

You can avoid the problem of losing contact with the people who have your old address by forwarding mail addressed to the old address to the new one.  It’s a simple service and virtually every email provider offers it. 

Saving Energy

We posted yesterday about cutting expenses that don’t have a negative impact on sales.  Today, we’re going to take a look at some ways to make that happen.  With utility prices going up all over the country, energy saving is definitely a good place to start.  There are any number of ways to save serious money without hurting your selling environment. 

Lighting is a critical part of your store design.  A poorly lighted store makes a poor impression on customers.  If color is an important part of your selling story, the wrong fixtures and bulbs can also hurt your business by distorting colors.  For example, the most common lighting in most stores comes from fluorescent tubes.  The standard for years has been the T12 lamp which uses a magnetic ballast.  The modern equivalent is the T8 lamp with electronic ballast.  According to Energy Star, switching to T8 lamps will produce a savings of about 35%.  An extra bonus is that the electronic ballasts don’t make that annoying humming noise that we’ve always associated with fluorescents.

If you use any incandescent fixtures in your store, a switch to compact fluorescent lamps will also save energy.  CFLs use 75% less electricity to produce the same illumination as a standard incandescent bulb.

Here are some other energy-saving tips from the California Public Utilities Commission:

  • Set programmable thermostats to turn the heat/cooling system on 30 minutes before people arrive and off from 30 to 60 minutes before they leave. 
  • Turn off lights in unused areas that aren’t visible to your customers.  Depending on the circumstances, motion sensing switches in areas of limited use (restrooms, lunch rooms for example) may be a good investment.
  • Dress comfortably for the weather.  Remember that in winter your customers are wearing winter clothes.  If they’re wearing coats, a temperature of 72 degrees is going to be uncomfortably hot for them.  Set the temperature at 68 degrees and wear a sweater.
  • This one may be the most overlooked.  Keep your heating/cooling system in tip-top condition.  Change filters regularly and during cooling season, make sure your condenser coils are clean.  A properly maintained HVAC unit can save up to 5%.
  • Turn off unused equipment at night.  Computers, printers, monitors, and fax machines use electricity even when they’re not in use.
  • Don’t leave exterior doors and window open more than necessary. 
  • While water isn’t as expensive as electricity, the cost can add up.  Fix dripping faucets and constantly-running toilets as soon as possible to save water.

When it’s time to replace HVAC and other major electrical appliances, check with your state government for possible rebates.  Many local governments are offering rebates on Energy Star rated units.  You could get cash back in addition to the money you’ll save on your electric bill.

Finally, here’s something to think about.  You know what your net profit percentage is.  Say it’s 5%.  Then a dollar of additional sales equals five cents of extra profit.  Bur a dollar of reduced expenses equals $1.00 in additional profits.

If you have any ideas that have save you energy, please share them by commenting.

Oh, I almost forgot.  Thanks to         Brad Trnavsky for including our post, Customer Service Is More Important Than Ever,  in this week’s edition of The Carnival of Sales and Management Success.  Check it out.  There are some good posts there this week.

YOUR Domestic Product

Small Biz Thoughts by Karl Palachuk is a blog aimed primarily at small business consultants.  I thought he had some particularly good things to say over the weekend posting on the "recession".  I put the R-word in quotes because, like Karl, I think the thing is highly overrated, unless you’re in the business of selling newspapers.

As Karl points out, the "official" definition of a recession is two consecutive quarters of decline in the Gross Domestic Product.  So, the only sure way of identifying a recession is to look in the rear-view mirror and see if it’s already happened.  We know one thing for sure, if we buy into the predictions that a downturn is going to happen, and if we respond by cutting advertising and marketing, cutting store hours, cutting payroll, and all the other things that "conventional wisdom" tells us to do, the predictions will most certainly come true.

Here’s the thing.  A "recession" is a decline in the overall economy.  Obviously what happens at General Motors, or General Electric, or any of the other "Generals" is going to dramatically impact the Gross Domestic Product.  Home building has a big impact, too.

But let’s look at an example.  Let’s say a consumer in your neighborhood decides to put off buying a new home for a while.  Somehow, a six-figure purchase just isn’t in the cards right now.  But, he or she decides to make postponing the bigger and better house a little more palatable by buying a new top-of-the-line sewing machine, and maybe a new vacuum cleaner.  How about a couple of new ceiling fans and some lighting to dress up the current homestead?

Instead of spending a quarter to a half a million dollars, our hypothetical customer has spent a few thousand.  That adds up to a deduction in the GDP.  But it equals an increase in YDP (YOUR domestic product).

Remember, this isn’t smoke and mirrors.  You’re going to have to work for those sales.  But isn’t that why you got into business in the first place?  As a former boss of mine used to say, "If it was easy, everybody would be doing it."  It’s not easy.  But you’re the professional.  You’re the one who has the tools to make those sales happen.  Let the economists worry about the BIG numbers.  The numbers that are important to you are the ones that are rung up on your cash register every day. 

Here are the three things that Palachuk says we need to do:

  1. Keep our customers happy.  That goes without saying.
  2. Increase our base. As I mentioned earlier, Palachuk’s company is a business-to-business operation but the principal is the same.  He talks about raising his rates.  Your goal is to increase your average sale.  That means more up-selling and more add-on selling, something you do on a daily basis.  Remember, that customer just put off buying a house, (s)he has money to spend.
  3. Expand our base.  The lifeblood of any business is more customers, and today it’s more critical than ever.  You need to add new customers just to replace the ones you lose through death, or moving away, or any number of other things that you can’t control.  That’s just staying even.  The real gravy is the number of new customers that exceeds the number lost.  Do you know what that number is?  If not, you should.

