Archive for December, 2010

Go Ahead, Be a Grinch

Wednesday, December 22, 2010 by:David Zahn
Comment
Comments
|
|

As you sit around the holiday fireplace this year and feign being happy with the gifts you will never use, pretend not to mind the cost of the dinner on the table, or act interested in hearing the same stories over and over from the forgetful relative, you may get the vague feeling that you are impersonating the Grinch.  Afterall, tis the season to be jolly, right? Or not. At this time of the year, people are expected to be merry and dismiss any negativity.  If you must, go ahead and join in the frivolity.  But come Monday, when you go back to work, give yourself permission to be a Grinch as you look at what you want to accomplish in the New Year or consider making resolutions about what you plan to change in 2011. Negative thinking is not necessarily “bad.”

In business, being a Grinch is not always a bad thing

Business Perspective

As we continue the climb out of the recession of the last couple of years and there seems to be hope on the horizon, the tendency to be upbeat and positive about the future is enticing.  Afterall, there are books like, “The Secret” that propose that you can have anything you want in this world – anything – so long as you think about it positively enough. For instance; if one wishes to lose weight, the book maintains that you can focus on being skinny (perhaps without as much attention to eating right or exercising).  If one desires to be independently wealthy, all one needs to do is to tap into the universe’s power, spirit, or secret and believe strongly enough and it will be delivered.

As any business person can tell you – that just is not a high probability outcome!  The laws of mathematical odds dictate that hoping for a low percentage outcome will lead to failure much more frequently than success.  So, while there is something to be said for maintaining a positive PERSONAL outlook on things and to be goal-directed; it is not to come at the expense of being fact-based, practical, and occasionally negative about ideas, processes, or initiatives that are less likely to contribute to the success of the business.

In a twist on what it SHOULD be in business, positive employees are promoted, given more plum assignments, higher raises and generally have brighter futures in companies while the more grumpy and negative employees are treated less like team members and more like outsiders or are isolated.  In fact, it is essential that the realistic and rational be heard.  To the extent that the people who are seen as negative can provide challenges that are business-based and promote better decision-making, they should be encouraged.

The Balance

Opponents of negative thinking do not see or believe that it is possible to be both negative and happy (I am making a distinction between being positive and being happy.  They are not the same).  The truth, however, is that negative thinking can have a positive influence.  The improvement on product design, marketing plans, ROI analysis, etc. can often be credited to someone who looked at the initial initiative and saw room for improvement. 

 It can be suggested that negative people, in their effort to improve upon the existing efforts are forced to communicate better, think more clearly, make fewer mistakes, be less gullible, and are better at decision-making.  Afterall, in order to rise above the internal inertia of sticking with the existing strategy or tactics, they must demonstrate an enhanced information-processing strategies.  Curiously, research has shown that what it all comes down to is that negative people pay more attention to their surroundings. They’re not always negative solely for the sake of being negative.

What To Do

Here are five ways to work better with negative thinkers:

  1. Don’t try to change them. It could be that their good aspects outweigh their inconvenient attributes.
  2. Seek their opinion. Chances are they’ve picked up on stuff you’ve missed, especially if you tend to be incessantly optimistic.
  3. Let them vent. Sometimes all they want is to be heard. Their ideas and solutions can be really valuable.
  4. Plug information gaps. An absence of information causes them to panic, so be honest and forthcoming with what’s going on.
  5. Engage their minds. Give them problems to solve. Consult them when making decisions.

Being a Grinch does not mean that one is not being positive about the future of the business just because they are negative about current plans, product ideas, or other ideas.  They may just be what will ensure the most positive outcome!

Social Media and Business

Wednesday, December 15, 2010 by:David Zahn
Comment
Comments(1)
|
|

Time Magazine has announced that Mark Zuckerberg, a 26 year old entrepreneur and creator of Facebook, is the “Time Person of the Year.”  With much fanfare and gallons of ink devoted to the creative genius of the idea, business platform, and usefulness of the application; one out of every twelve people ON THE PLANET now has an account with Facebook.  To say that it is a success is an understatement of epic proportions, and yet – businesses still are not leveraging it as well as they could.

