Are You a High-Margin Business?

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Achieving profit is the real goal of being in business. Profits are what allows a business to invest and grow. Some businesses have higher profit margins than others. That can be due to the type of industry, the competitive landscape, and economic conditions.

There’s often a direct correlation between the margins a business can charge and the amount of pain their products and services help to ease in the minds of the customers who buy them. Increasing this real and perceived value will directly impact profit margins.

Most businesses have a mixture of customers. To become a high-margin business, your goal must be to move the needle from lower-value customers to higher-value ones. The first step is to identify the types of customers your business attracts and pursues. Here are a few general characteristics to consider.

Low-Value Clients:

  • A large number are required in order to sustain profitability
  • Typically cause the most headaches
  • Want you to lower your prices
  • Make you feel like a commodity
  • Position you as the lower-value provider
  • Can and will leave you for a lower price at any time

High-Value Clients:

  • Provide greater profitability, so fewer are needed to help you reach your financial goals
  • Generate higher value with fewer headache
  • Help position you as an authority and valuable partner vendor
  • Give you higher credibility in the eyes of your other prospects

So how can you increase your perceived value?

  • Educate – Sell by teaching and sharing your expertise. Nothing is more powerful in positioning you as a business that is worthy of higher fees than actually showing how your products and services solve problems for your customers.
  • Show Results – Include testimonials and success stories from your past customers to help prospects understand what kind of real-world value you provide. Third-party validation works much better and is more believable than the same information stated as your own.
  • Offer a Powerful Guarantee – Guarantees not only help remove some of the doubts your prospects may have but also show that you believe in your products and services enough to stand behind them. Strong guarantees and warranties allow you to justify charging higher margins.
  • Get Endorsed – When possible, get an endorsement from a well-respected and known personality who can verify the quality and value you bring to the table. Your prospects will know that such a person would not vouch for a shoddy business or service. This increases the perceived value of your business in their eyes.
  • Promote – Promote your awards, achievements, membership associations, charitable contributions, and any other resources that will speak to your involvement in the community and the values you bring. Each of these builds further trust in the eyes of your audience. Each bit of added trust allows you to charge higher fees and margins in your business.

By increasing both the real value for your customers and the perceived value seen by your prospects, you will be able to increase your profit margins. Lots of companies can solve problems for their customers. Those that are able to tell the story of what, how, and why they solved those problems — and to do so in a way that resonates with prospects — are the ones that achieve higher margins.

Is Your Business Sellable?

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One of the goals of every business owner should be to build a company that is worth selling. Whether it is actually put on the market or not is another matter.

A business that is worth selling is growing, vibrant, and healthy. That’s why it’s in the best interest of everyone involved in the company to continually work toward building a sellable business.

Many metrics are used to measure the worth of a sellable business. One of the key metrics is the ability of the business to generate recurring revenue.

There are several ways to achieve a consistent, recurring revenue stream. Not all will work for every type of business, product, or service. Here are a few ideas to consider, depending on the types of services and products you provide.

Long-Term Sales Contracts

One method of building recurring revenue is to offer contracts that tie a client to a long-term engagement. A customer could be enticed to sign a contract if they are offered preferred pricing and services. An example of this can be seen with most cell phone contracts. The multi-year contracts are offered as a way to get a free or discounted cell phone in exchange for signing a two or three year contract. The buyer gets the cell phone quicker, and the cell phone provider locks in a guaranteed, predictable revenue stream.

Service and Maintenance Contracts

Some businesses can offer service contracts for after-sale support. For example, an IT company will charge for installing and setting up a network in a business but could also charge a yearly support fee to keep the network up and running free of viruses. Maintenance contracts can be a great source of additional revenue throughout the year. In many automotive dealerships, the service bays bring in much higher profits than the car sales departments.

Product and Service Training Fees

If your product or service involves a learning curve, customers would get more value from their purchase if you also offer training and certification after the sale. Product training becomes a true win-win, as the customer gets better use of their purchase, while you get additional revenue from an existing client. Many software companies offer training for their products to help their buyers understand and use the software to its potential.

When your business can generate sales from multiple revenue streams that support each other, the risk to a potential buyer is reduced dramatically. The business becomes a much more attractive candidate.

