Dave Donelson's Blog: OutTakes, page 5
October 16, 2012
Social Media Marketing Tips From The Pros
“You have to create a plan. I see many professionals and smaller businesses who haven’t looked at their objectives. Who is their target audience? What key messages are they trying to get out?”
--Stacy Cohen, Co-communications
“A great way to gain followers on Twitter is to Retweet what someone else has to say or to jump into their conversation and add your own perspective. Also ask people to retweet your links by adding the words ‘Pls RT’”
--Stacy Solomon, Internet Marketing Consultant
“If you are spending five hundred to a thousand dollars each month on marketing and take even one or two months of this and invest in setting up your social media, you can see a significant long-term gain for your business.”
--Gerald Stern, WOW Production Services
“One hundred high-quality followers easily equals one thousand so-so followers, because in the social media world you want people to constantly pass on the things you write, as well as send you material to post. Business people must avoid an overt ‘sales’ method—you’ll just turn people off and you’ll lose your following.”
--Chris Cornell, Westchester Social Media
“You should never expect social media to be completely cost-free. Someone must spend time staying on top of all those tweets, messages, Facebook updates and blog posts. Likewise, quick (if not instant) replies are necessary to maintain a reputation for responsiveness.”
--Kristen Ruby, Ruby Media Group
Whether they pay-it-forward or pay-as-they-go, more and more business owners and managers are turning to social media networks for very good reasons. “In the current economic downturn business owners must go above and beyond to promote themselves,” says Rye NY Chamber of Commerce Secretary Sally Wright. The organization received dozens of requests for a repeat of its recent social media seminar. She adds, “Social media is one great way to accomplish that.”
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
--Stacy Cohen, Co-communications
“A great way to gain followers on Twitter is to Retweet what someone else has to say or to jump into their conversation and add your own perspective. Also ask people to retweet your links by adding the words ‘Pls RT’”
--Stacy Solomon, Internet Marketing Consultant
“If you are spending five hundred to a thousand dollars each month on marketing and take even one or two months of this and invest in setting up your social media, you can see a significant long-term gain for your business.”
--Gerald Stern, WOW Production Services
“One hundred high-quality followers easily equals one thousand so-so followers, because in the social media world you want people to constantly pass on the things you write, as well as send you material to post. Business people must avoid an overt ‘sales’ method—you’ll just turn people off and you’ll lose your following.”
--Chris Cornell, Westchester Social Media
“You should never expect social media to be completely cost-free. Someone must spend time staying on top of all those tweets, messages, Facebook updates and blog posts. Likewise, quick (if not instant) replies are necessary to maintain a reputation for responsiveness.”
--Kristen Ruby, Ruby Media Group
Whether they pay-it-forward or pay-as-they-go, more and more business owners and managers are turning to social media networks for very good reasons. “In the current economic downturn business owners must go above and beyond to promote themselves,” says Rye NY Chamber of Commerce Secretary Sally Wright. The organization received dozens of requests for a repeat of its recent social media seminar. She adds, “Social media is one great way to accomplish that.”
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
October 9, 2012
Pricing For Profit - Step Two
Once you know how much the merchandise or job costs, you mark it up to provide a profit. One way is to use what’s known as “keystone” pricing, which simply means doubling the cost to arrive at the selling price. This provides a 50% gross profit margin. That’s why retailers can put goods on sale for 40% off and still make a profit. It works fine, but it isn’t always the best choice.
You can also use manufacturers’ suggested retail pricing, which even further simplifies the calculations. Nationally uniform prices, of course don’t reflect local market conditions, much less the individual business owner’s costs of doing business. Remember, too, that they’re designed to help the manufacturer move more merchandise, not necessarily help you make more money.
Using a standard markup sounds simple, but that’s really only the beginning of sound pricing strategy. You also have to be sure that the gross profit is large enough to cover your overhead, or the indirect costs of operating your business, and still leave a net profit. Whether you’re marking up merchandise or deciding on a labor rate, you’ve got to build in something to cover the rent—and all those other bills you pay every month.
