photo credit: Lordcolus

A lot of thoughts come to mind both ways about Wal-Mart‘s effect on local businesses and consumers.

No shortage of them are provoked by this Forbes op/ed saying that the lack of access to Wal-Mart in NYC is actually a tax, and continues by stating that building a WalMart in NYC is economic stimulus.

For example, the author ignores the local sourcing that WalMart used to do during its “Buy American” phase. He also fails to discuss that when left enough time in a competitive market devoid of Wal-Mart, poorly run local businesses tend to fail anyway.

What do you think?

photo credit: x-ray delta one

Jeffrey Gitomer* sums up a lot of understanding of people, sales, psychology and more when he says “People don’t like to be sold but they love to buy.”

Do you make it easy for them to buy?

Really? Let’s talk about it.

Beyond impulse

Are the things you sell displayed in a manner that will make it easy for your customers to select exactly what’s best for them?

Or…are they displayed in a manner that maximizes how many things you can get on the shelf?

The question is prompted by the recent untimely and tragic death of our old TV**. I recently had the (ahem) “luxury” of shopping for a replacement HDTV after our old one finally gave up the ghost.

I had a budget in mind, so after a little browsing on the net to see what was new, what features and standards were must have (and which ones were not), my youngest son and I caroused around town to the usual suspects (minus one that was closed) to find a new box.

The brands and models were pretty much the same from store to store, for the most part.

But something was different

What differed – radically so – was the presentation.

Two examples of the several we visited:

Store A

• Had units scattered about in no particular order. It’s possible they were grouped very roughly by price.
• Their display was moderately helpful for a standing customer (no seats) because half of the sets were more or less just below eye level. The rest were barely off the floor, which didn’t show off those models well.
• Their pricey 3D sets were presented well, in a manufacturer-provided display with goggles.
• Their sets displayed the same picture on most sets so you could compare. It was a mix of sports and scenic shots and “regular” stuff.

Store B

• Had sets jammed so close together and displayed at differing angles above, at and well below eye level (again, no seats). The first thing I thought of was the clothing stores with racks and aisles packed so tightly that you can’t walk between the racks. They didn’t have their sets displayed in a manner that was designed to encourage you to take the time to browse, evaluate and buy. If you knew what you wanted and they had that item in stock, no problem.
• Had models scattered all over the store with no rhyme or reason. Not grouped by size, price, features, manufacturer or any other sensible criteria. They were clearly just shoved where they’d fit, making it almost impossible to compare two closely priced or sized models.
• 3D sets were just…where they were. It would’ve been impossible to evaluate them properly as displayed.
• The most expensive (and amazing) set was a Sony non-3D set whose picture and specs were way over the top the best we saw all day. Yet this set was presented in the middle of a row of stacked up stuff with cardboard boxes across from it in a narrow aisle where your face was less than two feet from the massive screen. If I was the Sony rep for this store, Id be taking the manager out for a long chat. And their manager. And their manager.
• Their sets displayed a buffet of content, with so much variety from screen to screen that was almost impossible to compare models.

Where’s the recliner?

Some audio stores figured this out before the box stores killed all but the high-end audio places: Build a room that presents your gear in its best light (or sound, as it were).

If I’m selling TVs, I want a small number of my very best selling TVs a normally lit room (like people’s homes) with a recliner, coffee table, couch, etc sitting around. I want them paired in good, better, best pairs with the 6 best selling, best quality units I have in those three price ranges. I want them to sit down and take a look. Toss em the remote and let them visualize that sucker in their own home.

All the other models, if I have to have all them, can be presented grouped by size within price range and paired so I can compare like models. Remember, you want to create an environment that makes it easy for the customer to make the best choice for their needs and budget. You don’t want them walking out frustrated because they learned nothing from shopping in your store.

The reason to make a sale is to get a customer, not the other way around. Your business is about customers, not TVs or Kitchen Aid mixers or snowblowers.

Wally

Yes, I know the mass merchandiser in you is going crazy. You may think want your store to look like Wal-Mart so that you sell them SOMETHING no matter what.

Well guess what? The best TV display for the buyer’s needs was…Wal-Mart’s. They were grouped by size within price range. No, there wasn’t a couch or a recliner. Yes, there was crazy-bright fluorescent lighting. Yes there were strollers 2 aisles over and video games beeping 20 feet away and a blue light special (whatever) announcement over the loudspeaker every 13 seconds.

Still, the layout was optimized on that wall to make it easy to choose a TV, not to make it easy to get all of them out of the box and on a shelf so we could say we did so.

Interesting that Wal-Mart would win in that department and not have the best price. Go figure.

*If you haven’t read Jeffrey, I suggest you do so. Good stuff. Start with “Customer Satisfaction is Useless“.

** Jim Rohn said “Poor people have big TVs. Rich people have big libraries.“  Meaning – educate yourself. And keep at it. Watch a little less TV, read a little more. Do better for yourself in the next year by spending time to better yourself.

Just a few days ago, I was talking about iTunes passing Amazon and Best Buy in 2007 total music sales.

That’s all kinds – CD and downloaded music.