Predictable, recurring, multiple income streams make a business seem less risky to a potential buyer. So the sooner you start building recurring revenue streams in your business, the better your position will be if and when the time comes to sell.

How to Be the Master in Your Field

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Pablo Picasso created paintings the world has marveled at for decades. Looking with awe at these masterpiece creations, it would be perfectly logical to imagine that the distinctive brush strokes were made by someone with a natural gift — a gift not achievable by most.

Although Picasso’s talent is undeniable and his style unmistakable, that genius was actually developed in a surprising way that many don’t realize.

From the time Picasso was a young boy, he was formally trained by his father in oil paintings and figure drawings. And what method did his father use to train young Pablo? Jose Picasso was an artist who believed the best training for his son required formal and disciplined copying of the masters’ work. For many years, young Pablo Picasso fervently reproduced paintings, drawings, and plaster casts of the masters. He not only copied religiously but also experimented with a variety of styles, theories, and ideas, until he developed his own voice and distinctive style.

So what does this have to do with business?

The ideas of meticulous practice and of learning a skill by emulating the leaders in a field are not as common today as they were in the days when apprenticeships were more common. In a world that craves instant gratification, people often overlook the hard work required to develop any talent and simply assume it just comes naturally to those who are gifted.

The good news is that there is a short-cut. The bad news is that even the short-cut requires some sweat equity.

Not everyone can become a Pablo Picasso. Not entirely because of the natural talent gap (though that’s part of it), but also because of the not-wanting-to-put-in-the-hard-work-required gap.

There’s incredible power available to you in muscle memory. Muscle memory is “consolidating a specific motor task into memory through repetition.” When any task is repeated over and over, a muscle memory is created which allows one to perform the task almost effortlessly.

Olympic and professional athletes, concert pianists, and all other performers in the top of their field are perfect examples of muscle memory in action. They have practiced and performed so often that their performances seem to be effortless. That is the power of muscle memory.

Muscle memory can also apply to business mastery. It requires finding the leader in the field, analyzing and dissecting what they have done, and then recreating and reproducing those skills, often while adding your own unique style and flair. Practice often until muscle memory takes over. If it worked for Pablo Picasso, it can work for you.

Introducing: Your Next Sales Super Achiever

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We all want to increase sales and grow our businesses. We also know that hiring and grooming a sales superstar is one surefire way of achieving those goals. Unfortunately, finding and retaining a sales superstar is a difficult task. Until you find the secret to make that a reality, here’s an alternate path to consider for reaching your sales goals.

Self-publish a book!

You read that correctly. One of the best ways to increase your sales and grow your business is to author and publish your own book. Self-publishing your book allows you to present your points to your target audience in an authoritative way — just like a sales superstar would.

Now, to be clear, we aren’t talking about writing a novel the size of War and Peace. Nor are we talking about writing a prize-winning book. This type of book is written specifically to bring you leads and the types of customers who are looking to buy what you sell.

They say everyone has at least one book in them, but no one tells you how to go about writing it. Being an author is on many people’s dream lists, but few go about actually accomplishing the tasks needed to bring a book to life. Perhaps that’s because writing a book seems so overwhelming. “It will take many years.” “I don’t know how to write a book.” “I don’t know what to write about.” These are some of the many excuses that stand in the way of making authorship a reality.

It doesn’t have to be that way. Here are five simple steps to get you going:

  1. Pick your topic title.
  2. Make an outline of your main topic and sub-topics.
  3. Choose three main subjects to write about.
  4. Think about ways you or your products/services go about solving your customers’ problems. Come up with 10-20 solutions.
  5. Write about and expand on one of those points one hour every day.

It really can be as simple as that. Within a few weeks, you’ll have the main part of the book finished and ready for editing. Finding nice cover graphics and having it printed is not difficult.

Imagine being able to hand a prospect your own beautifully printed book. Do you think that would establish credibility and open some doors?

Your own self-published book is the ultimate business card — and the sales superstar you can use to grow your business in ways not otherwise possible. What’s more, this kind of sales superstar has no ego and doesn’t call in sick either. There’s at least one book in you. Start writing it today.

The Five Dollar Workday

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Five Dollar Background

Henry Ford, the famous Ford Motor Company founder, was known for many things. Among them was his role in promoting the assembly line as a viable means for mass-producing automobiles, a process that made cars more affordable for middle-class Americans.

