I’ve been reading a lot of negotiation blogs on Forbes after my negotiation class last semester, and anchoring is one of those funny human psyche things that I find interesting. Anchoring is basically throwing out a number to set the expectations in a negotiation. The trick is to find a number on the high end, but not so high that it’s too ridiculous to even consider. This is true in a non-negotiating context as well, and the situation on gas prices got me thinking about the anchoring phenomenon.
Gas prices have been falling lately (YES!), down to the low, low price of ~$3.10/gallon in Texas. You all actually think that price is low, don’t you? I do… and at least one Facebook friend does too! Her status update read, “Gas for $3.05? Yes, please!” I was in California over the weekend, where gas was ~$3.90/gallon, so the $3.10 actually does seem pretty cheap. Notice what I did there? I told you the “low, low” price, and gave a reference point considerably higher. My language and examples, combined with your own experience with high gas prices from 2009-2009 (we’re talking nearly $4/gallon in Texas, that’s RIDICULOUS!), and you think $3.10 is pretty stinkin’ reasonable.
But what if I told you how much gas cost when I first starting driving? When I was 16, I managed to get gas for .89 cents… EIGHTY-NINE CENTS per gallon. On average, I could fill up my Honda Civic for .99 cents/gallon, for a total of $16 per tank. Now how do you feel about that $3.10/gallon gas price?
It’s interesting, because I fought the, “less than $3 gas is cheap” mentality for a long time, holding on to my .99 cent price-point far longer than I should have. I had anchored myself at less than a dollar, and I wasn’t having any laughable numbers above that price. The problem is, I’m a price-taker when it comes to gas, so digging in my heels about paying more than a dollar… or two… or three, was useless. I’ve finally re-set my anchor point around the $3.50 mark, so I’m actually quite happy to pay $3.10.
As a marketer, you have to understand and manipulate this anchoring principle. Times change, perceptions change, and margins change, but humans still hold on to some kind of anchor about price. This is why pricing a product or service during a a launch is so critical. Too high, and you’ve priced yourself out of the market, but too low, and people might think the quality is cheap. Too high, and you’re stuck giving discount after discount until you reach the true market value of the item, but then you’ve trained your customers not to buy at full price (see my reluctance to purchase at JC Penney with their new pricing scheme). But, too low, and your margins are shot, but raising the price makes customers feel like you’re just being greedy, even if they would have been happy to pay the price originally.
I went to an event for Salesforce yesterday to do some research on implementing it as our CRM solution, and I met a consulting company that works on integration and implementation of the Salesforce platform. The rep mentioned a blog post on the Clear Task blog about “self-implementationitis”. The author gave the symptoms and solutions for curing the ills that come with self-implementation of a system.
We’ve been dealing with our CRM for nearly a year, and from what I understand, the aviation industry as a whole is plagued with CRM failure and stalling. Our biggest need is the ability to “fly the fleet”, which effectively uses a combination of logic and algebra to spit out an alert to contact the customer just prior to their timeframe for making a purchase. The problem is, it’s really hard to get accurate information to plug into the logic and algebra formulas! So, the first DIY vs. consultant question: Do we hire someone to make phone calls and download lists to get this information, or do we hire a consulting company in the industry that claims to already have this data? Do we try to build our own database of this information, or pay to upgrade an industry database that supposedly has all of this kept up-to-date?
In addition to the information problem, we’ve also got a resource problem. We simply don’t have enough programmers to support our open-source CRM. We’ve done a lot of customization already, but the CRM is still glitchy, which means that it’s difficult for us to run reports and update accounts. The consulting company at the Salesforce event says that since they’ve implemented hundreds of systems, they can streamline our implementation, and help us with the customization. Essentially, they can take a few months to make our system a well-oiled machine. So, the second DIY vs. consulting question: Do we block out time for our current IT resources to dedicate to the CRM? Hire someone to come in and support the CRM long-term? Or, do we hire a consulting company for an up-front investment in implementation? Do we put a consulting company on a yearly maintenance contract?
Finally, we’ve got a tech savvy problem! I was nerding out at the marketing implications of the latest product releases for Salesforce (that will probably turn into a topic for next week!), but at the end of the day, I’m not going to be the main user of the system. Our less-than-tech-savvy sales and management team will be the main users! And, the aviation industry is slow to come around to newer technology, particularly the social aspect of today’s platforms (remember those issues with a privacy threshold?). Thus, we can have a system with tons of bells and whistles, data overload, and tons of screens and fields. We’ve added fields to the current CRM system, which means you have to scroll for quite a while to get to the green “save” button at the bottom. You either have to go to a different screen, or scroll forever to add new engines and aircraft into the system, which makes it difficult for parse quickly. So, the last DIY vs. consulting question: Do we go back to the drawing board internally to figure out more specific requirements, or hire a consulting company that knows the aviation industry to tell us what our requirements should be? Do we fiddle with the system until we happen on a great UI, or bring in a professional that understands the human-computer interaction from a few decades back?
