Coffee talk business conversation

I see you're in your office.
I sit here every weekday after 2pm gathering my thoughts and writing about random business conversations.

I remember reading that in one of your blogs. I was in drive-thru and I saw bright orange jacket screaming at me. Then I saw it was you and it wasn't a surprise.
How's your business purchase coming along?

I haven't done anything further with it.
Why?

I have to figure out the money thing and decide if it's worth it for me.
Are you worried about financial stability?

Of course.
What if you lost your job tomorrow?

I'd be out of work and have to find another job.
You aren't comparing like objects. The stability of your employment is based on the assumption that you will be continuously employed forever. When we both know, downturns in the economy, rightsizes, merges and acquisitions, competitive factors and technology threaten our jobs everyday.

Yeah but I have a steady paycheque, whereas if I bought that company, there is no guaranteed paycheque.
Has the business been around for more than 10 years?

Yes.
Is the business dependant on the current owner being there?

Yes and no. The employees do the "real" work while the owner sits in an office all day, doing nothing except taking a three hour lunch everyday at god knows where.
Don't misinterpret entrepreneurship with technical work.

What's the difference?
Let me change the question.

I should've expected that from you.
When you're at home, do you have chores to do?

Umm, yeah. Don't we all.
Right, but isn't the chores we do like cleaning the garage, mowing the lawn, or painting the fence considered work?

Sure, but it's not paying work.
Exactly, but if it doesn't get done, what happens?

Things start to break, and the value of my home will go down. I'll be miserable.
So as much as you hate it, if it doesn't get done, things will be worse.

Exactly.
The same goes for business. Many would-be entrepreneurs get into a business that does a technical job that they're really good at. They focus on the technical aspects of the business and ignore the other stuff. The focus on where to make their dollar today. And just like you're home, if you ignore the other stuff long enough, it devalues itself, it starts to break down and ultimately it will make you miserable.

You've lost me. You're comparing household chores to office work. I get the need for office work. I'll just hire someone to do it.
Right, so why haven't you hired someone to mow your lawn yet?

Wha??? That's not a fair question.
My point is that your discounting the contribution of the owner in his organization because he sits behind a desk and then disappears. Just because he isn't doing the billable work, doesn't mean his contribution to the organization isn't substantial.

Ok. Fair enough. He's there everyday.
Are the sales growing or are they flat?

Flat, but with new blood, the sales could explode.
Could they implode?

The majority of sales are dependant on federal political contracts.
Are these contracts awarded annually?

Yes. But he gets them every year.
So what's the problem?

I'm afraid the contracts won't give me enough security to move forward with a purchase.
That's fair. Why do you want a business anyways?

To make more money.
Wrong answer. If you want to make more money, keep your job, or get another job, or figure out how you can make money on the side while keeping your job.

But I want to own a business.
No. You just said, you wanted more money. You think owning a business will give that to you. That's a false assumption.

What's the right answer?
There isn't one. An absence of the wrong answer is the right one.

Now your talking in riddles. Please help me out.
Wrong answers include; more money, more time, more fame and more flexibility. You see there's a difference between owning a business and owning a personal revenue stream.

Personal revenue stream...um,  I'm confused.
A business is something that helps many people in the community: suppliers, employees, customers and owners. A personal revenue stream is a type of business with a single purpose - make money for the owner.

Can you give me an example?
That's easy. For years young professionals, like doctors, dentists and orthodontists would buy a book of business from a retiring professional. Dr. Smith's clients would get sold to Dr. Kelly, which is truly just a personal revenue stream transfer. There wasn't any brand equity transferred. The brand "Dr. Smith" was gone, and the new brand, Dr. Kelly was here. So although, the young doctor would buy a business, he actually had nothing because the brand equity left with the retirement of the previous doctor.

But customers will keep going because we're all creatures of habit.
Yes, but the relationship was with the person and not a strategically built brand.

What would have to be done to turn the same model into a business?
The young doctors started clinics using names not associated to the practicing professionals. Dr. Smith's office became "Doc Wellness". Anyone working at Doc Wellness was an employee, including the presiding doctor. Dr. Smith could leave or sell and Doc Wellness lives beyond him. Now that's brand equity. Customers who came didn't necessarily get Dr. Smith each time.  Just like in a restaurant, they couldn't always choose who would be serving them. They were building relationships with a brand and ultimately a business.

