Randy Stuppard – Common Sense Marketing

I hear it all the time. "We’re in a recession so we need to slash our prices!"  Ugh.
This is usually the first step on the slippery slope to bankruptcy. Slashing prices is NOT the first place to go to when the economy heads south. And having the lowest price is only as good until the day comes (and it will) when someone with deeper pockets comes along.

The next places businesses look to cut is employees and advertising. Two more deadly places that are filled with mines.

If you must cut, cut costs that are not revenue generators. What are revenue generators?

Anything that produces a profit:

• Sales people
• Marketing
• Advertising

Places to cut costs: (cost centers)

• rent / lease
• some employees (everyone has customers – internal or external)
• *accountant
• *lawyer
• phones
• fax (do you really need a faxline?)
• products and services

*Accountants and lawyers protect your business. They can’t build it. They work for you, not the other way around. I tell my accountant and lawyer what I want and have them figure it out to make it work.

Don’t cut your sales people or their commissions. Who cares if they make a million dollars a year? How much do they have to sell to make that? Get your ego (and your accountants’) out of the way of making money.

Marketing and advertising should all be measured. If it’s not producing a profit, drop it. Measure again after you drop it …

So if you’re not going to reduce your pricing, what are you going to do?

Most businesses wait too long to raise their prices and don’t raise them enough when they do. But you don’t have to do either. But keep that in mind …

Smart business owners find ways to add value to their products and services. They bundle them in unique ways so they no longer can be compared to their competitors. Customers can’t do an "apples to apples" comparison and thus raises you out of the commodity business.

These bundles have a larger margin and makes you more money.

How do you bundle? Go through your invoices and look for trends of what your customers buy. When you find a number of items that consistantly show up, put them together with a larger margin, add value (free low cost items, guarantee, etc) and then sell it. Measure the profit. If it makes money, keep it. If it doesn’t sell, you either bundled it wrong, did not add enough value, priced it wrong, or marketed it wrong. Keep testing!

If everyone is doing the same thing, be a contrarian and do the opposite. As Warren Buffet says "Be fearful when others are greedy, be greedy when others are fearful".  It’s not an easy thing to do, but it’s the smart thing to do. It’s really hard  when your friends tell you you’re crazy – then tell you you’re lucky when it turns out well.

Later…
Randy Stuppard

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