I thought the Clear Task article was very helpful, but it made me question our current course of action. What do you think? DIY or hire a consultant?
We’re evaluating some new CRM options, and several people have recommended Salesforce. I had a chat with a sales rep from the company, and man, he was a GOOD sales person. We’ve also brought in some consultants for sales training, and after the initial phone call, I told our management team, “We just need to get our sales reps to do exactly what that guy just did. He’s a GREAT sales rep.” So, what are these people doing to be such good sales people?
Mutual benefit. A lot of sales reps just blather on about how great their product is, how much money/time/whatever they can save you, and how many more dollars you could earn if you just purchase their product. They never stop to ask whether we’d be a good customer for them. Do our needs actually align with what they’re offering? I know they haven’t thought about this because they’re so focused on “selling” me something! Both of the reps that I liked have asked questions that indicate that they want to work with companies that also meet their needs. Are we going to be a time suck? Will their product fail to meet our needs, resulting in unhappy customers with bad reviews? It’s not just about selling me a product, it’s about creating a win-win situation for BOTH parties.
Ask probing questions. Both of these reps asked a lot of open-ended questions, and they drilled down to the very root of the issue. Everyone wants to save time or make more money, so if I tell you that’s our goal, it’s not helping. What problems, EXACTLY, are causing you to lose time? Which areas, EXACTLY, do you think you could earn more? They didn’t feed me answers to lead me to their product, but just probed and probed until they hit on a problem they could solve. Plus, they gained a ton of insight into my business, my pain points, and my ability/timeline for making a decision.
Follow up nicely. Remember this rep that drove me nuts because he just wouldn’t take “no” for an answer? Both of my likeable reps asked if they could follow up, and asked about my preferred method of communication. If they weren’t available, they gave me alternate contact information for someone who was also helping with our account. Most of all, they didn’t badger me! This was partly because of the mutual fit and probing questions mentioned above. They already knew that if they had to chase me that hard for the business, it probably wasn’t a fit. Their questions revealed my timeline, key decision-makers, and milestones that had to happen prior to purchase. They’d send a “checking in” email every few weeks, and eventually, we made the choice to move ahead or move on.
Know me, know my business. I’m always amazed at good sales reps’ ability to pick up names and businesses at lightning speed. But in reality, that’s part of their job! The consultants made a point to learn all the reps’ names, and call them by name any chance they had. The Salesforce rep started using the same industry jargon that I explained almost immediately. In short, these guys made my business their business. This goes back to the mutual benefit… it’s not a one-off product sale to them, it’s a profitable partnership. If they can figure out a way to help me, they in turn help themselves.
I’ve dealt with a lot of reps in my career, and these two stand out as pleasant and effective. Which kind of rep are you?
I have another article on The Daily Muse today, “What to Know About Networking with Family Members”. I’ve posted at The Daily Muse several times, and you can view my other articles here.
The Daily Muse is an excellent site aimed at young professional women (there’s some great articles for men, too!) They’ve assembled a wonderful team of talented writers, so make sure you browse through the rest of the site!
The summer session for my MBA is in full swing, and I’ve been a little frustrated with one of my professors. He’s an adjunct who recently attained his PhD, and this is his second or third semester teaching. He brings excellent practical application into the classroom, and he generally cuts out the academic jargon to get straight into what we’ll need as managers in our post-MBA positions. However, in an effort to treat us like professional adults, he wants to run the class like a democracy! Now, I’m all for giving team members a platform to collaborate in the office, but in the classroom? I’ve gotta support a monarchy (not quite dictatorship, there should be some give and take!).
The first night of class, he asked us what format we would prefer to be quizzed. In a class of 40 people, some wanted online, some wanted in-class, some wanted essay-style, others wanted multiple choice… and on and on and on! You can’t really put the format to a vote in a classroom situation. The timing of the quiz has also been the subject of debates and an actual vote-by-hand-raising in last night’s session. This drives me nuts, largely because everyone has some excuse about why they can’t take the quiz at this time or that. “I’m working, can we move it to Friday?” “I travel for business, can we do it in class?”