Every business has indirect expenses (not related to the cost of a piece of merchandise or a particular employee’s labor on a job) that have to be paid. The obvious ones include your building and what it costs to operate it (utilities, maintenance, taxes, insurance), your fixtures, tools, office equipment, vehicles and other fixed assets (their cost on an annual basis is your depreciation expense), your salary and benefits (especially health insurance), not to mention the office manager and other general employees. Don’t forget to add in your property and casualty and liability insurance premiums, accountant’s fees, advertising and marketing expenses, office supplies, telephone, and so on and so on. While you’re at it, make sure you include an annual contribution to your own retirement plan, be it a 401-K, SEP-IRA, or whatever.
Finally, add something for net profit. That’s the whole point of running the business, right? The net profit, by the way, is not the same as your salary as the manager or owner. Your salary is payment for your labor managing the business. If you’re the owner, the net profit is the return on your investment and the compensation your receive for the risks you take. There’s a big difference.
The total dollar amount of your shop’s gross profit, the figure that has to be larger than your overhead expense, is also dependant on how much merchandise you sell or how many jobs you complete. These are determined, at least in part, by the prices you charge. If your prices are too high, customers will run away, so it can be a vicious circle. Cost-based pricing is all well and good, but ultimately, the prices you charge are determined by what your customers are willing to pay. That’s where a whole raft of other factors comes into play.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
You can also use manufacturers’ suggested retail pricing, which even further simplifies the calculations. Nationally uniform prices, of course don’t reflect local market conditions, much less the individual business owner’s costs of doing business. Remember, too, that they’re designed to help the manufacturer move more merchandise, not necessarily help you make more money.
Using a standard markup sounds simple, but that’s really only the beginning of sound pricing strategy. You also have to be sure that the gross profit is large enough to cover your overhead, or the indirect costs of operating your business, and still leave a net profit. Whether you’re marking up merchandise or deciding on a labor rate, you’ve got to build in something to cover the rent—and all those other bills you pay every month.
Every business has indirect expenses (not related to the cost of a piece of merchandise or a particular employee’s labor on a job) that have to be paid. The obvious ones include your building and what it costs to operate it (utilities, maintenance, taxes, insurance), your fixtures, tools, office equipment, vehicles and other fixed assets (their cost on an annual basis is your depreciation expense), your salary and benefits (especially health insurance), not to mention the office manager and other general employees. Don’t forget to add in your property and casualty and liability insurance premiums, accountant’s fees, advertising and marketing expenses, office supplies, telephone, and so on and so on. While you’re at it, make sure you include an annual contribution to your own retirement plan, be it a 401-K, SEP-IRA, or whatever.
Finally, add something for net profit. That’s the whole point of running the business, right? The net profit, by the way, is not the same as your salary as the manager or owner. Your salary is payment for your labor managing the business. If you’re the owner, the net profit is the return on your investment and the compensation your receive for the risks you take. There’s a big difference.
The total dollar amount of your shop’s gross profit, the figure that has to be larger than your overhead expense, is also dependant on how much merchandise you sell or how many jobs you complete. These are determined, at least in part, by the prices you charge. If your prices are too high, customers will run away, so it can be a vicious circle. Cost-based pricing is all well and good, but ultimately, the prices you charge are determined by what your customers are willing to pay. That’s where a whole raft of other factors comes into play.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
October 6, 2012
Master The Short Game With Dave Stockton
I got quite a lot from reading Dave Stockton's book, Unconscious Putting , probably because the master's approach very much mirrors mine: see the hole, role the ball into it. Sweet and simple. I consider myself a pretty good putter but not a great one, though, because I still don't have as many one-putts as I need to really get the putt count down. That's where Stockton's latest book, Unconscious Scoring , is helpful.
Why? Because one-putts come mostly from hitting your approach shot closer to the hole in the first place. That's what Unconscious Scoring is all about. Again, I really, really identify with Stockton's KISS (Keep It Simple, Stupid) philosophy.
