Who Can We Trust? …and The Power of The Pen

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With the financial markets in turmoil, the real estate market experiencing legendary drops in value, investors are also being flimflammed by once pillars of the community Irwin Madoff is just the tip of the iceberg. We are now dealing with businesses that were once solid as a rock that are now losing money at an unprecedented rate. In extreme high profile cases, these companies have become dependent on government handouts and discuss bankruptcy the way some people talk about going out for lunch.

The part that aggravates me so much that I just want to YELL OUT the line from the 1976 movie, Network, “I am Mad as Hell and I am Not Going to Take it Anymore”  when these shining examples of the best of American business become desperate. They start employing tactics that were previously reserved for the get rich scheme artists, carnival barkers, and sleazy unethical businesses that clearly employ bait and switch tactics or run Going Out of Business Sales on a quarterly basis.

Who can we trust? This week I was working with an organization that represents vendors that sell to retailers, mostly large chain stores. I was fortunate enough to be able to talk to a few of the leading vendors. Their biggest concern wasn’t about getting the business; their concern was all about getting paid. Many of these companies (the majority are all household names) are publicly traded companies, yet instead of being ethical and maintaining the high road of integrity, they have decided to look for the loopholes to take advantage of the customer. Company officials keep ordering and using lines like “You know we are good for all of our purchases. We are just running a little late”. Then 3 weeks later, they file for Chapter 11 Bankruptcy and the vendor loses everything.

During Circuit City’s Going Out of Business Sale, many (most) of the stores would NOT allow anyone to open the box of a product just to inspect it before they bought it–after all, sales were all final.  Well consumer rights editors and government organizations were flooded with complaints. I watched a TV news piece in Orlando which showed a woman who spent $1,100 for a TV and when she got home there was a large crack on the screen. She immediately contacted the store and was told she was out of luck and they wouldn’t take it back. Then they accused her of causing the break. Sure Circuit City is out of business but the liquidation company that ran the sale is still in business. (That is an assumption on my part. I do not know if they used a liquidator but generally they do.)

What do we do when our banks lie to us? It’s happening every day. I had a friend who sold a house, passed papers and received a cashier’s check for the proceeds of his house. He quickly deposited the check  that was strangely enough written by the same bank where he had his account.

After 10 days he was really concerned and called the bank and got a real run around until he finally received a call back from a VP of the bank and was told that the cashier’s check bounced. Huh? They can’t bounce. No, they can’t.  However what happened was that the cashier’s check was issued by error because the officer that issued the check broke a rule and issued a check on an account that had deposits enough to cover BUT those deposits had not all cleared. In other words, someone deposited checks into an account that bounced before they were returned. This is almost an impossible task to do with the advent of high speed computers but this officer somehow over rode the system and got burnt. So the bank, realizing the mistake, didn’t want to pay the check. Whatever happened to ethics, responsibility, and doing the right thing? My friend understands how negative press can affect the wellbeing of a company. So he wrote a simply press release with a list of newspapers, magazines, TV, radio stations, and of course the attorney general office. He then sent it to the bank and demanded his money be put in his account by noon of the next day. Oh, he did have to sign an agreement that he would never discuss it. (Notice I didn’t mention any names.)

Banks and every company are concerned about negative press. It is much more powerful than any attorney you can hire. I AM NOT saying that you shouldn’t hire an attorney. You must, but public scrutiny is such a powerful tool.

Now, what prompted this article? I am personally involved in one of the most unusual scenarios involving a bank making a major error and trying to stall, delay, and cover up an employee’s error that could affect the life and well being of a severely handicapped person. This is an outrage and I won’t stand idly by and watch this abuse of power and lack of common decency. This MUST stop NOW. So to the 74 magazine and newsletter editors that carry my articles on a regular basis: in less than a month you will have one of two stories you can run. One of a company that did the right thing or the name of a company and a story that will SHOCK and disgust all of us. I promise I will write one of those follow up stories.

Let’s see the power of the pen.

There is No Room for Ordinary Anymore

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One of the reasons I LOVE The Retailers Advantage so much is because of the wonderful and brilliant people I have met and the interviews with some of the Greatest Minds in retailing. This week I had a wonderful conversation with Doug Fleener from Dynamic Experiences Group. Doug has positioned his business as the premier expert in the area of creating memorable customer experiences. His goal is simple:  make the customers’ experience so memorable that the customer becomes your advocate. The more advocates we have, the better our business will become.