Didn’t take long for that to become old news. On Tuesday, a leaked Apple memo shows that January 2008 music industry numbers from NPD indicates that Apple has now passed Wal-Mart in total music sales (and remember, this includes Walmart.com’s music store).

Goliath has an Achilles heel. You simply have to look a little harder to find it.

Woolworth had one. Sears had one. K-Mart had one. Now, it’s become clear that Wal-Mart has one as well.

How closely have you looked for cracks in the armor of your market’s Goliath?

If YOU are the Goliath in your market – what would you attack, if you were David?

Everyone supposedly roots for the underdog. This weekend, there was a lot of underdog action going on.

On Friday, the unranked Razorbacks surprised #1 ranked LSU 50-48 in Baton Rouge’s “Death Valley”. It was the first home loss for LSU in 19 games on a field notorious for dropping opponents with a lethal combination of humidity, heat, and the loudest fans in the country. The game brought back fond memories of an unranked early 1980′s Arkansas team hosting the then #1 ranked Texas Longhorns, who left Fayetteville that evening without their #1 ranking thanks to a 42-11 spanking the Hogs gave them.

In Saturday’s NCAA Subdivision playoffs, Wofford (1400 students) defeated the Grizzlies of the University of Montana (14000 students), 23-22. Wofford, a tiny school from the warm climes of South Carolina ran an unusual “give the ball to anyone” option offense in 20 degree Montana weather and kept the Griz defense on its heels much of the game.

All of this reminded me of a clip I saw last April about a kid with an attitude named Brock and a wicked football drill called “The Death Crawl”. When I first saw the Brock clip, I didn’t know it was from a movie, I thought it was just a motivational clip from a video production company.

Turns out it was from the Feb 2007 movie, Facing the Giants.  The movie as a whole sometimes gets a little high on the sappy-meter, but it’s worth watching. I think it struck a chord with my wife and I because of our early struggles to have kids, while the football theme and the business lesson also kept it interesting for myself and my youngest son, the Apprentice fan.

In the context of the scene’s location in the movie plot, the scene is even better. For now, this 6 minute clip taken out of context will have to satisfy you.

After my son leaves for Missoula (he’s in the Griz marching band) to end his Thanksgiving break a little early, we watch the movie (it’s on Starz Family). It’s the night before the Griz-Wofford game, and as the movie plays out Im thinking “just like Wofford”.

I’m guessing the only people on the field who thought that Wofford had a chance to beat Montana in 20 degree weather on Montana’s home field was…Wofford’s coaches and players. They didn’t quit.

It’s no different with you and that franchise or that big box store. Whether it’s Starbucks or WalMart or Pizza Hut or whatever, one of the best weapons in your arsenal is being the only one who thinks you’ve got a chance to win. To you, it’s personal.

Last week, a story in the Flathead Beacon (a weekly print/internet paper that carries my business column) discussed a Whitefish MT store called Main Street Art and Crafts Supplies.

Main Street offers arts and crafts, but takes things to the next level, by offering classes in cake decorating, stained glass, etc.

One quote leaped out from the Beacon story, telling me that owner Rick Latta gets it:

“I can’t compete with Wal-Mart prices, but Wal-Mart doesn’t walk customers through projects, give them ideas, teach them tricks or have a studio with tools where people can come and work and ask questions,” he said.

This is where you make a difference by hiring the right people (experienced in those crafts), paying them a little more so they don’t have to work at Wal-Mart, and more importantly, doing what Wal-Mart simply won’t do.

It doesn’t matter if your small business competes with Borders, Amazon, Barnes and Noble, Lowe’s, Home Depot, Target, Best Buy, Circuit City or Starbucks: They won’t do the little things like Rick is doing. Will you?

Those stores will focus on price, above all else. You have to change the rules of the game, as Rick has.

Earlier today, #5 ranked Michigan strolled onto the field in the largest football stadium in the U.S. – their home field in Ann Arbor Michigan. I suspect they were planning to spend the afternoon stomping the crap out of little Appalachian State, a much smaller team from a much smaller school in North Carolina – but they may have forgotten that Appalachian is a school that is used to winning.

The Mountaineers had a little David in them, beating Michigan 34-32 after leading 28-17 at the half. At the end of the game, Appalachian State had the ball and a first down on the Michigan 6 yd line after the return of a blocked Michigan field goal with 6 seconds left. Unlike David, 1 lucky shot wouldn’t do the trick for Appalachian State. They had to perform consistently, returning to the field until the battle was done.

Before you think “What does that have to do with me, much less WalMart?”, look at the rest of Appalachian State’s season.

Appalachian State is current 2 time (2005, 2006) defending champion of Division I-AA college football (which is no longer called Div I-AA). They’ve now won a game against the #5 team in the country in a home game at that team’s stadium – the largest in the U.S.

Next week, they still have to play Hickory NC’s Lenoir-Rhyne (a 2008 US News and World Report “Best College”), who is probably not quite the powerhouse that Michigan is. The natural thing to do is just show up and assume that they’ll get their 16th win in a row, like Michigan might have done – or at least for 3 quarters.

