The Financial Sector Rescue Plan is Answering the Wrong Question

Asking the right question is the biggest part of getting the right answer. The question the government is asking is “How do we keep the financial sector failures from creating an economic catastrophe?” Answering this question does nothing to keep it from happening again. It is curative and reactive when we need something preventative and proactive.

The right question – “How do we keep from getting into this mess in the future?” (How could we have avoided it in the first place?).

Over the last 30 years, I’ve been involved in managing companies with revenues from $100,000 per year to $100 million per year. And in every case we took great care to avoid putting the security and stability of the company at risk. One of the easiest ways to put a company at risk is to allow one or a small group of clients to become too big a percentage of the company’s revenue. If you lose one or two, the company is put at great risk of collapsing.

This is a fundamental business principle that our government has ignored. We should never have encouraged or allowed a small group of mega-companies to control so much of our economy that going away jeopardizes the security and stability of our nation.

Monopoly laws protect individuals from a few companies taking control of choice, driving up prices, and driving down customer service. If we need any regulations at all, we need one that would ensure no small group of giant corporations could take control of our economy and jeopardize the security and stability of our nation again. It’s just bad business. One possible solution – If a company is big enough that the government has to bail it out for the security and stability of the nation, it’s too big. Revise the monopoly laws to break it up, and we won’t have this problem in the future.

One of the functions of government is to provide security. It has failed us miserably in this case. Instead of preventing economic cancer by following basic business principles, they encouraged economically bloated lifestyles in mega-corporations that were a recipe for disaster. So now we’re spending our time, money, and energy trying to cure something that a good business would have never let happen in the first place.

This band-aid will do nothing to prevent it happening again. Will the government ask the right question? How do we keep a few companies from ever threatening the future security and stability of our nation again? It is the business of government to answer this question. Otherwise the present band-aid will only cover up a wound that will not heal.

Fixing Your Marketing; Stop Focusing on Your Competition

How much time and energy do you spend trying to figure out what your competition is doing? You’ll win buzz word bingo with “competitive analysis” and “benchmarking”, but will you win customers? Is our competition really a good place to look to decide what we should be doing?

When I was landing and managing clients like Microsoft, TAP Pharmaceuticals, Seagate, Veritas, Jostens Publishing (yearbooks) and other Fortune 500 clients, I never followed what my competition was doing. I followed my clients and potential clients very closely, and expended all my efforts trying to figure out what they needed and wanted, where their entire company was going, and how we could help them get there.

I always got a lot of pressure to find out who the competition was, what they were doing to market themselves, etc., but I was too busy focusing on my customers. I suppose taking a look at the competition is a good idea, but I found that most of the companies that spend a lot of time comparing themselves to their competition ended up mimicking them, selling against them (instead of selling FOR themselves), and deciding what services they would offer based on what the competition was doing. It crushed creative, innovative, and consultative thinking about where they should go next.

If I focus on my competition and on marketing against them, I lose my focus on bringing the best, most innovative product/service to market. Having something people want and find really useful – that’s the key. And you don’t find out what people want and find useful by asking your competition, but by asking your customers and then taking a proactive leadership position to bring things to market that your competition hasn’t begun to think of.

How do you do it? Proactive leadership. I must lead my customers in my area of expertise. We don’t respond to our customers or to the competition – we lead our customers into the future by knowing what they need.

How do we know what they need? Most often, companies make the mistake of working real hard to provide their product or service. Period. (And a big mistake).

We need to work real hard to know the vision, mission, strategies, objectives, and action plans of our client’s entire company, THEN ASK OURSELVES HOW WE FIT INTO THAT. Why would we want to provide service without knowing how what we do helps them get to their overall objective? When we figure out how we fit into their bigger picture, it changes the way we view our own products/services, and that creates innovation and proactive leadership in our area of expertise.

You are not a rock, you are not an island. You are part of your client’s overall plan to make more money. If you get their bigger picture, you’ll make more money, too.

Stop focusing on your competition and start focusing on your client’s overall mission and how you fit into that. You’ll find yourself leading them in your area of expertise, and they will find themselves leaning on you heavily for much more than your product or service.

