I was talking to a client in the retail sector and reviewing the important figures in his company. A quick overview showed us that the sales were taking a dive and something needed to be done to increase those sales before the end of the quarter.
My first thought was to look at pricing strategies and consider an end of season sale to boost takings.
As a business coach, I usually guide my clients to the right answers. But in this case, the error in judgement and the potential profit impact was so high that I had to immediately banish the thought.
The idea that people will buy from you because you are the cheapest is totally flawed. There is a difference between price and value and the truth is, people are looking to buy value, not spend the least.
Discounting your product actually has a much larger impact on your business than you may think.
Imagine that your customer is paying £100 for your product or service. Let us take £60 as your direct costs. So with a total price of £100 and direct costs of £60, you have a gross profit of £40.
Now let us assume you decide on a 10% discount. You are reducing the amount that you get from your customer to £90. Your direct costs, however, remain the same at £60. Now you are making a gross profit of £30. The decrease in just 10% of the price is creating a 25% decrease in your actual profit. And the smaller your margin, the bigger the drop in profits.
So if you are planning to discount your product, make sure you assess the real impact on your business. Most of the time, it won't be worth it.
When business owners come to me for business coaching, they are usually trying to take their business to the next level. And yet, the only time they have ever increased their prices is because of an increase in costs.
This is a huge missed opportunity, especially for those who provide services. If you have been practicing your business for some years, your brand has gained value. You have proven that there is a market for your expertise and that in itself makes it more valuable.
When the value of your product or service has changed, you can reconsider your pricing strategies.
If your costs have not gone up, a small price increase can dramatically increase your profit margin. If your price is £100 and your costs are £60 and you put up your prices by just 10%, you are actually increasing your profit by 25%.
When you increase your prices, even by a small incremental amount, the effect on your profits can be just as dramatic as the damage that comes from discounting your products.
You cannot just increase prices whenever you like. You have to assess what the value is of the product you are offering and whether your price truly reflects that value. So your pricing strategies should focus not on price but on value.
One way of adding value is to assess your expertise. As a long-standing and trust-worthy business, you provide assurance to customers and you can add a premium for that assurance.
Another way is to identify your competitors and figure out how and why you are better. If you are not, then make yourself better so you can increase your prices.
It is possible to add value in some way without discounting, while providing a lower fee to your customers. You can do this by providing offers instead of discounts.
A really great example is what supermarkets do, where they offer vouchers for "£6 off your next £40 spend" or something to that effect. You can also create "buy 2 get 1 at half price" deals and add value without discounting too much much.
If you feel that you absolutely must offer a discount then make it work for you in some other way. An easy way to get value for your business out of a discount is to relate the discount to an early-bird payment or shorter credit terms such as, "10% off if you pay up front".
But whenever you can, say no to discounting. Instead, come up with smart pricing strategies to provide value without slashing your profits.
Copyright © 2015 Graham Thatcher
Just this week I had to practise what I preach as I was having a problem with a big organisation's customer services.
I teach people how to open doors to long sought-after contacts and how to get themselves into the press. I applied my own teaching to a situation I was facing and it worked!
I was having some big techie issues with a very large organisation that does not have phone support. This organisation has been highly recommended to me by many people so I decided to take the plunge and use it, despite the lack of phone numbers.
Then it happened that I needed to speak to them urgently...I emailed their support daily. Zero response.
I kept on emailing thinking I would "break" them but I got no reply.
Then I decided to go all out and use my secret weapon, LinkedIn.
I Googled the company's marketing and communications manager and the business development manager and in so doing quite a few new contacts in the organisation popped up in LinkedIn.
So I sent all of these people (in this very hard to reach company) a personalised LinkedIn contact request.
Luckily one person accepted that very day. I took the bull by the horns and thanked her kindly for accepting me and then I wrote about my experience.
The next day: boom! My issue was resolved.
This doesn't only apply to customer services issues but also when trying to contact anyone no matter how high up or unattainable they appear to be. Try it! Use the back door to open the front door.
