Protecting Your Profit Margins – More Pricing Strategies

It has often been said that there are two fools in each market. One charges too little. The other charges too much. So where is the middle ground? How can a dealer compete with the discounters, still maintain profit margins, and in fact, come out on top? As we discussed in our last article, pricing strategies are the key. Develop price credibility rather than just slashing price.

Packaged pricing strategies and applying lead-item pricing brings customers in your door and influences your customers to look for value in the complete package, not just the low price advertised at ABC Discounter. As I mentioned, we all have to face the price war game, but businesses don’t have to give into discount defeat if we learn to use more key pricing strategies like buying incentive (nonlinear pricing), price bundling, and creating a buying environment. In addition, knowing how to price correctly is imperative.

The independent business owner who, for example,says to his customer, “With the purchase of this copier I can give you a savings rate of 50% on your first purchase of toner,” has accomplished two important goals. This strategy allows a dealer to give “incentive” to buy more without giving away the store. It is similar to the “first pair at full price, second pair at half price” strategy. In fact, many people shop some stores just because that is their well-known and advertised pricing strategy. Giving reasonable savings on the desirable and necessary accessories items while preserving the margin on the big ticket unit opens the door for more sales and increased profit.

Price bundling is another great strategy. A parquet flooring purchase may include a new throw rug. The purchase of a new microwave includes a set of serving dishes. A new bicycle purchase includes a helmet.

A word of caution is wise at this point. The savvy business owner must know how to develop a pricing structure that includes profit. Without knowing how to do this, many owners can be their own worst enemy in the price war battle. They get trapped trying to offer lower prices than their competitors in order to get business. What they don’t know is that very same competitor might be losing money. Remember, we are value merchants, not discount merchants. Margin must be based on an accurate picture of your business structure, not just what you perceive, in a moment of price war panic, the competition is charging. Generally, margins are wider on accessory items or service, not on your core units. For example in the auto industry, the margin on the car is far less than the margin on the service. So why don’t you give a service package to capture customers for your business? Check your pricing structures. If you have a 15% margin on your core products, and a 35% margin on accessories, give the break on the accessories. Following is a brief profit margin grid you will find helpful.

To make a profit of:

10% . . . . multiply by . . . . 1.11
15% . . . . multiply by . . . . 1.17
20% . . . . multiply by . . . . 1.25
25% . . . . multiply by . . . . 1.33

More than one business has folded because owners didn’t understand how to build profit margin into their pricing structure.

Another pricing strategy that is not as tangible as incentive buying or price bundling, but is equally as effective is creating a buying environment. It takes special skill to develop an atmosphere where your customer is less cognizant of the price and more cognizant of the value and the experience. For example, a top-notch business I walk into may actually have color TV monitors showing people enjoying the product or service being offered! There needs to be an event atmosphere in the buying environment. It’s much easier to close the sale when a customer feels as if he almost experienced the satisfaction of owning the item right there in your store! This is a value building technique but is truly a pricing strategy as well. A typical customer is willing to spend more in an environment that takes him to where he is going to use the product. If I, as an upscale bicycle dealer, have an area behind my store where my customers can actually try the bicycle, price will become less significant. How often have people been drawn by the aroma of fresh baked bread and then can’t resist buying the bread machine? Its not a matter of tricking people, it’s a matter of creating the environment. If I walk into a recreational dealer and the whole environment is flat, what have I got to go on except price? Yet, if I am greeted by the images of a family having a lot of fun on the road in an RV, price suddenly is not the only motivating factor.

However, pricing strategies alone will not do the job of saving your profit margins. It’s not enough to merchandise a pricing strategy, your staff must be able to dialogue the value to the customer. How do you define service that is packaged with the sale? Call it your “Gold Tag Service” and define that you are going to give the two complimentary service checks with the purchase of a new car.

Clearly, strong and accurate pricing strategies combined with tangible definition is key to building a successful future. Its always easier to maintain profit margins by giving the customer the option of buying more through value incentive instead of buying down just to get the discount!

You can find more of Winninger’s business strategies in his dealer-focused books: Price Wars ($24.95) and Hiring Smart ($15).  You can contact the Winninger Institute at (800) 899-8971; e-mail at twinninger@aol.com; or visit our website.

Pricing Strategies That Make Sense

Low pricing is not a strategy! May I repeat? It is not strategy to discount price and give up your margins. Value pricing is a strategy and one you can count on to bring you business and continued success in the price war battle.

There are a number of ways to price and in my opinion, bold-faced discounting is not one of them! Too many independent retail photography businesses are giving into the pressure of discount pricing and end up losing the battle when, if they applied some solid pricing strategies, they could retain loyal customers and gain new ones who shop for value and not price alone.