Ford had a global vision with consumerism as one of its centerpieces. He had an intense commitment to lowering costs through systemization and building a more process-driven company.

This focus made his next move (which is not as well known) quite a shock at the time.

The Five Dollar Workday

In January 1914, Henry Ford made a radical decision. He increased Ford Motor Company employee wages from $2.34/day to $5/day (equivalent to approximately $110 today) and reduced the workday from nine hours to eight.

While this was one of the most generous pay hikes of its time, Ford didn’t do this simply out of the goodness of his heart. At the time, the Detroit area was already becoming known for companies offering higher-than-average pay. In addition, the boredom of repetitious, assembly-line work led to higher employee turnover rates. One of the underlying reasons behind Ford’s move to increase wages was the desire to attract and retain top-notch employees by effectively creating golden handcuffs.

Ford used his PR machine and news journalist contacts to spread the word about the generous pay. Soon, there were thousands of applicants at every Ford factory, which allowed the company to hire only the best applicants. The fortunate hires stayed with Ford much longer than they otherwise might, since they couldn’t get similar pay elsewhere. In one bold move, Ford had managed to solve most of his company’s labor problems.

But higher employee retention was only one benefit of Ford’s plan. Within two short years of the pay raise, Ford’s profits increased by 200% to $60 million per year. Within five years, Ford Model T’s were rolling out at the rate of one every 24 seconds, much faster than the 12 days each had initially taken to produce. By the end of 1914, the 13,000 Ford Motor Company employees were producing 260,000 automobiles annually, while the rest of the automotive industry produced 280,000 combined.

At the time, much of corporate America did not view employees as an asset. Instead, they were seen as part of a company’s expense. With this single move, Ford was able to open the eyes of the corporate world. Ford had created a workforce that became a model for the eight-hour workday and HR departments of today. More importantly, he set the pace for the eventual rise of middle-class America. Ford employees could actually afford to buy one of the cars they produced.

With the $5-per-day pay hike, Ford was able to reduce employee turnover, increase the pool of high-quality applicants, reduce absenteeism drastically, and attract top-notch employees. The corresponding morale increase led to the highest productivity rates in history.

So what’s the moral of this story? What can we glean from it and apply to our own companies in the 21st century?

When companies shift their mindset from viewing employees as an expense item on the financials to an asset with vast potential, they can begin to see brighter possibilities for the whole company as well. Employees who truly believe they are appreciated and feel valuable to their company are much more likely to be highly productive and happy with what they are doing. Content employees are much less likely to actively seek opportunities elsewhere. Loyal, long-term employees lead to stability and customer satisfaction.

Henry Ford made a big splash with his five-dollar workday. The same kind of impact can be made today by implementing innovative ideas that show employees you appreciate what they do.

Studies and surveys have shown that higher pay is not the top motivator for employees to stay with their company. Feeling valued, being content in their role, and accomplishing larger goals are more important criteria. Find effective ways to instill those feelings in your employees, and you can make your own splash.

8 Skills Successful Entrepreneurs Have That Others Don’t

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There are skills you can learn from textbooks, skills you can learn in business school, and skills and lessons passed down from mentors and peers. Then there are the skills that can only be learned in the school of hard knocks and the real world. An entrepreneur who wants to be a true leader must understand which skills are the most important in order to lead a healthy and growing business. Here are eight of the most critical skills which differentiate successful entrepreneurs from others.

1: Patience and Persistence
The life of an entrepreneur includes facing many closed doors. Successful entrepreneurs have grit. They focus on the end goal and have the patience to see it through to completion despite the roadblocks.

2: Planning Skills & Time Management
Entrepreneurs must wear many hats and are often pulled in many different directions throughout the day. It’s critical, therefore, that plans and goals are flexible enough to handle unexpected surprises when they occur. Successful entrepreneurs set the GPS for their lives and businesses so they know where they are going every hour of every day.

3: Communication & Persuasion
Whether speaking with a prospect, a customer, an employee, or a stakeholder, it’s critical that the message and key concepts are presented clearly. When the point is made with focus and clarity, the chance for ambiguity falls by the wayside. Leaders know how to communicate and how to persuade.