You still haven't answered my question, what's the right answer to why I should own a business?
That's a very personal answer that I can answer for you. What I can tell you is a business exists for only one reason, and it's not for you. The business exists to help others get what they want. It has to be greater than the owner's needs. A business helps customers first. And when I mean customers, I mean buyers, employees, suppliers, bankers, government and landlords. If there's anything left, the owner gets to decide where it goes - his pocket or a in a future investment.

It has to be greater than the owner? I thought the business was mine.
You control the asset. But without everyone else, you have nothing. It is their grace that allows you to succeed. Never forget that. But that's a story for another time. You haven't decided to buy yet.

No, I'm scared.
That's perfectly normal. You have to figure out why you want to do this beyond money. And here's why: Imagine in a moment of weakness, when nothing seems to be going well, when you wish you just had a job. The 80 hour week isn't commensurate with your pay. Your wife is worried. You're worried. Mortgage on your house just got missed. At what point do you quit?

I don't know.
You'll quit when the pain is greater than the perceived reward. If your goal is money and there isn't any, you'll lose faith quickly. If your goal is something greater, you'll persevere through the lack of funds. You'll even invest more money to try to keep your dream alive.

That's crazy. Who would do that?
Only people who get into business for money would say that. A dream is all us entrepreneurs have. And building on it is why we do what we do.

I can't afford to make a mistake. How will I provide for my family if I do?
Then stay out of business. Mistakes are going to happen. This isn't grade 12 math where there are only right and wrong answers. There's no way of knowing for sure what is going to happen. World War 3 could start tomorrow and kill all of our efforts.  I don't worry about the things I can't control. I only dream of things for a better tomorrow.

I have to go, but I just wanted to say hi.
Hi to you as well. Good luck with whatever you decide to do. Just remember, do it for something greater than for yourself. And ask yourself this, if money wasn't a concern would you do the deal?

I don't know.
Right. Money's usually not the problem, but always the excuse to not do something.

Are you a car chasing dog?

Entry: December 27, 2017

Sitting in a coffeeshop, sipping on a green tea, I was writing about sales conversions when someone  interrupted my thoughts.

Excuse me, do you remember me?
Not sure, where do I know you from?

From a marketing class you did in June. Can I ask you a question?
Sure, what's up?

I'm having a hard time converting clients into my 12 session packages.
Refresh my memory on your product.

It's a service based product that I charge $85/hour for consultation. I'm trying to get those early purchasers to convert onto an annual package.

Have you converted anyone yet?
No

Did your client pay a fee for the first session.
Yes.

Good, that means you got them to open their wallet. That is one of the hardest steps in the sales cycle.
So why can't I get them to buy future sessions. Dentists get their customers to book right away after their initial session.

Be careful of your thoughts
What?

Dentists sell preventative maintenance contracts. A patient calls for one thing, maybe a sore tooth. The dentist pulls the tooth and explains why the patient may want to buy into their maintenance contract to not get more sore teeth. It's really fear based marketing. Many people walk into a dentist office to get the problem fixed never to come back until the next problem arises.

But the dentist really wants the customer to come back every six months right?
Of course. That's as close to guaranteed sales as anyone can get.

So how do I make my business more like a preventative maintenance contract?
It starts with your approach.

How much money are you spending on marketing?
None, I do the free stuff like Facebook, Facebook Live and Instagram.

What are your results?
I got three clients from it.

And once those three clients experienced your service, what happened next?
I offered them my 12 session package at a discount, but no one took it.

Based on what you told me, that's not what dentists do.
Yes they do. You said it yourself, they get you into the preventative maintenance contract.

No. Dentists get you to agree to another session. - One at a time. Slowly but surely.
Yeah, but once you're in, they've got you.

Not necessarily. Let me explain in a different way. Are you married or in a serious relationship?
Yes, I've been dating the same girl for 2 years.

How did you meet?
On Tinder.

Ok, so when you met your girlfriend on Tinder, did you ask her to sign up for a 12 month relationship package?
No, that would've been weird.

Why?
For two reasons, I don't know if I like her yet. And even if I did,  I wouldn't want to scare her away by being too....

Aggressive?
Oh my!

You're trying to marry your customers on the first date. Stop that right now.
So you're saying, my main goal after the first date is to get a second date???

Use your first session as a "getting to know you" opportunity. Just like in dating, if you don't think you can help, or if you don't want to help,  don't offer a second session.