Here’s the thing: you’re in grad school, in a part-time MBA program, as in, you have multiple priorities right now. And, if you’re not going to put a high priority on your degree, you might need to re-consider your choice to attend business school right now. I’m not saying people don’t get busy, emergencies don’t happen, or homework isn’t an inconvenience, but if graduate education were easy, everyone would do it! In addition to the knowledge you gain in the classroom, the MBA is about time management, juggling priorities, and choosing the most profitable projects. Notice any parallels between your personal life and professional life? I certainly do. Sometimes I don’t want to crunch the numbers in a spreadsheet for the marketing budget, but that’s part of the job. Sometimes I don’t want to read my textbook or attend class, but that’s part of the program. Are you going to make excuses in your day job? If not, don’t start that habit in grad school!
I understand that the professor is trying to be fair, but I think it’s a much more valuable and true-to-life experience to realize that sometimes life ISN’T fair. Sometimes we have to take projects we don’t like, on a timeline that’s too tight, and a budget that’s too lean. Sometimes the office is a creative, collaborative place, but sometimes the head of the organization needs to crack down to make sure that projects are delivered in top quality for customer satisfaction. If I’m voting, I’m going to cast my lot in favor of a stronger leader, at least in the classroom!
My husband and I did a bridal photo shoot for our future sister-in-law last weekend. My husband is more technically proficient on the camera, so I was directing our model for most of the shoot, which sparked a lot of thoughts on managing well. I believe a manager’s job is to get the best work out of their people, not just delegate or revel in their power. If an employee is performing below average, I would first take a look at their manager. Sure, there are mitigating circumstances, but I’m willing to bet the sub-par adequacy can largely be traced to poor management. So, what did the photo shoot teach me about managing well?
Have a plan, and share it with your employees. We’re new to shooting with more than just each other, so having a plan was crucial! We went on a recon mission to map out locations, figure out the lighting, and generally know what we were getting ourselves into prior to the shoot. Once we arrived, I told my future SIL where we planned to shoot and the general flow of the afternoon, which made the shoot much more smoothly. Sometimes managers have no idea where they’re heading. Other times, they have a long-term plan, but they just keep that information to themselves. No wonder their employees can’t effectively prioritize their projects or integrate ideas into the big picture!
Preempt the pitfalls. We knew our model would sweat her make-up off, that the sun would go down, and that it was a little muddy in some places, so we used our plan to preempt the pitfalls. While my husband was shooting, I was walking around looking for the next pose, making sure the hair, dress, and veil stayed perfect, and generally making sure things were going well, so that he could focus on getting the shot. Managers should do the same thing for their employees. Is trouble brewing among the top executives? Managers should curtail the effects on their subordinates so that their employees can focus on delivering great work. Is a huge project coming down the pipeline? Managers should start re-arranging the project assignments to ensure the right people are available for each task. Good managers will think a move or two ahead, and work to create an environment that is free of undue stress or unproductive drama.
Be enthusiastic. It’s summer in Texas, which means it’s stinkin’ hot outside, even at 6 pm. Add to that the insane mosquitoes that graced our shoot, and things could get real annoying, real quick. So, what did I do? I did a jig. I did spirit fingers (don’t judge, you know what those are if you’ve watched Donnie Darko!). I gave a sassy hip pop, I laid down on the ground or scampered up a ladder, and I got all up in my model’s space. All of my excitement rubbed off on her, kept her in good spirits, and ultimately, we got the shots that we needed. These over-the-top strategies work in management as well. Think about it: do you want to work with a depressing, boring person who mopes about when you have to stay late to meet a deadline? Or, do you want to work with someone that makes you feel a rush of adrenaline and pride at a job well done? Employees mirror their manager’s attitude, and your enthusiasm is infectious. So do a little jazz square every now and again, climb on a desk if you’re so inclined, and give a joyful yell every so often… you might just make work fun!
I loved working on this shoot with my husband, and I think we learned a lot about managing a shoot and directing a model, and I love translating the lessons from the shoot to the office environment. What are your tips for managing well?
We’ve established that my privacy threshold is pretty low online, but this article on Forbes re-affirms my comments that people are, in fact, talking about you. The article takes a slightly different angle on your personal web presence, but I think many of the points transcend into the corporate brand as well.