Like Michigan, WalMart can just show up and win – but even they don’t do that. They measure everything, for example. That’s one of the reasons why I suggest you do the same – measure as many things as you can so that you can make good decisions about what to change – and do so quickly. More quickly than Wal-Mart.

The big difference between you and Wal-Mart is obviously size, just like Appalachian State and Michigan… As long as you pick your battles (price is NOT one of them), the combination of their size and your ability to move quicker than them (less meetings, less politics, less infrastructure) gives you an advantage.

If Appalachian State wins every game for the rest of the year, they will not be the NCAA Division I football champions. Does that mean their season won’t be a success? Hardly. The same goes for you.

While you can win certain battles against WalMart, but you probably won’t ever be bigger than they are, much less put your local store out of business. That simply isn’t important.

The thing to put out of your head is thinking you don’t win if WalMart (or the big box store / franchise in question) stays in business, or if they continue to sell what you sell, or if they still service what you service. That’s what Zig calls “stinking thinking”.

You win by prospering DESPITE them. Pick your battles, then be as nimble as Appalachian State. Or Angel Cabrera.

Tiger boots a birdie putt on 18 at the U.S. Open to lose to a relatively unknown dude from Argentina? Exactly what you were expecting, right? Angel Cabrera beats Tiger Woods.

Angel is in the clubhouse, resting at 5 over. He’s done his best for that 4 days, for that course. Meanwhile, Tiger is still out on the course, chasing him.

Who expects Tiger to lose?

He does..just not very often. That’s why he works as hard as he does. That’s why he has a coach.

Still, on any given day (or 4 days), Tiger is beatable.

And so is WalMart. Not at every thing and almost certainly not on price. But at something you do.

It’s hard for Wally World to focus like a laser beam on the ins and outs of say, outdoor power equipment (there I go again) when they have 22,000 SKUs in one store.

You, on the other hand, can focus on that equipment, and the special needs of those who use it.

The result – if you want it? WalMart misses the same putt and you’re the go-to shop for the guy who dotes on his lawn and garden.

Thing is, you have to work just as hard as Angel. No one sees the 2000 balls a day the PGA golfer hits, or the 1500 free throws Michael J used to shoot each day. They only see the glory, the trophy and the money.

Some make it seem easy, but in most cases, the easy part is the only part you see. Sometimes the person who seems to be the “overnight success” has been chipping away for 20 years. You just didn’t notice.

Be the Chinese Water Torture. Drip, drip, drip. One more slight edge. One more shot. One more putt. One more direct mail piece. One more…cuz the loser guy won’t take that extra step.

You’ve seen it a million times.

Good, Better, Best.

Yugo, Chevy, Cadillac. Penney’s, Bali, Victoria’s Secret. Regular gas, mid-range gas, premium gas. WalMart, Zales, Tiffany & Co.

And so on.

In every population, marketing tests repeatedly show that there’s a fairly stable percentage of people who buy…The big expensive item or service.

Let me repeat that: In every population, marketing tests repeatedly show that there’s a fairly stable percentage of people who buy the most expensive product or service. It really doesn’t matter what the percentage is, though we’d all like it to be higher:)

The point is that if you don’t have a higher priced item, you can’t sell it. Oddly enough, even though we’ve all seen it, not all that many of us make it available to our clients.

Maybe you live in that one community where everyone drives a Yugo, lives in a trailer and shops exclusively at 2nd hand stores…but I doubt it. (BTW, if everyone shops at 2nd hand stores, where do the “1st hand goods” come from?)

If you don’t live in that community, then there is some percentage of people who will buy the nicer, more expensive product or the more comprehensive service. Not all of em, but some of them.

Those items and services should provide a great value to the customer as well as a better profit margin to you. That profit margin is what keeps the profit pump primed when the last 2 customers bought “good” rather than “better” or “best”.

Cell phones are a prime example. Everyone is hot and bothered about the new iPhone coming out in 2 weeks, despite the $500+ price tag and the fact that it is only available on the most technologically outdated cell network in the country (AT&T).

It’s guaranteed that on June 29, iPhones will be a huge success because a portion of the population will view it as a good value for their needs. Sure, some will get it just because they have to have the newest, coolest geek toy, but that won’t last long.

Ask your grandfather if he would pay $500 for a phone and see if he doesn’t give you a Three Stooges smack on the head, or at least look at you like you’ve lost your mind:)

Yet people will buy the premium product or service…if you have one.

Even better, you’ll often find that they will be better customers than the rest. By better, I mean that they’ll take better care of what they bought. They’ll listen to your instructions and advice. They’ll buy more often if given a good reason. And by doing so, they’ll buy enough that it’ll allow you to sell the $59 phone that the newly graduated kid with their first job needs. The one who you can keep as a customer for life if you have your act together.

What’s your $500 phone?

Not very often.

Yesterday, I was talking about the folly of competing primarily (or mostly) on price and how silly it is because of the lack of loyalty it creates among your customers.

However, there are a few times where the low price makes sense.

One example is something retailers call “loss leaders”.

