35 Ways to Enhance Sales Without Cutting Prices
President and CEO
30 Minute Photos Etc. & 30minphotos.com
September 8, 2005
Digital & Wireless Imaging Summit
Photo Marketing Association Fall Imaging Conference, San Diego, CA
There is a vacuum of leadership and creative marketing today within our industry. The reason: to many companies are just using price as the sole selling proposition. If you too agree that we need more entrepreneurial bravery to redesign our business model then read on.
The photo imaging platform can be safeguarded from becoming a commodity-based product with spiraling downward prices, and instead, return our business into an “on demand” service that justifies higher fees.
Let me first share with you a good trend that boasts encouragement for our future: Within just the past 6 months I personally have signed more NDA’s than in my first 15-years in business – and some with companies as prominent as Google. This indicates vast growth potential as many more companies are valuing the experiences of real entrepreneurs.
Many business models subscribe to the “get big or get out” message, but today technology is enabling the independent photo retailer with access to the same tools and a more level playing field. Today’s technologies are creating more formidable competitors to the former, industry leaders.
For those new to the photo imaging industry, let us start with a math equation and a theorem. For decades, the average consumer shot about 6-rolls of film per year — about 150 photos. They took that many because that was how large their album was and that was the typical number of photographs that people captured from their year-round events. Today, after the initial excitement from the purchase of a new digital camera or cameraphone, the number of digital snapshots steadies at about 800. Yet, picture-takers still want just about 150 prints on average. So, if the industry is discounting a photograph to just 10 cents, the gross profit is under $50. Those companies giving away unlimited free prints with $100 memberships; 50 prints for just $5.00 or using ad slogans which market to “penny pinchers” will not make any money.
Let us study this model of offering free prints with memberships. Don’t get too concerned, because if anyone engages in this unsound practice, they will fail. Sure, it works for Netflix – but they have maximums. Imagine if you could order an unlimited number of DVDs? Even with the pending new photo print technologies, those photo processors offered unlimited free prints will fail. Just think of how out-of-control it would become; Realtors, for instance, could order tens-of-thousands of photo promo cards, savvy techies could conceptually order a million 4×6 prints, and industry competitors could benefit too; I could use those free services to print up thousands and thousands of my own photographic promo cards. But, it’s not about price, it’s about service, and quality.
Right now our digital imaging industry is faced with a precipitous piercing in the price of its products because some people don’t understanding the market. While their focus groups advise them to just keep cutting prices, we should instead be enhancing earnings and customer satisfaction. We need to give customers what they want and communicate regularly with them. You know, whenever someone asks if my online boutique Kodak-quality photo service is “as cheep” as the giant chain stores, I always reply: “I hope not!”
What we need to do is come up with value-added benefits that cause consumers to take and print more photos, but not for free. We need to make it super easy to get real pictures from traditional film, digital cameras, camera phones and wireless devices too. We need to de-emphasize price and exit the commodity-based mind set in exchange for making picture-taking and printing fun and easy. We need to change our business before the market does it for us.
We need to study new advertising strategies and edgy, smart ecommerce Internet services to stay ahead of the competition. One example is that I am always surfing other sites. Recently I saw a new “Live Help” ecommerce product for customers to type a question and get instant feedback. Within hours we had it live on our home page. Now our computers “ring” as loud as a phone when someone, anywhere in the nation wants to instantly “talk” with us. It’s easier, more efficient and less costly than an “800 toll-free” service and even faster. We even get to capture their email addresses for future marketing. Think of how many new sales are closed because of this interactive personalized service. The best though is Bank of America; when you visit their site, even if you don’t want to interact with them, a popup with a real person at the other end asks if you have any questions, and that’s just for clicking on their site.
Former GE chairman and CEO, Jack Walsh amplified this idea in his recent book “Winning.” He shared lessons in how to handle and balance business issues. And, like Starbucks, Welsh explained that we need to find the momentously big, new “ah-ha.” This does not just have to relate to a new technology – although we certainly have that with instant online photo fulfillment. It can be simple things like service and finding great new ideas.
Startups and emerging, entrepreneurial companies are the best examples for regularly identifying new, special “ah-ha’s.” Welsh explained that unlike giant companies, entrepreneurs are the engine of the economy and are not afraid to think differently and try new things. After all, we are the innovators. But, sometimes we should work with the larger companies as partners and look to industry leaders for direction.
In 1972, a new invention changed an industry. The first affordable, automatic drip branded coffee maker was introduced for the home. Mr. Coffee threatened donut shops and coffee stands; people were being inspired to brew their own java at home. The previous year, Starbucks was founded in Seattle. Eleven years later Howard Schultz joined the company. I love how he tell’s the story, though. As a graduate from the University of Southern California’s school of business and Entrepreneur Program, I remain very involved and still attend when prominent business leaders come to share their stories with the alumni and students. A while back, Mr. Schultz spent the day and we even had dinner together. He explained the reaction upon telling his Jewish mother in Brooklyn that he was planning to move to Washington state to work at an unknown, unproven startup with just six coffee shops. As you’d expect, his mother asked: “What, are you crazy?”
