photo credit: Furryscaly

Remember the outrageous 7/70 bumper-to-bumper warranty Chrysler introduced back in the early 1980s when they introduced K-cars?

At the time, Chrysler’s quality problems were front and center reasons to avoid buying their cars. Likewise, major car manufacturers limited long-term warranty coverage to the engine and powertrain (ie: transmission, axles and such).

Iacocca came up with the “outrageous” warranty to get people past the quality question so they would  give Chrysler’s cars a chance. He knew the warranty was only good to get them INTO the cars – they’d have to meet their quality goals or that warranty would bankrupt them.

High Anxiety

While the warranty was a big change for car owners, the main purpose was to provide a little anxiety release. To get you to realize that Chrysler’s quality had changed, so much so that they were willing to cover *everything*, and thus, you could trust them to buy their vehicles.

Obviously, it worked. The K-cars saved Chrysler (for the time being, at least) and they paid back the then-controversial billion dollar loan (guaranteed by Congress) in 3 years, rather than the required 10.

It should be noted that Iacocca says much of the reason to pay the loan off quickly was to get the Feds out of his business. No question there is lots of controversy about the 1979 bailout / loan guarantee and the terms that went with it, but that isn’t the topic of the day.

Fast forward to today – when you wouldn’t dream of buying a car without a very-long-term bumper-to-bumper warranty.

So what does your business do in an environment of high buyer anxiety?

Remove the anxiety

Hopefully the obvious answer is to remove it.

Back in the Granite Bear days, we found some buyer anxiety issues cropping up. The few people who would ask for a refund would do so right at the deadline date. In almost every case, we found that those were also the folks who hadn’t started using the software yet. They were worried they’d be stuck with it and having not tried it, the obvious thing to do was ask for a refund.

One of our solutions was to extend our 30 day money-back guarantee to 60 day and then to a whole year. As I’ve noted before, some people thought we were nuts and would give back tons of refunds on day 364, but that ignores the reason people bought business management software in the first place – to manage their business and save them time. Who in their right mind would invest a year into integrating software into their business (and vice versa) and then toss it out the door on a specific day? That’s nuts.

In our case, we knew that if they really *used* it for a year, they’d never ask for their money back. We were right and it made a huge difference in sales, despite seeming like an insane thing to do. Our upfront costs of sales and implementation were mostly buried by day 30 (and definitely by day 60), so it made no difference whether we gave back the software on day 60 or day 364.

We also implemented other things that got them moving right away – another guarantee. Do you have specific guarantees for different parts of your business?

Recessionary buybacks

Recently, you’ve seen a number of major car companies offer to buy your car back if you lose your job – and that’s after they make several months of payments for you.

Hyundai started it and several other manufacturers felt the pressure to follow suit.

As I hear it, one very dark economic area’s local Hyundai dealer had their best weekend *ever* after corporate started offering these deals.

Something else that tells you about people in a recession: They aren’t all broke. If the buyback changed car buying behavior of a large group of people – did it also put a bunch of money in their pocket?

Of course not. Clearly they had the ability (and desire) to buy, but their anxiety about the future kept them from buying.

Your turn

In my case, I guarantee my marketing / strategic planning work.

Some people suggest that I’m nuts to do that. I might be nuts, but that has little to do with the fact that I’ve never been asked for a refund.

Meanwhile, it’s a huge differentiating factor because almost no other consultant guarantees their work. They either don’t have the confidence in their work, or the gumption to hang that guarantee out there – likely for fear that someone will use it. Maybe that even tells you something about the work product they provide from a strategic perspective.

Someday, someone might ask for a refund. Even if they do, it’s a great anxiety reliever for every other client – regardless of the economy.

What are you doing to take your clients’ anxiety off the table (or reduce it substantially) and get them from thinking to taking action/buying?

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Mac sales are off 3%. What will Apple do???

It’s not just the Mac, Microsoft just had their first quarterly decrease (6%) since they went public 23 years ago, blaming it on slow PC sales.