Marketing isn’t about clever tag lines, it’s about focusing on the right things that will make our clients want to buy more from us.

Fixing Your Marketing; “Me, Too” Doesn’t Work

Why doesn’t your marketing work? Reason #3 – The Two Last Words of a Dying Marketing Campaign – “Me, Too.”

A lot of marketing success is just dumb luck, other times its extensive research. But once somebody hits on something that works, a Mother Duck/Duckling phenomenon kicks in. If it worked for the other guy, maybe I should try it, too. Maybe not.

So we try it, and it works! Then a few others jump on board and pretty soon that unique marketing tactic is being used by nearly everyone in the same industry. Now the tactic is no longer yielding the results it did when only a few people were using it simply because it’s no longer unique and the customer sees no difference from one company to the next.

They’re all in lock step waddling down the same path.

Every medium has suffered from this as it proved to work, became popular, then saturated and then ineffective.

The problem is that we confuse cause and effect. We think that since everyone in our industry is doing it “this way” that it must work, so we do it, too. There is safety in numbers and if I’m going to spend a lot of money on a marketing campaign, I want to know that everyone else would do it that way, too. But if everyone is doing it that way, cut and run. “Me, too” is a bad advertising strategy.

Formula websites are an alluring form of “Me, too” advertising.

People pay hundreds to thousands of dollars to be let in on the secret formula of how to build a unique website that will get you traffic and results like none other. So thousands spend money to be sold the same formula, so they can be nearly identical to everyone else who has paid to get this secret.

I’m guessing the formula still has some verifiable results. I also know that every time I hit one of these sites, I leave immediately because I believe whoever bought the formula is banking more on the formula than on the actual value of their product.

I’m an early adapter, but as others begin to see this formula repeatedly, it will be a big problem for all those that banked their identity on being unique by being exactly like tens of thousands of others. The saturation effect isn’t far away.

What can you do to be different? Where can you make a splash where no one else is skipping stones? Are your competitors all in newspapers, TV, radio, Yellow Pages, direct mail? It’s counter-intuitive, but the more your competitors are concentrating their market in traditional mediums, the more you should think about going a whole different direction. You’ll get a much bigger bang for your buck.

“Me, too” is a waste of your money and time. Waddle down your own path.

Fixing Your Marketing; Features vs. Outcomes

Why doesn’t your marketing work? Reason #2 – Maybe you are marketing Processes, Features, and Benefits/Results when you should be marketing Outcomes. My friend and fellow Team Nimbus facilitator, John Nordlander reminded me of this during a MasterMind session with some great business owners this week.

Processes – Most of us are making money at something we are either passionate about or at least deeply involved with. That attachment makes us want to tell everyone how we do what we do. But they really don’t care. HOW we do what we do is only interesting to us. Stop trying to tell your customers HOW you do things (actually they’ll ask later if you market your Outcomes first).

Features – The same love for how we do things (Processes) makes us want to tell people all about the features of what we sell; how it stretches farther, has stronger glue, spins faster, takes up less space. Again, your customers really don’t care. Stop trying to tell them WHAT your cool product can do (actually they’ll ask later if you market your Outcomes first). FYI – “our system is 99% reliable” is a feature. Boring.

Benefits/Results – Now we’re getting to some things that are on some customers’ radar screens. What’s the benefit to your customer? What result will it bring them? If I can get them to realize the benefit of using my product, I’ve got a shot at getting their attention. The problem is that benefits and results are “clinical” – 4 out of 5 dentists recommend. Or “you will have cleaner teeth”, or “your car will run cleaner”. While some customers will connect with the clinical results, it’s not enough for most.

Outcomes – The difference between this and a Benefit/Result? We connect intellectually and “clinically” with Benefits and Results, but we connect subjectively and “emotionally” with Outcomes. “You will feel the power”, “You will have more free time”, “Skiing will be more fun”, “People will like you better”, “You won’t have to sweat the details anymore.” “Life will be easier.” Outcomes stir the emotions.