We need to study Starbucks’s success. Mr. Coffee is like today’s home inkjet photo printers. In fact, you can buy a Mr. Coffee today on EBay for the cost of a Mocha Frapachino. Starbucks wasn’t threatened either, today it has revenues in the billions. You know they frown upon coupons and never remotely consider emailing promotional discounts. But, think about the photo industry and how today it’s all about discounts and lots of free stuff. Why isn’t our business model more like Starbucks? When was the last time Starbucks slashed prices in half or gave their core product away for free? The coffee company and its nearly ten thousand worldwide locations are designed to provide value and enhance each customers’ experience. And, they charge more. Think of that tiny slice of Danish for $1.95 at Starbucks. Or you can nearly buy an entire cake at one of the wholesale superstores for that amount, but you choose to buy a morsel at Starbucks because … it’s convenient.
Don’t just think “hot.” Ice cream from Cold Stone Creamery is another example. Both Starbucks and Cold Stone sell high-end products in relatively stagnant food segments. Yet, both have phenomenal growth. Anyone who can sell a $4.00 cup of coffee, a $1.85 bottle of water and a handful of sprinkles for 50 cents is someone we should be following.
We need to ask what is the next “new-thing,” The next “Lance Armstrong Bracelet”? And, we have to be first-to-market, in a rush – today there are over 40 different types of silicone bracelets. We need to identify the ingredient that spontaneously launches the next “new-thing” to help build a new market. One way is to link up and partner with other entrepreneurs, other companies and even Fortune 500 firms.
We need to change our business before the market does it for us. Think of new advertising strategies and Internet services to stay ahead of the competition. George Zimmer, CEO of the clothing retailer, Men’s Warehouse Inc. got it right when he said most men consider suit shopping about as enjoyable as root canal. While getting photos from digital cameras and cameraphones isn’t as taxing as a trip to the dentist, we too need to simplify and clarify our message.
According to Intelliquest, the leading reasons people don’t buy online are because: They are concerns about fly-by-night operators (81%); Don’t want to hassle with returns (72%); Fear using credit cards online (69%); Think that ordering online will lead to selling their email address and will then receive junk email (63%); and they want to touch and see the product first (62%).
Nikon’s ad slogan “at the heart of the image” really goes beyond explaining how much the camera matters. Indirectly, it draws parallels to what really matters. “At the heart of the image” is not just the camera and photographer, but the processor too. When you have the most state-of-the-art processing equipment you own the mechanism that creates excitement. Simply put, along with professional service, your lab equipment provides mom’s with lasting photographs from their children’s first soccer game. That’s what is so vital about our business.
Can you think of a word or phrase that defines our business? Look at other advertising messages that helps define how to specialize our business and keep it simple. Here are some examples:
1) Viagra tells us to “get back to mischief.”
2) A beautiful, full-page dreamy evening photo of a couple at a five-star resort is the subject of an Expedia.com ad with a simple two word message: “Search For”:
3) Westin Hotels uses a romantic looking photo of a couple lounging at their resort with this tag line: “Tension has a melting point.”
4) And, my favorite advertisement are these words from DHL: “The Roman Empire. The British Empire. The Fedex Empire … Nothing Lasts Forever.”
Each of these slogans is simple and explains in seconds what they are selling. They use a few words and a photo to package their entire business into one simple and friendly message. The photo industry lost sight of this message and instead today focuses primarily on price.
Yes, technology has changed some of the rules, but think of Clive Davis – the famed music mogul. At a recent conference he shared penetrating advice with the music retailers. He acknowledged his industry is “faced with a major threat … competition from digital distribution.” This threat has forced companies to reinvigorate their marketing campaigns. As chief executive of Bertelsmann’s BMG North America, Mr. Davis, a Harvard Law School trained entrepreneur inadvertently shared advice that parallels the imaging industry as well. In fact, it’s identical. Record stores are disappearing at the same woeful tempo as are many photo specialty retailers. Changing consumer preferences are devastating the traditional stores and their tight operating margins. Davis, who transformed the music industry with talent like Bob Dylan, Rod Stewart, Whitney Houston, The Grateful Dead, and most recently with Alicia Keys and Busta Rhymes, knows what he’s talking about.
Today, music retailers are combating declining market shares and fighting back with new technologies which may sound very similar. They are installing computer kiosks to merchandise custom designed CDs. New hybrid CD-DVD formats and CD burning at retail are other growth opportunities in the record business.
