Monday Mornings with Madison

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Sales

The Effect of Abundance and Scarcity on what Customers Value

Rabbi Avigdor Miller once marveled at the notion that “two gases [hydrogen and oxygen] — neither of which can quench thirst – can be united into a clear and sparkling liquid which pours down one’s throat in a life-giving stream.” He added that “No liquid in the world can take the place of water for relief of thirst. This fluid is the most potent of all elixirs, although its availability and its inexpensiveness cause it to be overlooked. It is the universal solvent and the vehicle of digestion and of blood circulation. If water could be obtained only from the pharmacist, it would be the most costly of liquors, both for its vital properties and for its enjoyment.” And yet, most likely very few in the U.S. open a faucet and marvel as water pours out… precisely because it is so abundant and available.
Yet, in places like Somalia, South Sudan, Nigeria, Yemen and even places in the U.S. such as Flint, Michigan and drought-affected parts of California, water is very scarce and the cost (and value) of water has skyrocketed. In such places, people have a genuine and profound appreciation for clean drinking water. That’s because the value of everything is deeply affected by abundance or scarcity, whether the item is essential for life or not. In the U.S., the abundance of water has caused the value of “this most potent of all elixirs” to be mostly taken for granted. On the other hand, other commodities that are not essential to life – such as diamonds, gold, rhodium, platinum, plutonium, taaffeite, tritium, painite, californium – are highly valued because of their scarcity, even if they have no life-giving properties. This value is subjective. This is known as commodity theory, and it is something that every entrepreneur, business leader, and sales professional should understand thoroughly. This is where the laws of economics and the actions of sales and marketing professionals meet. Continue reading

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The Art of Negotiating Business Deals

One of the most challenging parts of working with a new client is finalizing the business agreement. This is the process in which the parties hammer out the details of the contract. The bigger the deal, the more complex the agreement. And negotiating the final terms of a complex deal can have its challenges. In those situations, a sales professional might find himself in a position where the customer holds all the cards. The salesperson may have invested a lot of time and effort in developing the opportunity. He may have even promised his boss that a commitment was imminent. The salesperson may feel boxed in and the customer may think he can dictate the terms. That’s a losing proposition for the salesperson and his company, even if they land the deal. Business deals that start out very lopsided – a win-lose proposition – don’t bode well for a good long-term business relationship.
The goal in any negotiation should be to achieve a win-win outcome. That may sound cliché and idealistic, but it is the secret to long-term success. But if the sales professional starts negotiating from a weak position, it will be hard to hammer out a win-win contract. To chisel out a win-win agreement, a sales professional must garner some negotiating power and then use smart negotiation strategies during the process to close the deal. Here are some tips. Continue reading

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Using Chess Strategy in Business, Part 2

There are many benefits that come from playing chess. Psychologists often cite chess as an effective activity to help improve memory function. That is probably why chess is recommended in the fight against Alzheimer’s. Playing chess can also help the mind solve complex problems and work through ideas. It is also thought to increase one’s intelligence, although that’s not been scientifically proven. And the effects of chess on children – which has been correlated to children getting better grades in school — has led to chess being introduced in schools in a multitude of countries. That said, many are still intimidated by chess because it is perceived as a game for geniuses. But while chess is a thinking-man’s game — one that requires a great deal of strategic thought and tactical reflection — it is not just for geniuses and savants. Anyone can learn to play chess and improve through study and practice.
Indeed, many past and present political and military leaders – including U.S. Presidents Thomas Jefferson and James Madison, Sigmund Freud, Queen Elizabeth I and II, French Emperor Napoleon Bonaparte, former U.S. Secretary of State Henry Kissinger, former U.S. Vice President Spiro Agnew, British Prime Minister Clement Atllee, Alfonso King of Spain, and Vladimir Lenin – all played chess. Many titans of industry also play chess, including Bill Gates, Co-Founder of Microsoft, Billionaire Investor George Soros, Carl Icahn, Chairman of Federal-Mogul, Peter Thiel, Co-Founder of Paypal, Jared Heck, co-founder of GroupMe and Fundera, Seth Bannon, Founder and CEO of Amicus, and Victoria Lipschitz, CEO of Grid Dynamics. In fact, Boaz Weinstein, chess player and head of Saba Capital, once said that “Chess helps me in trading, teaching me to focus on the important decisions and to accept risk.” Last week, we looked at a few useful strategies. Let’s look at some more chess strategies that can be applied to business. Continue reading