For example, a grocery store offers milk or eggs at a ridiculous price to get you in the store, knowing full well that most people won’t leave the store with just milk and eggs. Obviously, that’s why milk and eggs are at the back of the store, to force you to walk past the frozen pizza, ice cream, wine, steak, light bulbs, pasta and tampons, or whatever you forgot to put on your list – assuming you have one. The hope is that you’ll spend some dough on something else and make up for the loss (or lack of profit) on the milk and eggs.

Loss leaders are a good way to get a client into your store, nothing more. They still don’t generate loyalty. They don’t do anything to make me think “There’s no place else I’d rather buy groceries, and I don’t care what’s on sale across town.”

Thing is, most grocery stores don’t put forth the effort to generate loyalty among their shoppers. Maybe it’s because their margins are typically 2-3% so they assume most people’s loyalty lies with Wednesday’s sales flier.

Oddly enough, there are grocery stores that DO have loyal customers and that see much larger margins. Why? Because they do more than just sit food out in an attractive kiosk and offer special coupons on Wednesday.

Stew Leonard’s is probably the best known example, but there are others. Dig around in Google about their business and see if you don’t find some ideas that you can borrow for your own business.

Be careful not to fall for the “But Mark, I’m not a grocer” trap: You don’t have to be in the grocery biz to learn from their stores – and that’s where you should look for ideas on beating WalMart.

Fools. Some days I feel like I’m surrounded:)

I’ve never written about this “little store”, but I think I should because there’s a lesson about companies like WalMart, IBM and such.

Let’s say you’re the owner of the low price general store in town. All the locally-owned retail store owners despise you because you found a way to buy stuff cheaper than they can. As a result, you keep getting bigger and bigger.

Then, someone else comes to town that does what you do, except that they do it a little bit better: Their prices are just a little lower.

Who are you?

You’re K-Mart.

Yep, that formerly giant retail monster. The one with the dirty stores, empty shelves and often cheap (even for price-sensitive stuff) merchandise.

You thought I was talking about WalMart, I suspect. Nope.

The point is that competing on price is foolish, if not dangerous.

Why? First off, somehow, someway, someone will figure out a way to have a lower price.

Second reason: This list

• Woolworth
• Sears
• K-Mart

Three huge staples in the U.S. retail arena at one time, yet today they are either gone or as good as gone.

No one ever thought Woolworth would be put out of business, but today, they’re gone.

No one ever thought Sears could be beat. Today, they’re about mowers and tools primarily, otherwise marginalized in the retail world in most areas. If it wasn’t for Craftsman tools, would anyone go there anymore?

No one ever thought K-Mart could be beat. They’re too big. No way.

WalMart never believed a word of it.

They all focused on price. Even WalMart does so, at least in their marketing. Fortunately for them, their advantage is more about logistics and business intelligence, much less sheer size.

One difference in WalMart is that they keep trying to get more of your purchasing dollar. They added auto service. Groceries. Florists. Hair cuts. Banking. Insurance. Restaurants. Eye clinics. WalMart has become the mall in many areas.

But still, that price thing looms large and you just can’t do it.

You can’t compete with Wally World on the price of a box of PopTarts and a fanny pack.

You can’t gain serious advantage and loyalty by being the low price leader. Why? Because the shopper looking for the lowest price will always go somewhere else if that somewhere else has the lowest price.

I know people who don’t value their time and will drive all over town for an afternoon, saving 29 cents on a loaf of bread here and $1.42 on a 6 pack of beer there. I suppose if you have nothing else to do that’s fine – but that makes the point: Loyalty and the low-price shopper don’t go hand in hand. If someone will drive across town using $3.29/gallon gas (and their time) to save 29 cents on a $2.00 item, they likely don’t appreciate your service or anything else you do for them.

The low-price shopper follows the price. The low price shopper results in low margins. The low price shopper might prefer to shop at Nordstrom’s, but shops at KMart because they need the lowest price. If Walmart has the lowest price, off they go.

The same thing happens to you.

If you’re a small retailer or service business, you can’t afford to build a business that way. You must build loyalty and provide what will motivate your clientèle to return time and time again because your products and services are better and because you’ve educated them and proven that the higher price is a good value.

The low price vendor sacrifices margin and gets a less loyal client. If you compete primarily on price, your competition has to do only one thing to steal your customer: lower their price. WalMart says “Well, that was easy. Next victim?”

Compete on something truly meaningful. Don’t set yourself up to get Walmart’d.

In this past Sunday’s Daily Interlake, Helena-based Democratic consultant and political reporter David Sirota discussed himself, his upcoming book, his research for the SF Chronicle, his education myth story, and himself (again<g>). Finally, he got around to talking about how brave he was to “question the planet’s richest man”. This was a reference to a question he asked of Bill Gates at Montana’s recent economic development conference held in Butte.

If you check out David’s site and blog, you’ll get a pretty clear picture that he’s not too fond of either party’s elected officials, nor of big corporates. I should note that, generally speaking, David’s view of the widespread corruption in government (and most corporates, for that matter) aligns somewhere in the same neighborhood as mine, but I sure don’t share his negativity about the reasons Montanans have to be optimistic about the economy, global or otherwise. You can be cynical about the government and some corporates and still be optimistic about business. And I am.