The great Donald Cooper, the legendry Management Consultant from Toronto, shared two one-hour programs  with The Retailers Advantage and me that redefined what it takes to be successful today.  Donald is a Hall of Fame Retailer in Canada and now works in 40 different industries around the word. Donald agreed whole heartily with Doug but he used some terms that we all need to memorize. We must be Extraordinary to survive; competition just doesn’t allow “good enough” anymore. We must “amaze” our customers. OK, I think we understand that but what separates Donald is his commitment to “Commitment”.

We have to first create Clarity in the following areas:

1. About the customer value and the experience we commit to deliver (every employee needs to know and understand it)
2. We need complete clarity on the bottom line we “commit to deliver”.
3. We must “commit” to ourself and employees the business we will become (not just plan but commit)
4. We must also “commit” to the values that our business will run on.

Yes, commitment. It’s more than just a plan or goal. It is doing whatever it takes to fulfill your commitment. We must be passionate about what we do and enjoy what we are doing. If you don’t enjoy what you are doing, get out NOW. Few people ever succeed in something they don’t enjoy. With the current business climate, it’s not easy to love what we do but we must look at these times as a challenge to overcome.  It’s time to get our creative juices going and make things happen. Succeeding now is the greatest self-esteem booster we can ever have.

Where do we find the inspiration and the ideas that will set us apart? Donald said that they are all around us. Be a keen observer of how people and businesses position and present themselves. What makes them different, what makes you talk about them? Anytime you are wowed and you are about to share your experience, think about what they did and how someone else could do that, and how you could adapt or adopt that wow.

Sometimes it’s a smile, a person who cares about the customer, someone who works for a company but clearly understands the mission and purpose of the company. That is the person who is as passionate about what they are doing as you are. These are the people that customers think they own the business. Yes, they take ownership. If you ever have anyone who works for you and isn’t as committed and almost belittles your passion, then you have a cancer that must be removed. They can be wonderful people but if they have that “give me a brake, you can’t be serious” type of attitude, they must be let go. Sometimes it hurts, especially if you are like me, who hates to ever fire anyone, and looks at letting someone go as a personal defeat.

We just have to do what we are committed to do and if we don’t, we better start studying what real commitment means. This was a tough week for me because I had to let go one of my oldest friends to whom I had offered a part time job. Oh, it wasn’t a big job but it could have developed into something pretty good. It was to just start as a little extra spending money, but it would have been fun working with an old friend and it gave me a nice feeling helping out their financial situation.

Instead of ownership, passion, commitment, or the opportunity I thought it was, it became “how little can I do”, “you didn’t tell me what to do”, and  an attitude of this can’t be that important so I’ll do it tomorrow. Trust me this one really hurts and you begin to understand why many people say to never hire family or friends. That’s the easy way out but when you care about family and friends, it’s hard not to. But I am also committed to what I am doing, especially being a true advantage to retailers. Now I have to make a commitment to save a friendship but that’s not as hard as you might think, because a real friend respects your commitments. Otherwise they aren’t a real friend.

Let’s Talk About Marketing and Advertising in Times Like These

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Actually I am writing this because someone wrote to me last week and requested that I write more pieces about marketing and advertising. Thank you for the request. I really appreciate when my readers make a special request.

STOP!

That’s the first lesson we need to understand about marketing. Are we providing a vehicle and an attitude that encourages our customers to make suggestions? If not, why not? Our customers are our greatest source of information and they would love to share with you if you would only ask. I like to say that when we ask our customers for their opinions, it’s a silent compliment. What we are saying is “your opinion counts”.

There has been some rather dramatic marketing news this week. A report was released by the Promotional Marketing Association that further reinforces a tool that many of us both love and hate and has been a topic for discussion in the column many times before. The topic is the use of Coupons. The use by marketers and the redemption rate is exploding due to the recession. Use by businesses has increased by 179% and that really only represents big businesses. The redemption rate is even greater when counting smaller businesses–it was a staggering 209%.

I have always believed in coupons as a powerful vehicle but numbers like this make it an almost mandatory strategy to use. Just make sure that you are delivering real value in your coupons. Make it good enough that you would be motivated to read and use.

The next tip I want to share is The Bounty in Bundling: How many bundles of merchandise are you offering your customers today? Do you have 2-fers, 3-fers, Buy one and get the second one for a dollar, or the second one is half price. I could go on and on but you get the idea. Very few business owners ever complain about reducing the price when they are selling multiple items. Now take that to the next level– brand the package. Yes, give it a name, an identity, or something that adds a sense of value in the mind of the consumer. These can be called names such as “the Buyers Best”, “the Smart Shopper’s Choice”, “The Offer you can’t refuse”, ” The Gambler’s Choice”, “the Special Incentive Package”, The Value Pack”, “Only the best package”, “the Collection”, or “Our Signature Collection Collection”.