4: Confidence & Sales Skills
Successful entrepreneurs are able to sell their products, services, ideas, and passion not only to the outside world of customers but also to their internal team of employees. That requires confidence and sharp sales skills. Successful entrepreneurs can sell anything.

5: Knowledge and Learning Skills
Successful entrepreneurs are passionate about continuous growth and improvement. When others think they know all there is to know, these leaders will push themselves to expand their horizon. They set aside an hour or more each day to read and learn about new, noteworthy industry advances they can apply to their business.

6: Realistic Optimists
No one can avoid bad news. Losing customers and having employees quit is part of life for any entrepreneur. The difference comes in how people view these challenges. The successful entrepreneur doesn’t hide bad news under the rug, but has learned instead to deal with it quickly and move on to the task at hand without being dragged down.

7: Resourcefulness and Managing Cash Flow
Resourcefulness is a great trait for any entrepreneur. The ability to think creatively and come up with out-of-the-box solutions is a must-have skill. This goes hand in hand with being able to manage the cash flow of the business. It’s a skill that shouldn’t be outsourced and one that the most successful entrepreneurs have learned very well.

8: Intense Focus
What separates the most successful entrepreneurs from others is their ability to focus intently on the goals and tasks at hand. In a world of short attention spans and constant noise, these leaders are able to put blinders on when needed, unplug from all the unnecessary distractions, and see the task all the way through. That is perhaps the biggest difference between successful and ultra-successful entrepreneurs.

Becoming a successful entrepreneur is not about what you are now, but what you do today and tomorrow. You now know eight critical skills to work on to be what you are meant to become. Start working on them today.

How Premiums Work Better Than Coupons and Discounts

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What is a Premium?

A premium is anything of value that you offer a prospect or client in exchange for taking an action that you direct them to. This could include an incentive or a gift.

The right premium could encourage someone who might otherwise set aside the mail to act now instead of later (or not at all). This works especially well when there is a limited quantity available or you state a deadline for responding. An example of this would be offering a Starbucks coffee gift card in exchange for filling out a survey or submitting an honest testimonial.

Premiums can also be used to generate demand for your products and services, to reward fast response, or to boost the size of an order.

Why Does a Premium Work?

Everyone wants something for free, but they also want to reward those who rewarded them.

Premiums work because of the “rule of reciprocation” made famous by Robert Cialdini, a psychologist and author of Influence: The Psychology of Persuasion. According to Cialdini, “We are obligated to give back to others the forms of behavior that they have given to us. Essentially, thou shalt not take without giving in return.”

How Premiums Improve Direct Mail Response?

Any direct mail campaign includes the following components:

  1. The Mailing List
  2. The Design
  3. The Copy
  4. The Offer
  5. The Print & Packaging
  6. Timing & Delivery

How do premiums fit into this? They are part of the offer.

Most premiums have low costs but a high perceived value. Although premiums add to the cost of a mailing, the gain in response and the attention they provide outweigh the additional expenses.

Premiums can be delivered in several ways, depending on the goals of the campaign. The premium can be delivered as a front-end offer, when you want your mailing to stand out. It can also be delivered as a bonus or incentive, if the recipient responds to your call to action. In this case, a photo or graphic image of the premium would work well.

Examples of premiums can be found in daily life outside of direct mailers. The McDonald’s Happy Meal is often purchased because of the toy premium inside rather than the food. Many cereal boxes are sold because of the trinkets inside as well. Premiums are often used at sporting events when the ticket attendant hands out a calendar or a bobble head to the first 1,000 attendees. Premiums are also found in many non-profit mailers, where a free set of mailing labels with your return address printed on them are included, along with the request for a donation. Our society at large is conditioned to appreciate premiums.

Premiums can also be used to encourage your existing clients to give you referrals and testimonials. They can be used as great reminders to motivate your best clients to help you get more customers.

But will premiums work for you?

Remember that your premium is only one part of the direct mail package. You must still follow best practices and essential principles of direct mail. Although a premium can improve results, premiums alone do not guarantee success.

Just because premiums work for many companies does not guarantee that they will work for you. Test different premium offers, and keep careful records of your costs and sales (or leads) generated.

Although the recipients are not obligated to respond, history, case studies, and human psychology indicate that offering premiums can significantly boost your response rates. Direct mail + a premium can be a winning combination to boost business for your company.

