I hate it when companies do things to make them look very generous, but in reality they sacrifice nothing.  This is why I love TOMS shoes so much.  TOMS shoes is a shoe company that has a policy they call “one for one”, whenever a customer buys a shoe TOMS gives a shoe to a child in South America.  It’s such a genius idea.  They have really cool shoes at good prices and every time you purchase from them you are allowing them to bless a kid with a pair of shoes just like you bought.  I love it because you get to be a part of something bigger, by doing something you’d do anyways.

That’s what makes them great, they have figured out how to fill multiple needs with one purchase.  They fill your need of wanting shoes, they fill your need to help someone less fortunate, and they fill the needs of the kids in South America.  They have taken the phrase “find a need and fill it”, and have completely run away with it.

What needs can you find and fill?

David

Take for example HD video playback. It was announced before the release of the PS3 that it would offer Blu-ray disc capabilities. This would enable better quality game play, and the ability to watch true HD 1080p movies. Xbox 360 soon added an external HD movie player that was sold separate of the system for a hefty $199.99. Also when the 360 was released, if you wanted to play games wirelessly, you had to purchase an adapter for $99.99. PS3 offered  built in wireless. (Recently, a new 360 was released that has built in wireless. However, HD videos cannot be played since “HD Movies” are no longer in production, and Microsoft decided not to add the Blu-ray feature). In addition, if you want to play online on Xbox 360, also known as Xbox live, you have to pay. PS3 offers Playstation Network (PS3) for free. Now all this post has been up to this point is background information. The real purpose of this blog post is to ask a question. Microsoft recently announced that it would increase its 1 month Xbox live membership cost by 25% and its 12 month membership by 20%. Why? Why when the economy is in an all time low, and consumer confidence is at an all time low, and the rest of your products cost a considerable amount more than the competition, even when the competition offers a superior product (in terms of included free features and, in my opinion, better game video quality) would you choose to raise your prices???

The answer: Does it really matter if prices are raised? Zach, a co-author of this blog, has always preached that a great strategy is to create a product that does well when the market is up, and just as importantly, if not more, when the economy is down. One would expect that in a recession, consumers spend much less of their income on things such as gaming. This however is not true. People tend to stay inside more and spend more on home entertainment. One example is going to a movie vs. staying home. On a Friday night for a family of four, a trip to the movies will cost about $40 (just for the tickets). Add in a large soda, large popcorn and candy, and you’re somewhere around $60!!! That should be illegal. So why not just visit your local gaming store and for the same price, buy the latest game or 2 Blu-ray movies?

This is exactly Microsoft’s approach. Gamers seem to not be too sensitive to price changes, as long as they are not too big of a change. (Xbox live went from $7.99 to $9.99 per month and $49.99 to $59.99 per year). So maybe Microsoft is going for the stereotype of “expensive = good” as described by Robert Cialdini in his book Influence, The Psychology of Persuasion.

Question: Would you as a consumer continue to play Xbox live if its prices were increased by 20 to 25%? Or would you find a less expensive substitute, such as PS3?

-Austin

It’s incredible how something so simple can create so much income.  A lot of places are scared to give away an entire meal and drink for FREE, no strings attached.  Usually, the deal will be “FREE meal with purchase of a meal and two drinks”.  Customers HATE small print!  So, many businesses attach small prints to everything they do in order to insure they don’t get screwed.  When you do that you lose your customers’ trust.  If you give coupons that will attract one person to come in, they will most likely bring at least one other person with them!  While at Cici’s my wife pointed out at least two teachers she worked with, which each brought at least 4 people with them.  It’s awesome how simple it is.  All you have to do is figure out what will get people to come to you.

What are you doing to attract people to your company?

David

I feel like business comes down to one thing, it’s not how awesome your prices are or how cool your product is; it’s all about how you treat your customers.  People like to be treated well and will actually go out of their way to have excellent customer service.

Instead of the mindset that only managers can take care of problems, think about empowering each and every one of your employees to be able to take care of a customer when they complain.  One of the worst things a company can do is train their employees to always refer problems to managers.  When a customer is mad and explains a problem to an employee they don’t want to hear, “Well, let me get a manager to take care of that”.  They want to have their problem solved then and there.  When you train your employees to take care of problems not only will you have happier customers; you will also have better employees.

What are you doing to make sure your customers are happy?

David

The other day I was driving down the highway and a building that I pass almost every day caught my attention. For months and months the building has been under construction and up until last week I really wouldn’t have been able to tell you what was being built. In fact, I probably wouldn’t have remembered the building that was being constructed if you’d just randomly asked me about things I passed on the drive home.