Stockton says you only need two basic shots around the green to produce a fabulous short game--a low shot and a high shot. After explaining why this approach will work for players at all handicaps, he shows how to hit each one in two clearly-illustrated chapters.
Next, he carries these principles into various situations where he demonstrates how you don't need to create a whole new swing to get up and down every time you face a tough lie. Stockton covers numerous trouble shots--from a bunker, hardpan, a divot, off a side-hill, etc.--with some elementary modifications of his basic two-shot repertoire. The book is rounded out with chapters on the Mental Game, Practice, Equipment, and Putting.
The material in Unconscious Scoring came from Stockton's excellent five-major-championship career as well as his work with world-class players like Phil Mickelson, Annika Sorenstam, Yani Tseng, and Rory McIlroy, who also wrote the foreword for the book.
Among many other books, Dave Donelson is the author of Weird Golf: 18 tales of fantastic, horrific, scientifically impossible, and morally reprehensible golf
October 2, 2012
Pricing For Profit - Step One
When it comes to prices in your business, how much is enough and how much is too much? How do you set your prices? Buy low and sell high is the obvious answer, but for many companies, especially those with a mixture of retail merchandise and services, bricks-and-mortar and online competition, and customers driven one day by a penny-pinching budget and the next by the lust called gotta-have-whatever-at-any-price, there aren’t any easy answers.
Setting prices requires that even the most experienced manager or owner take a few moments every once in a while to dust off the calculator, get the accountant on the phone, and do some serious figuring. It’s tempting to just mark all merchandise up by a fixed percentage and figure labor at a flat rate comparable to what your competitors charge, but that’s not managing for profit, it’s hoping for one. There are several factors that you should consider.
Start with the cost of goods sold. That’s the amount you pay the manufacturer, wholesaler, or whomever for the merchandise you sell, whether at retail or as part of a service job. But it also includes the cost of acquiring those goods (shipping and handling), carrying them in inventory (interest expense), and allowances for returns and defective merchandise. If you pay any salespeople a commission or spiff, that needs to be taken into account, too.
For service work, you have to cover your direct labor costs on each job. These include not only an appropriate portion of your technicians’ annual salaries, but also their benefits, payroll taxes, unemployment insurance, worker’s compensation insurance, etc
What about the cost of your time? Whether you are a one-person business or simply provide indirect supervision of your staff, your time is a cost that has to be covered. One way to approach this is to divide what you expect to personally earn on an annual basis (including those items above but not your profit from the business—I’ll talk about that later) by 2,000, which is roughly the number of working hours during the year. Let’s say your “salary” plus benefits is $100,000. Your hourly labor cost is $50. Multiply that number by the hours you estimate you’ll personally spend on the job, add in the other worker’s costs, and you have your direct labor costs.
These aren't the only factors, so check next week for more guidelines on pricing for profit.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
Setting prices requires that even the most experienced manager or owner take a few moments every once in a while to dust off the calculator, get the accountant on the phone, and do some serious figuring. It’s tempting to just mark all merchandise up by a fixed percentage and figure labor at a flat rate comparable to what your competitors charge, but that’s not managing for profit, it’s hoping for one. There are several factors that you should consider.
Start with the cost of goods sold. That’s the amount you pay the manufacturer, wholesaler, or whomever for the merchandise you sell, whether at retail or as part of a service job. But it also includes the cost of acquiring those goods (shipping and handling), carrying them in inventory (interest expense), and allowances for returns and defective merchandise. If you pay any salespeople a commission or spiff, that needs to be taken into account, too.
For service work, you have to cover your direct labor costs on each job. These include not only an appropriate portion of your technicians’ annual salaries, but also their benefits, payroll taxes, unemployment insurance, worker’s compensation insurance, etc
What about the cost of your time? Whether you are a one-person business or simply provide indirect supervision of your staff, your time is a cost that has to be covered. One way to approach this is to divide what you expect to personally earn on an annual basis (including those items above but not your profit from the business—I’ll talk about that later) by 2,000, which is roughly the number of working hours during the year. Let’s say your “salary” plus benefits is $100,000. Your hourly labor cost is $50. Multiply that number by the hours you estimate you’ll personally spend on the job, add in the other worker’s costs, and you have your direct labor costs.