Back to the question…

Sirota asked Gates why Montanans, much less Americans, should be optimistic about the economy. But he didnt phrase it like that. Instead, he used the tiring approach of including his opinion and several jabs at Microsoft as part of the question, in what feels like an attempt to Al Sharptonize the question.

According to the Interlake piece on the opinion page, the question Sirota presented to Gates was: “Why does he think Montanans – or any Americans, really, – should be optimistic about the economy he (Gates) describes and the ‘good paying’ jobs he says he offers when we know that companies like Microsoft are aggressively trying to outsource more and more jobs to cheap overseas labor markets?”

Journalists are supposed to ask smart questions and report the news, not make the news. I just don’t get why experienced, professional journalists feel the need to add the “So, when did you stop beating your wife?” thing to what would have been a good question. To make it worse, he taunts Gates with “and the ‘good paying’ jobs he says he offers” (emphasis mine), knowing full well that Gates isn’t stupid enough to respond to them. The intended result? He gets away with implying that Microsoft doesn’t offer good paying jobs, an asinine assertion.

So let’s get to the core of David’s question: Why should Montanans be optimistic about the economy?

There are a number of reasons that I see on a regular basis.

In Northwest Montana, for example, there is a thriving entrepreneurial culture. For example, New Media technology companies like Auroras TV are using local programmers, paying big city wages and treating people right. A new, funded, media company like the Flathead Beacon starts up using a cast of journalism pros that almost exclusively hail from U of Montana. Businesses like Resource Label USA move TO the Flathead from other parts of the country not just to enjoy the mountains, but because the people available to employ are more employable.

Why are they more employable? Sirota refers to Gates’ mention of the need for better education as “regurgitation of the Great Education Myth“. He says that it is a myth that (according to Gates) “all a state like Montana has to do is better educate its work force in order to compete” and in fact, the problems stem from inadequate wage/labor protections in international trade agreements.

Interesting concept. It seems like he’s saying “We don’t need smarter people, we need more/better government restrictions on foreign trade.” Dumber Montanans is what we need? Surely that can’t be what he means. Ironically, the last 2 times I saw Resource Label CEO Don Farris speak, he noted that 9 in 10 Flathead-area prospects who apply at Resource are employable, vs 1 in 10 in Tennessee. Why? One reason he notes is the quality of the education that employment prospects demonstrate here. You know, because of that “Education Myth” thing.

But it’s bigger than that, and this is the thing I think David missed out on when trying to use Gates’ comments as evidence to prove the Education Myth: “Even if Montana had the best education system on the planet, how can Montana workers compete with workers in developing countries making the equivalent of slave wages especially when Microsoft is already showing that it has every intention to outsource at all costs?”

First off, workers in developing countries making “slave wages” aren’t competing with workers in Montana unless their employers are just plain stupid. That’s like trying to compete with WalMart on CD and Fruit of the Loom prices. Will smarter people solve every problem? No, but smarter people sure do help.

See, entrepreneurs all over Montana don’t have to compete with Microsoft programmers in Redmond OR India, don’t generally care what Bill Gates does or says, and create successful, thriving businesses in Montana DESPITE what goes on in chambers in Helena and Washington DC. That’s what someone who has actually started, grown and run a business knows: entrepreneurs find a way. They dont make excuses about what’s happening in Helena, Washington, China and so on. They make it happen. Doesn’t mean they ignore Helena and Washington, but they don’t let them become barriers and reasons not to be successful.

I wish more members of the professional press would take advantage of the opportunity to be entrepreneurs, much less employers. It’d make business journalism a lot more interesting.

My take? Montanans have cause to be enthusiastic about the economy. We don’t have a ton of huge businesses employing 20,000 people in the manufacturing sector – the kinds of businesses that Chinese companies often compete favorably with. Instead, look at how many businesses in the state employ 5 or fewer employees. These are the businesses that make the economy strong because of the balance they provide. Not just service sector employers, but manufacturing and professional businesses as well. Because Montana’s population is small, client growth occurs outside the state. Result? Many members of the latter 2 sectors are net exporters, getting the majority of their revenue from outside Montana. That’s money that economic development folks LOVE to hear about.

Staying on top of the issues David brings up is important. Letting them become excuses for not being successful is dumb. Don’t do it.

I hear SO much complaining about price and how people are so cheap that I just can’t stand it anymore.

Look, if price was the only factor in purchasing, everyone would live in a trailer, drive a Yugo, and buy all their clothes at the second hand store or WalMart.

That’s right. Everyone, even the wealthiest in society, would be standing in line at WalMart. Woohoooo!

Imagine your life…

14,352 people in line.

Embarrassed husbands at the register suffering through a broadcast of “Price check on super earthquake size tampons in aisle 71″ blaring over a $1.29 half-rotten old ceiling speaker. Of course, it’s in a scratchy, annoying tone of voice.

137 babies crying because they need a nap, a diaper or a meal. 28 of those are crying because the cheapest diapers on the planet are chafing their cute little bottoms.