I understand we all must at one time or another, face the issue of discounts and competitive pricing but it does not need to be at the sacrifice of the profit margin. Two solid strategies that can aid you if you find yourself in a price wars game are:

#1. Package Pricing
#2. Value Pricing

Our focus here is on Package Pricing. Package Pricing uses a tactic called “lead item pricing”. This involves pricing an item comparable with the discounter in your market and then offering your customers “package pricing” when they get in the door. So in other words, if I am pricing a digital camera at $999.00 because ABC Discounts down the street has it priced at $999.00 as well, I want to make absolutely sure that the item I am pricing is something for which they will want to immediately add items. This does not mean selling accessories to add on to the price, or the next time they come in, but showing them the way to have the other items they will need right away at one price.

How do I accomplish that? I merchandise a like item right next to the “lead price” item but it is “packaged priced” at $1499.00. Most customers will choose the “discount” item, right? Not necessarily! If I do my job right, I will show them that for $500.00 more they can get so much more VALUE, the price difference disappears. I have highlighted the packaged priced items, put spotlights on the package and gave it more attractive signage. My customer thinks, “Wow, for only $500 more look at all I get!” Customers see value, not price. You don’t give them the opportunity to just “think” about the options they would like to have; you package them together so they perceive they “must” have them and can get them all at one easy, value priced package. It’s what we call, “price point perception”. The $999.00 item gets their attention, but value does its job, rises to the surface and gets you the larger sale and the added profit margins.

If you can “package” your photographic products or services together for a great value, the first time purchaser is far more likely to walk out of your business without ever giving the discounted single item a second thought. After all, you’ve made the price difference pale in comparison to the value. Although I discourage discount pricing, if you find yourself in the market with discounters, “price point perception” can work for you. Customers must not perceive that you are so expensive they won’t even check with you to see what you offer. The strategy is this: pick out an item that you can effectively promote that has a price point comparison with the idea in mind that your customers will never buy that one anyway. They will buy the packaged one, but you have won the opportunity to get them in the door. The rest of the job is up to you.

The second level, or Part B of Package Pricing is to do away with the “lead item” and present your customers with the $1499.00 package right up front. The key here is that you have to be very good at this. You must be able to identify for them what they are getting for that price. In this pricing structure you are “selling the difference.” The customer must be able to easily identify or answer for himself what he is getting for $500.00. Ideally, he should be able to get 3 times the value compared to the price. So for $500.00 in “price” he should perceive at least $1500.00 in “value”. Value cannot equal price. Value perception must exceed price reality. In doing so, you can effectively give your customer true value and still maintain important margins.

For example, a retailer may offer a camera at $395.00 that a big-box store sells for $295.00. The customer must be able to clearly answer, “What am I getting for $100.00 more?” If the retailer uses package pricing the customer will go home with film, carrying case, cleaning supplies or accessories and a gift certificate to use at the photography section of the local Barnes and Noble or similar type bookstore. He doesn’t even have to show a lower priced item and then try to sell up, the savvy retailer just packages the value and sells it right up front! Despite today’s competitive discount price wars, package pricing is a very valid and successful strategy.

Winninger is the author of two popular independent retailer-focused books: Price Wars ($24.95) and Hiring Smart ($15.00). You can contact the Winninger Institute at (800) 899-8971; e-mail at thomas@winninger.com; or visit our website

Boost Your Business’s Income – Sell Your Product For What It’s Worth

What a time to be alive! We have just entered the Twenty First Century, Undoubtedly the era in which we will discover the greatest technological advances the human race has ever known. Animal cloning has already been successfully accomplished, scientists are on the brink of finding the cure for several diseases, and we are bound to see space travel become within reach of all of us. The economy is burgeoning as the global demand for American knowledge and expertise increases every day. As I said in the preface to my newest book, Full Price, the Twenty First Century will certainly be “The American Century”.

Then, given the flush economy, the positive attitude of consumers and the rise in per capita income, why is it that so many people are still dissatisfied with their jobs? Why is it that companies continue to increase sales yet profits remain the same? Why is it that we aren’t getting what we’re really worth? To find the answer we must take a closer look at the way the majority of American companies do business. A “cookie-cutter” formula has relegated businesses to fighting the price war battle, rather than maximizing their resources to achieve full price for their products or services. Waging war on with a “price-buster” strategy will reap only minimal results and companies will continue to realize a mediocre level of success. Lowering price is an acceptable way of doing business, if that’s what you’re in the business to do. Duplicating the same strategies of the guy down the street or the “big-box discounter” is fine if you want to live out your days doing just what everybody else is doing. Just like reaching for the elusive brass ring, you’ll never get what you’re really worth. In my many years of consulting with and advising some of the top companies in America, I found out long ago that finding a niche and then servicing it with outstanding products and services, defining value rather than defending price and creating a brand for your products and services is the difference between survival and success.