Your Unique Selling Proposition

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What’s a unique selling proposition (USP)? First the <em>Wikipedia</em> explanation:

<blockquote>”The unique selling proposition (a.k.a. unique selling point, or USP) is a marketing concept that was first proposed as a theory to understand a pattern among successful advertising campaigns of the early 1940s. It states that such campaigns made unique propositions to the customer and that this convinced those buyers to switch brands. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects.”</blockquote>

A strong USP can mean the difference between being “just another company” and one that’s unique and memorable in the minds of customers and prospects. To do this, a USP must accomplish three things.

<ol><li>Each USP must make a strong appeal to the target audience. Not just words, not just product puffery, and not just window advertising. It must say to each reader: “Buy this product, try this service, and you will get this specific benefit.”</li>

<li>The benefit must be one that the competition either cannot, or does not, offer. In other words, it must be unique.</li>

<li>The proposition must be strong enough that it can attract new customers to your product or service on its own.</li></ol>

Here are some USPs you might recognize:

<ul><li>Nike: “Just Do It!”</li>

<li>Apple: “Think Different.”</li>
<li>Miller Brewing: “Tastes Great, Less Filling”</li>
<li>KFC: “Finger Lickin’ Good”</li>
<li>Subway: “Eat Fresh.”</li>
<li>Energizer: “It Keeps Going, and Going and Going…”</li>
<li>Head & Shoulders: “You get rid of dandruff.”</li>
<li>Domino’s Pizza: “You get fresh, hot pizza delivered to your door in 30 minutes or less — or it’s free.”</li>
<li>FedEx: “When your package absolutely, positively has to get there overnight”</li>
<li>M&M’s: “Melts in your mouth, not in your hand”</li>
<li>Metropolitan Life: “Get Met. It Pays.”</li>
<li>Southwest Airlines: “We are the low-fare airline.”</li>
<li>Walmart: “Always Low Prices. Always.”</li></ul>

Your USP is your unique answer to these questions:
<ul><li>Why should I listen to you?</li>
<li>Why should I do business with you instead of anybody and everybody else?</li>
<li>Why should I do something instead of nothing?</li>
<li>What can your product do for me that no other product can do?</li>
<li>What will you guarantee me that nobody else will?</li></ul>

There are two types of USPs: explicit and implicit.

<strong>Explicit USP</strong>
<ul><li>The message you lead with</li>
<li>Clearly stated in your marketing materials</li>
<li>Involves promises & guarantees</li>
<li>Aimed at new customers or first-time buyers of a particular product or service</li></ul>

<strong>Implicit USP</strong>
<ul><li>What customers love most about you</li>
<li>Things that keep existing customers coming back to you</li>
<li>May get mentioned by customers in testimonials & word-of-mouth referrals</li>
<li>You may go for years and never state it publicly: “We operate with absolute integrity.”</li></ul>

Whether you have a new business or an existing one that needs a stronger USP, here are some ideas to help you come up with a USP that translates to a benefit the customer wants. A strong USP can have some or many of these characteristics.

<ul><li>Faster service</li>
<li>More personal service</li>
<li>Services above and beyond the basics</li>
<li>Guaranteed on-time completion</li>
<li>Guaranteed delivery</li>
<li>Guaranteed friendliness</li>
<li>Guaranteed live phone support</li>
<li>Better prices</li>
<li>Exclusivity (“Ours is the only package that includes ‘x.'”)</li>
<li>Superior quality</li>
<li>Convenience</li>
<li>A better promise or guarantee of results</li></ul>

Your USP should be unique, useful, simple, and memorable. A well-thought-out USP can help you position your company in a powerful and strategic way. It’s never too late to strengthen your USP. Start today.

Is Your Business Card Bringing You Business?

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Typically, many hours are spent deciding on the logo, layout, and tagline to include on a company’s business cards. But not much time goes into thinking about strategies to make those business cards actually work to bring in customers. That is a mistake.

Business cards are like mini ambassadors for your business. They represent you, your company, and your brand. Business cards often provide the first impression a recipient will have of you and your company. They shouldn’t be just an afterthought in your marketing collateral mix.