4621 other kids in line, tugging on mom’s pants leg to get a toy or candy bar, noses dripping.

Some of those noses are getting wiped on a dirty little shirtsleeve.

Some of those kids are getting smacked and told to “shut up!”, while other people in line are thinking “about time they did something” and still others are now ticked off that the parent hit their child.

Doctor Spock and the HR managers in line both cringe, knowing that you praise in public and criticize in private.

Finally, far too many people looking (and smelling) like they hadn’t bathed in a week.

I guess you get the picture by now:)

If price were the only factor in purchasing, every single one of us would be living some version of this make-believe nightmare. But we aren’t, because “price is everything” just isn’t true. Sure, there’s a small percentage of people who buy everything based on price. Maybe 5%.

Everyone else has their price is no object (or not much of an object) moments about something.

• They dont buy generic orange soda, cuz it tastes like crap compared to Minute Maid orange soda or Orange Crush.
• They refuse to eat WalMart brand Pop Tarts because they get half the pseudo-fruit of real PopTarts and the fruit you do get is all dried out and not nearly as corn syrup sweetened as a real PopTart.
• They won’t buy a laptop at Costco because they like the 1900+ pixel-wide, high resolution laptop screens that Dell offers.
• They buy Marlboros because GPCs and USA Golds really taste awful and make them look “poor”. And of course they want to feel like that cowboy dude that they think every woman is in love with. Hubba hubba.
• They drive Honda Accords because they like knowing they’re getting a vehicle made in the USA, rather than those junky Brazilian (or Mexican, Korean or whatever) Heartbeat of America Chevrolet mini-cars.
• They drink Bass ale because it tastes better than Bud, which tastes better than PBR or Keystone Light.
• They wear a REAL Seiko because only the lamers wear WalMart’s Casio-lookalike. Or a Piaget because everyone thinks their old Rolex is a $39 knockoff.
• They swing a Callaway Big Bertha because guys like Tiger don’t swing a Wilson Staff.

Ok, enough. I think you get the point by now. Keep in mind that this applies to everything from toilet paper to corporate jets. Unless you have a mental block about what your software is worth.

Much of the time, it’s YOUR fault that price is such a big issue with your products and services, or at least, the perception.

• You compare price on your website or in your marketing materials.
• You don’t bother talking about ROI, value, or time saved in distinct, specific terms.
• You don’t show that the cheaper competitor delivers less stuff, lower quality stuff, and/or delivers in twice the time you do.
• Your testimonials, if you have any, don’t say factual, specific things that clearly show yours is the product of choice – regardless of that 97 cent difference in price.

Speaking of testimonials, I have NEVER known a business (particularly a software company) that didnt have a testimonial that sounded something remotely like this from at least ONE client:

“We thought Joe’s software was expensive, until we used it. Now it saves us 42 hours of programming time each month, enough to pay for an extra programmer. Our code is more dependable than ever. While it’s hard to quantify that other than by performance, it’s obvious to us because better code means less support – and that’s exactly what our clients have seen. For example, our support calls due to disconnected sessions with the customer’s server have dropped 27% – which means our tech support lines aren’t as busy. Our clients have told us that our support wait time has dropped noticeably, and they’re happy about it. That happened because our support team responds more quickly since we have 27% fewer “dropped session” calls to handle. Finally, our profit for next quarter will improve even more because we can put off hiring another support person for at least another few months – without impacting the quality of the support our clients receive.”

You’ve got clients that have said these things or WOULD say them if you prompted them to tell them why they think you hung the moon. Ask. And then USE them wisely to get the price that makes actually makes it worthwhile to work your keester off.

Your price issues are marketing problems, not client problems. You can fix it. You have to position your product in some way other than “we’re cheaper”. Someone else can always beat your price, then what do you have?

Hey, I promised Id get back to WallyWorld and Hamilton. And yes, I know its about time, but before I step back into the step by step system we’ve been discussing, I wanted to go over a list that Tom Peters put together on this same topic.
Over at http://www.tompeters.com/entries.php?note=007977.php, Tom talks about what he things the small business has to do to complete with WalMart.

Tom says his “WallopWalmart16″ list is focused on “eating the big guy’s lunch”. Seems to me that none of us are necessarily going to run WalMart, Target, HomeDepot, Lowe’s or Costco out of town, which is what I would call eating their lunch.

One of your goals should be to regularly and systematically identify and carve off pieces of their business that they simply don’t pay enough attention to. Yeah, a niche.

Tom notes that you have to be in a niche, never attack them head-on (which in most cases means price), repeats the don’t compete on price thing and offers a few other tidbits are worth listening to. As you might expect, he refers to “In Pursuit of Excellence” by closing with the advice that you have to win these clients away one experience and one thrilled customer at a time.

In my experience, the two gems in there that seems to be missed by so many businesses are “Sophisticated use of information technology” and “Focus on Women-as-clients”.