Amusement and fun are the key selling propositions which Davis urged the record industry to engage in. “It’s fun to shop for music … and you’re not making it a fun experience,” he jabbed. Like record retailers, we too need to make the retail and ecommerce experience exciting.
The visual presentation of your retail and online ecommerce business must be sparkling and inviting. Keeping up with the fast-paced technology changes is secondary to getting people into your retail space. If you don’t have customers, they will never know how advanced your services are.
Attracting and retaining customers is more than being skillful with gimmicks and price cuts. It’s about chemistry and making a personal connection.
35 ways to win over consumers without once discussing price
1) Increase visibility. Differentiate your business and create a unique story that impassions people to seek you out. Create a strong, unique brand image, strategy and story. What’s your niche? Do you have a business that consumers will go out of their way to patronize? Create an “In partnership with the community” campaign to support area non-profits and build an “In The News” index of media coverage that helps promote your company. Unlike a fleeting yellow page or online directory advertisement, smart PR builds lifetime loyalty.
2) Commit your company to constantly innovate and build a business model that others will follow.
3) Pledge to turn your business into an on demand organization where operational excellence and instant fulfillment of orders is paramount.
5) Build customer loyalty and equity. The photo imaging industry is driven by the person snapping the picture; they are setting the agenda, so we need to understand what they want and provide it and more. Make sure your customers know they matter, most.
6) Keep it simple and remember the “elevator test.” If you were standing in an elevator and had just 30-seconds to explain your business to a stranger, can you? The Photogize B2B software has a great slogan that says it all: “We Make Digital Print.” My message is that I own an online boutique photo service to simplify what today is very complex. I turn your digital camera pixels into real Kodak-quality pictures.
7) Get really good at what you do.
8) Listen and compliment your customers. We are in the unique business by knowing about them, their travels, life events and even hobbies, so personalize the retail experience by talking to them about them.
9) Exceed expectations and always smile.
10) Word-of-mouth marketing. Don’t just hope to build word-of-mouth, but rather, inspire people to recommend you to others. When was the last time you actually asked your customers for referrals. Remember: “A-B-C” – Always Be Closing. Ask your retail and online customers to tell their friends. We include personalized promo photo cards with all online orders. It includes one of their actual photos and a personalized message beginning with their name and this: “Enjoy your custom Kodak-quality photos. We appreciate your great referrals; tell a friend”. This advertisement actually gets kept and taped to their refrigerators!
11) Be proactive with trouble-shooting technical questions and instantly solve customer problems.
12) Always have a fresh, youthful, modern, clean store design and polished website presence. If you still have holiday photo cards featured in January, you’re not getting the message.
13) Build an infrastructure that is stable and provides consistent service with minimalized operational interruptions.
14) Use your entrepreneurial training to your advantage. Entrepreneurs are always the most motivated and charismatic person in the room. We always maintain a seriousness of purpose. When was the last time your email bounced back from an entrepreneur explaining that they are away on vacation or unavailable for several days or weeks? That’s a corporate-thing. Entrepreneurs use today’s communications technologies to always be reachable to quickly make decisions.
15) Ease-of-use. Be reliable and stay focused, but be flexible – remember your goal isn’t just to build market share but more importantly, to build wealth.
16) Understand that your expertise is knowledge that can’t be matched. It helps to know the market, its needs and your customers.
17) Innovate. Be the first to market and link up with other companies by beta testing and partnering with them. But, remember there must be a “win-win.” Ask “what’s in it for you.” Make sure they deliver too.
18) Study the technology and set new expectations. Always be reading, including the industry trades and not just in imaging, but other areas too. Investigate and listen for new opportunities. I added a 24/7 “Live Help” support to my ecommerce site. A seamless fulfillment system I designed enables orders to be ready for pickup within moments, or completed and packaged for mailing back the same day. We use modern communication tools like email to stay in touch with customers. Use services like Stamps.com to instantly track orders and make the entire lab experience seamless, easy and operational with minimal labor and infrastructure investment.
19) Ethics and loyalty. Never break a promise. Even if things go wrong, use it to your advantage by dazzling the customer (a holiday greeting card order mailed back to a customer in New York didn’t arrive on time so we redid it, Fedexed the order and quipped that we hoped the customer could find another 150 closest friends to share the extra photo cards with as both would be arriving the following day, but we wanted to be sure at least one got there. With me, whenever there is an interruption from first-class service, the customer is actually lucky because we so dazzle them with enhanced support and extra special results to regain their trust.
20) What’s your company’s history? I have a 15-year track record. Today’s value proposition is that I compete directly with the leading online photo services and wholesalers, but I have a story and they don’t. The entrepreneurs are the ones with consistency, while a study the larger companies suggests an ocean of strategic shifts and employee turnover. Always be forging a history and creating permanent relationships. Leverage these connections and alliances within your community, affiliations and businesses. [I use Event-Pix to host free photos for charitable events, with 100% of the proceeds contributed to the organization].