Buyers at all levels, whether a child buying bubble gum or a hardened government buyer – all of them without exception buy emotionally. If you connect on the emotional level, you win. Bank on it. Help people connect with Outcomes.

By the way, if you do, they will then want to know the clinical Benefits/Results, all the Features, and how in the world you make it happen (Processes). So you’ll still get a chance to share all that “craftperson” stuff pent up inside. You’ll just have to be patient and wait until they want to hear it – after they connect emotionally with the Outcome.

Share Outcomes and you’ll have more fun selling, have happier customers, and live on a tropical island. And the birds in the trees around you will sing continuously. (OK, a little heavy on the Outcomes, but you get the idea.)

Fixing Your Marketing; The Penguin Problem

Create our own waddle.

Reason #1 why your marketing doesn’t work – You are using Big Business marketing rules. If you’re playing by their rules, you’re going to lose just about every time. Make up your own rules and you’ve got a better chance of your marketing working.

It’s a problem of penguins.

Marketing is noise – 1,000 penguins on a rock outcropping. It’s like white noise out there. What do I mean? The biggest competitor in the industry spends $1,000,000 on advertising and grosses $10,000,000 in revenues – a nice 1 to 10 return ratio. So we assume that if we spend $10,000, we’ll get $100,000 back – 1 to 10 – right? Wrong. Why? Because we’re focused on the wrong ratio.

Back to the penguins. Our $10,000 is fighting with their $1,000,000 for attention. They own 990 penguins all making noise for them, and our solution is to add 10 penguins to the same rock to make noise for us. Our penguins are drowned out every time.

And worse yet, we’re competing against everyone advertising in the medium we’re using, so it’s really tens of thousands of penguins against our 10. The marketing noise is deafening. We don’t stand a chance if we play by big business rules.

I met someone starting a small business who was about to put 100% of their $10,000 annual marketing budget into newspapers – a few penguins up against thousands. We got her to redirect the funds. (FYI – If you’ve got thousands of penguins or a paper with a unique niche, newspapers can work.)

Until they have a big enough budget to place more penguins on the rock, how could they spend that money better? Understand this: the two last words of a dying marketing program are “Me, too.” Everyone else is advertising in a certain medium, so I think I better be there, too. That seems reasonable, but is the best way to waste your money. Instead, ask yourself, “What could I do to make a noise where no one else is squawking?”

I do a weekly lunch workshop with 35-50 business leaders and once a quarter I’ll ask “Of the four major ways to market ourselves (advertising, direct marketing – including cold calls, public relations, relationship marketing) which one brings you the overwhelming majority of your clients?” If there are 40 people there, 39 answer “relationship marketing” and the other guy didn’t understand the question.

If you spend time and money building a network of gate-openers and raving fan clients, you win. The big guy with lots of money doesn’t have your relationship network and would never invest the time to create that network. Until you’re big enough to own a big “waddle” of penguins (yep, that’s a penguin herd), put your dough into relationships.

By creating your own marketing rules, you beat the big guy, because he actually can’t afford to play by your rules! All he can do is keep throwing money at the problem. And since you’re penguins aren’t on his rock, he’ll never beat you no matter how big his waddle is.

Why living abundantly will make you more money.

Do you live in a world of abundance or in a world of scarcity?

What?

Really. The answer effects just about everything you do in business including how you make money, how you grow your business, how you serve your clients and employees, and how you impact the community around you.

If you live in a world of abundance, you fundamentally believe you will get yours by helping others get theirs, because there is plenty to go around, and the generous will do well. Profit comes from serving others and focusing on getting better, not from eliminating competition.

If you live in a world of scarcity, you fundamentally believe you will get yours by getting it before the greedy guy does, because there is only a limited supply to go around, and the bad guys will get it all if I don’t get mine first. Profit comes from grabbing the scarce market before the next guy gets it, and eliminating the competition.

Companies that live in a world of abundance operate differently. I was in Nordstrom’s once and they didn’t have what I wanted. They called their competitor in the same mall, found the product at a lower price, had someone go down and buy it for me, brought it to Nordstrom’s while I finished my shopping, and gave it to me at the competitor’s price.