Sophisticated use of information technology means a little more than “buy cool new computers”. It means keeping track of things that most businesses don’t capture, much less measure, monitor and use when making business decisions. For example, I’ll bet if I asked you to produce a set of mailing labels for your top 25 clients, based on lifetime sales, you couldn’t do it in less than 5 minutes. If I asked you to tell me which of your clients are “overdue” for a visit based on their historical purchases, could you produce this list? If you can answer those questions, then you know things about your clients that enable you to make wiser choices about your marketing. You know WHEN to follow up on each customer. Do you think Walmart knows when you havent been in the store for 45 days and your average is every 22 days? Depending on what you use to pay for your purchases, they probably know. The difference is…they wont do anything about it (yet).

What are you doing with your systems? What are you measuring? How are you using that information?

In the 1950′s, women make 80% or more of the purchases for the home. Since then, women have been (mostly) emancipated, have broken through tons of barriers and are climbing corporate ladders and experiencing entrepreneurial success everywhere. And guess what…they still make 80% of the purchases.

Despite this, few retail or service businesses do anything about it. Their store, their marketing, their follow up systems..none of that takes the “woman factor” into consideration. Certainly, there are businesses whose clientele is not primarily women, but there are still ways those businesses can cater differently to the women they do serve – and lock those ladies in as a lifetime customer.

What are you doing to make doing business with you easier and more pleasant for clients who are women?

Sorry folks, been inundated with business this month and unfortunately, the blog has suffered as a result. I’m back in the saddle, so lets get back at helping Hamilton get it together before opening day.

Not long ago, I added a step or 2 to the Hamilton retailers vs Walmart preparation effort. Lets get this down to a cookbook so anyone can follow it – including me:)

Ingredients:

• Your roughed-out USP
• 1 large pile of index cards
• Something to write with.

So far, we’ve talked about your USP, then we covered a few ways to get started figuring out what your USP is. Don’t feel bad if you havent gotten this nailed down yet. The next couple of steps will help you fine tune it.

As I noted in the original list, lets walk around your store. Think hard about everything you carry and why. Write em down. Dont pretend you can memorize everything, WRITE IT DOWN. We used this trick in the USP workshop, so lets use it again here. 1 product or service per index card (no, I don’t have stock in the index card industry). If you’re really stubborn, you can use a yellow pad, but I think you’ll regret it eventually.
We’re doing this for a number of reasons. We need a list and we need it on a media that allows for brainstorming (the cards). Each card can become your little niche market analysis, ready to study after you get back from the Missoula WalMart SuperCenter research trip.

Drive to Missoula and visit the SuperCenter there. It might even be worth visiting both stores. DONT take the yellow pad or index cards into the store. Find the products in the SuperCenter that Bentonville is going to give you a pounding on. Hint: They’re the ones with the retail price tags less than your wholesale cost, for starters. Make a mental note (mental notes keep you from getting booted out of the store for taking product notes). If you have to go back and forth to the car 20 times to update your notes, do it and get over it. Youll never remember all the details.

Drive back to Hamilton. Use the time to think about the products that you offer that compete directly with them. And be proud of yourself for not letting Walmart happen to you, but instead taking control of the situation. Im not kidding.

Sit down and go over each card. Toss your emotion out the door. I’m sorry, I don’t think too many people are going to care if your family has sold light bulbs for the last 100 years. WMT is going to toast you in that department. As you do this, keep your notes from the Miles City meetings close by. Learn from their mistakes, their successes and what is actually going on there.

That emotion thing is huge. You have got to get the mental blocks out of your head and stomp them. Your thought process has to be all business. Remember, WMT is coming in all business. They don’t care that you’ve sold light bulbs, inexpensive bikes, camping gear, beef jerky, Kudo bars, and toilet paper for 100 years. They have as much right to the market as you – this exercise is what allows you to create an apples to oranges comparison that they CANT win. Dont get me wrong. You aren’t going to put them out of business, and if you work smart – you aren’t going to let them do the same to you.

At the same time, the emotion of the customers in your line of business is critical. Price shoppers arent typically loyal customers. They shop price and little else. You want higher end, rabid customers who could easily sell the products in your store – because they are really into them.

How does this apply to Hamilton v. WalMart? Remember, just because your business has sold inexpensive bikes for 100 years doesnt mean you have to get out of the bike business. WalMart doesn’t carry $900 bikes. You can – and still do what you love doing – just a little differently (and better).

Next time, we start hammering away at the products and services cards you put together on your trip to the Missoula SuperCenter. We’re going to find your $900 bike.

More on this later today, but I thought Id include a link to this article, as it addresses many of the things I mentioned in my original post.

Tom Peters on Beating Walmart

Ok, not me, but the blog did. I got tired of looking at the bunny every day and felt the blog needed more of a Montana feel, so here we are. I’ll be getting back to the Walmart topic shortly, been a busy week.

Last time, we talked about your USP. I’ll assume you’ve gotten that worked out and that you have already fine tuned it, or will soon. Still, I want to talk about that topic a bit more, because its important.
I’d like to hear a few, and would be happy to comment on them. I should have mentioned my company’s USP yesterday, during the examples – not because it’s as good as the Domino’s or Fedex USP, but because it makes silent suggestions to the prospective client – something your USP should do as well.

My company‘s USP is “More clients. More productivity. More profit. GUARANTEED.”