When I saw the hotel I decided to go ahead and stop and check it out. My company hosts a convention in May so I was looking at it as a potential replacement for our 2011 event. When I walked in I pretended I knew what I was doing so that I could have a look around. Sure enough, the inside was as cool as the outside.

To the right, you can see the bar and a lounge area. Everything in the hotel was very modern. So much different than a typical hotel (especially in Tulsa). This hotel was definitely something to see. Something very unique. Something for people like me to talk about to tweet about.

Not only was the hotel modern on the inside and out, but the staff was very friendly. I walked up to one of the ladies at the desk and asked if I could get the tour. As we walked I explained the event that we host every year, talked about how cool the hotel was, etc. We looked at a meeting room and also saw all the amenity area’s and one of the rooms.

The hotel had all kinds of good things going for it, including being so drastically different that it will generate all kinds of buzz. There is no question in my mind that before the close of 2010 A Loft Tulsa will easily be known by a large portion of the population of Tulsa.

Are you giving your customers something to tweet about?

Zach

]]> http://businessovercoffee.com/2010/08/26/give-them-something-to-tweet-about/feed/ 1 http://businessovercoffee.com/2010/05/13/please-stop-doing-that/ http://businessovercoffee.com/2010/05/13/please-stop-doing-that/#comments Thu, 13 May 2010 16:55:59 +0000 Zach http://businessovercoffee.com/?p=375

Gary says it like it is. Please stop doing that.

This opened my eyes a little more to the fact that we need to be constantly thinking creatively (coincidentally he also teaches a creative thinking class). I’m pretty sure he didn’t have that response waiting until someone asked that perfect question. It was just a second nature reaction. This is what we as business people should be aiming for. We should constantly be thinking of everyday things that we can turn into profit for ourselves and our companies.

So What?

The so what of this post has basically already been stated, but I hope you can pull a deeper meaning from it. Often times, when a person brings up a subject such as a new bill or anything really having to do with politics, they more than likely want to strike up a conversation, maybe for boredom’s sake or maybe for plain debating. But we need not be suckered in and miss the bigger picture. As a capitalist, I want to be able to have the Midas touch; that is turn every situation possible into a profitable outcome.

Sell an Experience

Like I said earlier, few companies have products that are so good that they sell themselves. Most of the time a company must sell itself to consumers in order to sell its actual product. When a customer is contemplating where to purchase a particular item, and price is the only difference, they will most often select the store with the lower price (as one of our bloggers Zach did when purchasing his new Flip camera – read his post here). If a company wants to make any sort of profit, they probably will not do so by trying to compete for the lowest price (unless they are the mega store Wal-Mart). So what must they do to make their more expensive product worth while? Sell an experience.

How?

Selling an experience isn’t easy, but when done correctly can be great for both the company and the customer. Many times when I go to a store to buy a product, I want to talk to someone who is an expert on the product and can reassure me that it is a good purchase decision. I want to be greeted at the door, remembered from my previous visit, be offered add-ons that I might actually need, and have some type of frequent shopper bonus. This would be a great “experience” for me as a shopper. One of the biggest elements I just mentioned (from an employee standpoint) is customer recall. A friend of mine told me recently that every time he goes into Starbucks, the barista on duty greets him by name and asks him “hot or cold?” That’s amazing to me. Starbucks has done such a great job at this element that of all the customers seen each day of the week, the barista can still remember a single customer’s order. Amazing.

Nice SHUs

No not shoes, SHUs (Super Heavy Users). A super heavy user is pretty self explanatory; it’s someone who uses a certain product or service often. McDonald’s definition is someone who eats at their restaurant at least SEVEN times a week. I would consider myself a super heavy user of electronics. I use them all the time, never get tired of them, love talking about them, and love buying them. So i would be perfect for a store that sales electronics. What I’m trying to say is basically that companies should hire super heavy users of their products to be employees. Who else better to talk to a customer about a product they love than someone who uses it every day. Some examples of companies who do this are Best Buy (look at all the geeks who have worked there, myself included), various clothing stores (where the employees are only allowed to wear that specific company’s clothes), Nike (who many times hires athletes to sell and develop its products), and many more. Having an employee who loves what he is selling and has actually used it before, compared to an employee who only has book knowledge of the product, makes such a big difference.

So What?