Value. That’s it. Plain and simple. For twenty -three years I have partnered with some of the greatest business people and entrepreneurs in America and I have always challenged them to achieve market dominance by creating value. Creating value doesn’t mean merely stating what’s great about your product or service and then hoping people will buy it. There are two elements that make up value – differentiation and uniqueness. The market leaders of today build their value by differentiation. They offer their customers something of value that sets their product or service apart from the competition. If you look, duplicate and act like your competitors long enough, soon you will become just like them. You won’t even be competition to them, you’ll just be anotherspoke in the wheel. Being above the crowd creates a value that makes it possible to get what you’re really worth.

So just how does a business charge full price for its products or services and get it? How does a career seeker set a salary and get it, with full benefits? We’ve been trained as a society to think asking for full price is not quite right? We’ve been fed a diet of price discounting for so long we feel almost embarrassed to want and get what we’re worth. I have good news, my friend. It’s not as arrogant or assuming as we might think.

It’s really nothing more than creating what I call in my book, Maximum Value Perception. Just as in sports, the MVP is regarded as the one who give the highest overall value to the team so it is with business. Our customers see our Maximum Value Perception when we “seek and fulfill the highest need of our premium customer”. Within that definition there arise some important questions we must first answer for ourselves.
• Who is my premium customer?
• What is my premium customer’s highest need?
• How do I determine my Maximum Value Perception?
• How do I achieve Maximum Value Perception and receive full price?

I have found so many businesses hope to outsell their competition, yet haven’t spent hardly any time at all defining what makes up their best customer. A premium customer is the one who has the highest level of need for your product or service. What you can do or provide for them is
essential to either their professional or personal life. Second, they have a unique value need for your product. They agree with the value of the service you provide or the product your offer or they can be easily educated about it. Third, the premium customer has a frequency of need for your product.

They are not a “one-time” sale. An upscale salon owner might view her premium customer as that client who purchases comes in not only for a regular cut and style but also for manicure, pedicure and facial appointments and purchases a wide array of beauty products as well. Fourth, a premium
customer influences others. They have a positive impact on others with regards to your company.

In short, the premium customer is the best customer for your product.

Thomas Winninger – 612 896 1900 – Thomas@winninger.com – www.winninger.com

Tipping Points

What is a tipping point, or what some people refer to as a turning point? What made it happen? What were the characteristics that set it apart? I am reading a fascinating book about A.C. Gibson, the founder and inventor of the erector set. I am reading the book because over the holidays I happened to catch a television special related to boys toys that was entitled “The Man Who Saved Christmas.” Isn’t it interesting that the show about A.C. Gibson and the erector set was on television at the same time that book appeared on the bookstore shelves? That is a question for our next session.

Tipping point is when something so significant happens that the future direction of activity is significantly enhanced. It might be person that you meet in your life that changes your life forever and you are smart enough to take advantage of the opportunity and not let it pass by. A.C. Gibson had invented this wonderful kit of parts similar to the steel girders used in constructing a building. As a matter of fact, he was actually in the magic business, creating magic tricks and selling them under a company called Mystic. He was riding the train from Connecticut to New York when he looked up and was fascinated with the way that steel workers were assembling the structure of steel to support the building. Going home that evening he sat with pencil and paper and drew out the components for a toy that would give kids the opportunity to build things with motors and parts that were similar to those structures.

He produced the erector set and put it in a big box. It weighed a ton. Actually about 150 pounds but as games go, that relativity is a ton. He could not sell it. One night his wife, pregnant with their child, was thinking about the toy that A.C. had invented. The realization came to her that the reason no one was buying it was because they couldn’t see it because it was in a box.

As the story goes, she woke him up and said, “Take it out of the box. Set it up in the toy store. Let people see how fascinating it is when it works.” He did as she said and the rest of the story is that A.C. Gibson Company became the number one toy company of its time and went on to create other creative toys for kids. They claim that their engineering, construction, and scientific career were based upon their experiences with toys made by the A.C. Gibson Company. This man received over 30,000 letters a month from kids.

The point of the story is not in his success, but in the thing that changed the future direction of the company: the tipping point. Every business and career has it. Unfortunately, sometimes it gets passed by. Sometimes we don’t recognize it as an opportunity. In my business we always say, “we hope the book gets legs.” We hope that it gets its own energy, similar to the energy of the book “Who Moved My Cheese.” This book had its turning point when a major United States corporation read the book, found that it was applicable to their people, and ordered thousands of copies. All of a sudden, the book started getting the recognition that it deserved. It is now selling over 12 million copies and is one of the most successful titles of business books of all time. A simple little book, less than 120 pages, that everybody can relate to because somebody has moved everybody’s cheese.