The use of social media has become an integral part of marketing a business but there are also pitfalls to watch out for. Here are seven tips on how to avoid getting into sticky situations on social media.
Sharing repetitive posts and overly-promoted or irrelevant content will turn off your audience, losing you likes and followers. Do your homework to work out which type of content works best for your audience. Find out when are they most active and which topics are most likely to be retweeted.
Social media can be time-consuming but if you rush things, you'll miss opportunities to engage online and mistakes are more likely to happen.
Social media tools such as TweetDeck and Hootsuite can make managing your social networks easier; helping you schedule tweets and monitor hash tags. In addition, Buffer gives you the opportunity to keep up-to-date with changing trends and timelines with user engagement analytics.
A lot of businesses make the mistake of signing up to and posting on all the social media platforms, even those irrelevant to their business. You know your audience better than anyone else; carry out research to determine what platforms are the most important for your target market.
Carelessly posting on behalf of your business can have a negative impact on the way your brand is perceived by your customers. So, carefully proofread any posts before hitting the share button.
Your social media accounts should be a reflection of your brand and represent how you want your customers to see you. Make sure that everything you send out supports this message, including the content that you are sharing.
Inviting criticism can be fatal on social media channels; a well-documented example of this comes from British Gas, who carried out a live Twitter Q&A with its customers on the same day that it put up its prices. As a result of this, the company was bombarded with criticism and negative feedback, all in the public eye.
Carefully consider who has access to and control of your social accounts to protect your brand. Putting control into the wrong hands can be disastrous. When HMV made 60 members of staff redundant in 2013 a stream of Tweets narrated the course of events, resulting in a backlash from the public. It was later revealed that the company had left an intern in charge of their social media account.
Copyright © 2015 Sophie Greenwood, account manager for PR agency Peppermint Soda.
The launch of Apple Pay in the UK is making the headlines this week. But what does it mean for small retailers?
Apple Pay is a contactless payment app aimed at anyone who has an iPhone 6, an iPhone 6 Plus or an Apple watch paired with an iPhone 5 and above. Apple has announced a number of retail partners that will be offering Apple Pay but, as TechRadar points out, it actually works with any contactless terminal at the checkout.
Jeremy Nicholds, executive director of mobile at Visa Europe told TechRadar: "All retailers that currently offer their customers the option to pay using contactless can accept Apple Pay. In the UK this includes household names such as Boots, Tesco, Nandos, Café Nero, the Co-operative Food and Morrisons."
It's certainly simple for shoppers to set up Apple Pay. They just have to enter their debit or credit card details within Passbook on their iPhone. Once they are set up, they can tap their phone or Apple watch on any contactless terminal. They'll also need to use TouchID (fingerprint) to confirm their identity.
Most of the high street banks have pledged to support the service although it may be a few weeks before they are all ready. Even so, Apple Pay has a clear appeal for banks, as well as for consumers and retailers, because of its high level of security and ease of use.
But just how big an impact will Apple Pay have on small retailers in the UK?
One thing's for sure, contactless payment has already proved popular in the UK, especially on public transport and in cafes and supermarkets. Of course, not everyone has the latest Apple kit but those that do will undoubtedly want to be able to use it wherever they go.
Apple Pay has, however, been somewhat slow to get established in the States. But in many ways, the UK is far more open to this kind of technology and with 250,000 sites reportedly ready to go, Apple Pay in the UK is more widely available than it was at launch in the US in 2014.
Danielle Levitas, svp research and analysis at App Annie, says: "Compared to the rest of Europe, the UK is a leader in mobile banking. In Q1 2015 downloads of the top ten retail banking apps in the UK were almost twice as high as those in France and three times as high as Germany. This success and proliferation in the UK shows there is an appetite for change in how people pay for goods and the increasingly important role of mobile."
Raj Sond, general manager at First Data Merchant Solutions, describes Apple Pay as a "fantastic opportunity for SMEs" because they will be able to "reap the benefits of this new payment method without the usual cost barriers associated with adopting new technology."