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When “Company Policy” Creates Lifelong Customers… for the Competition

There are three little words that help businesses create lifelong customers more effectively than practically any other phrase: “It’s company policy.” The problem is that those words create lifelong customers for the competition of the company saying that to its customers. For businesses that want to drive their customers to the competition, have at it. Use that phrase to your heart’s content. Better yet, just close your doors now and save yourself the time and slow agony of going out of business the old fashioned way… failure to make money.
Let’s face it. Saying “It’s company policy” to a customer is just a nicer way of saying “We don’t want your business.” That is what a customer hears when an employee blames “company policy” for an unwillingness or inability to solve a problem or accommodate a request. And when a manager says “It’s company policy” to an employee, he is saying “If you don’t like it, go work somewhere else.” As technology and innovation continues to disrupt industry after industry, leaders and managers will be forced to decide whether they are going to stick-to-their-guns and cling to outdated company policies that kill business and alienate employees, or whether they are going to innovate and evolve with the times. Continue reading

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Content Marketing: Quality vs. Quantity

By now, most everyone has probably heard someone harping about the need for businesses to “tell their story” or “engage consumers with content” or “connect with customers on a personal level”. For over a decade, the mantra among marketers has been that Content Is King. Content is meant to attract and keep the attention of customers and potential customers. As the saying goes, “Be careful what you ask for; you might just get it.” Everyone jumped on the content bandwagon. Ad agencies, marketing firms, public relations firms, SEO firms and media vendors all rushed in to help. They all touted the need for “MORE CONTENT.” The goal was quantity. Tell stories. Share information.
Today, consumers are saturated – actually overwhelmed – by content. Social media has enabled and encouraged everyone to share information and tell stories. Methods of storytelling abound. Businesses are sharing more information. Experts are writing white papers. Industry leaders are putting out Forecasts. Charities are telling stories. Teenagers are chatting and tweeting and sharing pictures, videos and stories. Even religious leaders – who used to be confined to telling their stories from the pulpit – have joined the digital storytelling revolution. And the media — the original reporters of the world’s stories — now find themselves vying to be heard above the storytelling din. People are experiencing an onslaught of ‘content’ the likes of which has never before been experienced. The whole of humanity is busy creating content. It is a growing ocean of noise. Now what?
This is where the law of supply and demand kicks in. When there is a glut of supply in the market, then the value goes down. Whereas once upon a time quantity was the name of the game with content, going forward the focus is shifting toward quality over quantity. Welcome to the age of quality content. Continue reading

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Industry Insiders and Influencer Marketing

Reaching customers during their decision-making process is one of the most coveted goals of sales and marketing professionals. Reaching someone at just the right time with just the right information can have a profound effect in influencing a purchase, especially if it is coming from a person of trust. Say, for instance, a man is looking to invest money. There will be many steps that go into the decision-making process of what to invest in. He might read some recent articles about the stock market in reputable investment magazines. He might get some advice from blogs written by investment gurus about investing in real estate. He might hear a radio commercial featuring a celebrity recommending investing in bonds. And he might get advice from friends and family members who have successfully managed their own investments. Some of this advice will be considered and some will be discarded. The man is more likely to listen to someone who is a trusted advisor, friend or colleague, especially if he is in the midst of the decision-making process.
Indeed, this is known as Influencer Marketing. Influencer Marketing is one of the best strategies for successfully infiltrating and influencing the decision-making process. Hence the name. Just how does Influencer Marketing work? And how effective is it? Continue reading