The tipping point. How do you identify tipping points? Well, again it can be an idea, a person, a connection, or a significant uniqueness that sets you apart from everything else. Ask the question, how can this circumstance, person, situation, or skill significantly affect the outcome of what I am doing?
There was a wonderful book called, “If it ain’t broke, break it.” This book says that sometimes we need to turn the corner in order to create the turning point. We need to put on a parachute and jump out of the airplane. We need to seek out someone who can see it differently than we do. But it is always important to ask the question about what the turning point is so that we can create a model for ourselves.

Thomas Winninger – 612 896 1900 – Thomas@winninger.com – www.winninger.com

Key Business Technique – Develop A Market Intelligence System

Quality Information Yields Quality Decisions

Do you have products sitting in your business waiting for customers to come in to purchase, or do you have customers that come to you wanting to buy your products and services? In today’s price competitive environment, the successful business will be customer driven rather than product driven. They develop their product line and service menu first by testing them in the marketplace and then developing and broadening only as their information or intelligence system applies.

A Market Intelligence System employs various methods of collecting valuable data or information that enables you to forecast the direction of your market. The key is to be sure you are gathering quality information. Truly, the quality of information that you gather will dictate the quality and success of your decisions over time. Businesses do not fail because they don’t have good ideas; they fail because they make poor decisions based on a lack of information. A Market Intelligence System that is tailored to the size of your business helps you fulfill customers’ needs because it identifies their profiles, purchasing habits and motives and their wants and needs.

PRIMARY AND SECONDARY DATA
Starting a Market Intelligence System does not need to be difficult or expensive. The most important initial information that you need is primary data and that consists of names and addresses of your customers. Those can be obtained from customer checks or by having the customer fill out an information card and they are given a membership to your “Shoppers Club”. Primary data also includes what is purchased, how much, how often, when and specifically by whom. The source for this data comes right out of your cash register/computer system. Primary data is the basis for your Market Intelligence System.

Secondary data is the next level of information necessary for an effective system and comes from a variety of sources. Sales associates should be talking to each and every customer that comes into your business. Perish the thought that your sales team would merely be asking, “Can I help you?” It is so easy to gather information with open ended questions such as, “Will this be your first purchase or are you seeking to upgrade your current model?” or “Where do you think you will use this product most often?” to “What have you purchased previously and from whom?” Over time the information garnered from these types of questions will be valuable to your decisions regarding future inventories. Advisory boards and focus groups also are critical to providing the information you need.

IDENTIFY WHAT YOU WANT TO KNOW
Collecting data is important but knowing what you want from it and how you want to apply it is equally important to a successful Market Intelligence System. You must develop specific objective for the data you are collecting. Ultimately you want to own your customers’ buying cycle. How can you do that if you don’t possess the information that helps you determine buying motives? Are you collecting information based on customer wants and needs? Do you track inbound inquiry calls? When you have a customer call asking about an item that he says he’s not ready to buy yet, but will be soon, is that not critical information? Are you tracking the frequency of purchases and the average dollar amount? Granted, large ticket items are not purchased with the frequency of clothing or groceries, but frequent requests for a particular model or item may very well impact your inventory purchase decisions and influence critical changes in your product lines to serve premium customers. Customers who purchase an item above a certain dollar amount should automatically be given a “Be Back Coupon” and a personal thank you note.

If you are not retrieving information from a database that tracks timing on service for a piece of equipment, how can you tell your customer when to buy a new one? There comes a point when a discerning business owner will tell his customer that the purchase of a new piece of equipment will cost less than the continued service on an older model. That is putting a Market Intelligence System to work for you!

Is your database matching customer profiles with purchases? For example, if you notice that a customer or customers in a particular profile typically buys a certain item, and they start purchasing another item, are you offering that item to other customers with the same profile? It sounds complicated, but there are numerous inexpensive software systems that help. I personally recommend a client management system called ACT! It has a wide range of options that allow you to manage your database, establish callback schedules and maintain customer profiles.

I see too many business owners that think a Market Intelligence System consists merely of weekly cash reports. They can’t tell me what their best day was with a particular item over the last six weeks or what people are asking for when they call on the phone. The outstanding owner will know the answers to those questions because his Market Intelligence System has given him the data. It goes back to the quality of information you are gathering with each transaction or inquiry. The key to a successful Market Intelligence System is timely collection of relevant information and processing it quickly so it can be used to support your entire operation. It will help you shift your focus from merely what’s selling to who’s buying.