Transparency. The author tells an anecdote about her friend that’s interning at a recruiting firm. The friend has become a gatekeeper in the hiring process, and her job is to check out candidates’ online life. The thing is, squeaky clean profiles actually throw up a red flag! If there’s absolutely no negative coverage, her friend starts assuming that the person must be hiding something, because nobody is that perfect. Ever felt that way about brands? If there’s no drawbacks to their product, no bad experiences noted in the reviews, doesn’t it make you wonder if the company has scrubbed the forums or written company-sponsored Yelp reviews? Even the best corporate brands have a bad incident in their past! A completely flawless online profile might actually make you seem more suspicious, and these days, companies want transparency.
Consistency. So your resume says you went to Harvard, but your Facebook profile doesn’t list a school. Your Twitter location shows Dallas, but your LinkedIn profile shows New York. Hmm…. that’s odd. Some of these inconsistencies could be easily explained, but in this economy, companies probably won’t take the time to hear you out. And, it’s not just companies that don’t have time, it’s customers of your corporate brand. When I’m shopping for a product or service, I want your marketing jargon to match up with customer reviews and my own personal experience. Every piece of your personal and corporate message should fit together, and inconsistent online evidence will hurt you in the long-run.
Compatibility. The article mentions that safe profiles make you pretty boring, and companies want to know that you’ll fit in with the culture around the office. If all your status updates show that you simply go to work, simply come home, and simply go to bed, you sound like a drag. Sure, you don’t need to be posting about raging parties every night, but show some personality! Do you kick butt at the gym every Friday night? Do you love taking pictures and scrapbooking them? These characteristics might be crucial in your ability to fit in with your future co-workers. This definitely does not stop at your personal brand! The movement toward green products and ethical sourcing is growing rapidly, and many companies are trying to differentiate themselves to customers with CSR programs. It’s not enough to just put the cliche “made from 50% recycled products” in tiny print on a label, you have to show that you really care about this movement! Are you trying to get in with the artists, the cool kids, the business people, or the sports addicts? You need to show that you understand your demographic, and that your products or services are compatible with their lifestyles, values, and needs.
Control the conversation. I’ve said it before, but I truly believe that the conversation is going to happen. Do you want to have a voice in the conversation, or do you want to let others talk about you behind your back? My name is fairly unique, so most of the content you find when you Bing me is most likely created by me. I did this on purpose! I don’t have enemies or competitors trying to ruin my personal brand, but many people and corporations do. Do you really want your competitors making the only comments in the conversation? Get involved, talk about your awesome product (for your personal brand, your product is YOU!), contribute to the online information about your services, and exert some control over your web presence. You can stay silent, but the internet will keep talking.
I thought this article had an interesting perspective on the advice about your social media presence. They’re talking about you… but are YOU talking about you?
As a marketer, you’d think I would love taking advantage of promotions and deals in stores, right? I mean, I’ve bought several daily deals online, but in general, I’m very skeptical of deals. My husband and I are quite frugal, so I’ve taken to looking at the per-unit cost on items, particularly at the grocery store. The fashion bloggers have taught me to consider a piece of clothing on a cost-per-wear basis, which has changed my whole outlook on purchasing clothes!
Sometimes, though, a deal is not a deal. I’m not talking about a blatant higher-cost-per-unit, or an absurd payback period. I’m talking about the fact that you would never buy it full price because you don’t need it. So, if you don’t need it, why would you buy it on sale? I’ve seen people buy clothes because they’re on sale, even though the item doesn’t fit right, or the color is wrong. “But it was on SSAAAALLLLEEEEE!!!!!!” Or, purchasing creamer or cereal in a larger size because the unit cost is lower than a smaller size, but you don’t really like the creamer or the flavor of cereal. Thus, the creamer will spoil and the cereal will go stale before you manage to force yourself to use them up, meaning you’ve wasted $2 instead of $1.25.
A deal is not a deal if you planned to spend $0, and you ended up spending $10 instead of $20. Your budget didn’t exist in the first place, so no amount of discounting or mark-downs can compete with zero. I think the best way to combat this, is to ask yourself if you would ever buy that item or a similar item full price. I look terrible in yellow clothes, so I would never purchase a yellow item at full price. Thus, no amount of sale can persuade me to purchase a yellow item. I love peppermint coffee creamer, and I regularly buy the big bottles at full price. So, if they go on sale, I have no problem stocking up on them, because I know I’ll drink them eventually. I’m even willing to switch brands or make substitutes to take advantage of a sale, but only if I already needed the item in the first place.
Next time you see a sale, control the impulses! Remember that if your budget is $0, that’s the cheapest sale you’ll find, and don’t succumb to anything more than your budget allows! (in this case, it allows NOTHING, because you don’t even WANT that product, let alone need it!)
