When running a small business it’s easy to be seduced by the siren song of percentages. Many owners concern themselves with percentages of COGS and gross profit margin, basing important merchandising decisions on rules of thumb. Often they’re businesses are dashed on the rocks of bankruptcy, all because they neglected the more important dollar amount of gross-profit margin.

The difference between percentages and hard dollars is not an academic argument. It could very well mean the difference between profitabilty and financial insolvency. Consider the following scenario:

A small business owner buys widget X at $1 and sell it for $4.

• markup = $4/$1 = 4X
• gross profit = $4 – $1 =$3
• gross-profit margin = $3/$4 = 75%

Now, that same business person see’s widget X with extra features and trapping being sold at $4 from their wholesaler. Most owners would mentally calculate that they’d have to sell the product at $16 (4X markup). While the extra features make the widget X greatly improved, they know no sober will pay that money, so they don’t stock improved widget X.

Why didn’t they think about selling it for $8?

• markup = $8 / $4 = 2 X
• gross profit = $8 – $4 = $4
• gross-profit margin = $4 / $8 = 50%

For the same amount of effort a $4 gross profit and better than $3. Yet many small businesses don’t see it that way.

They stick to old rules of thumb, thinking that a 2X markup is worse than 4X, and keep selling products that net them a lower gross profit. They’ve been seduced by the sirens song.

Photo credit Daniel Y. Go

Aside from the usual sound bites about my career, relationships, and shenanigans (varies by audience) I grab nearly every chance to plug how great it is to live in Rochester.  The city couldn’t have a better unofficial ambassador.

Gladly, I’m not the sole cheerleader for the area. In fact, there alot of postive and proud people who are doing much to promote and improve the Rochester region. This is exemplified by Eyes on the Future, an annual summit designed to encourage economic development, civic engagement, community volunteerism and entrepreneurship.

Taking place at St. John Fisher College this October 10, 2008 from 8:00AM to 11:00AM,  the theme of this event will be “Why Rochester?” The panel will speak about recent successes, assets possessed by the region and ways the community can share in bringing economic development to the region. If all this talk spurs twice as much action from everyone in attendance, I expect there to be a bright future for the Rochester region.

Of the over 1000 people who will attend this event, will you be one of them? More importantly, what actions do you think need to be taken to restore the economic vitality of Rochester?

Photo credit Yoshi

• A leader depends on goodwill not authority. A marketer strives to build positive brand equity. In other words, it’s a sustained effort of creating consistent experiences that lead to postive associations, and a clear position for the brand.

• A leader pulls (not push) you by acting as a role model. I don’t completely agree with Corelli on this point. A combination of pull and push marketing is the right strategy. Yes, a leader will convert people to loyal followers by acting as a role model but he will also use push tactics. For instance, a monthly incentive that rewards exemplar conduct is an effective method of instilling employee motivation. A marketer might pull people to subscribe to an educational e-newsletter with interesting content, but will occasionally pitch a product to the list to make an immediate sale.

• It’s not about where you are, but what you could and should be. Brands make a promise on a functional level (save time, a closer shave) and on an emotional plane (be happier, heightened social appeal).  A leader has a vision that she intends employees to fulfill for themselves and the company. You could increase your pay by increasing productivity X % (functional) and take pride (emotional) in beating the competition.

• It’s not about me, lets focus on empowering “you.” Good marketers eschew using the words “we” and “our.” The best marketers think of their customers as communities, while providing reasons for people to begin conversations about the brand.

• Leaders focus less on achieving immediate results, more about working hard to achieve ultimate objectives. Discounts and hard sells are appropriate in some situations but detrimental to long term profits if abused. The best marketers strike a balance in using these tactics. They also realize how their actions impact the organization as a whole. Therefore they make an effort to align their activities with sales, finance and HR.

How about you name one or two similarities between leadership and marketing?

Photo by pedrosimoes7

I had an interesting experience with the Brockport Auxillary Service (BASC) a little while ago, and it struck me as related to a post Seth Godin wrote some years ago about the end of the job interview.

To add some background filler, BASC provides support services to The College at Brockport, and the company had created a new opening for a marketing assistant. The description sounded like an unique blend of graphic design and event marketing with a dash of strategic planning thrown in, I immediately whipped up a personalised resume and cover letter.