It’s the recession. It’s the economy. People aren’t buying computers anymore.

<PAUSE>

Let me take you away from Katie, Brian (etc) and the TV news for a minute, OK?

The missing puzzle piece

What did I leave out of that picture? A couple of things.

First, let’s look at Apple.

If you ignore the 3% downturn in Mac sales, there was a bit of good news from Cupertino recently.

First, the one billionth iPhone application was downloaded from Apple’s iPhone AppStore this week.

Look hard at that number. ONE BILLION mobile applications.

Even if 500,000,000 of these downloads are the iFart application, that’s still a really big number. In fact it’s enough to provide one iPhone app for every human being in the United States, Canada and Mexico combined.

If you use the one billion number, that’s one iPhone app for everyone in the United States, Canada, Mexico and Europe, combined.

Next, despite the 3% drop in Mac sales, the first quarter of 2009 (January 1 through March 31) was Apple’s best month EVER.

Best ever for revenue, best ever for profit. Best Ever. Not in the last few years. For the company’s entire lifetime.

What’d I leave out?

On April 20th, CNet’s article about Apple’s upcoming quarterly financial report was titled “Apple’s Recession report card arrives Wednesday“.

Seems like they’d already decided what was gonna happen.

When Apple announced results, it indicated that iPod sales were up 3% vs. the first quarter of 2008 (1Q2008) so that was kinda good news, but Mac sales were down 3%. Uh oh.

One more thing. Almost forgot… iPhone sales were up 123%.

Someone apparently forgot to send a memo to Apple about the “economic gloom”.

If you dig around a little, you find stories talking about the decline of the computer market and how Mac sales are off 3%, thus illustrating that it isn’t just limited to the Windows-based PC and it’s all because of the state of the economy.

But they forget one little thing: Left out of the sales numbers were 3.79 million Macs.

Shhh. It’s Apple’s dirty little secret

3.79 million iPhones, that is.

See, the iPhone is a small form factor Mac, not just a phone. It’s a computer.

Ask 100 people who sell mobile phones if the iPhone is their competitor and they will all likely say yes. Ask 100 people who sell computers if the iPhone is their competitor and I’ll wager that almost none of them will say yes. They’re dead wrong.

Meanwhile, Apple understands that the job of making a sale is to get a customer, not the reverse. They know that once you buy a Mac, you’re likely to be hooked.

The iPhone lowers the bar and entry objections by providing a nifty computer with applications that you can easily install. Oh and it just happens to be a phone too.

They teach you – in fact, prepare you – for owning a Mac using their phone.

They teach you the same thing using the iPod Touch, which is basically an iPhone without the cell phone, camera and microphone.

Job of a sale: To get a customer

Ask anyone you know who has an iPhone. I’ll bet none of them use it just as a phone.

Ask them if they’ve bought their first Mac yet. If they haven’t, do they say they’re thinking about it? I’ll bet you get a “Yes” to one of those questions.

With Mac’s now having dedicated retail space in Best Buy stores nationwide, that purchase will become easier.

Steve Jobs has to be laughing.

What about you?

Your job is to figure out how to get a customer. You know that once you get them to be your customer, they’ll love what you do so much that they’ll never leave.

All you have to do is get them into the family. It’s OK to start with baby steps like Apple does.

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photo credit: smlp.co.uk

Scott McKain, author of Collapse of Distinction, is also the author of today’s guest post, where he talks about the four different types of businesses as categorized by today’s economy.

Which business is yours?

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photo credit: Johnny Shaw

What gets thrown overboard before a ship sinks?

What gets thrown out of a plane that is struggling to stay in the air, or that appears to have less fuel than it needs to reach land?

Answer: Dead weight. IE: Everything that isn’t absolutely necessary.

If you’re an employee, what are you doing to make sure you are invaluable to the success of your boat (ie: your employer)?

If you own a business, what are you doing to make sure that the products and services you provide are invaluable, must-have items for your clients and prospects?

You can either be the one that stays onboard, or the one who doesn’t.