If you want to sell a premium product (or any product for that manner) and not be competitive with price alone, you must do something better – offer something more appealing that competitors are not (an experience). And have the people that are selling the product actually be interested in the product and willing to tell the world how much they love it. I believe these few simple changes could make any company that much better.

Several years ago while living in the dorms at college, a few friends and I had this idea for a product. It would be slightly smaller than a piece of paper, and maybe a half inch thick. The thing would be a touch screen and you could do all sorts of things with it… Sadly, we thought of the iPad about 5 years AFTER Apple starting making it. We knew there was no way to make it happen any time soon so we just sat back and watched.

About a year later I got an iPod touch. Every time I would see one of my friends I would talk about the core functionality that it was still missing that we had talked about. Then the iPad came out… Basically the product we were thinking about and about a thousand times better. Yet, it was still missing several of the key functionalities. Yesterday I got an email from Starbucks that delighted me to no end.

I knew there were a handful of stores on the west coast that allowed you to pay with your iPhone / iPod touch, but honestly this is what I’m talking about. I salute Starbucks, Target, and Apple for being awesome at what they do. I’m tired of carrying around Starbucks membership cards, gift cards, etc. The idea that I can whip out what’s already in my pocket for yet another task in my daily life means I can save some time, energy, and thought.

So What?

I’ll tell you so what. If you don’t see this as a huge, blinking arrows pointing towards the future, let me help you out. The iPhone / iPad / iPod will replace our wallets, period. Wallets will most certainly be a thing of the past. If you make wallets for a living… sorry. Your time is limited! If you code for a living, there is lots of money awaiting to be made. Here is a list of what’s in my wallet:

- Student ID
- Credit / Debit Cards
- Business Cards
- Starbucks Gold Card
- Drivers License
- A $1 dollar bill
- AAA card

Imagine for a second when Visa and Mastercard produce an app. When checking out at a Target or Wal-mart you will no longer have to swipe a card, you’ll just click your Visa app, enter your password, and maybe press your thumb print to the screen and then put the bar code over a scanner like you do with products at the self checkout.

Ever have a situation at a store where you want to use $50 from your bank account and use $15 on your credit card? The Visa App can do that. Ever have a friend go to the store and how him $5.03? I can send you $5.03 from my Visa App. Now all of your accounts can become one, giant bank account.

Business cards you say? Imagine being able to store all the business card you ever got into a clean, easy to use categorical system. Also imagine that you can never run out, no matter how many you have given away at the conference you are at.

Do I really need to continue with this? Before it’s all said in done, Capital One won’t be able to ask “What’s in Your Wallet” because none of us will have a wallet. We will just have our iPhones or iPads or iSomethings. I imagine there are great companies out there right now figuring this stuff out. Will you be in on it? Either way you’ll enjoy the benefits of what’s to come. Here is a salute to Starbucks, Target, and Apple for pushing us into the future.

Zach

Getting Personal

So what should your company do? Many people have the preconception that customers either want high quality at a high price, or low quality at a low price. Until recent years, there has not been a middle ground due to this misconception. In their book “Mass Affluence,” Paul Nunes and Brian Johnson argue that there is a segment of customers in the marketplace that are not currenlty having their needs met. They either have to pay too much for a product that does more than they want (say a $100 electronic toothbrush) or an inexpensive item that doesn’t do enough (A normal $2 toothbrush). A solution to this is a middle-of-the-line electronic toothbrush for around $10. Consumers wanting more functionality but not top of the line will finally have their needs met.

Raising the Bar (and Price)

In America, in order to avoid having to compare too many options, many people have created a shortcut when purchasing items. This shortcut is “expensive = good.” This is great for merchandisers. A good example of how retailers can cash in on this is told by Robert Cialdini in his book Influence The Psychology of Persuasion. Cialdini one day receives a phone call from a friend who owned a jewelry store. A certain type of jewelry was not selling well so she informed her head saleswoman to sell the jewelry at “price x 1/2″ (The owner was going out of town so she just left a note). The saleswoman misread the not and accidentally sold the jewelry for twice as much. When the owner returned, every piece of jewelry that was increased by 2 was sold out. Why? People used the shortcut of “expensive = good.”

So What?

The so what for this entry can be taken in many different ways, and I would suggest that each company take an individual approach to pricing. Many people think “sales are down so I should lower prices.” This can’t be more wrong for companies who are trying to differentiate themselves with quality. I’m not telling you to do it, and can’t be held responsible if sales decrease, but you might want to consider raising prices instead of lowering them. It just might surprise you.

-Austin