After following up, a week later I received a response from BASC’s Marketing Director. However, it was atypical in that to get a face-to-face interview I needed to pass two requirements:

First, the Director outlined a goal, increasing commuter meal plan sign-ups. My task to achieve that objective, design a print ad to appear in the campus newspaper, The Stylus. Taking this a step further, I designed an interactive flash ad that can be embeded in the online edition of the student newspaper. The flash and print ad complement each other since they both have the same theme. Not to mention the traffic clicking from the flash ad to the meal plan section of the website can be measured – gotta sweeten the pot from an accountability standpoint

This being my first foray into flash I’d appreciate any constructive feedback about the following ad. RSS readers can view the flash ad here.

The second part involved answering two questions:

Given what I know about college students, what techniques would I use to communicate with millennials?

A habitual channel surfer, and an avid fan of the Firefox web browser Adblock Plus extension, I have never been happy to be bombarded by advertisements. A Gen-Y’er myself, I think it safe to say the majority of us are turned off by marketing that is all hype, and not truthful. Meaning the messages that will get through have to be highly relevant. For instance, college students would be more likely to read an email newsletter from BASC if they know it contains a list of the top growing career fields over the next five years, or practical techniques to use in landing a internship. These are areas many colleges students are eager to know more about.

Two effective ways to reach the college set is using a combination of the online environment, and event marketing. As an example, you’re trying to increase enrollment in the commuter meal plans. Have BASC sponsor an event for commuters in one of the dining halls, whoever makes the wackiest dish out of the set ingredients wins a prize. You have a BASC rep there to tell people about the meal plans, and sign them up. Beforehand you would set up a Facebook page or group for the event, and invite a list of registered commuters to join.

My experiences with the Internet and technology.

While at the Public Market, I ran into an old high school friend, who to my surprise now lives in Rochester. During our brief chat we texted each other to update our phone numbers. Afterwards, I logged into Facebook at home to view George’s profile, and catch up on the lesser happenings in his life that he didn’t mention in our conversation. Then I left a comment on his comment wall, and he did the same later on. Now we carry on some lively conversations via IM – I use Digsby, a slick application made by the bright minds at RIT.

In addition, I frequently use the Facebook status updates to let friends know what I’m doing, thinking, wearing, etc. Likewise, I like to follow what’s going on in the lives of my friends, Digsby makes this easier because it pops up a little AJAX window on my desktop whenever a friend makes a status update, posts a picture, etc. So when my friend Mike, who’s an actor in NYC posts a picture of his crazy haircut for a role, I know about it right then and there, and can IM my other friend, Simon, and we both can laugh about how silly Mike looks.

Not to mention the group function on Facebook makes it a snap to coordinate a friendly game of floor hockey. What is the underlying value of this technology in my life? It is a social conduit, allowing me to bolster the relationships I’ve made, making my offline life all the more richer.
Finally, there is blogging. This is a great way to express, and develop your opinions which I do at my own site. But the best part of the whole endeavor is being able to have an interaction between the writer and readers, which for the most part improves upon the original idea. You’ll find that I’m an active commentator at the Daily Fix on the Marketing Prof’s website.

These efforts brought me to the interview table twice, where I had the chance to brainstorm solutions to reverse the bad publicity that campus parking faces. For instance, I suggested there be in an event during the winter where professors who volunteer park in the student lots for a day, and they make a mad dash to a class room. A funny reversal of situations, this brought a few chuckles from everyone in the room.

How does this relate to Seths post? What’s my point? Seth talked about two types of careers, the cog job versus the position which requires insight and creativity. The job interview as we know it is not suited for finding proper candidates for either position. You should hire a creative on the basis of how apt they are at solving your business problems, and whether they mesh with your team, not by how well they perform during a rote Q&A (unless they’re going to be a public speaker). Smooth talkers do not always translate into problem solvers. Out of all the companies I’ve interviewed with so far, BASC is one of the few that best understands that reality.

Update: another candidate edged me out for this position, so I’m still looking for gainful employment. On a related note, you should always follow up a rejection with a letter asking for feedback. How else are you supposed to improve for next time? Here’s my simple, follow-up rejection letter.

Error on the side of caution and tradition, content to tweak existing products and services.

or…

Be bold, reshaping and creating things that are completely new.

Each has its rightful place. The tough part is figuring out which to choose. Congratulations Kraft, on knowing when to take the bold path.

What’s the success factor? We now charge for EVERY service provided to the customer.

• Tune Ups
• Boot Work
• Rush Mounts & Adjusts = additional charge

Photo courtesy of Leap of Faith

Another great improvement. No more giving away ancillary products like a $15 pair of ski socks with a major $500 boot purchase. Which makes perfect sense considering more margin is made on the socks than the boots. After the years of conditioning, expecting to receive that freebie, a few customers can be obstinate. But the majority have quickly come to accept the new reality.

Me, well I’m just happy the shop and friends I enjoy working with will be around for next season.