But I'm leaving an opportunity off the table. Isn't that bad sales?
Not really. If you're not going to be able to help them because of their poor attitude, they're going to be more harm than good through negative referrals. They will bring you down and your ability to help someone more worthy of your talents.

But money is money. And if they've got it, shouldn't I want it?
Business isn't linear that way. If you think like that, you'll be chasing cars your whole life not understanding why no one is stopping for you.

You've lost me again.
Who chases cars?

Uh, dogs?
Exactly, and if you chase cars, then you're just another dog. Imagine you own a retail store on one of the busiest streets in your city. There are five equally competent competitors selling relatively the same thing within a mile of your store. To convince people you are the best choice, you've invested in the biggest, brightest sign. People notice you and inevitably, they stop in to find out your product is below their expectations and your service is worse. Will they be back?

No, but my product won't suck and my service will be the best.
Says all of your competitors.

But it will.
You don't get to decide that. The person walking through the door makes those decisions for themselves.

What does this have to do with chasing cars?
The amount of cars going by your store doesn't diminish. However, what happens is that the traffic inside your store does. Over time, those cars don't stop anymore. And all of your marketing efforts in your signage and your high priced rent is useless.

But someone will like what I offer, right?
Yes, but your adrenaline addiction for "traffic" and "opened wallets" will tantalize you with destructive behaviours like price discounting.

You've lost me.
If you chase money, it will always elude you.

So what do I have to do differently?
That's a conversation for another time. I'm late for my lunch rush. Here's my card, call me tomorrow to set up our next meeting. My hourly rate is $150.

Do you offer a discount?
Nope, and you should've picked up from our conversation that is the wrong question.

But I'm new at this entrepreneurship stuff and I don't have any money.
I get it. Would it make you feel better if I give you my consulting for free?

Yep.
But it won't help either of us because you won't take me serious.

Of course I will, I think you have a lot to offer me.
Let's step back for a minute. Think about everything I've already shared with you.

Chasing cars, discounting and relationships, I get it...
Well if I was chasing your car, I jump into the free advice, hoping that you'd like me enough to get into a relationship with me. Then when you were making money, you'd start paying me.

Exactly. I'll take care of you if you take care of me.
Wrong. You take care of me, because that's what you do. The customer relationship is based on you taking care of the customer.

But if I paid you, I'm your customer. Not the other way around.
That's what I mean by business not being linear. Customers are suppliers, consultants, street sweepers, people buying your product, people seeing your product. Any interaction with your brand creates a potential customer. Your role in your business is to create and keep as many positive customers as you can. Although you would be paying me, I'm still one of your customers. I help your business succeed. And you'd be my customer.

So will you help me?
I'm not chasing cars. I need a few more dates to figure that out. But the next date is not on my dime. If you're not willing to pay my hourly fee in advance to our next meeting, then I can refer you to someone else.

I will call you tomorrow.
Ok. If you don't, can you do me a favour?

Sure, what?
Throw out my card.

I've never met anyone like you. Are you serious?
If you can't keep a simple promise like calling me, throwing out my card releases me from having to tell you I can't work with you.

Did Amazon kill the Re-tail star

If you want to know the future, review the past.

There was a time when there was one store in town. And it sold almost everything you needed.
Food, hardware, clothes, and toys all bought under one roof.
One guy would be in the store to take your order at the front counter.
You could wait for him to gather your items or you could come back later to pick them up.
If your order was big enough, he would load them up in his wagon and deliver them to you on his way home.

As towns grew, the General Store couldn't keep up, so competition emerged. Merchants figured out that demand was somewhat based on supply, so they built bigger stores, put more stuff in them and eliminated the counter person. Customers could pick up what they wanted. They would go to the counter and pay the clerk instead. Less staff kept prices down. And low prices were the way to win the customer's loyalty.

Competitors showed up and started to specialize in products. New needs emerged with technological advances and economics of a growing population. Instead of General Stores, we built clothing stores, hardware stores, drugstores, grocery stores, liquor stores, and service stations.

Many stores were still General Stores, but they didn't identify as such. Sears, The Bay, Eatons, Woolworths, Zellers and K-Mart kept acting like General Stores but didn't accept the changes of the market demands.

Instead of picking out what we wanted in the store, we called or mailed our order to a counter person and our items would be delivered to our local depot for pickup. The item would be picked by employees, while we waited for its arrival.