He says: "Consumers – particularly the younger, more tech savvy audience – are much more likely to forget their wallet than their iPhone, which may open doors for SMEs to do businesses with a whole new customer segment. An increase in contactless transactions will also reduce the burden of cash management for small businesses, and the time SME owners and their staff must dedicate to behind the scenes admin."
However, research by Shopkeep has found that while most smaller consumer-facing businesses are positive about Apple Pay they don't believe it will have a material impact on how they operate.
Jason Richelson, ceo and founder of Shopkeep, says: "Our experience in the US says this thinking is flawed. Business owners in the US that have been quick to embrace mobile payments are growing three times faster than the national average, and going out of business much less often (5% fail within one year vs the 25% national average)."
Richelson says he expects rapid early adoption for many reasons – not least because Chip and Pin has been so successful in the UK and because British shoppers now spend more using cards than cash.
"Put it this way, any business that wants to exist in the future has to prepare for it," he says. "People will expect cashless transactions wherever they go and if smaller business in particular want to prosper, they must embrace the technology. These systems have become readily available and inexpensive over the last few years and implementing them will assist in delivering an improved customer experience."
Small businesses that are already offering contactless payment are certainly positive about the experience.
Tom Reaney of Burger Bear says: "To compete with bigger businesses it is important that SMEs and sole traders can accept all payment types and move with innovation - so accepting Apple Pay is going to be vital."
Copyright © 2015 Rachel Miller, editor of Marketing Donut.
Looking after and maintaining your company's website can be a difficult job, yet a third of small businesses still choose to do it themselves.
At first the process appears simple; hire the right designer, manage hosting prices and then maintain the site from there. However, there are several other factors that demand attention and that can be detrimental to your website if ignored.
Here are four website mistakes that are often made by small firms:
Like the fashion world, website trends are always changing and new designs are constantly emerging; what looked good a few years ago won't be reaching the standards expected by your customers today.
First impressions are important, so ask yourself: "what does my site say about my business?". That you don't care? That you're outdated? That you're disorganised? That you're not the best option available?
If you answered yes to any of these, then it is time to think about redesigning.
The content on your site should be created with two aims in mind: SEO gain and user engagement. Whilst you want to include keywords and longtail phrases specific to your business, you still need to focus on standing out against your competitors.
However, achieving the balance between content that is optimised for SEO performance and content that is written in the right tone of voice can be difficult.
By hiring a professional, you can publish unique content that will attract traffic, engage with visitors and tell the story of your business.
It is important that your site is built to be adaptable. If you're currently using a proprietary platform, move to an open source CMS system such as Magento and enjoy the lack of restrictions and advanced flexibility.
If a user can't find their way around your site easily, they are very likely to leave and seek out one of your competitors. This is known as a high bounce rate. Confusing navigation systems only add extra steps to the customer's buying journey and they can lose sales.
To improve, your website should be:
Address these issues on your website and you'll see a significant difference to your business.
Copyright © 2015 Nick Pinson, director at iWeb Solutions.
One should not confuse the pervasiveness of digital with its importance to business.
However, what has happened is that some people have come to the conclusion that digital actually is business; it's as if the only thing that matters is having a great digital strategy and being able to deliver on it.
But measurement is not everything!
I would argue that the greatest threat to most businesses is not being out of touch with digital developments; the greatest threat is losing sight of the business fundamentals. In other words, neglecting the needs of your target customers and the fundamentals of your business model.
I keep coming back to the same questions:
Why should people bother to buy from you when they can buy from the competition?
What makes you different from the rest?
Without a clear customer value proposition, no great digital proposition can possibly win over a slightly jaded and over-stimulated audience.
Don't get me wrong – I am a huge fan of the power of digital marketing. My businesses are living proof of what digital can do for a business. It just doesn't matter how cute a digital strategy you have if you haven't addressed the fundamental needs of your customers.
Copyright © 2015 Robert Craven. Robert runs The Directors' Centre, helping businesses to grow. He is a keynote speaker and best-selling author of Kick-Start Your Business and Grow Your Service Firm as well as The Customer is King. Robert's forthcoming book is Grow Your Digital Agency.