In this issue:
• Driving Growth in the Face of Economic Turmoil
• Mini-medical plans are taking off
• The new era of working by task, not time
• People really do get what they pay for
• Employees that play together stay together
• Loosening up the tightwad customer
• Why you should ask for more in your next negotiation
• Increase word-of-mouth buzz for your product
• Tools for brainstorming the perfect company slogan
• The challenge of hiring top-notch salespeople
• Speeding up slow payers
• Be careful when offering free incentives
• Much more...
Driving Growth in the Face of Economic Turmoil
Growth is possible in any economic climate. Consider these
five strategies during this period of uncertainty.
LISTENING TO THE economic
news these days can be downright depressing — even more so than
usual. The stock market is down. The subprime mortgage problems are
continuing to have an impact. The dollar is growing weaker every
day. Consumers are tightening their purse strings and many pundits
are projecting lower than expected growth.
So how does a company continue to grow in the face of economic
turmoil? Here are five strategies and tactics to consider during
this period of uncertainty:
1. Increase your focus on existing customers. For many
companies, their primary focus is on selling to new customers, and
little attention is given to the tremendous potential in their
existing customer list. But when consumers become more skittish and
conservative in their purchase behavior, they become less likely to
take a risk on an untested vendor — opting instead to do business
with the vendors they already know and trust.
While economic uncertainty can make customer acquisition more
challenging and expensive, it can also make re-marketing to existing
customers for repeat sales and referrals more productive.
2. Spend time tuning-up your profit path. In great economic
times, the rising tide can float all boats — even the boats that
aren’t as “ship shape” as they could be. But when you can’t count on
that rising tide, you have to squeeze everything you can out of
everything you’ve got, making sure that all elements of your profit
path are working to their full potential.
Optimizing your profit path could involve making improvements to
your lead-generation — quickly shifting money away from marginally
productive placements toward those that are clearly more profitable.
Optimization might also include improving the performance of your
sales funnel — paying particular attention to the point of sale,
where prospects have demonstrated greater purchase intent and
Pricing is another area where more attention and focus can be very
productive. For a typical company, pricing has tremendous leverage
on profits and even small improvements can have big bottom-line
impacts. And let’s not forget cross-selling and up-selling. By
putting just a little more thought into what’s being offered and
how, attach-rates and order-values can often be improved
3. Reinforce your warranties and guarantees. Risk-averse
prospects put more consideration and thought into their purchase
decisions. And, they do everything they can to minimize their risk
of making a mistake. By reinforcing your warranties and guarantees,
you help alleviate this concern and aid the prospects’
If you have great warranties and guarantees, now’s the time to be
making a big deal of that fact. And if your warranties and
guarantees are lacking, now’s the time to work on them — a powerful
risk-reversal strategy can often be the deciding factor for a
prospect who’s on the fence.
4. Understand and match your true demand. Sales and demand
are two very different things, and what’s selling the most is not
always reflective of what’s in highest demand. In our work, we often
identify big pockets of untapped potential by simply understanding
how true demand is actually flowing. And by working to sell more
effectively into that true demand, growth and profits can be
increased from existing prospect levels.
So take a look at how demand is actually breaking-out in your
business. Identify the most-considered products and use your actual
sales data to see how well you’re converting on those discrete
segments of demand. Don’t be surprised if you find big discrepancies
between the true demand picture and the actual sales picture. These
gaps simply represent untapped opportunities that you can capitalize
on with a little more attention and focused effort.
5. Don’t forget to put profitability first. In the heat of
battle, it’s all too easy to forget that top-line revenues don’t pay
the bills or keep the lights on, and that it’s not what you make,
it’s what you keep that matters most. So while hitting your top-line
growth objectives might be a bit more challenging in an uncertain
economic climate, always remember that you have much more control
over what really matters — your bottom-line.
So put profitability first. Say “no” to those bad revenues that pad
your top-line while gutting your bottom-line. Focus on more
profitable prospects with higher lifetime net-values. Be aggressive
in reallocating funds toward more productive activities. Put pencil
to paper and actually calculate the profitability impacts before
executing those discounts and price promotions. Drive changes that
will improve your per-order and per-customer profit contributions.
Identify waste and eliminate it — fast.
There are many, many ways to improve bottom-line performance in your
company. Double-digit revenue-growth shouldn’t be your only option —
particularly in an uncertain economic climate.
Rafe VanDenBerg is the President of Business Development
Xcellerator, Inc. a consulting and training firm that helps
companies generate more profit and growth from their sales and
marketing efforts. He can be reached through his firm’s educational
website at www.bdxi.com or by calling (208) 938-4356.
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T R E N D S
Mini-medical plans are taking off
Mini-medical or “mini-med” plans have become more popular over the
last three years as employers struggle to control rising employee
heath care costs. Mini-meds cover basic medical services, such as a
limited number of doctor visits per year and prescription medicines.