By doing that, it adds additional value. We have to make offers so good that the customer can’t refuse. It comes down to the  Power of Packaging. Here is one other idea that we often overlook. Did you ever think of printout out a one page “Treasure Map Of Savings.” Make it look like a little booklet of savings. The way you do that is by simply using a standard size 8 ½” by 11″ sheet of paper and folding it in the middle to make an 8 ½” by 5 ½” booklet looking piece. Microsoft Word has plenty of templates that automatically set it up for you.

Lastly, I want to share some of the best ad words and phrases that have ever been written. I hope this helps.

1. Secrets of
2. New
3. Now
4. Amazing
5. Facts
6. Breakthrough
7. At last
8. Advice to
9. The truth of
10. Protect
11. Life
12. Here is the
13. Discover
14. Do you
15. Bargains
16. Yes
17. Love
18. Don’t hate yourself
19. How much
20. How would
21. This is
22. Only
23. Free (not in the copy)
24. YOU
25. How to

What’s Your Business Worth?

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One of the reasons I love The The Retailers Advantage so much is because I get the opportunity to interview some of the brightest and most fascinating people. This week I interviewed Chad Simmons who is the author of the Blue Book of Business Evaluations. One of the things he stressed was knowing how much your business is worth.  Just knowing its worth can start to effect the business decisions you make about your business. There are so many factors that go into an evaluation but Chad did a great job of simplifying the entire process. There were a few points I want to share with you.

There are many ways of looking at the worth of a company but Chad breaks them down into three easy to understand categories:

1. Income, how much positive cash or profits before and after taxes is the business generating? If the business nets $50,000 after all expenses and inventory are paid that would mean that if you bought the business for anything less than $500,000 you would be returning 10% or better on your investment. Of course there are other factors to consider such as how regularly is the business generating that kind of cash flow? How much of a salary does the owner take? Income is just one way of looking at the businesses value. Think about it this way. Some businesses work on very high margins such as software producers or book publishers. Many times people refer to Microsoft as a cash cow because of the exceptionally high margins. Then couple it with high volumes and bingo you have a cash producing machine.
2. Assets, what does your company own that would increase the value? Many plant nurseries and garden centers might not generate a lot of income but the land where they are located is worth a fortune. Years ago, a friend of mine bought a Holiday Inn that was marginally profitable until the state announced that a new highway was going to be built either in front of the property or through the property. Either way that location soared in value. If the highway went in front of the property then the asset went up in value because of the third consideration.
3. Marketing Possibilities,  now because a major highway was going to pass in front of a hotel opens the door for many more customers. When websites such as Face Book or Utube were sold for millions and millions of dollars it wasn’t from their assets because they had very few. It wasn’t from the income they were earning because some of these high tech companies were not showing any profits at all. It was all based on the marketing potential of the business.

Timing is obviously another factor. Here is some bad news. Most retail businesses have been devalued for no other reason than it’s a retail business and we are in a recession. Even if you are doing well, an outside appraiser assumes that business would be off because of the recession.

After two parties agree that one party wants to buy the business and the other party wants to sell it, both parties are within a negotiable range. Now that range can be rather sizable but everything still comes down to the negotiation. So who generally wins? Chad’s response was whichever side provides the most logic that supports their position. Then he went on to repeat that’s why you need to know what your business is worth and how it is figured. There are plenty of rules of thumb but many don’t really apply to all businesses. Some people devalue retail inventory because retailers need to turn their merchandise quickly and only wine gets better in time. However, if you are a jeweler with a big inventory in gold, then your inventory made you money because of the rising cost of gold. Be careful with the rules of thumb.

I hope that was helpful. One other side note– I put Chad on the spot and gave him a scenario close to what happened to my store. I could have sold my retail business 12 years ago but realized that I would only end up with the value of my inventory. That was because buyers were only willing to pay 50 cents on the dollar for my  inventory and the rest for income and marketability which only totaled the full value of the inventory. It was a strong, healthy business but a retail business that is centered around a family that isn’t going to be there and located in a depressed downtown means the value goes down. Chad figured that out and agreed that running a massive closing sale was far more profitable and it was unbelievably profitable.

One more thing, I have to brag a little …

The Second Edition of The Retail Business Kit for Dummies was named last month the #1 Retail Business Book by AboutRetailing.com, retail’s largest website and portal for retail information.

Thank you About Retailing, and congratulations to all of my colleagues and fellow authors who also made it into the top 10. This is an honor that I sincerely appreciate.