Social Media guru, Mark Zuckerberg is Time's Man of the Year.

 The ways that businesses choose to use the social media outlets often are off strategy for their needs.  One example of this is a colleague of mine who owns a small business that employs ten employees commented on how her partner had “friended” some of the employees and how that seemed to change the interpersonal dynamic within the workplace from a place of business to a place to catch up on postings, comments about pictures in profiles, and reduce the level of professionalism and increase the feeling of being school-aged kids sitting in the back row of a class and passing notes to each other instead of paying attention to their classwork.

One critic of how social media is being misapplied is Peter Shankman, who wrote a blog recently about his perspective on what businesses do that misses the mark for maximizing results.  He rightly points out that social media needs to be an extension of the company’s marketing plans and integrated into the company’s strategy to generate sales, revenue, and profit.  Instead, Shankman shares that the questions he received after he spoke to one Fortune 100 company centered around:

“1) So how do we get more followers?

2) So how do we get more likes?

3) Should we hold a contest to get more followers/likes?

4) How do we get our followers/likes to spread the word about us?”

Shankman continues that while these may be leaders in their field and smart people to boot, they are clearly mesmerized by the “shiny new toy” and have forgotten the basic principles still apply.  His mantra when it comes to social media is captured in 5 basics:

Basic #1: IT’S ABOUT MAKING MONEY.
Any business executive would question a request from a subordinate to spend millions of dollars on events, advertisements, and activities that had as a goal – make people like us. And yet, Shankman points out that when the venue is social media, the same evaluative criteria are no longer applied.  If it is not tied to generating income, revenue, or profit, it is not a smart business decision.  If there is no ROI provided for the spend, then the decision needs to be rethought.

Basic #2: YOU DON’T MAKE MONEY WITH CONTESTS, PROMOTIONS, OR FREE STUFF.
Shankman points out that far too often the intention of a contest (to bring in new customers) goes awry and the people who respond are not prospects, customers, or even those that can introduce the business to new clients.  Rather, they are people in search of something for nothing.  They just want the free stuff.  There is no loyalty, no relationship, no business to be had.  Shankman proposes that the better approach is to hold a contest for the existing customers ONLY.  In that way, the brand or the company is further solidified in their minds.  To try to “buy” customers through a contest is a wasteful spend of money and social media will help accomplish the losing of money faster and deeper through the instantaneous nature of the communication.

Basic #3: Number of Friends/Followers are the equivalent of “My Daddy is Stronger than your Daddy”.
Shankman points out that numbers for the sake of numbers are a fool’s pursuit when the only thing that matters are number of CUSTOMERS, amount of REVENUE, and QUALITY of connection.  In fact, he advises that it is best to cull the lists down periodically and actually remove people who are either not providing value or receiving value from the connection.  If there is no business purpose to the connection, then Shankman recommends deleting the person from the “torture” of further communications.

The next one is a direct quote from his blog (with small edits to make the point without using some of the profanity in the original) that really captures the core point of his post:

Basic #4: CONVERSATIONS happen over beers. ENGAGEMENT happens over cash registers. Yes, it’s lovely when a brand converses with me. But you know what? A conversation isn’t going to make me buy. A conversation is something I have with my running partner during my cool-down run about how poor my non-cool down run was. I don’t want to converse with Nike or Pepsi. I want them to notice that I’m buying their product and reward me. I want them to help me when I have a question, and I sure as hell want them to engage me when I reach out with a problem. Conversation? Leave that for the Friday night bar-after-work scene.

Basic #5: Much like charity, all this stuff starts at home.
The last point made by Shankman is that rather than spend so much time monitoring what is said about a company, or focusing on having accounts on all of the leading social media sites (that then go unattended), companies would be better served to actually conduct the business when face-to-face at a customer pleasing level.  Empower employees to act, review standards of performance so that clerks are trained and rewarded properly and many of the complaint tracking needs would be reduced or eliminated.