To effectively market and advertise your business, whether through business cards, social media, or a website, the first step is to create awareness. Awareness is generated through uniqueness. The colors, stock, font, graphics, and unusual finishing touches like rounded corners or foil stamping and special die cutting can all add up to create a business card that stands out in a crowd.

Simple elegance and a clean, uncluttered layout work best. Sometimes more is learned about a business by the professional look and design of its business card than by almost any other marketing collateral. Prospects may forget about and toss out many other collateral pieces, but they usually keep an interesting business card.

Visually standing out is the first step to make a business card work to bring you business. The second involves the recipient and answering a simple five-word question…

What’s In It For Me?

The text on your business card must quickly and clearly explain the benefits of working with you. You can’t fit an entire brochure on the small area a business card provides (although some people try!). Most companies will list the services they provide. That is fine to do on the back of a business card.

On the front, however, where everyone looks first, you need to state clearly what results your products and services deliver. What is the primary benefit of working with your company? Make it short and sweet. Don’t hide it. Proudly display it on the front of the card.

The quality of the stock used, the font and layout, the finishing touches, and the copy used all work hand in hand to create a powerful, client-getting business card.

But those beautiful cards won’t do much good if they aren’t getting deployed. Take business cards everywhere you go. Put a stack in your car, in your wallet, and in your purse or briefcase. If you find the right target audience, hand them not one but several cards and ask them to pass the extras along to colleagues or friends who might be able to use your services.

Strategically thinking about the design, production, and copy on your business cards has the effect of creating a viral campaign for your business. Unlike the online variety, this is a viral campaign that can actually bring you real results and not just buzz in the marketplace.

Emotional Advertising

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Most advertising today is of the “me too” variety. When you’ve seen one, you’ve seen them all. The louder they yell: “LOOK AT ME!” the faster you want to toss the ad in the trash, change the channel, or click delete.

Open the yellow pages (if you can still find one!), look inside a magazine or newspaper, listen to a radio ad, watch a TV commercial, or take a look at your mail. Can you see any difference between most of the messages you encounter? Very few of the ads truly stand out.

Why does this ineffective method continue? Because competitors continually monitor each other. They conclude, without any real proof, that the competitor’s ads must be working. So they copy each other.

The line of thinking that goes with this method is to hit the audience over the head repeatedly until they cry uncle and buy something. This might work for a company with a massive advertising budget, but it is ineffective for smaller budgets.

If you want to create real wealth and grow your business, dump this method of old school, lazy, traditional thinking.

Start by taking a look at the most critical aspect of any advertising campaign: the message itself. Most ad copy lists a series of features. The better ones will also list some of the benefits you get from those features. But there is still something missing to make it stand out.

Most of us believe that we, as smart shoppers, make our buying decisions based on left brain logic. That may be true when we first start looking at a product or solution, but study after study has shown that most buying decisions are ultimately made with the right brain emotional side.

The way to hit a home run with your marketing messages is to appeal to that emotional side when prospects look at your product or service. To determine what emotional triggers work for your business, you’ll need to get inside your product or service to pull out what real solutions it provides. But that’s just the start. Next, you’ll have to tie the solution you provide to an emotion your prospect may feel about it. What pain does it solve?

The more emotion you can weave into your ad copy, the more effective your ad will be.

As an example, think about the luxury car market. Specifically Mercedes-Benz. Logically, it makes little sense to spend well over $60,000 to buy one of their higher-end models when a vehicle for less than half the price can get you from point A to point B just fine. How do they overcome this sales problem?

Sure, they provide a list of bells and whistles fit for a NASA space shuttle, but that’s not what really sells a Mercedes-Benz. The way they sell one is to appeal to the emotional part of the brain. The ads paint the picture of a countryside drive, sitting inside a quiet cockpit, where you can almost smell the luxurious leather. You can see yourself zipping around the curves while others look at you with envy. Mercedes-Benz is selling status, not just another car.

Emotions drive our purchasing decisions. We all tend to buy products from brands that make us feel good about ourselves or enhance our sense of self-esteem in some particular way.

Emotional advertising is not just for big brands with big budgets. It takes a little mental work to get to the message that will resonate for your audience, but the effort is worth it. Once you get to the core emotional hot buttons, your business and marketing messages will truly stand out from all the clutter.