What If There Was A Recession — But You Didn't Attend? (Part 2)

July 03rd, 2008 | 02:33 pm

Here's the second half of my conversation with Dan Kennedy. Again, it's a little long for a blog post, but I guarantee you'll find it to be an interesting and enjoyable read. Feel free to print it out and read it later. Maybe over the long July 4th weekend, which I hope you safely enjoy . . .

ME: But, Dan, the question that pops, what about the recession? “Surely this isn't the best time to be re-directing MY business at selling to an emerging affluent market” — that's what people will think. That the timing is bad. Better to think about this when “things get better.”

DAN: 1000% wrong. To be brief, if there is a protracted recession, across a wide swath, or in segments; either way, I'll prefer investing as much of my resources as possible in selling to those least and last affected by recession. And a number of business owners are already, quickly finding themselves in deep and worsening financial trouble by not being agile about this, by continuing to waste their resources selling to people with dwindling resources, easily and quickly affected by a rise in the price of gas and Starbucks, and easily and quickly scared silly. There's no better time, and it is arguably an urgent time to move to where the money is in the hands of confident spenders.

I think my MARKETING TO THE AFFLUENT book is URGENT reading for most business owners. There is a fundamental path to progress, all progress, that looks like this: Step 1 – Awareness, Step 2 – Decision, Step 3 – Resources, Step 4 – Action. In the MARKETING TO THE AFFLUENT book, I provide a whole new, thoroughly documented and truly fascinating new Awareness of the mass-affluent, middle class millionaires, affluent and ultra-affluent populations, their psyches, their buying criteria and behavior, who they are, what they buy, why they buy, how they buy – plus an even broader awareness of why and how money moves from person to person and place to place. Step 2 – I guide you in making informed decisions about how you can best connect your business (products/services/practice) to the best segment of this affluent market for you. And I get you convinced, confident and motivated to do so. Step 3 – I hand you the resources. For example, specific instructions for finding and directly reaching out to the best affluent customers (clients/patients) for you, in your area. For example, a detailed, diagrammed, step-by-step 'affluent entrapment system" for your marketing. Step 4 is then up to you. This can quickly change your fortunes. It can rescue you from and immunize you to recession. It can convert an ordinary business providing ordinary income to an extraordinary business providing exceptional income, spinning off extraordinary wealth. Within this context, incidentally, are very specific 'price strategies' that have led to huge income breakthroughs. It's all illustrated with real-life examples. And the book comes with an audio CD inside featuring highlights from my Price/Profit/Power Seminar, which cost $995.00 to attend, and was recently attended by more than 600 people. But to zero in: your key to changing your income for the better, even at a time when peers' and competitors' incomes are changing for the worse, is: changing the “who” you are deliberately attracting to do business with.

And further, Chris, you want your members/subscribers/students/readers to consider equity not just income. Income is what you make and take home today. Equity is the actual value of your business, represented in a number of ways, including its sustainability; its resistance to ups and downs, even to recession. In its ultimate exit-strategy value. Well, the value of your business is actually the aggregate total of the value of each of your customers. Amass low value, financially weak, fickle, easily discouraged customers; own a low value, fragile business.

ME: Seems hard to argue with all that. You make a convincing case. But people are still thinking: sounds great, but deliberately marketing to the affluent must be different and difficult. So, just how different is it, marketing to the affluent?

DAN: It IS different. First of all, there are profound – and in most ways, beneficial – psychological differences. These people think differently. That's why they are affluent. So you have to be in sync, you have to connect with the way they think, with what appeals to them emotionally. You also have to acknowledge different hurdles; they are more thoughtful, critical, and in some ways, skeptical buyers, more demanding customers. Fair, because they are a lot more valuable. So you have to be customer focused not product focused to an even greater degree. I devote about half the book, about 200 of its 400+ pages to just who are these people? - where did they come from? - how do they buy, why do they buy? - even specific behaviors in different buying categories – such as health, investments, for grandkids, for pets, even B2B. Second, there are process differences. While direct marketing fundamentals, systems and system structures don"t change, application does. In the book I diagram and describe a complete marketing system as a template, from lead generation through to the sale and post-sale relationship, and it will be familiar to most of your members/subscribers/students/readers. But within the familiar structure, there are significant modifications unique to the buying behavior of the affluent. There are certain known pre-requisites before an affluent buyer will act, that must be understood and met. In the book, I support these with considerable research data and actual case histories. I would quickly point out that ANY and EVERY business can be “tweaked” or, if need be, reinvented to successfully meet these pre-requisites so as to appeal to and attract affluent clientele. Third, and last that I"ll mention now, is the issue of finding them, knowing where they are, so you can directly and efficiently reach out to them. The information about that in the book affects both offline and online marketing and media choices. In short, Chris, your members/subscribers/students/readers can cross-breed everything you provide them with my Marketing To The Affluent strategies and systems and they"ll find it all completely compatible. Further, it will open new doors for them, to better and less price (fee) sensitive customers, a better business, even a better business life almost immediately. This is a way to take all of your most effective tools and techniques and apply them more profitably, something akin to taking superior farming practices and genetically improved seeds and applying them to more fertile ground. Why wouldn't you want to do that? Now, not later or someday?