You can find more of Winninger’s business strategies in his dealer-focused books: Price Wars ($24.95) and Hiring Smart ($15). You can contact the Winninger Institute at (800) 899-8971; e-mail at twinninger@aol.com; or visit our website.

Increase Your Business’s Profit! Educate Your Customers!

Does this mean that only people who graduated with honors will be your best customers? Hardly! Today’s successful business educates customers to expect that whatever we offer is the best. We offer the best in selection, service and integrated value.

Yet, how is it that customers know what to look for? Do they truly know how to shop for real value in an item, not just price? How do they know what to expect in a value versus price merchant? Education is the key! If the only way you are educating your customers is with a sign stating your best price, they can get the same introduction to math at the discounter down the street. The smart independent kitchen design dealer teaches his customer how to recognize a quality cabinet. Price becomes less of the focus when a client is on the lookout for dovetailed drawers and hand-rubbed finishes. Price becomes less of the focus when a customer finds someone who can truly design a special cabinet for her kitchen nook; not just a standard plan forced to fit.

TEACHING THE DIFFERENCE – VALUE SHOPPING
One of the most important things any business can do is to teach customers how to value shop. It can be as simple as providing a chart to point out value versus price differentiation. Very early in our education experience we were taught the difference between apples and oranges. The basic lesson is still very applicable to business today. If you went to the grocery store in search of a nice tart, juicy apple, would you buy a tangy orange? Not if you knew the difference! Why is it then, that we allow our customers to buy the discount model when they truly want the very best their pocketbook can buy? Why give them an orange when they really want a shiny red apple? It is our job to teach them the difference! Teaching differentiation to your customers is not as difficult as it may sound. At its core, it teaches how to recognize quality and what to expect in the product and its dealer or supplier.

A well-known overhead garage door dealer has used an instruction chart that shows residential homeowners how to shop for an overhead garage door. Instructions include specific points that help customers understand how a quality door operates and what its specific features are. It points out safety requirements and what a customer should be able to expect in a reliable and safe door. A leading HVAC manufacturer, Carrier, actually provides written specifications for mechanical contractors who are shopping for their product.

MERCHANDISING – DOES IT EDUCATE?
If you are limiting your merchandising to price stickers, banners and signs, then you will fall far short of educating your customer into bigger profits. Do you provide comparison charting in your dealership that customers can study to learn what is required of a furnace? Are your floor displays set up with special signage pointing out the features that make up a quality dishwasher? Do your customers know what is not negotiable in the safety and reliability of a riding lawn mower? I find it hard to forget the displayed image of a ragged, broken down piece of luggage that has been through the bowels of dozens of airports and only has splitting seams and broken latches to show for it. Sitting next to it is the quality model supplied by a fine leather goods dealer. Although it may be scuffed up a bit, the seams are holding and the latch is secure. As a very frequent traveler, you can bet I want to know how to differentiate between a quality piece of luggage and a bargain bag. Have you made it easy for your customers to know how to recognize quality and value? Is your sales team knowledgeable themselves in all aspects of differentiation?

How does this translate to bigger profits? I know of a retail grocery store that prints a detailed meal-planning guide for customers to purchase. They know just what to buy for a daily meal. This means as an end result, increased sales from spices and seasonings to side dishes and desserts. The customer leaves the store with a sense of satisfaction that she has everything she needs for a complete and healthy meal and consequently, more items in her cart! Are your customers being educated in what to look for in a safe, reliable and quality item? Do they know what horsepower they should be looking for in a boat for family water-skiing and leisure? Although the items you sell or the services you offer cannot fit in a shopping cart, a business with educational, merchandising, a knowledgeable staff and a program to teach value shopping, translates to bigger profits for you as well when your customers leave knowing they got the apple they wanted and not an orange. In addition, it means they will be back to purchase with you again, because they have been educated to know that they can expect you to offer the best and . . . deliver!

You can find more of Winninger’s business strategies in his dealer-focused books: Price Wars ($24.95) and Hiring Smart ($15). You can contact the Winninger Institute at (800) 899-8971; e-mail at twinninger@aol.com; or his website

Be a Smart Business Owner

Identify Customer Categories

Smart companies are the ones that don’t throw away their best response, service or product on customers who will never appreciate it. The smart business owners are the ones who know how to focus their energy on their best customers. They understand what sets apart the good, better and best. Knowing that, these leaders then set about to design and provide different levels of service and product integrity around the differences.

Our last article identified the three categories of customers: relationship, choice and transaction. Relationship customers have the highest level of intensity for what you have to offer and they are loyal to you. They look to you to be the industry expert, their personal consultant. Not necessarily the largest category by numbers, but certainly the most profitable to your bottom line.

