Posts Tagged ‘savings’

Do Not Forget To Use a Call To Action When Running An Ad

May 8, 2011

by Doug Smith, President, The Woodhaven Group, LLC

Many companies forget that in marketing the key to increasing sales and business cash flow is an effective call to action, often times referred to as a CTA.

I have had many business owners and CEOs ask me why their advertising was not performing.  They had beautiful graphics or photos.  A great job was done of listing features and benefits.  Lots of money was spent on a beautiful logo.

But, what was missing?

Very simply, what was missing was a failure to include a call to action which is a reason for the prospect to act and take the next step in the buying cycle.

It may be saying “click here” on an e-commerce site but more often it is an offer the prospect cannot refuse. Here are a few examples that have worked for me:

  • Buy 2 get 1 free
  • Free shipping or delivery
  • 50% off the regular list price
  • A specific sale price also showing the regular price and the savings realized by the buyer
  • A free service such as free alterations with the purchase of a suit

There are 2 important tips to a winning call to action:

  1. The offer has to be real, legitimate and have a perceived value in the mind of the buyer.  Never inflate the regular comparable price just to make the offer look better.
  2. There has to be a deadline to act in order to create a sense of urgency.

Regardless of the marketing channel used, the next time your business runs an ad, in order to increase cash flow and sales, make sure to not forget an effective call to action.

A Business Must Pry Loose Consumer Savings

August 4, 2010

by Doug Smith, President, The Woodhaven Group

It has been widely reported that businesses of all sizes have accumulated cash over the last year to reduce debt and have a cash flow cushion going forward.

Someone else is doing the same thing.

The consumer has decided that saving money is a good and needed strategy for themselves and their families.

The US government reported that consumers saved 6.4% of after tax income for the month of July.  This trend in increased savings has been happening now for a few months.  Compare this savings rate to 1%+ prior to the economic chaos that started in 2008.

Why is the consumer deciding to save more at this point in time?  Here are a few reasons as I see them:

  • It is no secret that consumers are trying to reduce any and all debt they have.
  • Uncertainty plays a major role in consumer psychology.  The consumer is telling themselves that caution is the best strategy and that means saving dollars until they can get a better “feel” on the future of the economy.
  • The consumer is becoming wiser.  Part of what got the consumer and the country into economic trouble was spending on unnecessary products and services as well as houses bigger than were needed.  You can add to that a few vacation homes.  Now the consumer is still spending, but it is on more necessities and less on “feel good” items with no lasting value. Some of the remaining dollars is going into savings.

In spite of this new pragmatic approach by the consumer, businesses still have to generate sales.  The consumer has not stopped buying. They are just buying less and being more cautious.  A company needs to capitalize on that mindset.  Here is how to do it:

  1. Know who your target customer is and channel your available marketing dollars at that customer.  As  a business, you do not have the luxury of using a shotgun approach.  That only wastes cash flow.
  2. Know which of your services or products is most desired at this time by your target customer.  Don’t make the mistake of emphasizing secondary products, styles, colors, sizes, or categories in your offering.  Lead with your strength.  Do research to find out what that is if necessary.
  3. The consumer right now appears to only be buying bargains.  So give them a bargain.  Find a way to promote your most wanted items to the target customer at a price point they cannot refuse. Then cross market and up sell to increase the average sale and bump up margin.
  4. Offer the best guarantee or warranty that you possibly can.  The consumer is not very trusting right now.  Let them know that once they finally decide to buy that they can have peace of mind that their purchase will not be a mistake.  Trust and credibility in the seller is currently an important part of the buyers decision-making strategy. 

The consumer has money to spend.  And they will spend it given a good reason to do so.

It is up to the owner or CEO to give the consumer a valid reason to dip into the increase in savings and spend it with your company.

Key Supplier Relationship Will Increase Cash Flow

May 3, 2010

by Doug Smith, President, The Woodhaven Group

The relationship between a key supplier and customer can be like family.

Executed correctly this relationship can profitably grow the sales and profit of both companies.

As you become more important to your supplier here are a few tips that can act as a guide to increase the amount of cash available for you to grow your business:

  1. Ask for and get extended terms on each invoice.  Once established you should not have to pay the same terms as a new customer of your supplier.  If 30 days is normal then ask for 60 day terms.
  2. If you have inventory make sure your supplier exchanges slow-moving inventory units for what is being used or sold the most.  This should be done a minimum once every 6 months, preferably once per quarter.  In some industries it makes sense to do it once per month.  Show future sales projections so your supplier can justify taking this action. 
  3. When the above inventory is returned make sure there is no restocking charge applied.
  4. If your business is seasonal, you may want to negotiate paying less during the slow months and more during the busy months.
  5. Have your supplier fund the purchase of a major capital item you need to buy to grow your marketshare. This may be a new piece of equipment needed in your manufacturing facility that will allow you to be more productive.  The payment can be spread over a multiyear term with a small amount added to each unit of inventory purchased from your supplier.
  6. Once you have become a major customer or “partner” of your supplier negotiate putting the key items being bought on consignment in your facility.  This inventory remains on the books of your supplier until you are ready to “pull” them for use in manufacturing.  Only then does the terms begin on your invoice.  If you combine consignment with extended terms then your cash flow really explodes.  To properly execute a program like this requires the use of security agreements and physical inventories but the cash savings is worth it.
  7. Negotiate additional advertising coop and simplify how it is processed.  Many companies offer a marketing rebate or credit to their best customers but then make it almost impossible to get due to extreme rules and regulations.  If possible, agree in advance on an advertising coop amount and deduct a fixed amount each month from invoices.  At the end of the year you can reconcile any differences.
  8. Ask for a price decrease.  You may be surprised how often a supplier will grant this wish to a major customer.  They realize the cost to acquire a new customer is high and realize your increased margin dollars over time will make up for a 2-3% drop in price.
  9. If you cannot get a price decrease, then get an agreement that the price either will not be increased or will be increased only by no more than a certain percent for a specific period of time.
  10. Regardless how great the relationship is and regardless how many concessions you are given, you need to still periodically compare prices in the market place.  If not locked down  prices can start creeping up.  There should be an understanding in a good relationship that you are always getting the best price possible.

Suppliers can be a great source of cash flow.  I have successfully used every one of the tips mentioned here.

A lot of the cash or money used to grow your business can come from well executed cash flow strategies.

This is one of them.