ME: Okay, way back when, in this discussion, you said you were working with your clients on two big areas – this one, attracting more affluent customers, but also a second, managing for profit. And in that book title, you use the word 'ruthless', which has to rattle some people right off the bat. So, what's that all about?

DAN: It connects two ways. First, affluent customers are less tolerant of unsatisfactory, even unimpressive sales and service practices. Second, the recently generous, forgiving economy tolerant, even indulgent of sloppy sales and service practices has turned grumpy, irritable, intolerant and punishing. Maybe as it should. And very frankly, a lot of business owners have been making their way across the lake everyday satisfactorily in very leaky boats. Those days are over. There are going to be a lot of fatalities, large and small, of poorly run businesses. There's also going to be a golden-age for those businesses that provide start-to-finish and continuing exceptional experiences. As to the word 'ruthless', that's to telegraph that this is NOT a warm 'n fuzzy book with happy stories about such customer experiences, the equal of a smiley-face sticker. The shelves are full of those books. Fun to read. Maybe inspiring. But now what? Ruthless management is mandated by ruthless times. This is about setting and enforcing standards that yield the best customer (client/patient) experiences and the best attainable profits, by micro-managing the profit impact of every job, every employee and every step in the marketing, sales, delivery and service aspects of the business. It is about creating a winning Program and that having everybody get with The Program – or get gone. I call this book, first of all, the permission slip business owners have been waiting for, to manage their people and their businesses for maximum profit – without anxiety, guilt or squeamishness. It's a liberating and empowering book. Then it has very specific, in-depth how-to strategies. I'm told people laugh out loud reading it, because of its unbelievably blunt and candid, and to some, outrageous and radical revelations. I'm glad people have fun with it. I put some very pointed, original cartoons in it for that very reason. But make no mistake — this is a very serious manifesto for serious business owners in serious times.

ME: I've, of course, read the book — several times, and I was struck by three things I'd like you to talk about, that I would call: process improvement, people improvement and profit improvement. Let's touch on each one.

DAN: Chris, that's a good way of putting it. It all starts with accurate measurement of what's really happening versus having or establishing standards for what's supposed to be happening. For three or four years, I was on a speaking tour, at seminars with 10,000 to as many as 35,000 people in the audiences, and I frequently followed – and got to know – General Norm Schwarzkopf. A line I wrote down from him is: shined shoes save lives. What he means is, being undisciplined, casual, sloppy about seemingly little things inevitably permeates to affect all things, and on the business battlefield where we operate just as on the actual battlefield, it'll get you killed in tough times. So, you need standards for everything. And everybody. Number of rings before phone is answered. Number of referrals per customer per 90 days, a certain 'under' triggering a series of pre-planned actions. Etc. Etc. In other words, you have to measure to manage, and what you can't or aren't measuring, you can't be managing. Face it. Get real about it. That's foundational to all three opportunities for improvement you named: process, people, profits.