These aren't the only factors, so check next week for more guidelines on pricing for profit.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
September 27, 2012
Smart Golf Lowers Scores
John Lloyd Retzer tells it like is on both GolfBlogger.com and in his new pull-no-punches golf instruction book, The Five Inch Course: Thinking Your Way To Better Golf. The book resonated with me because I've played, studied, and written about the game for more than four decades so I don't have any more delusions about my game. The majority of golfers, though, will probably read The Five Inch Course and decide its lessons really don't apply to them. All they need is another $400 driver, a few more hours of the Golf Channel, and another great swing tip from the attendant at the gas station, and they'll shoot par every time. Who knows? Maybe the Champions Tour is within reach!
It's not, of course, mainly because the majority of golfers won't play the intelligent take-fewer-chances brand of golf Retzer espouses. And that's a shame, really, because we could all play much better golf if we just dialed back our testosterone and followed his advice to adopt realistic expectations, play within ourselves, and stop pretending we can make a 160 wedge shot bend backwards out of the trees just like Bubba Watson. I rant about many of the same topics in Weird Golf.
Retzer hooked me in his introduction when he said:
"...this doesn't mean that lower scores are out of your reach. It just means that you have to play better golf with the swing you already have."
He goes on to remind us that
"Four ugly strokes equal four pretty ones [on the scorecard]."
His goal throughout the book is to teach us to work our way around the course in the least number of strokes, not with the longest drive. That often means leaving the driver in the bag, laying up on that long par four so you take double bogey out of the equation, and maybe even bunting a low runner 120 yards down a narrow fairway instead of taking a full swing that brings OB into play.
Retzer says some of his buddies call this "old man golf." I call it "smart golf."
The Five Inch Course is a collection of short mental game tips organized into chapters on practical topics like what to do before you play, how to think about what you're doing on the tee, what should be going through your mind in the fairways, and common-sense ways to save strokes on and around the green. The style is straightforward and highly readable with a bit of humor thrown in here and there.
Retzer's approach doesn't preclude taking risks or attempting that one-in-a-hundred shot over the water to a tight front pin. He just reminds us that we're going to be really, really sorry if we play that way on every shot in every round. Have some fun, he says, but remember that conservative play is the way to lower your score.
Among many other books, Dave Donelson is the author of Weird Golf: 18 tales of fantastic, horrific, scientifically impossible, and morally reprehensible golf
September 25, 2012
How To Turn A Newbie Into A Customer For Life
New customers are the lifeblood of any business, but only if they stick around long enough to become old customers. A one-time buyer is welcome, but the ones who put money in the bank are those who come back again and again.
One breed of new customer that’s tricky to develop is the neophyte, the guy or gal who is new to the world your business inhabits. Maybe they are a first-time home buyer or a young couple setting up a college fund for their newborn. The way you and your staff respond to that newbie can make or break your relationship with them. Treat them like an idiot the first time and you’ll never see them again. Treat them right, and you’ll create a customer for life.
It’s tough, though. A newbie doesn’t know what questions to ask. He doesn’t know what’s do-able and what violates the laws of physics and/or the local building code. She may have seen a TV show where some lucky stiff’s family room went from wreck to magazine-spread-worthy in thirty minutes and expect you to do the same. What’s worse, she’s going to take up way more of your valuable time than this measly little job is worth.
The next time a newbie walks through your door, put yourself in their shoes for a minute. Remember what it was like when you went onto the field for your very first Little League tryout? If you were like most of us, the experience was a little intimidating. Everyone else seemed to know exactly what they were doing, but you weren’t sure. You wanted to make the team, but the single most important goal was to avoid making a fool of yourself.
That’s what the newbie is feeling when he comes into your business for the first time. He or she may not admit it—and may try to bluff their way through—but they are nervous about sounding dumb when they talk to the experts in the field.