CHOICE CUSTOMERS
Choice customers, the second category, may be harder to recognize than the other two. They frequently purchase a lot and can be very solid customers. The choice customer will come to you for product and they enjoy the benefits that come along with it, but don’t seek out the higher level of service and support as do relationship customers. What is the best response to a choice customer? A choice customer will want a selection of items at different price points. Provide your customer with a strong value package of vertical integration. Offer Package A: which is a base item at a fair price. Package B: the same item but for perhaps $1000 more you include a value added item. Package C: the highest value package which is more expensive than A, but only a small increase in price from B. The choice customers need to have options and know how to compare the price against the package. They will be concerned about service after the sale, as with the relationship customer, but they will not necessarily base their decision on that. They may or may not come to you for their next purchase – they do shop the competition. The key to moving a choice customer into a relationship customer is to focus on value not price. Your approach to a choice customer might be, “Bill, I know you appreciate a good value for your investment. You want to provide your family with the finest car and the highest rating in safety. May I help define for you the benefits in purchasing Package C? The small increment in cost is far outweighed by the value received in owning a car with a more powerful engine yet an award winning safety design, plus the luxury your deserve!” A choice customer likes just that, choice, and the flexibility that comes along with it. But beware, the choice customers, if you are not skilled in capturing them, may easily float to the competition.

THE TRANSACTION CUSTOMER
The easiest category of customer to identify is the transaction customer. This customer has the least amount of attachment to you and your product or service. Transaction customers are price driven and will shop, bargain and barter until they have driven down the price as far as they can. They do not want a relationship with you, just the product and no matter how great of service you offer to these people, you can never build value with them. The “big box” stores know exactly who their customers are, the transaction customers. They do a great job of segmenting their part of the market and they appeal directly to the “lowest price”.

CREATE A CATEGORY BENCHMARK
Once you have determined which of your customers are in what category, it is particularly important to identify the product and service package that compliments their needs as well. Many businesses I work with are now are moving their transaction customers to catalogs, either on CD-ROM or the Internet, or they service this customer by phone orders. Relationship customers want a product and service package that is tailored to their high-level need. The airlines do a great job of identifying service levels with Platinum, gold and silver categories. The hotel industry has segmented their market into luxury/first class, extended stay and midmarket limited service accommodations. Your benchmark service must say to the relationship customer, “I want to be your industry specialist. You can count on me to provide you with not only great product and knowledge, but outstanding service designed to meet your individual need and lifestyle.” The most important thing to remember is that not all customers can be treated the same, nor do they really want to be. Knowing how to segment your market and identify your customer categories will help you maintain your Maximum Value Perception and command the full price you deserve.

Thomas J. Winninger, CSP, CPAE, and member of the Speaker Hall of Fame is the president of Winninger Institute for Brand Strategy. Over 70 major companies in North America depend on him to assist them in maintaining their market dominance. The new millennium has seen the release of his newest book “Full Price!”. He is also the best selling author of “Price Wars” and “Sell Easy”. Contact the Winninger Institute at (612) 896-1900. E-mail: thomas@winninger.com; or visit our website

How to Fix Your Fixed Business Income! The Rising Economy Should Mean Rising Income!

Increase Your Business’s Income

Many of the Wall Street “mechanics” are finishing up their repair job on the economy. They are saying it is finally fixed. As true as that prognosis may be, your business could end up broke if you aren’t careful. In fact, if your income as an organization has not moved upward over the last three months you have a problem on your hands. If the income of your business is fixed then your business is broke. The greatest imperative currently is to be operationally smart. If you want to avoid being in the red, your business has to be particularly financially aware as to avoid a fixed income as our economy returns from repairs.

Three moves will keep your business ahead of the game as the nation starts really running again. The organization that capitalizes the most over the next few months will:

1)Stay Focused-Financially speaking; it is time to go after the biggest bang for the buck. No matter where your company’s money goes, it must move in the direction of the best and most necessary of investments. The best organization in your industry will be the one who goes for the very best buy possible and waits on all other opportunities until later.
2)Cut Costs-This is a call to cut costs, not people. Stick with the items in your budget that create the greatest outcome for the income. Eliminate the fringe costs that are swallowing up your margin.
3)Do Business with Those Who Will Do Business On Your Terms-Many organizations have that pesky set of vendors who will only ship a items in a quantity not friendly to you, will require payment at a time not good for your company, or will cost you money by not delivering on their promises. It is time to direct your business to the vendors who will work with you. If someone needs to be flexible, it is the one providing the product or service. Therefore, work with people who will work with you.