Keeping Local Dollars Local

The Hometown Advantage is a national organization dedicated to promoting locally owned businesses.  In a February 5 article they report that an Arizona study found that state and local government purchases recirculate three times as much money in the local area as the same contract with a national firm.

The study, called "Procurement Matters:  The Economic Impact of Local Suppliers",  was commissioned by Local First Arizona, the state’s own organization for supporting local business.   Recently the state of Arizona switched its office supply contract from Wist Office Products, a local family-owned business to Office Max.  It was determined that only 11.6% of the contract’s total revenue remained in the local economy compared to 33.4% of the local company’s total revenue, nearly three times as much.

Some advantages of the local contract include:

  • Payroll. Wist has 60 employees in Arizona while Office Max’s contract division is located in Illinois.
  • Profits.  The profit from the Wist contract was returned to the local economy.
  • Other local purchases.  Wist purchases more goods and services locally.
  • Community support.  Local companies tend to be more involved in local charities.

Local First Arizona is using the results of the study to gain support for legislation that would require state contracts to go to local companies when prices are similar.

More information on local purchasing preference policies is available on the Local Purchasing Preferences section of the New Rules web site.

Joining the Conversation

Joseph Jaffe is a businessman, blogger, podcaster, and author.  I’m currently reading his latest book, Join the Conversation and will review it here when I’m finished.  I can tell you now that Joseph is a man who practices what he preaches.

His area of concentration is the so-called "new marketing" and social media.  His contention, and I agree with him, is that marketers can no longer "talk at" consumers.  We must carry on conversations with them with the emphasis on listening to what they have to say, hence the name of the book

Burtis_bowl_2
I mention Joe to lead in to an example of how this "conversational marketing" worked for Keith Burtis.  Who the heck is Keith Burtis?  Keith is a professional cabinet maker and wood turner from Buffalo, NY, and he’s in love.  He planned to take his girlfriend to a podcasting event in Toronto this weekend.  While there, he was going to propose to her.  The engagement ring would have to be picked up no later than tomorrow, February 22.  And that’s the problem.

What he calls "some challenges" have left him short of the funds needed to pick up the ring and pay for the trip.  That’s where Jaffe and the "conversation" come in.  Joe interviewed Keith on his February 15 podcast, Jaffe Juice and provided a link to Burtis’ wood turning web site.  If he could sell just a few bowls over the course of the next week, he’d be able to carry out his plan.

To make a long story short, as of today, he’s reached his goal.  He sold his quota of bowls and he and his girlfriend will be traveling to Toronto this weekend where he’ll pop the question.  Hopefully she’ll say "yes".  In appreciation for their purchase, the bowl buyers have received links on Keith’s web site back to their own sites.  Several of them are very well-known bloggers and podcasters, including Jaffe.

This story points out the power of the social media.  If you have a solid network of contacts, or if you can piggy-back on someone else’s network, there’s not much you can’t do.  Jaffe himself was able to push his book to number 2 on the Amazon.com business books list in just one day using the power of his network.

We’ll talk more about Jaffe’s success with this type of marketing in a later post.  For now, let’s just say that even if Burtis could have afforded to run a traditional ad, it’s unlikely that he could have even gotten it placed in time to help his cause of picking up the engagement ring in just a week.  But, by using his connection with Jaffee, he was able to reach a huge on-line community in a timely fashion and at no cost at all.

[UPDATE:  Monday, February 25, 2008 10:26 AM.  She said yes!]

Customer Service is More Important Than Ever

According to Forbes.com, The Best and Worst Companies for Customer Service,  the University of Michigan is out with their 2007 customer satisfaction survey, known as the American Consumers’ Satisfaction Index (ACSI).  The survey found that, overall, American consumers were just as satisfied in 2007 as they were in 2006–no more/no less.

Online retail scored well, led by Amazon.  Automobiles also scored high.  Interestingly, but not surprisingly, Wal-Mart dropped 5.6% to its lowest rating since the ACSI began in 1994.  Home Depot, which recently replaced many of its salespeople with lower-paid clerks, suffered a 4.3% drop to their lowest level since 2001.  The article also points out that Wal-Mart’s fourth quarter performance was less than spectacular, with just a 0.5% increase in same-store sales.

Tom Gruca, a marketing professor at the University of Iowa believes there is a correlation between customer satisfaction and cash flow and says he can prove it.  He is putting together a follow-up report that measures a company’s willingness to invest in service.  He says that preliminary results show a strong link.  "People aren’t stupid."

When sales are slow, the logical reaction is to try to cut expenses and that’s fine.  But cutting in areas that are going to hurt your ability to give your customers first-class service is very short-sighted.  Now is the time to show customers and potential customers what you can really do for them.  The Marts and Depots of the world are leaving the door wide open for the independent retailer to step in and grab more business.

Even if the customer isn’t quite ready to make that big-ticket purchase, when they are ready (for example, in May when they get that tax rebate check) they’re going to remember who took the best care of them back in February and March, when they were "just looking", and that’s where they’re going to spend their money.