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Good Business
Deeds Can Be Good Business Deals
Cause’ marketing that links
your company or brand to a non-profit group or charity enables y ou
to promote your business while you give something back to your community.
Perhaps the most interesting aspect of this kind of marketing is that it’s been
shown to make customers feel better about deciding to purchase and that
translates into an increase in repurchase intentions.
Consumers Transfer Their Emotional Bonds
Many people have emotional bonds with a non-profit group. They may even be
regular financial contributors or do volunteer work for a non-profit
organization. When these people see a business that’s supporting this
organization they’ll often be predisposed to purchasing from it. "Look at what
you sell and understand the targets you're trying to reach. Then align yourself
with causes that will bring out the emotions of that audience, from a
grassroots, a community and a media standpoint," advises Rodger Roeser, of
Justice & Young Public Relations in Cincinnati.
Employees Feel Better About Their Employer
Surveys consistently show that whether candidates are choosing an employer or
employees are deciding whether to stay with their present company, the degree to
which a business demonstrates a social conscience is perceived as increasingly
important. In fact, a majority of employees of companies in many industries have
said they’d work for less money if they felt their employer was socially
responsible.
It’s Good for PR and Community Relations
Naturally, there are a lot of positives about supporting a cause that will
benefit the image your business has in the community. You’ll be seen as a good
corporate citizen and as an organization that contributes to the welfare of
everyone in the community.
Seek Alignment with Your Business and Your Customers
There are thousands of causes and some will no doubt relate to your business
activities. Find a cause that has a link with your company, no matter how
tenuous, so that people will understand how your business fits into the cause
overall. The cause needs to also be related to the interests of your customers.
It should align with their feelings and beliefs, and not be in conflict with
other organizations they might want to support.
Tell the World What You’re Doing
Although it might seem a bit ‘commercial’, your business will only benefit if it
tells the world at large about your involvement with the cause. You need to
spell out what it is you’re doing and why you’re doing it. It will also help if
your business becomes a conduit for your customers to help the cause by making
donations through your website or at your business premises.
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Your cause marketing
activities should be part of both your external marketing and your internal
communications. It should be featured in your promotions, your packaging and
your website, as well as referred to in your employee newsletters.
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Give your employees and
your customers a chance to participate in the cause by hosting a function or
sponsoring an event where the proceeds go to the cause
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Ask the cause you’re
supporting to promote your association with them. They have every reason to
do this; the non-profit world depends on donations and they like to tell
prospective donors that they’ll be in good company when they part with their
funds.
In today’s competitive world
consumers want to know what a business stands for. Cause marketing will tell
them about your business values and reassure them that part of their purchase
money is going to a good cause.
Create a Network of Wealthy Customers
The New York-based Luxury Institute tells us there are 11 million households in
the U.S. with an average net worth of $US 3.1 million and an average annual
income of $US 256,000 - “For most luxury goods and services firms, these are the
20% or less of the clients who deliver 80% of the profits.” Whether the 80/20
rule applies to your business or not, if you can identify your wealthy customers
you can target them directly with high-value offerings. And even if you don’t
have 20% of customers that you’d consider ‘wealthy’ you can create a network of
customers that will help you grow your business and greatly benefit your bottom
line.
Define Your Trading Area
Start with an accurate definition of your trading area – where your customers
are. The geographic area you identify as your trading area will be the
boundaries for choosing members of your network. For some businesses it will be
a neighborhood, and for others it will be an entire city or state. This is an
important step in the process because the demographics of your trading area will
be used to identify the pockets of wealth that lie therein.
Find Your Pockets of Wealth
Every area, from the size of a suburban neighborhood to a city or state, will
have parts that are wealthy and some that are not so wealthy. Demographic data
can be used to locate the wealthy, that is, high income segments in your overall
trading area. This information can be sourced from local libraries and
government departments, and is generally segregated by zip codes, electoral
boundaries, place names or some other identifier you can use in your research.
Cross Reference Your Customer Database
How many of these ‘wealthy’ individuals are already in your customer database?
This is the first thing to check. You may already have the contact details for a
significant number of regular customers who fit into this category. Because you
haven’t thought about segmenting them according to their wealth you may never
have thought about creating high-value offers that target them directly.