Your first job, then, is to make the customer comfortable. Don’t draw attention to his ignorance by telling him it’s all right to be stupid. Instead, listen to his ideas in a non-judgmental way and ask him questions about what he needs at a level he can understand. Try to avoid using terms the customer may not have heard before, or, if you have to, explain them without being condescending.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
One breed of new customer that’s tricky to develop is the neophyte, the guy or gal who is new to the world your business inhabits. Maybe they are a first-time home buyer or a young couple setting up a college fund for their newborn. The way you and your staff respond to that newbie can make or break your relationship with them. Treat them like an idiot the first time and you’ll never see them again. Treat them right, and you’ll create a customer for life.
It’s tough, though. A newbie doesn’t know what questions to ask. He doesn’t know what’s do-able and what violates the laws of physics and/or the local building code. She may have seen a TV show where some lucky stiff’s family room went from wreck to magazine-spread-worthy in thirty minutes and expect you to do the same. What’s worse, she’s going to take up way more of your valuable time than this measly little job is worth.
The next time a newbie walks through your door, put yourself in their shoes for a minute. Remember what it was like when you went onto the field for your very first Little League tryout? If you were like most of us, the experience was a little intimidating. Everyone else seemed to know exactly what they were doing, but you weren’t sure. You wanted to make the team, but the single most important goal was to avoid making a fool of yourself.
That’s what the newbie is feeling when he comes into your business for the first time. He or she may not admit it—and may try to bluff their way through—but they are nervous about sounding dumb when they talk to the experts in the field.
Your first job, then, is to make the customer comfortable. Don’t draw attention to his ignorance by telling him it’s all right to be stupid. Instead, listen to his ideas in a non-judgmental way and ask him questions about what he needs at a level he can understand. Try to avoid using terms the customer may not have heard before, or, if you have to, explain them without being condescending.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
September 18, 2012
Negotiation Highs And Lows
I used to be a strong advocate of aiming high—making an outrageous offer so that I’d have plenty of room to come down when the buyer made a counter offer. Besides, I believed, low offers signal weakness.
I eventually learned that if the first offer was too high—outside the realm of what’s reasonable to the buyer—then the buyer just might not make any counter offer at all. Then where was I? If I lowered my offer to try to re-start the negotiation, I was really signaling my desperation and letting the buyer know that concessions could be won.
The first step in the Creative Selling System is gathering information about your prospect. And one of the key pieces of information is an estimate of the prospect’s spending potential. This not only gives you a goal to shoot for and an idea of how to structure your proposal, it gives you a good guideline for where to start your negotiations. As long as you begin with a proposal in the ballpark your prospect is used to playing in, you’re not likely to scare them off.
Take the time to do your homework and use one or more of the estimating methods I covered in The Dynamic Manager’s Guide To Sales Techniques. Even if you didn’t use those figures to structure your proposal in the first place, they will give you a sense of what’s possible for your negotiation.
Judge the reasonableness of your opening offer carefully. My rule now is that my opening offer is one at the high end of what the prospect could accept with no further changes if they were so inclined—and one I could defend without stretching my credibility.
It’s also good to practice a little mental discipline. Right at the beginning of the negotiation, establish in your own mind the lowest acceptable offer you’ll take. That way, you have a sense of how far you can go before you start cutting into profit margins, production capacity or whatever benchmark your company uses. As the negotiations proceed, you know where you are at all times. That sense of security gives you greater confidence during the process.
Establishing the lowest acceptable alternative in advance does something else. It keeps you in a win/win frame of mind because you don’t have to worry about losing! As long as you know the point at which you will walk away (and stick to it) you can’t lose anything.
As you may have noticed, we’ve now set an upper and a lower limit to pricing. This range makes it much easier to build a few small concessions into your proposal, or plan some value items you can add as the negotiations proceed. This helps you avoid making that big concession all at once, leaving you with no place to go if the buyer rejects it.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
I eventually learned that if the first offer was too high—outside the realm of what’s reasonable to the buyer—then the buyer just might not make any counter offer at all. Then where was I? If I lowered my offer to try to re-start the negotiation, I was really signaling my desperation and letting the buyer know that concessions could be won.