Many examples of both abundance living and scarcity living exist in the technology world. Abundance living is demonstrated by Linux and other open-source software that is available for all to build on. Google built their business on “do nothing evil” (some say they are wavering on that lately). On the flip side, in 1997 I was given a confidential document that showed a three-year plan by Microsoft to drive Novell out of the market. The focus wasn’t on how Microsoft could get better, but how they could eliminate the competition so they wouldn’t have to get better.

Markets are indeed limited. It’s counter-intuitive, but in the long run you will almost always get more of that market by living abundantly, not be grabbing everything you can up front. Scarcity living might give you a first leg up, but will create a reputation you don’t want long term.

Put helping your clients above your own desire to sell them something. I dare you to help your competition be successful, too. Or if you can’t get your arms around that, at least focus on getting better instead of eliminating the other guy. You’ll make more money in the long run, create loyal followers, and develop a legacy that will carry the company forward.

Do you live in a world of abundance or in a world of scarcity? The answer will affect everything you do in business, and will go directly to the bottom line.

Make more money – stop selling and let people buy.

Serve, don’t sell.

The stereotypical used car guy focuses quickly on what he could say or do to make the sale. What emotional string can he pull? What weakness can he exploit? Do they hate confrontation? Are they easy to confuse? Do they have big egos? Do they fear losing out on the car to somebody else? Most importantly, how are they perceiving me, the salesperson?

Problem – We all want to buy things, but nobody really wants to be sold anything. I might actually enjoy buying furniture if I didn’t have someone in my face as soon as I walk in trying to “answer my questions” (translated, figure out what they can start selling me).

Here’s a simple concept; serve, don’t sell. Don’t ever sell anybody anything. Ever. Just serve them where they are in what they need, even if their need has absolutely nothing to do with what you sell. If you were disciplined enough to stop selling your product or service and simply figure out how to serve the people you meet, your sales would increase exponentially.

Why? First, the old sales saw is true – people buy from people (not companies), and they buy the most from people they like the most. Do I get people to like me by being clever or reading body language? No, people like me because I do something that actually helps them move forward in whatever it is that is standing in their way.

Second, if we serve people in what THEY need, not in what advances our agenda, it builds trust, credibility, and motivation all at once. And the result is ironically indebtedness. You’ve helped me so much, if there is anything I can ever do for you… The used car salesman would die to get that kind of loyalty out of a customer. He just wouldn’t serve the customer to get there.

You’ll read this, but it’s not likely you’ll actually apply it. We all “believe” it, but because the benefit is many times delayed (no quick sale), we have trouble actually doing it. You may make a few less quick sales, but you’ll make a lot more long term ones.

Oh, and be prepared for this. “My friend said you took care of him in a way that didn’t even relate to your business. That’s why I’m here to buy from you.”

I dare you to not even bring up your business. Just serve them where they are, not where you want them to be. You’ll make more money in less time.

 

A Gold Medal Business Lesson from Jonny Moseley

I was at a customer appreciation event for a large telecommunications company in Beaver Creek last week. Jonny Moseley, 1998 Olympic gold medalist in freestyle skiing, and I sat and talked on the shuttle bus together on the way to the golf course the first day. And on the second day we played together. He had some great insights about skiing that apply to business and life in general.

His best tip?

“Skiing is all about many small recoveries, finding a way to reign it back in each time you begin to lose it.”

So goes business. So goes life. When we focus on skiing with no risk, we finish well down the list in obscurity. When we focus on skiing on the edge and making good recoveries each time we cross the threshold, we’re in contention to win. We need to take measured risks, but we also need to have the tools to make it through the rough patches.

Speed of Execution is the #1 indicator of success in business. What have you been thinking about for days or weeks that you should already be doing?

Are you playing it safe so you never have to recover? Or are you creating a business with an edge?

And just as importantly, do you have the tools to recover as you hit the rough times?

Make more money in less time!

