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    June 30, 2010

    Cheap versus Free

    I recently read the book "Free" by Chris Anderson the author of The Long Tail.  It is a good read and really makes you think.  I don't agree with everything he says nor do others, but the one point he makes that really made an impression on me is the huge difference between cheap and free.  One example he gives is an experiment that is done by Dan Ariely the author of "Predictably Irrational".  They placed a table at a university where they were advertising chocolates.   6-30-2010 4-12-27 PM  They had Lindor Truffles for 15 cents (a high end chocolate which typically sells for much more), and Hersey Kiss's for 1 cent.  73 percent chose the Lindor Truffle over the Hersey Kiss.  They then decided to lower the price of each candy by one cent.  The Truffle was now 14 cents and the Kiss was 0 cents.  69 percent chose the Kiss.  What Ariely came to understand through this experiment and others is that the brain is constantly deciding how to allocate resources.  When faced with a choice where resources don't have to be allocated (i.e it is free) the brain is relieved from having to do work.

    How does this affect your market?  This is not just true for free goods, but also free services.  If there is no charge for deliveries or no penalty to ask for a faster turn around I will choose whatever I want because I don't have to allocate any resources.  This is not a new thought of mine.  This was actually in my first post on this blog.  Chris Anderson and Dan Airely just did a better job of explaining it.  More on this later...

    September 28, 2009

    What Does Starbucks and AEC Reprographics Markets Have in Common?

    When I first entered this industry I was curious when I would hear two companies in the same market claim that they didn't see the other as true competition and rarely ran into each other.  They would claim that the reason the other company wasn't competition was because of their superior service.  What I came to realize is that these companies didn't run into each other because they were servicing different market segments.  They often didn't realize they were servicing different segments because over time Mr. Market did the segmenting.  The segmentation was mostly down the lines of design market versus construction market.

    The economic downturn has caused business owners to look much more closely at their business and the market in general.  They are understanding what markets they are currently servicing and looking to expand into the other segments.  What is important to understand is that these different segments have very different requirements especially price requirements.  If your pricing and service differentiation are not carefully thought through it will erode your margins instead of growing your business.  In this environment nobody needs more margin erosion.  An article in CNN Money talks about Starbucks struggle between the competing value propositions of fidelity and convenience.  This is very similar to differences in the AEC community.  Design professionals want fidelity and construction professionals want convenience.  Your pricing and service differentiation should match these market requirements otherwise you will loose business by charging too much, or erode margins by charging too little and having to provide more services.

    May 18, 2009

    Chinese Wisdom

    Chinese Crisis The Chinese word for crisis is written in two characters.  The first stands for danger, and the second for opportunity.

    May 06, 2009

    Why Not You?

    This truck was parked in front of our office.  In cash you can't read the text on the photo taken from my iPhone.  They advertise Document Management Solutions, Secure Destruction Services, and Data Protection Services.  Sounds pretty good...maybe even strategic.  Could you offer document retention and document destruction services to your existing customers?Why Not You?

    February 13, 2009

    Google is Charging for Downloads

    Google is brilliant at finding ways to monetize the distribution of digital content.  Today they are allowing "partners" on YouTube to charge for downloads.  They are not yet getting a cut from the fees as it is an experiment.  Watch and learn from Google.  There are many parallels to what is happening with the distribution of AEC content and the distribution of music and video content.

    February 02, 2009

    A Reprographer Leading Change

    Jared Willis, Director of Sales for Barker Blue, is walking the walk.  It is easy to attend an industry event and walk away with good ideas.  We all know that implementing them is the hard part.  On the plane ride home you are filled with inspiration and are thinking about how these new nuggets of knowledge or wisdom are going to change your business.  On Monday morning the reality of managing your business hits you.  It is a struggle to move from working in your business to working on your business.  Barker Blue is doing a great job of acting on much of the learning they have done.  Jared has a great blog where you can follow the wisdom and experience they have gained.

    A recent post of his describes his experience with a PR firm and how they created the perception of value.  Too often reprographers are willing to say we will do anything to satisfy the customer, but they don't communicate to the customer what they are doing and it is not valued.

    Some other industry blogs in case you aren't aware.

    ReproTrends - Curtis Thornton, Thomas Reprographics
    The Rockpile - Tanner Bechtel, ReproMAX

    January 30, 2009

    It's Not as Far Fetched as it May Seem

    Here is a funny video published by TechCrunch showing a 1981 report on the news being delivered electronically.  Funny unless you work for a traditional news paper (i.e. New York Times or Chicago Tribune).

    Most newspapers have and continue to hold-on to the old business model.  They have tried to change, but are too reluctant to break with the past.  Most news is funded by advertising.  In the 1980's, the newspaper was a good place to spend advertising budget. Today Google is getting more and more of that budget.  Companies are still spending money on advertising and people are still reading the news.  Its just a different business model.  I personally read the newspaper less and less.  I get more of my news digitally.  I don't think my children will read newspapers.

    Imagine a news report recorded today about the construction document distribution industry being shown 20 years from now.  What would people in 20 years find funny?  My 16 year old son has never seen rotary phone (shown in the video).  20 years from now few will remember a diazo machine.  What will the business be like?  What will it be like in 5 years?

    January 29, 2009

    The Optimist, the Pestimist, and the Leader

    Steve Bova, IRgA Executive Director, commented on my post yesterday and spurred a memory of an adage I heard.

    A optomist says "the glass is half full", 
    A pestimist says "the glass is half empty",
    A leader says "maybe this is the wrong glass".

    Look at your business and your customers business.  Things are changing.  Are you looking at your business correctly?  Are you presenting things your customers value?  How do you change your service offering or even just how you communicate what you are offering to match what your customers need right now.  Times are tough but people are working really hard.  What are they working on?  How can you be part of it?

    January 22, 2009

    Why Do Robbers Rob Banks?

    I had a mentor early in my career who during a conversation about where to invest our company's sales resources said "John, Do you know why robbers rob banks? ... Because that's where the money is."  This doesn't mean in times of economic crisis you should hold up a bank.  Keep your ear to the ground to see where money is being invested and how you can be part of it.  Trying to get business out of a customer or project that doesn't have the business to give you only impairs your relationship.  Here are some indicators from ENR as to where the money will be.

    January 07, 2009

    Selling the Way Your Customers Buy (Even Now)

    2007_hyundai_santa_fe.03[1] "People hate to be sold, but love to buy" the adage goes.  Maybe today they don't love to buy, but still have to.  Too often we are focused on selling our products the way we want to sell them rather than the way our customers want to buy them.  Today people are concerned about the economy and have become risk adverse.  Hyundai put out an interesting program called the Hyundai Assurance Program.  If you lose your job you can return the car.  I assume they have run the numbers to make sure this can work for them, but this is a bold move.  It addresses the risk factor and it also gets them press and credit for being innovative.  I heard an article on NPR last night where the reporter asked the acting CEO whether he thought this might come off as desperate.  I had to laugh.  Didn't I just see the CEO's of the larger US auto manufacturers in front of congress asking for money or they would go bust.  They weren't presenting anything new and innovative that might help people and stimulate the economy.  That looked desperate.  

    Even in a down economy people's will have situations where they need a new car.  There will still be business to be had.  More people will be thinking of Hyundai now and Hyundai may grab a larger share of a small market.

    What can you do to address your customers risk aversion?  Do you have equipment sitting in inventory that could be placed at an FM?  A 2 to 3 year commitment would be nice, but would your customer be more interested in a month to month contract now?