By using technology, those first to the catalogue business benefitted greatly from their innovation.
Was the concept much different from the General Store?

Some companies figured out that they didn't need retail space. Why spend rent when customers are ordering over the phone and by mail? Enter Consumers Distributing.  From 1957 to 1996, Consumers Distributing sold "online" only. Their business model was flawed in that they were often out of stock when customers tried to order.

The new-age General Store emerged with Sam Walton guaranteeing lowest prices. He recognized the inefficient supply channel and knew if he fixed it, he couldn't be beat on price as the current game was being played. And thus emerged the term "Category Killer".

Say good bye to Consumers Distributors, The Bay, Sears, Eatons, Woolworths, Zellers and K-Mart. They were all competing on price with each other and Walmart changed the game to their advantage.

The General Store still exists and will always exist.

In 1994, technology brought in the next wave of competitors.
You still go to a counter. We call them websites now.
Someone else picks the item.
Someone delivers it.
You still have choice.
And price is still important.

In 2015, Walmart closed 247 stores.
According to Price Waterhouse Cooper, 56% of all worldwide retail shopping is done online.

The world of retail has changed.
You can no longer compete on price.
We knew that 23 years ago when Walmart started killing the competition.
We know that even better today as Amazon euthanizes Walmart.

So don't try.
Decide that you are not going to be the best price.
Decide that you are going to be the best at something else.

Some products are commodities, where the only thing that matters is price.
That's why Dollar Stores exist.

If you are trying to compete with these giants in a commodity type industry, you're like the chickens we used to kill every October. You're still bouncing around, but your head has been cut off.

"Customers" (I use the term loosely), are coming to your store, benefitting from your expertise, acquiring knowledge, checking out reviews and prices on their phone, and then making a purchase decision that probably doesn't include your store, unless they need the product now.

The future of off-line retail is dead, unless something changes.

Consumer prices are generally higher in traditional retail because someone has to pay for the expensive rent.
Offline retail cannot compete on price with online retail.
The metrics don't work.
Time is also a problem
Consumers are busy.
The old way of shopping is inefficient for these time sensitive buyers.

Despite this, off-line retail has a huge opportunity.
The king of off-line retail, Costco, knows this better than anyone else. Offering samples at the end of each aisle helps them sell more food but it also helps them stay ahead of online retailers by offering samples to create enjoyable shopping experiences.

CNBC reported in 2016 that Millenials are spending less money on stuff and more money on experiences. They'd rather ride a scooter and travel to a foreign country twice a year than own a Lexus and have a $50,000 debt.

Experiences over Stuff

I asked my millennial friend Craig about this and he smiled. He and his wife earn almost $150,000 per year. They own a modest home, no kids, and a dog. No fancy cars, but they travel four times per year.

Experiences over Stuff

The experiential shopping factor at a Walmart on a scale of 1-10 is 0.
The experiential factor on Amazon is close to the same.

They both sell stuff. You buy it. It shows up.

Off-line retail has something Amazon does not. It can offer an experience.
And I'm not talking about the cliche experience most retailers currently offer, like friendly service, nice posters, inviting music and well dressed employees.

Experience is deeper than that.

Imagine wanting a baseball bat.
Before you buy it, you can try it out while you hit a baseball into the stands of Fenway Park or Wrigley Field. Half virtual, half real so the customer can test the "feel and performance" of the product.

You can still buy the bat online for $20 cheaper, but maybe the "trial" comes with a $10 handling fee that is credited to the purchase of the bat if you buy it.

You can do that with almost any retail product. But it takes guts to move in that direction.

The world of retail is constantly changing.

Amazon will sell cheap stuff until the next General Store emerges. Technology will decide what that will look like, as it always has.

So the only way the new face of retail will survive is if it changes the way it offers new, exciting experiences to its customers.

Get customers to break down your door

Apple Pie is best 10 minutes out of the oven with a scoop of french vanilla ice cream.
The ice cream slides off like a 5 year old boy screaming with joy on the playground.
The first bite reminds me of that one apple tree in my grandma's back yard. The grandkids would pick the tree bare each autumn so grandma would bake us a pie.
We called our grandma, memere, which is slang for grand mere in French.
Her freezer had an endless supply of Napoleon (neapolitan) ice cream.  
In the fall, she traded it for french vanilla.
Without ice cream, apple pie is disappointing.
My memere made a great apple pie. Your grandma did too. Mine is gone and so is her apple pie, so we will never be able to settle who's was better
It's the first day of Autumn and I can't help but think of those apple pie days in my youth. Huck Finn and Tom Sawyer never had so much fun...
This is part of a previous blog I wrote. Can you smell the apple pie cooking in the oven?

