Orangecast has launched a private business directory called CompanyWho.  The goal of company who is to provide the hundreds of small business customers that Orangecast meets as a part of business operations, relationships with the SBDC, and the State Bar of Texas access to a business directory that does not associate with “bad neighborhoods” on the Internet.

CompanyWho is an organic directory and it will stay that way.

Let’s face it, costs are going up all around us. Whether it be the price of our corn based ingredients or goods that require shipping which are in turn dependent on rising fuel costs, overall COGS are going up. As a small business owner, the question is not whether you need to do something about it. The real issue at hand is your overall strategy and how you position it.

This topic has been on my mind for sometime. It takes the right situation for me to really get fired up and sit down and right this. What was the catalyst? I was at my barber shop this week and their prices went up for the first time in over a decade. They’ve been in business over 40 years and when I use the word “barber shop” I truly mean it. This place is old school. So when they have to raise their prices, I knew this this was reality.

The barber shop decided to simply position it as “costs are going up and we had to raise our prices”. They had good points to surround the message. For example, when they opened the shop, a bottle of mens shampoo was under a couple of dollars. The good stuff is $52 a bottle now. One of the barbers said he had a hard rule of not paying more than $35 for a pair of sheers early on in his career. The good ones now are $480. Air Conditioning, rent, taxes, etc. . .it’s all rising.

In the end, the barber shop can pass on these costs and still be competitive. My business on the other had is constantly being challenged by customers to “sharpen the pencil on that quote”. So, in this post I thought I’d simply cover a few options and positioning business owners should consider:

Cost Are Rising and So Are My Prices

This is the barber shop’s approach. I think it is the least desirable as it sends a negative message to customers. Still, even the most savvy of marketing professionals use it. Starbucks makes a huge press event out of it! My only advice here is get your points in order to completely communicate the need to your customers and consider raising the prices of some services and not an accoss the board price hike.

Get Lean Before You Start Passing On

Every business has some inefficiency in it. Whether it be power consumption, leases, hosting costs, over night mail usage, travel expenses, or simple waist associated with last minute decisions (travel change charges, etc), you should use an economy like the one we have to get the excess out of your model and create as much of a profit margin as possible before raising prices. Then if you do have to raise prices in the end, you can communicate the fact that you worked all of these costs out of the business and still have to.

Cash Price vs. Credit Card Price

We all know that we have to pay a percentage to the credit card companies. If you raise your credit card price but leave a cash price that is untouched, you give your consumer the option. Ones who are price sensitive with have an option. You can also position this as a cash discount.

Make More Money in More Creative Ways

I am a firm believer that before you take the “easy out” of just raising prices you need to consider how to get more money out of your customer base. This could be anything from a marketing push to sell an under consumed but high profit good or service to bundling in order to get customers to buy more. I’d challenge my barber shop to sell more shampoo or bundle a shoe shine in with every hair cut at a raised price since the shoe shine guy is a sunk cost anyway and the customer would see perceived value in the price hike. This is the single best approach to dealing with rising costs. . . be serious about making more money! Upsell, cross sell, just plain sell.

We are all faced with rising costs but in the end your pricing has to rhyme with customer needs and ability to digest price hikes. If not, in the end, your plan will look fine on paper but you’ll loose money in the long haul!

-Derick

In a previous post I took a few jabs at the cost cutting measures of electronic checkouts. To be fair, I also talked up a few positive points as well. Most retail stores, however, still have people taking money and “ringing” customers up. What fascinates me is the “shove the change, receipt, and whatever else at the customer” upon checkout. OK, I could go off on the fact that people can’t count change anymore (or at least it is rare) but I’m going to stick to the marketing. Customer interaction is a privilege and every moment should be focused on their needs. A couple of core needs at check out are whether they got everything (upsell or catch a lost sale), customer satisfaction (being friendly) and courteous exchange of money. And yes, some customers have the need for a receipt. What I don’t get is the “shove a receipt at you”. After all, the IRS doesn’t need receipts for general expenses under $75 (IRS Publiction 463). So, why is there an assumption that everyone needs a receipt? Why is that considered a bonus? What happened to just asking them?

So I don’t come off as just complaining, I thought I’d put a few missed opportunities when just shoving a receipt at a customer:

1. Further demonstration that you are engaged with them and showing them that they are important. “Would you like the receipt in the bag?”
2. Recapping the value they received during their visit. “Here is a receipt if you’d like and your savings are clearly marked from the special items.”
3. Insuring they understand return policies. “I’m placing the receipt in the bag. You have up to 30 days to return for a full refund but you’ll need to show this receipt.”
4. Calling out your web site. “Here is a receipt. Our contact information and website is at the top. Have you ever shopped online with us? We run some great specials.”

The receipt exchange is simply a missed marketing opportunity!!! Meanwhile, the big box stores will continue on with the policy of shoving a receipt at you as it is something as imperative that you MUST HAVE!

-Derick

It is possible to walk into a store these days, due to electronic check outs, and never talk to a store employee. This is generally an operations or accounting driven decision aimed at cutting cost. By not having contact with their customers, they miss touch points for satisfaction, up selling, and more. Though, there are some customers who enjoy what they consider a hassle free opportunity to enter a store, get exactly what they want, and get out, all and all I feel it is a disaster from a marketing perspective. Thus, an opportunity is born!

Small Businesses retailers can’t afford electronic checkouts. Thus, as the large box world goes to a no customer touch model, now is a time to really double check your customer experience and touch points to ensure you have interaction that provides high satisfaction and an overall valuable experience.

Visit the big box concepts and constantly look for ways to fill the voids they so quickly create!

Derick