Create Lists of Wealthy Prospects
Now you want to obtain mailing lists and other contact details of people who
live in those areas you’ve identified as wealthy. If it’s simply people living
in a particular part of town you could do it by renting a mailing list from a
list broker for those neighborhoods or for particular zip code areas. If it’s
all wealthy people in a city or state you’d be best to speak with a commercial
mailing list provider who could create the list that you need and arrange to
have your marketing materials sent out on your behalf.
What Can Your Offering Be?
This will naturally depend on the business you’re in. A wine retailer might want
to make these wealthy prospects an offer of a dozen bottles of fine red wines. A
furniture store might offer them a home decorating service. A car dealer could
offer them a test drive in a luxury vehicle. Your offering to them should be the
best products and brands your industry has to offer because you know they can
afford it.
How Do You Communicate Your Offer?
Because your data will probably be geographic in nature this is a natural for
direct mail that can target specific addresses. When you have your offer ready,
create a direct mail piece that presents it attractively with appropriate
up-market illustrations. Link this offer to your Internet site where it can be
repeated for those who want to place their order online.
Focus your content on what your wealthy customer will get. Show an understanding
of their lifestyle and tastes. For most of your prospects this will be your one
opportunity to make a good impression, so demonstrate that you know what they
want and have taken the trouble to make it available to them.
Experiment to Find Your Product's
Price Flexibility
 Pricing
is an art and if you don’t get your prices right you’ll have trouble finding
either profits or buyers for your products or services. Most experts agree that
there are just three basic methods of pricing:
Cost-based: You take the cost of the product and add a fixed percentage
of this as a markup or apply a fixed multiplication factor to calculate the
final price.
Market-based: You let the market tell you what to charge by monitoring
your competitors and matching their pricing.
Value-based: You price your product on the value it delivers to customers
rather than on the cost of making it.
Value-based pricing is by far the best of these three pricing methods. It
incorporates an understanding of the value your customers receive and focuses
your thinking on the benefits you provide. However, of the three basic pricing
methods, value-based pricing is the hardest to calculate.
Problems with Other Methods
Cost-based pricing is severely limiting. It doesn’t take
into consideration some of the things consumers value most – quality and
service. If your manufacturing or purchasing costs are excessive your selling
price will be too high and your products won’t sell. Market-based pricing is
dangerous. To gain market share either you or one of your competitors will lower
prices, leading to a price cutting spiral that reduces margins and
profitability. It’s a lose-lose situation.
Pricing Flexibility is Critical
Value-based pricing gives you the flexibility you need to grow a business by
improving your value proposition. As the value of your product grows, so will
your revenues, so it’s worth making an investment to add value to what you sell.
There will, of course, be less flexibility when you're selling physical goods,
especially commodities. However, if you are selling something like a service or
an online product you have a much wider range of possible price levels and a
much more flexible pricing structure.
Just How Flexible is Your Pricing?
Look at what you’re selling and think about how you see your business. How good
is your product and what level of customer are you selling to? If your product
saves a customer a hundred hours of drudgery a year it’s worth quite a bit,
regardless of what it costs. And if you’ve positioned your business above its
run-of-the-mill competitors you should be targeting a premium price for
everything you sell.
The only way to find out exactly how flexible your pricing can be is to test the
product at different price levels in real life situations. This will give you
hard data on which you can base your pricing decisions. Let’s use a hypothetical
example of a product that costs you $18; you want to test three pricing levels –
‘bargain’ ($28), ‘reasonable’ ($36) and ‘outrageous’ ($49). How you market test
these three levels of pricing is another matter and requires a great deal of
thought. But let’s say you get the following results:
1. At the ‘bargain’
price of $28, 300 units sold for revenues of $8400 and a profit of $3,000;
2.
At
the ‘reasonable’ price of $36, 280 units sold for revenues of $10,080 and a
profit of $5,040;
3.
At
the ‘outrageous’ price of $49, 250 units sold for revenues of $12,250 and a
profit of $7,750.
These
figures indicate a great deal of pricing flexibility and suggest that further
testing at even higher prices could produce an even higher level of
profitability. Only by testing at a range of prices will you know how people
will respond to your offering. The aim is to optimize the sales/profitability
combination which is just what this kind of testing will do.