The first step in the Creative Selling System is gathering information about your prospect. And one of the key pieces of information is an estimate of the prospect’s spending potential. This not only gives you a goal to shoot for and an idea of how to structure your proposal, it gives you a good guideline for where to start your negotiations. As long as you begin with a proposal in the ballpark your prospect is used to playing in, you’re not likely to scare them off.
Take the time to do your homework and use one or more of the estimating methods I covered in The Dynamic Manager’s Guide To Sales Techniques. Even if you didn’t use those figures to structure your proposal in the first place, they will give you a sense of what’s possible for your negotiation.
Judge the reasonableness of your opening offer carefully. My rule now is that my opening offer is one at the high end of what the prospect could accept with no further changes if they were so inclined—and one I could defend without stretching my credibility.
It’s also good to practice a little mental discipline. Right at the beginning of the negotiation, establish in your own mind the lowest acceptable offer you’ll take. That way, you have a sense of how far you can go before you start cutting into profit margins, production capacity or whatever benchmark your company uses. As the negotiations proceed, you know where you are at all times. That sense of security gives you greater confidence during the process.
Establishing the lowest acceptable alternative in advance does something else. It keeps you in a win/win frame of mind because you don’t have to worry about losing! As long as you know the point at which you will walk away (and stick to it) you can’t lose anything.
As you may have noticed, we’ve now set an upper and a lower limit to pricing. This range makes it much easier to build a few small concessions into your proposal, or plan some value items you can add as the negotiations proceed. This helps you avoid making that big concession all at once, leaving you with no place to go if the buyer rejects it.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
September 11, 2012
Put Time On Your Side When Negotiating
One of the factors never to be overlooked in any negotiation is time. Time pressure works for and against both parties, often in interesting ways. Anyone who has been involved in union negotiations, for example, knows that the largest concessions always come just before the strike deadline. In fact, sometimes that’s the first time any concessions occur! Knowledge of the deadlines faced by the other party can be a powerful tool.
The pressure to come to an agreement is generally greatest on the party with the nearest deadline. Magazines are much more inclined to negotiate liberal terms for ad space the day before the issue closes than they are the week before. The prospect whose insurance policy is about to lapse is more eager to renew the policy than one with a 90 day grace period remaining. Know your prospect and know their deadlines.
One way to use time to your advantage is by making small concessions one at a time, drawing out the negotiating process if that is to your advantage. On the other hand, you may need to bring the deal to a close, in which case you may want to make a BFO, or best and final offer.
As a seller, though, don’t be surprised if the buyer calls your bluff. They have nothing to lose and plenty to gain by telling you your BFO isn’t good enough. If you back down and make a further concession, all you’ve done is prove to the buyer that you’re a bluffer—and that your word isn’t any good.
The time to make a BFO is when you discover you’re negotiating with yourself. You can tell that’s the situation because the other party isn’t offering any concessions—you’re the only one making any movement. It’s one of the most frustrating situations you can face. You make all the moves, getting nothing more than a “that’s not good enough” response from the prospect. The time to take a chance and make your BFO is when you have nothing to lose.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
The pressure to come to an agreement is generally greatest on the party with the nearest deadline. Magazines are much more inclined to negotiate liberal terms for ad space the day before the issue closes than they are the week before. The prospect whose insurance policy is about to lapse is more eager to renew the policy than one with a 90 day grace period remaining. Know your prospect and know their deadlines.
One way to use time to your advantage is by making small concessions one at a time, drawing out the negotiating process if that is to your advantage. On the other hand, you may need to bring the deal to a close, in which case you may want to make a BFO, or best and final offer.
As a seller, though, don’t be surprised if the buyer calls your bluff. They have nothing to lose and plenty to gain by telling you your BFO isn’t good enough. If you back down and make a further concession, all you’ve done is prove to the buyer that you’re a bluffer—and that your word isn’t any good.