However, coverage maxes out each year at levels as low as $5,000 to
$50,000, and many plans severely restrict hospital stays and even
For some organizations, limited coverage is enough — at least some
of the time. The American Association of Healthcare Consultants
estimates that 85% of employees file less than $1,001 worth of
health insurance claims each year. While the coverage doesn’t cover
catastrophic expenses, some employers are saying it’s better than
Industry observers predict that limited medical plans will shake up
the industry over the next few years. Many large carriers have begun
targeting smaller businesses and several organizations — such as
Aetna and Cigna — have begun acquiring mini-med providers. At this
point, the only thing that could limit their growth would be
government action, such as state-mandated coverage or a change in
Source: Trend Letter, April 2008
The new era of working by task, not time
Since the Industrial Revolution, jobs have been structured around
units of time — a 40-hour workweek, an eight-hour day. However, that
time-based standard may be shifting to compensation by task, fueled
by the preferences of the newest crop of workers from Generation Y.
“Many younger employees find they can complete tasks faster than
older workers, perhaps partly because of technical proficiency, but
even more, in my view, because they work differently,” said Tamara
Erickson, an author and expert in workforce issues. “They spend less
time scheduling and are comfortable coordinating electronically.
They resent being required to log work hours and stay in the office
after their tasks are done, and the idea of face time really annoys
them. They love to work asynchronously — anytime, anywhere.”
Another reason the workforce is moving toward a task-based
definition of jobs is the fact that many knowledge workers are
already effectively paid by task, not time, and taking advantage of
flexible work arrangements. As virtual work continues to spread,
this may be a fairer approach to employee compensation.
At Best Buy’s headquarters, more than 60% of employees are now
judged only by task or results. Productivity in the involved teams
has increased by 35% while voluntary turnover has decreased.
Task-based pay requires that management articulate expected results
and tie accountability to getting the job done.
Source: Harvard Business Review, Feb. 2008
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N E W S
People really do get what they pay for
Price has a powerful impact on the psychology of consumers, and
lowering your price may create unintended results. In a study
published in the Journal of the American Medical Assn., researchers
found that people given identical pills got greater pain relief from
the one they were told cost $2.50 than from one supposedly costing
“We all know that we expect more from products with high prices and
good names, and we wanted to see if these things could change how we
react to pain medication,” said MIT behavioral economist Dan Ariely,
who led the research. “The answer seems to be yes.”
This isn’t the first study to show a relationship between price and
perceived quality. In an earlier experiment, Ariely found that
people given inexpensive energy drinks felt more tired and worked
out less than those who received identical energy drinks that cost
more. In addition, researchers at Caltech reported in January that
expensive wine was experienced as being more pleasant-tasting than
identical wine that supposedly cost less.
Source: Los Angeles Times, March 5, 2008
Employees that play together stay together
Employees who socialize together also tend to work better together.
Fat paychecks, pensions and health insurance are not enough to
recruit and keep employees these days. Companies are finding that
adding a bit of social context to work is crucial to keeping
employees happy and productive.
Some companies are even creating employee clubs. Many are small and
informal like a softball or basketball league or require little from
the company other than the use of a meeting place, server space and
office supplies. Workplace specialists say clubs are a way to build
camaraderie and help people get to know fellow employees away from
work. Companies benefit, too. Clubs help create loyal employees,
reduce turnover and improve morale while costing very little.
A Towers Perrin survey released last October reported that operating
margins rose nearly 4% over three years among companies where
employees felt supported and involved. At workplaces where that was
not the case, profits fell 2%.
Twenty years ago, most companies tied high morale to accomplishments
on the job. Today, managers realize they need to think more broadly
about what makes workers happy.
Source: New York Times, February 16, 2008
Loosening up the tightwad customer
We all have a friend who can’t seem to save, constantly splurging on
new shoes or the latest gadgets. But, contrary to persistent media
coverage of overspending and under-saving, a recent international
survey of more than 13,000 shoppers suggests that chronic
under-spending is far more widespread than originally thought. In
fact, the study reveals that tightwads outnumber spendthrifts by a
Researchers found that tightwads save, not because they care more
about the future than spendthrifts, but because forking out the
money is too painful of an emotional experience.
Demographic comparisons revealed that annual income differs little
between tightwads and spendthrifts. Females are no more likely to be
tightwads than spendthrifts, but males are nearly three times more
likely to be tightwads than spendthrifts. Respondents under the age
of 30 were only slightly more likely to be tightwads than
spendthrifts, but respondents over 70 were five times more likely to
be tightwads than spendthrifts.