Social Media may be fun and may help connect people to each other, but businesses need to remember that they are not in existence purely for the emotional experience; there has to be a payoff for their actions that can be brought to the bank as a result or it is just simply a waste of time, energy, and resources.

Cash, Credit, or Concern?

Tuesday, December 7, 2010 by:David Zahn
Comment
Comments
|
|

Given that this is the holiday season and the economy has not been as robust as many would have hoped it would be after the tinkering by the Federal Government to avoid a crisis, a strange confluence of activity is occurring. People are feeling compelled to spend on gifts, parties, and holiday celebrations, but are having to give careful consideration to how they plan to pay for their purchases.  Businesses; and retailers especially are having to make decisions based on the need to be competitive – and yet to also manage their own finances, cash flow, profit and revenue.

Cash

Businesses have to remain focused on money during this holiday season.

Most retailers are quite happy to receive cash for purchases.  As an asset it is immediately able to be used for purchases, saving, or any other use without having to wait for processing, costs to convert, or incurring fees to have third-parties involved in the transaction.  Further, cash is legal tender and as such, it is accepted in exchange for products or services.  Although there are some businesses that prefer not to handle cash (one example are purchases made on certain airlines can only be paid for with debt cards, credit cards, or non-cash options), most are more than willing to accept it.

The downsides to handling cash are that one must make change for payments that are in denominations above the cost of the purchase and the ease with which the cash can be taken by others if not properly protected.  Additionally, having cash on hand also often requires making separate trips to a bank for deposts or risk having huge sums on the premise (which invites unsavory sorts to consider stealing it or runs the risk of it being lost).

Credit

Another common way that purchases are acquired is by the use of credit cards.  From a business person’s perspective, the use of credit often serves to make it easier for customers to make a purchase, and therefore can increase the number and amount of sales.  The business then has a separate relationship with the credit provider to have them pay the amount charged minus a servicing fee or transaction fee. 

 However, the convenience offered by the credit card to the shopper or purchaser comes at a cost to the business.  The business must now wait a period of time (contractually determined) and has to pay anywhere from 1.5% to as much as 5% of the purchase fee to the credit card for transaction processing.  The issue becomes exacerbated when a business accepts returns or has to refund money for a purchase.  In that instance, the business has to pay the processing or transaction fee twice – but no actual purchase has been completed!  It is for that reason that some businesses have instituted a “stocking fee” to accept returns back (to cover the physical costs of having to return something to inventory, but also to cover the administrative fees associated with the product’s return).

Payment Plans

Some retailers or businesses allow for payments to occur on a plan or on installments.  Of course, even in those instances, the product is usually not transferred to the customer until the last payment is made.  In trying to break up a larger cost into smaller and more manageable payments, it can often help a customer afford the purchase.  Ordinarily, the business does not pay interest on the money paid over time, though banks used to offer “holiday savings plans” that were savings accounts that did provide interest to the depositor (those plans seem less frequent now as they have been replaced in large measure by credit cards).

 However, not all industries or businesses can as easily use this approach.  It would not work with a service provider as easily as it does with a product (going to a Veterinarian and having services provided, medicines given, and then expecting to pay on a payment plan is unrealistic as the Veterinarian cannot “hold” the pet until the last payment is made).

Internet Competition

The internet has become a very accepted and established way of making purchases for many customers.  However, for the business that relies on foot traffic or personal relationships to transact their business, the internet business model has led to a new requirement for many businesses – free shipping.  The expectation that customers will not have to pay to receive a shipment is now a standard in most instances.  The cost for delivery of product is increasingly being borne by the business shippping the product.

This holiday season is a good time to consider just how well cash flow, expenses, liquidity, and fees for servicing customer transactions are being monitored and managed.  In an economy where profit margins are being squeezed to remain competitive and to attract customers, the other side of the calculation (costs, expenses, and administrative fees) must be closely evaluated.