The time to make a BFO is when you discover you’re negotiating with yourself. You can tell that’s the situation because the other party isn’t offering any concessions—you’re the only one making any movement. It’s one of the most frustrating situations you can face. You make all the moves, getting nothing more than a “that’s not good enough” response from the prospect. The time to take a chance and make your BFO is when you have nothing to lose.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
September 4, 2012
Overcoming A Distaste For Negotiation
Some people are leery of negotiating a sale. They feel that the process is somehow dishonest or demeans them, their product, or even their prospect in some way. In fact, I often encounter sales managers who proudly point out that their prices are firm. They insist that every customer pays the same price and that’s the one set by the sales manager. They would rather forego a sale than violate their holy pricing policies. These sales managers need a strong dose of reality—and they often get it in the form of declining market share.
There is nothing holy about a given price, nor is there any moral law that says that every customer is entitled to the same terms. In fact, certain religions make a pretty strong moral case for customizing prices and other terms according to each customer’s individual needs. Don’t get me wrong. There’s nothing wrong with having a firm pricing policy. But let’s not hide the reasons for it in some kind of moral cloud. Firm pricing is a matter of what management feels is best for the selling company. Ideally (from their standpoint), it controls demand to produce the maximum profit from the available supply. And having firm prices makes the administration of the revenue stream easier, which makes the sales manager’s job easier. There’s nothing wrong with that.
But there is nothing wrong with negotiating every sale, either. Humans have been doing it for thousands of years in one way or another. In fact, the most successful economic system yet invented, the free market economy, is predicated on the freedom of sellers to offer different value for various prices and for buyers to accept or reject them.
Isn’t that what happens when your favorite department store puts an item on sale? Apparently, the store’s customers made the choice to not buy that item at the previous price, and the store made the choice to offer it at a lower price as a result. Isn’t that a form of negotiation?
Western retail negotiation just doesn’t happen face-to-face (usually) like the haggling that occurs in a Middle Eastern souk. It’s the same process, but the department store is haggling through the medium of its displays and signs rather than having hawkers standing in the aisles soliciting offers for the merchandise on the tables.
In business-to-business sales, nearly every sale is openly negotiated. There may be published price lists and standard terms, but very few buyers would keep their jobs if they didn’t at least try to do better. And few sellers would keep the revenue flowing if they didn’t make pricing adjustments to stay competitive.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
There is nothing holy about a given price, nor is there any moral law that says that every customer is entitled to the same terms. In fact, certain religions make a pretty strong moral case for customizing prices and other terms according to each customer’s individual needs. Don’t get me wrong. There’s nothing wrong with having a firm pricing policy. But let’s not hide the reasons for it in some kind of moral cloud. Firm pricing is a matter of what management feels is best for the selling company. Ideally (from their standpoint), it controls demand to produce the maximum profit from the available supply. And having firm prices makes the administration of the revenue stream easier, which makes the sales manager’s job easier. There’s nothing wrong with that.
But there is nothing wrong with negotiating every sale, either. Humans have been doing it for thousands of years in one way or another. In fact, the most successful economic system yet invented, the free market economy, is predicated on the freedom of sellers to offer different value for various prices and for buyers to accept or reject them.
Isn’t that what happens when your favorite department store puts an item on sale? Apparently, the store’s customers made the choice to not buy that item at the previous price, and the store made the choice to offer it at a lower price as a result. Isn’t that a form of negotiation?
Western retail negotiation just doesn’t happen face-to-face (usually) like the haggling that occurs in a Middle Eastern souk. It’s the same process, but the department store is haggling through the medium of its displays and signs rather than having hawkers standing in the aisles soliciting offers for the merchandise on the tables.
In business-to-business sales, nearly every sale is openly negotiated. There may be published price lists and standard terms, but very few buyers would keep their jobs if they didn’t at least try to do better. And few sellers would keep the revenue flowing if they didn’t make pricing adjustments to stay competitive.