The American economy is almost back to full tilt. A few months of cost awareness will put your organization in the driver’s seat for the major period of growth ahead. The worst possible scenario is to have a fixed income in a fixed economy. Clamp down on the company cash and protect your margins for a little while longer. Being operationally smart now will result in a growing business when the economy gets in gear.

Thomas J. Winninger, CSP, CPAE, and member of the Speaker Hall of Fame is the president of Winninger Institute for Brand Strategy. Over 70 major companies in North America depend on him to assist them in maintaining their market dominance. The new millennium has seen the release of his newest book “Full Price!”. He is also the best selling author of “Price Wars” and “Sell Easy”. Contact the Winninger Institute at (612) 896-1900. E-mail: thomas@winninger.com; or visit our website!

A Key Strategy to be a Leading Business Owner!

Build A Strong Team!

You’ve had a great month. Sales are up, margins are stronger than they’ve ever been and the future looks bright. All that hard work you’ve put into segmenting your market, creating your brand and controlling the customer’s buying cycle has really paid off! True in a major way, but I see far too many business owners who fail to recognize that at the end of the day it is not the product or services they offer but the team they have built that is the company’s most valuable resource and gateway to full price.

If you’ve ever had a family member that has been seriously ill or injured, you were more than likely to seek out the very best professionals that could give your loved one the most excellent care possible, right? Certainly for example, providing art supply products or services to your best customers cannot equate to brain surgery. Yet, when you have given your life-blood to building the finest art supply store possible, why trust it to people who will give your valuable customers less than excellent service? All the best foundations of great marketing strategies can be destroyed in the moment when a sales associate treats a customer carelessly, or casually. In my work with great companies all over the nation, I often find them remark that one of their greatest challenges is attracting and retaining good people. The strong economy has done us one disservice by assuring employees that if they don’t like one job, there is another one waiting just around the corner. As I’ve said before, if everything you do today affects the strength of your business tomorrow, you can’t afford to put just another warm body on your sales floor. Leading business owners are the ones who have the right culture and procedures in place that enable them to identify, retain and develop the right employees.

THREE KEY ELEMENTS TO BUILDING THE RIGHT TEAM
To develop effective, productive and successful teams, the smart leader will focus on:

• Tailoring their people to functions, not just the job description
• Exciting their members for the long term.
• Recognizing that building a team is an ongoing process.

Have you ever talked to a prospective team member who asks what the job description is? I would immediately begin to describe the function. For example: if your business is large enough to require a receptionist, you have a unique opportunity to build a team member that can make the difference is whether or not a client will stay with you or not. The receptionist’s job description is to answer the phone and greet customers, but that isn’t her function. More importantly, her function is to convince customers that “her” office, showroom or dealership is the best possible place in the industry that they can go to have their needs met. See the difference? The team member (not “employee”) in sales has a much higher function than showing a digital camera model to an interested client. His function is to find out the highest need of that client, match that need to the best product available and then make the process of the sale a rewarding and fulfilling experience for the client.

EXCITING FOR THE LONG TERM
Smart leaders focus on making team members comfortable with the functions of their employment during the orientation process and clearly identify the skills they want their members to learn. They quickly then move on to building an environment for their team members that fosters personal and professional growth and a tangible way to track that growth. You want your clients to look to you for your wealth of knowledge and experience in the industry, right? Then are you making sure your team members have that knowledge and experience? Having them read trade magazines is fine but being able to relate personal experience to a client is as necessary as being able to quote industry facts and figures. You may consider creating a Mountain Bike Outdoor University. Take your staff out a couple times in a season to try out the equipment and “test the water” so to speak. It’s the ultimate in hands on training.

I believe good people are looking for significant things from a potential employer. They include the educational opportunity to learn skills which can be leveraged for the rest of their lives; the chance to become part of the lead team in the dealership; and a place where loyalty and commitment are tangibly rewarded. This comes in the form of “soft” benefits such as creating a fun place to work, opportunities to build skill levels and in “hard” benefits such as profit sharing, tuition and flex-scheduling.

TEAM BUILDING IS AN ON-GOING PROCESS
Recruitment should be treated in the same way as marketing and sales are. Campaigns should be targeted to attract those people most likely to be interested in working with you. Successful leaders raise their visibility to these targeted groups. They do not just hire people. Instead, they constantly look for good people who have the potential to grow their dealership. Don’t look for people just when you have a position to fill. Every time you have a special event, sponsor a seminar or training session, have brochures about your business and applications available.

The economy of this new millennium demands that your business runs everything more efficiently, laser specific to market segments and anchored to value. Having a well-defined, cutting edge support staff that is wrapped around your business strategy will go a long way to bringing you the full price you deserve.