Tightwads are most sensitive to marketing designed to reduce the
pain of paying. In one experiment, participants were asked whether
they would be willing to pay $5 to have DVDs shipped overnight. The
cost was either framed as a “$5 fee” or a “small $5 fee.”
Spendthrifts were unaffected by the manipulation, but tightwads were
20% more likely to pay the fee when it was less painfully presented
Source: Journal of Consumer Research, April 2008
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T I P S
Ask for a little more in your
next negotiation. When researchers from Duke University and the
University of Chicago asked 266 MBA students to negotiate a deal, they
discovered that each side underestimated how much the other was willing to
bend by a wide margin. What’s more, each party thought it got the better end
of the negotiation. Based on the findings, the researchers recommend leading
with an aggressive opening bid, and giving ground only grudgingly.
buzz with this tip from WOM expert Andy Sernovitz: Post signs
throughout your company that say, “Would anybody tell a friend about
this?” It’s a magic question that raises the bar across the
organization. Whenever you see the sign, you’ll look at your product
and say “It’s fine. It’s good. But what can we do to make customers
tell their friends ‘You’ve gotta try this.’” Each department should
come up with their own way to answer this question.
A catchy slogan can
send a powerful message to prospects wondering why they should
choose you over your competition. But writing an effective tagline
can be challenging. Here are some tools for developing a memorable
slogan: Start brainstorming by asking team members to complete the
worksheet at www.reliablegrowth.com/public/tagline_worksheet.pdf.
Next, visit Marcia Yudkin’s tagline generator at
www.yudkin.com/generate.htm with the goal of creating several
taglines. If you need inspiration, the University of Texas at
Austin’s Advertising Department has an online ad slogan archive that
includes well-known slogans like Maxwell House’s “Good to the Last
If you advertise with
Google AdWords, a slow loading site could cost you. Google
announced it will start using page-load time when calculating your
“quality score.” A low quality score can affect an ad’s position and
minimum bid. Go to each ad group’s Keyword Analysis pages to find
out if Google is already measuring your landing page load time. To
speed up load time, Google suggests the following: Use fewer
redirects. Use fewer, smaller and more highly compressed images. Do
not use interstitial pages. Minimize the use of iframes. Contact
your web-hosting provider to discuss other ways of improving your
website’s load time. On the positive side, these same techniques
will provide a better experience for your visitors and, therefore,
should translate into higher revenues for your company.
If you lost your
iPhone, Blackberry, digital camera or notebook computer and a
Good Samaritan found it, would they know how to get it back to you?
If you are like most people, the answer is, “No.” Be sure to label
all portable devices with your name, address and phone number. Don’t
forget the chargers for your portable devices, too. Chargers are one
of the items that are frequently left behind at hotels.
The problem with trying
to hire top-notch sales talent is that they are rarely, if ever,
looking for a job. Therefore, you may need to target who you want
and go after them directly. To do this, talk to partners and people
in the industry and ask who the best salespeople are. Ask the same
question to customers and prospective customers. From there, contact
your best leads and praise them about the good stuff you’ve heard.
Tell them you would like to talk with them about an opportunity and
ask if they’d be interested. Any good salesperson isn’t going to
walk away without at least learning a bit more. In fact,
CareerBuilder.com’s 2006 passive job seeker revealed that 61% of
employed salespeople are not looking for a job, but would be open to
a new opportunity if they came across one.
Have slow payers become
a problem for your business? Here are some ideas that should
help: First, billing notices are not nearly as effective as calling
clients on the phone to ask for payment. Also, consider requesting a
credit card to have on file for future payments. Credit card
payments will require an extra 2% or higher fee, but you can make
adjustments to your terms to recoup that cost. If your terms require
payment in 30 days, shorten it to 15 days. This sends the message
that getting paid in a timely manner is a priority to you. Finally,
consider offering a small discount to those who pay early.
While offering a “free
gift with purchase” is often a good sales tactic, be careful
about what you choose to give away. Research at the University of
California, Berkeley, discovered that these promotions can make
consumers denigrate the perceived value of the gratis product. It
can also make consumers expect to pay less for the giveaway if they
purchase it in the future, or they may be hesitant to buy it at all.
Therefore, be careful when giving away a product that you usually
sell or when partnering your product as a bonus gift for a joint
content is a powerful way to sell. Most buyers seek out
information to help them with their purchasing decision and then
slowly build trust with the provider of that information.
Fortunately, creating education-based information products has never
been easier. Today’s rich set of multi-media software and web-based
applications makes the creation of teaching tools a snap. Here are
some idea starters: Create online videos showing prospects how to do
something. Create voice recordings of your best customers telling
their stories about how you helped them. Take your best
presentations and create virtual copies that can be viewed online.
Post an audio “tip of the day” to your blog.
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Business Intelligence Report
(ISSN 1091-9597) is published 12 times a year by DBH Communications, Inc. PO
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