The point of the the story is to bring out an emotion. The type of emotion is not important.
If the story brings out an emotion, then it has done it's job.

What does any of this have to do with marketing?
If you can create an emotion in your target audience, they will remember the ad. They will personalize your story for their own perspective.

Through personalization, they will find comfort with your brand.
You never have to sell to a group who wants to buy.

You can sell anything with this story. You're not limited to ice cream, apples and ovens.

You could finish off the ad selling ice cream:
...Nicholson's old fashioned ice cream.  Like the kind grandma used to put on your apple pie.

or apples:
...Nicholson's Orchard. Grandma said wild apples make the best apple pies.  We think she was right.

or books:
...Richard's Bookstore. Your imagination is waiting for you.

The job of the ad is to get into a customer's head. Most of us have eaten apple pie. Most of us have memories of grandma. Those emotions get exposed in a story like this.

Go write a story. It doesn't have to be about your product. The product is secondary to the story.

The story is the hero.
The product is like the supporting cast to the story.

If the customer participates in your story, you were persuasive.
If you're product is relevant to the customer, they will buy,
When he is ready to buy.

If you're ad is neither relevant nor persuasive, then you've wasted your marketing dollars.

Persuasion can be about price, limited time offers and limited stock. But that's the quick route to selling that loses effectiveness with any passage of time.

Those pesky price offers only work in the short term.
I hope you'll be in business longer than that.

Cliche is predictable and unrewarding

Do you live a cliche life?

No one wants to average, but everyone wants to be considered normal.
We feel unique, but most of us don't want to stand out.

Cliches are based on predictable patterns, words, solutions, and problems.

Go to school, get an education, get a good job.
You have to spend money to make money.

You can't save your way to success.

A life without struggle is not a life worth living.

First in wins.

Curiosity killed the cat.

A cliche thought followed by cliche action creates predictable results.

We cannot win by fighting the same battle as everyone else.

Winners in battle change the rules to their advantage so they can win. All great generals of war know this.

To win the game, you must change the rules, or wait an extremely long time with many casualties.

I'm impatient, and I don't want any casualties on my side.
I'd rather change the rules in my favour.

The United States military is the greatest military force the world has ever seen. In 2000, they developed War Game called Millennium Challenge. Paul Van Riper, a lieutenant in the Vietnam war was hired to act as a Middle Eastern rogue nation, otherwise labelled as "Red Team". The good guys were called "Blue Team".

Paul Van Riper knew the traditional steps in war. He prepared for the big slow moving machine to start their process. When "Blue Team" knocked out communication towers, he had already incorporated Morse Code to keep the lines open. When Blue Team attacked the ground head-on, Red Team attacked the back line, taking down aircraft carriers, and battleships. Blue team was highly predictable and Red Team was not. Using guerrilla warfare tactics that weren't conceived by the intuitive mindset of the opposing generals posed a major challenge for Blue Team. Within weeks, Blue Team was defeated despite its resources. Van Riper wasn't predictable and Blue Team didn't know what to do each time he struck.

Marketing works exactly the same way. The battle to gain attention is harder every day with each piece of new technology demanding our attention.

The way to win at marketing is by doing things differently.

Roy H. Williams of Wizard of Ads teaches his students about Broca's area of the brain. Broca is the gatekeeper to our brain. If the received information is not new, exciting or different, Broca slams the door shut and doesn't pass the material to the area of the brain that will retain it for future use.

Cliche is not new, exciting, or different.

Your life works the exactly the same way.

Two roads diverged in a yellow wood,And sorry I could not travel bothAnd be one traveler, long I stoodAnd looked down one as far as I couldTo where it bent in the undergrowth;

Then took the other, as just as fair,And having perhaps the better claim,Because it was grassy and wanted wear;Though as for that the passing thereHad worn them really about the same,

And both that morning equally layIn leaves no step had trodden black.Oh, I kept the first for another day!Yet knowing how way leads on to way,I doubted if I should ever come back.

I shall be telling this with a sighSomewhere ages and ages hence:Two roads diverged in a wood, and I—I took the one less traveled by,And that has made all the difference. 

- Robert Frost "The Road Not Taken"