Thomas J. Winninger, CSP, CPAE, and member of the Speaker Hall of Fame is the president of Winninger Institute for Brand Strategy. Over 70 major companies in North America depend on him to assist them in maintaining their market dominance. The new millennium has seen the release of his newest book “Full Price!”. He is also the best selling author of “Price Wars” and “Sell Easy”. Contact the Winninger Institute at (612) 896-1900. E-mail: thomas@winninger.com; or visit our website!

The Road to Success for your Business!

The fact that you think you sell the best there is to offer will not contribute much to your business’ success in this new millennium. The facts are that the business leaders who will thrive in the years ahead are those that are able to cope with constant change. Successful merchants will consistently foster creativity of their own and will learn and absorb that of others. Being Number One will not be measured by assets alone but also by your firm’s ability to identify key market changes and stay ahead of the tide. Today’s customers are more educated, more demanding and more perceptive. They have tools that allow them access to the world, not just the businesses in their neighborhood or town. The successful merchants will be those who are able to grasp the bigger picture and can creatively align themselves with the changing natures of their market structure, while still maintaining their market niche.

IDENTIFY YOUR DESTINATION
Sound like a staggering challenge? I continually stress to my clients, large and small, “Without a destination, your company becomes tactically unsuccessful rather than strategically dominant.” I have seen large companies lose their way and succumb to failure because they did not have a destination. I cannot, within the limits of this article define your destination for you, or give you a set of specific strategies that will get you there. You alone must define that. The most important thing required is for you to answer for yourself, “Who do you want to be?” Are you merely a business owner or are you an “industry lifestyle consultant?” More clearly, are you going to continue down the path hoping you’ll sell a few more units than last year? The successful merchant will be the one who positions himself as a consultant who uses his experience, service and knowledge to assist clients in matching the right products to their lifestyle needs and wants. I have often stressed the importance of segmenting services to targeted customers. Not all customers want to be treated the same and doing so will drag your business down very quickly. Value merchants must be proactive and able to adapt to and even anticipate market changes. Today’s business leaders, no matter the product or service, are leaner and more adaptable than their peers. Often I find long established businesses tailor their strategies to the world as it was. This is not because they can’t change, but because of the entrenched view of key leaders who believe there is no need to. The closer you live to the future, the closer you live to your customer.

The key then in this fast paced environment is to determine your destination. As you have previously created your mission statement, you must now plot the path to deliver it to your customers. Although I call it destination, your future success will always be a continual journey. But you must have a course mapped out that will prevent you from wandering aimlessly, chasing market fluctuations after the fact.

THREE CRUCIAL COMPONENTS
To effectively plot a destination that supports your domination of your market, you must address three crucial components:

1. The changing profile and needs of your customer universe.
2. The Competitive universe in which your customer shops for and buys your product or service.
3. The specific technologies that provide an ability to sell to that customer universe.

No longer is a white male, age 25, the only one who enjoys and can appreciate the unique uses and benefits of a personal watercraft. Jet skis are now common among a broad range of users from children to men and women, not just young white males.

Your customers now have a much wider base from which they can shop and do business. The Internet revolution has broken the barriers of time and distance and made products and services available to people around the world. Information technology now allows Wal-Mart to record every sale in every one of its stores in a giant data warehouse. The information is then applied to market strategies and allows Wal-Mart to distribute products to stores where the most people are likely to buy them. Are you connected to a data base system that could allow you to get emergency repair parts to a remote rancher who’s ATV is down within a matter of hours rather than days?

The emergence of e-commerce has put tremendous potential in the hands of business owners, regardless of size or location. Although selling a finely tuned racing sled over the Internet may not be the most effective vehicle for you, technology can enhance your position as an industry specialist. Does your website offer visitors a chance to experience a virtual reality test drive in a sports car or a mountain bike? Can they access your showroom from their living room and then leave you an e-mail message you can respond to within 24 hours? Do you provide a link that can connect someone who is viewing your website from across the country to a dealer within 25 miles of his or her home? The benefit for you? Collect a referral fee from the dealer after purchase! Technology and the effective use of it will provide you a whole new realm of access to your customer universe.

Thomas J. Winninger, CSP, CPAE, and member of the Speaker Hall of Fame is the president of Winninger Institute for Brand Strategy. Over 70 major companies in North America depend on him to assist them in maintaining their market dominance. The new millennium has seen the release of his newest book “Full Price!”. He is also the best selling author of “Price Wars” and “Sell Easy”. Contact the Winninger Institute at (612) 896-1900. E-mail: thomas@winninger.com; or visit our website at www.winninger.com.