The choice is ultimately yours. Yes, YOURS.

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photo credit: onohoku

I‘ve always been amazed that a large company can lay off 20,000 or 30,000 workers and not fail soon after. These days, layoffs of 5,000 to 20,000 are regularly in the news.

In January 2009, 241,749 people were laid off across the U.S. – and that likely only counts the firms large enough that they have to report layoffs to the U.S. Department of Labor.

It likely doesn’t include the people who are working fewer shifts or short shifts. Not a layoff, but just as impactful to those folks. That number could easily be in the millions.

Still, it’s the companies with tens of thousands too many white collar workers that are stunning.

What are they thinking?

If you can lay off 30,000 workers next week – what in the name of standing around the water cooler are that many people doing to create value and generate revenue this week?

How critical could their work really be if a company can afford to send that many people home with less than a day’s notice?

We’re not just talking about manufacturing companies where an extended shortage of orders could result in having too many people on staff. Even in that sort of environment, sales don’t change so quickly that 30,000 people who are providing value and generating revenue on Monday are suddenly not needed on Tuesday.

What management team would allow such a glut to get to the point where you’d not only have to lay that many people off, but you’d have to do it all at once?

How was the performance of those people being evaluated?

For that matter, how was the management over those folks being evaluated if their company could afford to layoff that many with one massive cut?

Gluttony: Also one of the seven deadly business sins

Just so you get an idea what kind of impact we’re talking about, let’s do a little math. 30,000 people who are paid an average of $35,000 a year is a total payroll of ONE BILLION, 50 MILLION dollars. 20 million bucks a week.

That doesn’t count benefits, the employer half of SSI and Medicare, unemployment insurance (much less the increase caused by laying off 30,000 people – YOW) and so on – nor does it count the human resources team necessary to handle the various work that has to be done to handle the paperwork and such that’s necessary for 30,000 workers.

Nor does it count the office space necessary to house that many people and all the assets necessary to give them something to do (desks, computers, chairs, etc).

How do you waste $20,000,000 a week – plus all those costs – on that many people who are easily expendable (proven by the ability to lay them off all at once). How can you afford to discard the experience and business knowledge that 30,000 people have gained in your industry?

Doesn’t make much sense, does it?

What about your business?

For the small business owner – it’s not just a cash flow issue, it’s about not hiring people you don’t need, being smart about the ones you do hire, and cross-training the team you do have so that you don’t ever have to lay them off.

There are a few large companies who have never laid someone off. You can read about them here: http://money.cnn.com/galleries/2009/fortune/0901/gallery.no_layoffs.fortune/

As for everyone else – now is the time to strengthen your business, train your people, test new product lines and services and start competing harder in your market while many of your competitors are in a possibly weakened condition.

If your direct competitors – or those in similar fields – are laying off people,  put the word out on the street that you’re interviewing.

Why? So you can get a look at the folks everyone else has laid off. There just might be a gem in the bunch.

Why not use their sharpest knife against them?

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photo credit: s-a-m

Jeane Vogel is an artist in St. Louis, a non-profit consultant and a long-time friend. Oh and now, a guest poster here at Business is Personal. 

A few days ago, she wrote this gem entitled “George Bailey, meet Darwin“. 

If you read only one thing this weekend, make it be this.

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All around Columbia Falls, people are cleaning up their yards, picking up and storing canoes and such so they won’t get snowed on; and getting firewood cut, split, stacked and covered as winter approaches.

All the signals are there. The cool weather is already here, often dropping below freezing at night. Most of the leaves have fallen and the tamaracks are golden. Winter is coming.

Interestingly, I see people treating their business the same way. They’re taking steps to deal with the economy’s anticipated winter. Some markets are already seeing it, some are not.

With the slowness of the economy – and yes, I’m hearing it from a broad mix of business owners, but not all of them – folks are preparing for winter in their business.

What do I mean by the winter of their business? Two things really. Winter might be when portions of the economy are slow, and winter might also be when a company is near the end of its life – perhaps a natural thing.