Dave Donelson distills the experiences of hundreds of entrepreneurs into practical advice for small business owners and managers in the Dynamic Manager's Guides, a series of how-to books about marketing and advertising, sales techniques, motivating personnel, financial management, and business strategy.
August 30, 2012
Golf Purists Love Pasatiempo
11th Hole, Pasatiempo. Photo courtesy of Rob Babcock/Pasatiempo Golf Club
California has so many great golf destinations it's easy to overlook one of the best courses in the state--if not the nation--simply because there's no resort attached to it and the professional tours don't stop there. I'm talking about Pasatiempo, the classic Alister Mackenzie gem roughly midway between San Francisco and the Monterey Peninsula, home to one of his other famous designs, Cypress Point (not to mention Pebble Beach, Spyglass, et al). No matter where you're playing otherwise in Northern California, Pasatiempo is well worth the short side trip. It's a must-play for serious golfers not to mention students of golf architecture. How good is Pasatiempo? When Bobby Jones played it on opening day in 1929, he immediately hired Mackenzie to design Augusta National.
Pasatiempo is only 6,521 yards from the tips, but it plays to a stalwart 72.4 rating/143 slope. Its dramatic elevation changes and seemingly endless natural hazards make for a rugged course whose difficulty is cranked up several notches by Mackenzie's strongly contoured greens and sprawling, glorious bunkers. Every hole seems to offer a risk and reward tactical choice and every green runs fast, true, and convoluted.
Each successive tee box presents you with a unique challenge. The opener is a 457-yard par four that requires a long, accurate approach as well as a powerful drive. The third hole, a magnificent 235-yard uphill par three, is protected not just by its length but by four menacing greenside bunkers along with a mind-messing cross bunker. The first par five you play, the sixth hole, is 567 yards, but believe it or not, accuracy counts more than length on every shot due to the tight fairway, cross bunkers, and long, narrow green. Next up is the shortest par four on the course, the 348-yard seventh hole, where trees from both sides nearly meet overhead to practically form a tunnel over the fairway. Needless to say, a controlled tee shot is essential.
Natural hazards abound on the back side. A bottomless ravine threatens both your drive and your approach on the 392-yard eleventh hole, then comes back into play guarding the green on the 373-yard twelfth. Fifteen is a 141-yard one-shotter perched behind another deep fissure in the earth's crust, as is the 169-yard finishing hole, which also slopes--and putts--more like an icy ski slope than a golf green.
16th Hole, Pasatiempo. Photo courtesy of Rob Babcock/Pasatiempo Golf Club
The number one handicap hole on Pasatiempo is the 387-yard sixteenth, a hole Mackenzie himself considered the best two-shotter in the game. The drive is uphill, blind, and rewards a high draw if you can pull one off. The approach is what separates the men from the boys, however. It's back over the ravine you've encounted on several holes and into a brutal three-tiered green that is a full 49 yards deep and has a frightening false front. Coming up short is not an option, nor is leaving your ball above the hole. In other words, par on this hole is almost always a function of a perfect second shot. It's easy to see how Pasatiempo was built to enhance match play, the predominant form of competition in its day.
The club has hosted numerous USGA championships and is the permanent home of the Western Intercollegiate Golf Tournament where everyone from Ken Venturi and Gene Littler To Johnny Miller, Dave Stockton, and Tiger Woods competed during their college years. LPGA star Juli Inkster literally grew up on the course and Alister Mackenzie chose to live there--his home is along the fairway on the sixth hole. And here's an aside for New York area golfers: Mackenzie is believed to have worked on Century Country Club in Purchase while he was a partner with Colt & Allison, the official designers of the course.
One of the best features of Pasatiempo is its status as a semi-private club. Certain tee times are reserved for members, but you can book a time online as much as 365 days in advance. If you treasure the classical traditions of golf architecture or otherwise want a spectacular golf experience, book yours today!
Among many other books, Dave Donelson is the author of Weird Golf: 18 tales of fantastic, horrific, scientifically impossible, and morally reprehensible golf