If your goal is to acquire new customers you would probably choose the
‘reasonable’ price as the increase from $28 to $36 cost very little in terms of
volume. If your customer base is relatively stable you could charge the
‘outrageous’ price and optimize your profits. Only after you have the facts can
you choose the price that best suits your overall business objectives.
How to Conduct a Reference Check
Finding managerial talent is a difficult
task in a small business. Most small businesses don’t have an HR department to
handle the role, so the owner winds up looking after everything from writing the
advertisement to interviewing candidates and making the final selection. At this
point, it looks like the job is over, but one critical task remains – checking
the candidate’s references.
Most instances where a managerial appointment has gone wrong result from an
incomplete check of references. This could be because only favorable referees
have been included, or it can be because the references have been fraudulently
created. The only way you’ll ever know if the person is as they represent
themselves is to put in the time and effort necessary to check their background.
Then, and only then, should you offer the position to the candidate.
The Purpose of Checking References
A reference check allows you to gather information about the candidate that
you’d otherwise never get. You’re speaking with people who know them, who’ve
managed them, and who’ve worked with them; and they know a lot more about that
person than you do. Even if the person whose reference you’re checking is
appointed and settles in well, your reference checking can provide you with
guidelines as to how best to manage and develop them.
In the worst case you’ll discover that the candidate who seems right for the
position has something unsavory or criminal in their background. This can save
your business from exposure to problems like fraud, theft, lawsuits or other
inconveniences you don’t need or want.
How to Handle Referees
You should ask candidates to offer at least three referees, but more will be
even better. You naturally want confirmation of the candidate’s background and
competencies, but you also want to gather examples of the candidate’s strengths
and weaknesses, their management style, and how they relate to others in the
workspace. The person with whom you’re checking the reference doesn’t know you
and will be wary about giving out any information that could rebound on them.
For this reason, it’s essential that you spend some time establishing with them
that you can be trusted and will maintain their confidence.
Outline the position you’re seeking to fill and the impressions you’ve had from
your initial exposure to the candidate. Cover any areas of uncertainty, and be
sure to verify anything about that referee that’s been included on the
candidate’s paperwork or said in an interview. Then let the referee do the
talking as much as possible, only stepping in when more information is needed.
Ask as many open ended questions as possible, and give the referee a chance to
express their feelings and opinions. Try and gauge their like or dislike for the
candidate and look for some emotion when they’re describing them. If they use a
word that rings an alarm bell, don’t hesitate to ask what they really mean.
The Questions to Ask Referees
You’ll naturally be interested in the candidate’s abilities that relate directly
to the requirements of the position you’re filling. Some sample questions are
shown here, but you’ll also want to create specific questions that relate to
your own requirements. Write them all down before making calls to referees and
be sure to cover the same questions with each referee to build up a complete
picture.
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I’ve told you about the job
we’re trying to fill; how do you think (candidate) would fit into it?
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What would you say
(candidate’s) best features are?
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What qualities do you think
might help (candidate) make greater progress in their career?
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What did (candidate)
achieve for your business?
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How well did (candidate)
relate to co-workers?
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If (candidate) had stayed
with your business, where might he/she have wound up?
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What advice would you give
me regarding developing (candidate’s) abilities?
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Is there anything else
you’d like to tell me about (candidate)?
Commercial Background
Checking
It’s also well worth paying a professional background checking service to
perform a final check before making any appointment. They’ll find out whether
the candidate has correctly stated all details of their employment history,
education, and whether or not they have a criminal record.
Memorable
Quotation
“Anybody
can cut prices, but it takes a brain to produce a better article.” – P.D.
Armour
How to
Make the Most of Your Newsletter
Be sure to read each article with the mindset "How could this apply to our business."
Take notes as you read and commit to having the ideas implemented by the time the next edition arrives. Also, make copies for team members. To really make sure something positive happens, work with your business development specialist to talk your team through the ideas and how to set a schedule for getting them implemented.
Cornerstone Business Solutions is here to help you get started.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.
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© 2006 RAN ONE Inc. |