A Gold Medal Business Lesson from Jonny Moseley

I was at a customer appreciation event for a large telecommunications company in Beaver Creek last week. Jonny Moseley, 1998 Olympic gold medalist in freestyle skiing, and I sat and talked on the shuttle bus together on the way to the golf course the first day. And on the second day we played together. He had some great insights about skiing that apply to business and life in general. Read more

Good and bad profit, & how they define your future

After Kinko’s was bought from Paul Orfalea in 2000 by FedEx, Kinko’s went from a paragon of “good profit” to a great example of “bad profit”. Orfalea said “the Kinko’s he created “has been gone for a very long time.”

One small but significant change FedEx made was to change the payment process for copies from good profit to bad profit. GoDddy has the same “bad profit” disease.

In Orfalea’s Kinko’s, you grabbed a copy key, plugged it into a copier, made 10 copies and went to the counter to pay. If a copy or two was bad, they subtracted it at check-out from the total before charging you. The copies were high-priced, but the service was good, flexible, and customer-focused. I came back regularly to let Kinko’s make more “good profit” from me.

FedEx had a better idea that made me stop coming back. The FedEx Card. Here’s a review from a Kinko’s consumer written on www.yelp.com:

“All I had to do was make two copies and fax it…
but noooooooooooooooooooooo, it can’t be THAT easy. what happened to the old way at kinko’s when you used to walk in and grab the copy key counter and walk to your copy machine make copies…”

Now you have to buy credits on one of their payment cards, or use your credit card – they prefer and push the payment card option, because they are literally banking on:
– you not using all the credits, and making huge interest off the money you have given them.
– a significant minority of people losing or tossing the card before spending it to zero (like a gift card, the amounts that go unspent are staggering – pure profit).
– not wanting to stand in line to get a few pennies put back on your payment or credit card for a bad copy.

It’s all bad profit.

GoDaddy gives you “free privacy” when you buy five or more domains. No where on their website does it say “free privacy until you renew, then we’ll charge you.” No modifier anywhere – just “free privacy”: “Register or Transfer five domain names or more and get FREE PRIVACY – http://bit.ly/IHLdQY . No fine print anywhere on their website. If you don’t catch it when checking out, you’re paying for “free privacy” until you catch it on your credit card a couple years later. How many millions of dollars in bad profit have they made on this? I talked to customer “service and they actually said, “You know it will be charged on renewal because the statement doesn’t say it won’t.” How many lawyers did that take to come up with?

The Kinko’s payment card system and “free privacy” GoDaddy charges for probably bring millions in short-term profits to them. But it’s “Bad Profit”. Good profit makes me glad to come back and spend more money. Bad profit makes me know that I’ve been had up front and makes me want to find another solution as quickly as I can. I never want to go back if I can help it.

Nordstrom’s is famous for good profit. They charge more than others, but focus on making sure the customer is completely satisfied. And people happily go back and spend more money there then they would somewhere else, because they know Nordstrom’s really means it – the customer comes first.

Kinko’s and GoDaddy aren’t alone in bad profit. Lots of companies do everything they can to extract as much money from you as soon as they can, without regard for any future relationship. Blockbuster made a lot of bad profit on late fees until Netflix came along and didn’t charge late fees. Blockbuster took it on the chin.

And then there’s the airlines.

Not only are they charging for you to check a bag, without telling you, they are charging you both ways. There is nothing on the websites or in their marketing info that makes it clear that you are going to pay $100 for your golf clubs leaving home, and another $100 coming home. They are in survival mode, so trying to create long term relationships where people are glad to spend money with them doesn’t enter into their equation right now. But it’s a big contributor to the downward spiral of the industry. Hats off to Southwest for being the exception so far.

The bigger questions, though:

  1. Is there any bad profit in the way you work with your customers? Are you getting every penny you can from them up front without regard for building a long term relationship that could bring you profits for years to come?
  2. Is your offering built on good profit? Are you making people want to come back by treating them well up front and NOT taking every penny available?

Don’t be GoDaddy or FedEx. Create a business around good profit and customers will bring their friends the next time. Create one around bad profit and they will ask their friends for an alternative solution.