21) Practice the “80:20 rule.” Study what is the most profitable segment of your business and direct your attention to those areas. Remember: “less is more.” Just think of technology and cellphones; today many of the features just confuse users. The WSJ explained that rather than providing all the new features and tricks, some new models are without digital music downloading, and video cameras. Instead of Internet browsing, new phones are looking more ordinary and featuring thinks like larger icons warning of a low battery.
22) Turn customer satisfaction into more than a slogan. Become easy and fun to do business with to improve your customers’ experience.
23) Look to your customers for feedback and ask them for it.
24) Always convey optimism and confidence. Being closely involved with law enforcement, I always admire police for being so calm. The person being stopped for speeding might not know that the previous call was for a fatality or spousal abuse case, yet the officer is always professional and focused. This is a good lesson when everything appears to be going wrong and you have to face a customer. Get comfortable saying “yes” first, then figure out how to do it afterwards.
25) Don’t do everything, specialize and become an expert in something that others don’t do.
26) Create new customer value with big things like constantly upgrading your equipment, to small things like on hot days give customers free ice cream. It costs a buck and buys a lifetime of loyalty. Even turn the packaging for your online orders into a box of “Cracker Jacks” by adding free extras like Starbucks Gift Cards, Good & Plenty and Hershey Chocolates.
27) Select untapped markets like photo restoration, online photo ordering, instant prints from photo kiosks, executive headshot portraits. Beyond new products, other untapped markets include following the lead of Fortune 500 companies and their support for diversity. Specialize your services by marketing to minorities and special customer segments.
28) Respond instantly, even if you have to use the elevator repair strategy. That’s where a new emerging elevator repair company in Manhattan wanted to break into the business so its gimmick was that within thirty minutes they guaranteed to have a service tech at your site, and they did. Other vendors took hours or days to arrive onsite to repair a broken elevator. How could this new company promise such instant service? They certainly couldn’t afford a giant staff of highly paid elevator repair technicians, so they instead hired minimum wage assistants, dressed them in a uniform and gave them a hammer. And indeed within 30 minutes their tech was onsite, busy hammering away, and bringing smiles to the building maintenance team because something was happening. And yes, eventually the real tech would show up too.
29) Create value for every photograph printed. Rather than thinking of a photograph as a piece of paper, train your staff to treat it as a customers’ most prized and sentimental memory. One way is with packaging and fulfillment. When you go to a boutique retailer they always add extra care to the packaging; you too should make each order special.
30) Broaden your dream wider than you can possibly achieve and accelerate your goals beyond the comfort zone of your experiences. These are the two parallel strategies practiced by the world’s most successful people – dreaming and reaching beyond your comfort zone.
31) Think big. Your website should convey a far-reaching message to identify that your business is no longer local, but rather can handle orders from across the nation. With technology today, any sized photo retailer can effectively compete with anyone.
32) Winning raves. Step back and think of your business like a Broadway production and make every day “opening night.” Transform your customers into raving fans and surprise them. From the example earlier, we randomly package candy bars and other surprises in our orders. This is seasonal, however, you don’t want melting chocolate sent across the country only to sit in a hot mail box and ruin the order. When we process graduation or new baby pictures an added promo photo announcement card is randomly added to the order.
33) Be lean. Today’s technology automates much of the photographic process which enables for a leaner staff.
34) Don’t keep your customers waiting. Whether it’s an in-store or online shopping experience you must complete the transaction in seconds or minutes. And, today you can. Make sure your website is direct, without extraneous links and electronic garbage that distracts from your key message. Get rid of any sign-up registration requirements and other order delays. Using Photogize B2B software from Graphx enables my online customers from across the country, and abroad to easily press “order all.” Moments later they receive a confirmation that the entire order was received, completed and is being packaged for mail fulfillment or is ready for pickup.
35) Exceed expectations and seduce customers into becoming your marketing team. If your product is consistent and you deliver value and are always on time you will score points.
Using these tools, your personal experiences, persistence, entrepreneurial courage and even more persistence you too will be less vulnerable to market forces. You will notice my comments today for maintaining a premium price and making money not once mentioned succumbing to price discounts to win customers. The secret: de-emphasize price. Get out of the commodity business and “make digital print.”
© 2005 – Mitch Goldstone, President and CEO, 30 Minute Photos Etc. and 30minphotos.com has been a leader in the photo imaging industry since 1990. His company is also lead plaintiff in the multi-billion dollar antitrust litigation against Visa, MasterCard and major banks for the interchange fee charged to merchants; For updates visit: the Credit Card Interchange Blog: www.WayTooHigh.com