I worked on it for a good while, because I wanted something short, memorable, believable and achievable.

Let’s dissect it.

“More clients.” – Almost every business wants more clients. Some may not be able to handle them as well as they think, but they still want them. Youll notice that I didnt say “More sales and bigger sales from your clients”. There’s a reason for this. While I believe it is far easier to raise profits by selling more to your existing clients (and increasing the transaction size), that is not typically on the radar of most small businesses. I have to put it on the radar once I start working for them. “More clients” speaks to the prospect about the marketing aspect of what we do for businesses. The Trusted Advisor program, “Ready4You” products like printed newsletters, Royalty Rewards and so on.

“More productivity.” – Every business wants to waste less time and produce its products or deliver its services more efficiently. This piece of our USP takes a complex mix of services and boils them down to 2 words. The mix includes technology, workflow, paper shuffling and for the lack of a better word – the integration of information technology (ie: computers) and industrial engineering (making processes more efficient and more consistent). Try getting that last sentence into a USP:)

“More profit.” – Every business wants to become more profitable. More clients and more productivity CAN be instrumental to that, but they are not an assurance of it. This speaks to the devil’s advocate in all of us. “Yeah, he may be able to do a bunch of geek stuff, or market us and so on, but if we dont make more money, who cares”. Well, I do. And the next portion of the USP is why I have to care.

“GUARANTEED.” – One thing Dan Kennedy pounds into us is that if we cant guarantee our work, we need to be doing something else, because our work isn’t good enough. I really cant agree with that more. If I dont know enough about what I’m doing to feel that I can guarantee my work, then you should probably find someone else to do it, don’t you think? One of the tasks your marketing message must convey is that you have eliminated the risk of trying your products or services. A “no weasel clause” guarantee is a great way to differentiate your business from everyone else. The no weasel part is critical. Asking for an explanation in order to get a refund is fine – but you must accept ANY explanation. The explanation is the value that you get for the refund – it tells you what you screwed up (hopefully).

What’s your USP?

In the 7 step process I described earlier, I intentionally left a few things out – primarily because the post would have been a book otherwise. Well, the good news is that we’re going to do one of those “missing” things right now.
Next – You need to do some work on your USP. USP is an abbreviation for “unique selling proposition”. You’ll find other definitions, but we’re all talking about the same thing, your biggest “Reason Why”.
Dont mistake your USP for a mission statement so long that no one ever remembers it (useless). They arent the same thing.

A USP serves as the answer to this question:

“Why should I choose your business, product and/or service, rather than any/every other available option available to me?”

Before you put some thought into that, let me give you a couple of classic USP examples:
“Fresh, hot pizza in 30 minutes or less, guaranteed”

“When it absolutely, positively has to be there overnight”

Im sure you know who both of these belong to, but just in case, its Domino’s Pizza and Federal Express (Fedex).

While I dont expect you to come up with something as good as these, I challenge you to try.

Now think for a moment (or an hour…):

Why should I visit your business and purchase products and services from you, instead of every other competitor I can think of?

Dont give me some weak effort like “Our service is the best”. Everyone THINKS their service is the best. You know better.
Make me drive across town, passing 5 of your competitors just to do business with you.

Give me a reason that will get me off the couch and out the door on Super Bowl Sunday, 4th quarter, in the middle of an ice storm.

Make it clear to me why I HAVE to do business with you, and no one else. Then we’ll come back to the next step.

PS: This is NOT busy work. Mess this up and your marketing is sailing without a rudder.

Rule number 1 – Thinking you are going to beat WalMart on price is about as stupid as sending your daughter on a date with Mike Tyson. Get that out of your head, if by some wild notion it was in there. Thinking that you can muddle along doing the same things 2 years from now that you do now? Not gonna happen. Hamilton retailers, your mindset has to change.

It really doesnt matter what you are doing right now – if you are a Hamilton retailer, your business is likely going to change. When it happens and why it happens is. What matters is what you do with the time between now and opening day. Ive been watching the Bitterroot Star for months and its been mighty quiet about the date, or guesses at the date.

First off, I would suggest contacting the Miles City Chamber of Commerce and ask them for the names of a few retailers who they feel have reacted successfully to the SuperCenter that opened in Miles City in October 2006. When you get the names, call them up and pick their brain. What did they do, step by step, from the time the announcement came until the store opened?

What have they changed since October’s opening?

What worked? What didnt?

If the people you get in touch with really get it, and are experiencing successes that you want to duplicate – fly them to Hamilton (yeah, I know, Billings to Missoula) and ask them to speak at a meeting of Hamilton retailers.

Its critical to understand that this is NOT a networking meeting. Likewise, it is not a whine, complain and wring-your-hands session.

It MUST be a practical, nuts and bolts, “what did you do, how can we adapt that to Hamilton?” session. I would suggest recording it, with questions going to microphones so that the questions and answers are available when notes fail you.

Step 2, coming next time…

http://www.walmartfacts.com/articles/4690.aspx

Havre retailers, I’d be interested in hearing your comments about this opening. What have you done to make sure your business can not just survive, but thrive in the shadow of this new WalMart?