My company uses a lot of open-source software, including the CRM system and email system. We use this software because it’s cheap. Except, it’s not really cheap when you consider all the man hours and system crashes we endure on a near-daily basis. What’s the true cost of this “free” software? Let’s take a look at a few unfortunate costs, shall we?
First, the IT costs. In theory, these costs are fixed overhead, since the IT team is on salary. But how long do you think you can keep their salary at the same level when they’re at the office on nights and weekends fixing a system that’s constantly broken? How many revenue-generating or cost-cutting programs can’t be implemented because the IT team is too busy wrestling with the open-source software that’s “saving us money”? It’s not just about the direct expense of the IT team’s time, but about the opportunity costs of having them focused on something that should be a given in a business environment.
Next, there’s the productivity issues. The CPAs in our Accounting department are required to complete a certain number of class hours every year. They are allowed to do this on company time via online webinars. Again, great in theory, costs nothing in theory. Except that 3 out of 4 of their webinars have crashed 45 minutes into the presentation, which means that they don’t get credit for that webinar. They’ve now wasted 45 minutes and will have to re-take the webinar and hope that the system doesn’t crash, again wasting 45 minutes and resulting in re-taking the webinar. That’s just one example. I’ve had my internet and network go down for an entire day. Sure, I could work on some designs… but I can’t email them to anyone for feedback or tweaking. Sure, I could just print the mock-ups for feedback… except that the printers are on the network, so no internet and network access means no printing. There’s other people that can’t even work on designs, so if the network is down, they are literally sitting at their desk twiddling their thumbs! But hey, it’s FREE!
Finally, there’s the cost of information and time. One time, the system went down, and we had lawyers sitting on the phone, waiting for a document to come through. These guys charge several hundred dollars per hour, and we were on a deadline with a bank, whose lawyers were also charging hundreds of dollars per hour. We had them on hold while we tried to fax (yes, this is in 2012!) a document because just as we sent the document via email, the system crashed. The CRM system still has bugs that don’t allow us to glean all the information we need out of it, so management is still flying a little blind. They didn’t want to pay for a CRM because they thought the sales reps wouldn’t use it. Now we’ve proved that the sales reps will use the system, but the system is still broken, so their motivation is waning! They spend time trying to input data, I spend time trying to pull out the data, and IT would spend time fixing the bugs… if they weren’t so busy fixing the email system that crashed. AGAIN!
In short, our free or cheap software is actually costing us a lot of time, headache, and ultimately money. Before you start claiming that your inexpensive solution is great, make sure you calculate the true cost. You might find that you’re paying more for less!
My standard answer to the interview question, “What is your biggest weakness?” is, “Outward organization. I know where everything is, and I tend to keep most things in my head, but my desk is always messy to the outside observer, and if someone else is trying to find something on my desk, it will be very difficult for them.” As mentioned in my post about my design process, I generally like to see everything to be able to work with it. In high school, my mom always tripped over my backpack, and kept telling me to, “put it where it belongs!” The thing is, my backpack was in the same spot on the floor every day! It “belonged” on the floor!
Oddly, though, my brain is the one place where I have some kind of actual organizational system. There are times when I literally imagine placing a piece of information in a folder, and filing it away under “short term memory” in my brain. Then, when I need to retrieve the information, I literally feel like I’m going to the short-term memory file in my brain, opening the drawer, extracting the file, and reading the information on the page. This is quite helpful during exam times, as I just read the notes from the page in my head. I don’t think this is photographic memory, but pretty close it to (or, maybe my years of memorizing scripts has taught me that skill!). Either way, my brain is generally a well-organized filing cabinet.
Except, when it’s not. Sometimes a piece of information is misfiled, or I don’t realized it was filed at all! This is when the fun starts, when your brain randomly goes into the mystery files to pull out some odd piece of trivia that you didn’t know existed. My husband is teaching himself to play piano, and he recently asked me to sit down and play the right-hand notes on a piece, while he played the left-hand notes. I’m not a pianist by any stretch of the imagination (no, seriously, I failed my piano juries during my freshman year of college, and my professor waved my hands off the keyboard because my scales were so disrespectful to the piano!), but somehow, I managed to sit down and sightread that right hand with only a couple of hiccups! Last week, he was complaining about pain in the area that connects the hips to the legs. I told him it was probably his Sciatic nerve… he looked it up, and I was right. Yeah, learned that one from an episode of “Private Practice” MONTHS ago!
All that to say, keep an open mind… you never know what information will seep in and be used one day in the future! I feel very Medici in these moments