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The Business Benefits of Bilingual Employees

Language – written and spoken — is the primary tool people use to communicate. While babies are not born speaking, they begin to acquire language skills relatively shortly after birth. By about one year old, babies are babbling and saying some words, and by two years of age most toddlers are learning new words daily and starting to form sentences. Based on the results of over 2 million people testing their vocabulary on www.testyourvocab.com, by age 9, the average American test-taker already has a vocabulary of 10,000 words and most American adult test-takers have vocabularies ranging from 20,000-35,000 words. That is for Americans learning one language: English.
It is generally believed that a person with a large vocabulary is better able to communicate with others, and that is usually a sign of intellect. If language is tied to intelligence, then it stands to reason that someone with the ability to speak more than one language would thus have an even larger overall vocabulary and would be even better able to communicate with others. Yet, there has been a great deal of debate in the U.S. over the years regarding teaching and speaking “English only”. Indeed, only 19.7% of Americans speak more than one language, versus 56% of Europeans. Looking at this issue strictly from a business standpoint, it appears that having bilingual or multilingual employees is good for business. Recent research shows that being able to speak more than one language is not only useful to businesses in places with a lot of diversity, it also makes for better – as in more talented – employees even in places where everyone speaks English. Continue reading

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Preparing an Annual Marketing Plan

It is a lot of work to prepare an annual Marketing Plan.  After all, a company’s Marketing Plan should itemize — in great detail — all of the company’s goals, the objectives to reach those goals and the strategies to … Continue reading

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Capricious or Cutting-Edge: When Should a Business Make Changes?

It’s been said that “if you always do what you’ve always done, you’ll always get what you always got.” The point is that sometimes you have to break routines and try new processes, products, systems or strategies to find better ways of doing things. Innovation usually leads to improvement, and refusing to ever try new things is futile and foolish. Consider the Luddites. The Luddites were 19th-century English textile workers and weavers who, fearing the end of their trade, protested against newly developed labor-saving technologies between 1811 and 1816. New inventions such as the stocking frames, spinning frames and power of the Industrial Revolution threatened to replace Luddites with less-skilled, low-wage laborers, leaving them unemployed and obsolete. The Luddite movement culminated in a region-wide rebellion in Northwestern England that required a massive deployment of military force to suppress. So famous was their rebellion that today the term Luddite has become synonymous with anyone opposed to industrialization, automation, computerization or new technology, in general.

Of course, there is also an argument to be made that a business that is always changing processes, products and strategies may find itself wasting both time and talent. It can be expensive to constantly be shifting gears and updating systems. Learning new software or revamping procedures takes time and can be confusing – and even frustrating — for employees. So change for the sake of change can also be counterproductive and costly. It is important for businesses to evolve, but it should be done carefully and thoughtfully to ensure it causes the least amount of disturbance, distraction and distress internally and externally. Continue reading

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Marketing Focus: Client Acquisition vs. Client Retention

Every business wants to increase their bottom line. And every company promises growth in revenue and earnings, but only one in nine companies is able to achieve sustainable, profitable growth. That explains why businesses spend a lot of money on activities to achieve profitable growth! Statista, the Statistical Portal, estimates that over 180 billion U.S. dollars was spent in advertising in the United States in 2015. And that is expected to reach $200 billion this year. Those funds are being spent basically to either acquire or retain customers. Or both.
While some companies focus on customer acquisition because they view it as a quick and effective way of increasing revenue, other companies focus on customer retention because they are marketing to customers who are already engaged with the brand, making it easier to capitalize on their experiences with the company. But which is more cost effective at driving up sales and increasing revenue? And should it be an either/or approach, or should companies focus equally on both? Given the amount of money spent on marketing, it is a question that should be carefully considered. Continue reading

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