In this case, I’m talking about the natural changes of the season of the economy, although sometimes the changes of the season aren’t so natural.

In the spring and summer of the economy, in other words – when the economy is rocking and rolling, some businesses seem to think that it isn’t important to pay such close attention to “trivial little things” like customer service, ROI on various media targets for advertising, lead sources and so on.

In that same strong economy, it often seems like almost anyone can run a business and make a profit. Ever notice how many people suddenly are in the construction business during those periods? A business card and a diesel pickup is all it takes to become a home builder.

But then…the economy turns. Or at least housing-related markets do. When it happens, spec homes sell slowly and weigh on a new contractor like the clock on Flavor Flav’s neck. Before long, many of these newbies and their diesel pickups are doing something else for a living.

In the winter-like periods of the economy, you start to see businesses pay more attention to expenses, lay off people that they probably shouldn’t have hired in the first place, start emphasizing customer service; in other words, start paying attention to the stuff they should have been watching all along.

As spring and summer comes, some will get lazy and stop watching those things. Will you be one of them?

The easy thing to do right now is to be consumed with thoughts of survival if your business is one of the ones that is struggling. Short term fixes won’t serve you well when the seasons change.

Plan your winter strategies with a long-term view. Put things in place that you can keep in place as your business and the economy strengthen.

Don’t waste time on duct tape and twine. No matter how long winter is, the strong but flexible steps you take now to fine tune your business will pay dividends in the spring.

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Depending on what you do for a living and, perhaps, what political party you prefer, the economy might be bad, good, great, lousy or so-so in your eyes.

If you listen to whoever is writing John McCain’s speeches, you might believe that the fundamentals of the economy are strong and recent bounces in fundamental numbers are an early indication that the surge, er I mean the tax rebates, worked.

If you listen to whoever is writing Barack Obama’s speeches, you might believe that the economy is in terrible shape and that if things keep going in their current direction, it’ll only get worse.

If you look back to the days of the Great Depression, you would find the same thing.

While I don’t intentionally compare today with the economics of the depression (Fannie Mae and Freddie Mac notwithstanding, perhaps), you could just as easily find people in really bad shape 85 years ago as you could find them in really good shape.

For most people, it comes down to your view of things at the moment. What do you see out the window? How’s it feel to sit at your desk? Are you buried in work? Or are you scraping for every job, every client?

You know, of course, that all of that is the responsibility of the person in charge of the economy.

You.

What you did a year ago, 6 months ago, last month, last week and today will determine – for the most part – how the economy (YOUR economy) is next week, next month and next year.

If you listen to pundits, the media or whoever, you’ll get the idea that things will be better or worse depending on who gets elected.

Think back a bit. Did the number of leads you got in the month after the last election change radically when the party in control changed (or didn’t change)?

For that matter, didn’t you go into business for yourself so that you’d have more control over your level of success? If so, why would an election even be on your radar, success-wise?

Rather than getting yourself tangled up in the victim’s web created by the political process – or at least, the current one – spend your time making plans and implementing things.

Elections don’t generate leads, they don’t create clients, they don’t close sales and they sure don’t generate profit.

If times are tight in your business, look around at every aspect of your business and ask yourself: How do I create profit by doing THAT?

Does it bring in leads? Does it help me close sales? Does it help me retain customers? Does it prevent others from “stealing” my customers? Does it make the experience of working with me more enjoyable or more efficient? Does it allow you to be more effective, more efficient or more productive?

If you can’t say yes to at least one of those, should you be doing it? If you don’t, STOP DOING IT.

It’s not up to John or Barack to decide the economy you experience – it’s up to you. Sure, they might do something that creates an opportunity, but that isn’t what I’m talking about.

I’m talking about taking action that will have an impact on your business today, next week and in the days before the election is decided.

Take half an hour to examine just 3 things you do in your business. Take action to eliminate them, or improve them.  Do it today.

And the really sneaky part? Do it again tomorrow for 3 other things. Make it a habit.

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