So, as an example, let's take the sales process, which I write about extensively in the RUTHLESS MANAGEMENT book. I have a client with this process: leads are generated by advertising; leads are moved to the setting of appointments; salespeople make presentations at those appointments; some buy, many don't. There are lots of things to be measured here. Conversions of visitors to the web site to requests for information; percentage of those sent info setting appointments; percentage of those setting then keeping appointments; and, of course, percentage buying vs. not buying. And there are many variables that can be worked on, to try and improve each of those results. If, for example, the percentage of appointments kept is 72% when they speak with Betty when they call in, but only 64% if they speak with Helen, we either find out what Betty's saying or doing differently than Helen and keep training and coaching Helen until she gets her efficacy up to Betty's, or we get Helen off the darn phones. We definitely measure both in real time, day to day; don"t keep the results a secret. If there's a script getting Betty the 72% we insist that it be memorized, practiced and used by Helen….we “mystery shop” and record her calls….and if she won't get with The Program within a reasonable probation period, we fire her. But here's a big, hidden opportunity found in this business. The non-buyers, left to the salespeople for follow-up, were nearly worthless; fewer than 5% came back and bought within 60 days. Mostly because the salespeople believed them worthless and wouldn't do – and lied about doing – the prescribed follow-up, let alone working earnestly on finding ways to improve the result. Taking that away from the salespeople and implementing a series of three follow-up letters over six weeks, we got 16% back to buy. That's a gain of 11 buyers per 100 sales presentations. That's big. This company had been doing “just fine” tolerating the 5% when 16% was available during the generous economy. They can't afford it during the turned-grumpy-and-intolerant economy. They shouldn't tolerate it at all. So, that"s process improvement. The Helen-Betty situation might be resolved by process improvement, a better script, training, better supervision. Or it might require people improvement. Now, given the 5% to 16% improvement created, this business can actually afford a dip in first presentation sales that might be caused by a price increase. Let's play. As example, if their salespeople average 20% sold, plus 5% after the fact, at $1,000.00 each, that"s $25,000.00 per 100 people getting presentations…if at a 50% profit: $12,500.00 profit. If I raise the price to $1,500.00 (thus DOUBLING the profit from $500.00 to $1,000.00)….the percentage buying at presentation drops from 20% to 15%, and that 16% drops to 9%, I'm at 24% vs. the old 25% (down only 1%)…24 x $1,500.00 gross, $36,000.00 instead of $25,000.00, and more importantly $24,000.00 profit vs. $12,500.00 profit. That's profit improvement. And, by the way, contrary to common fear, price increases do not necessarily cause significant drops in sales made. Then we can go back around the horn, to try to improve the at-presentation sales with better scripts, new answers to price objections, new financing options, sales training and/or new and better salespeople. And, of course, we could combine all this with deliberately seeking more affluent buyers. That's what my RUTHLESS MANAGEMENT book is all about. In short, squeezing a lot more good juice out of each orange you have, so even if, temporarily, your tree produces fewer oranges – the recession effect, you still get more juice, not less.

And please don't say: that example doesn't apply to me because – because whatever. I don't use that business model. I don't have salespeople. Yada yada. You just have to be smarter than that. The principles apply everywhere. And ruthless management starts with ruthlessly managing yourself.

ME: We've been plugging your book, but I know you have blatant and crass commercial messages…

DAN: I'm willing to sing for my supper – but I want my supper. And I think I've done a lot of singing here, don't you? So. First, the books; they are available at amazon.com, BN.com, Barnes & Noble, Borders, other booksellers, and free info about the entire No B.S. book series is perpetually up-dated at www.NoBSBooks.com. If you want bulk quantity discounts, if you"re buying dozens or hundreds of copies, try 1-800-CEO-BOOKS, or your local Barnes & Noble store has a corporate/business discount program. Both books have audio CD's included right inside, plus online resources at web sites provided in the books. Second, your members/subscribers/students/readers can get a terrific Free Gift Collection of other recession-busting resources of mine including three webinars, my Income Explosion Guide, two months of my No B.s. Marketing Letter, and more, all FREE…at www.nobsfreegift.com/chrishurn. These are resources that can be of immediate and dramatic help. It is my firm belief based not on 'positive thinking' but on experience – mine and countless clients – that attending and being adversely affected by the economic storms of the moment, and likely well into or through 2009, is OPTIONAL. The antidote is: awareness, decision, resources and bold action. These two books are, I think, the most timely I've ever written. And, thanks for the opportunity to shamelessly push them on your members/subscribers/students/readers.

ME: My pleasure — because I really believe they will benefit. Now, Dan, any closing thoughts?

DAN: Kate Hepburn said: “Old age isn"t for sissies.” The older I get, the more I appreciate the remark. Business success, especially in difficult economic times, isn't for sissies either. This is a time to ruthlessly hold yourself, your every process, every employee, entire business and its profits accountable. To have a zero tolerance approach to anything or anyone depressing profits. This is also a time for new thinking, new approaches, new initiatives, and bold action. And this is a time when it is more important than ever to be cautious of toxic influences of relentlessly negative pessimists, cry-babies, complainers as well as media mouths and politicians magnifying crisis and gloom for their own purposes – and to seek out and associate in every way possible with tough-minded, creative, innovative, forward-thinking people in your field, leaders of your field, as well as qualified, credible advisors outside your specific field who keep you focused on opportunity. That's why participating in everything you offer, Chris, is so important at this time. Frankly, the tendency, the temptation thoughtlessly given into by so many is to cut back on that which should never be cut back on, drop out of what should never be dropped out of, to isolate. Whatever small savings comes of it, the true cost is infinitely higher. Conservation has its place, but never as substitute for investment.