Sanders Says

The New Luxury: Experience

It's very clear to me that consumer's habits have changed, and will stay changed long after the economy recovers.  A March article in the NYT announced that conspicuous consumption was one of the recession's casualties.  The ethos of showing off material wealth is dying faster than gas guzzlers, diamond crusted watches and McMansions.  It's just not cool anymore, let alone financially prudent. In my career as a speaker, I've seen this mentality hit corporate meetings too. Those that exist are scaled down, un-rewarding and often bare bones to avoid any scrutiny (even non TARP companies).  

How, then, do we reward ourselves? What will replace retail shopping therapy and corporate extravagance? In my view, the replacement will be a private experience.  A nice dinner with impeccable service.  A spa day.  Paying a little more for better/faster/nicer service.  Investing in home repairs that bring in sunlight, music and beauty.  A return to Starbucks for a carmel-mach-whatever (small please).  Having a company offsite in a rustic but tucked away location -- with a full day devoted to community service.  I'm seeing this already, it's a very natural response to the times. 

In their landmark book, The Experience Economy, authors Pine and Gilmore argue that people will pay more for an experience that engages them.  Our job as providers (b2b to b2c) is to stage an experience using our products as platforms and services as a stage.  Same goes with meetings: experiences don't have to cost money, involve $$$$ celebrities or require high-end swag.  They need to be emotionally engaging and memorable.

Yes, last fall we sacrificed the experience for simple-services in an effort to survive the storm.  But as the clouds part, and the world still consider conspicuous consumption as the root of the problem, I'm seeing the consumer start to spend against experiences.  One note: making a difference is an engaging experience.  When you spend $ with a green, community focused or cause connected company, you have an emotional experience that fills you with purchase.  

The new luxuries will be emotional, not physical.  This means that all companies must segment the customer experience and find little ways to elevate it, even if there's a marginal price increase to follow.  Remember: margins lie at the heart of profits and experential products/services command higher margins during average to great economic times.  

My new life on Twitter

Kicking and screaming, I've entered Twitter world. 

As an author/speaker, Twitter offers me a great platform to forge relationships and maintain mindshare. It is also a great stream to fish in for ideas and inspiration.  Over the last few weeks, I've added Tweeting to my daily to do's.  If you follow me, I hope I'm giving you great return on attention. 

The people I follow on Twitter do just that, and they don't pollute my Twitter stream with overpostings or irrelevant observations.  I call these types Twitter trash. They don't get it and after a few too many bad tweets, I un-follow them.  

Here's what I offer if you follow me on Twitter: 

*  One daily idea for your life or perspective

*  Humorous observations and fave jokes from comics

*  Music, movie and book tips

*  Retweets of my favorite tweets in my stream 

*  Glimpses of my life on the road as a speaker, including real-time pics I snap with my iPhone.  

If you are a big Twitter'er, please recommend me to your follows via #followfriday. My goal is to break one thousand followers by the end of June.  

PS -- I use Tweetdeck as my platform. It's free, easy to install and allows me to post to Facebook and shorten URLs all in one place.  Moreover, I can follow all my replies, mentions of me or my books as well as hot trending topics on the network. 

Follow me on Twitter, I'm @sanderssays

Facebook is coming after Twitter

MySpace is going away quietly.  

Facebook is likely here to stay. Even though Twitter is the new kid in town, Facebook is not going to fade out as last-year's big thing. A foreign investment concern is pumping two hundred million bucks into Facebook, which will give it ample resources to contest Twitter's recent gains in the social media arms race. 

I believe that Facebook has a big lead in the area of monetization. Mike Murphy, former Yahoo executive, has a strong sales team and dozens of key agency relationships. Facebook actually makes some money from its audience via text, banner and channel partnerships such as Career Builder.  Twitter, on the other hand, spends money with no business model to speak of. 

It seems that Twitter's model is to get big and get bought. Here's the problem: Google learned the hard way from buying YouTube that you need a business model to offset basic costs (bandwidth, staff, etc.). Just ask Mark Cuban, who knows a thing or two about this space. GOOG would have to spend billion(s) to get Twitter, then take a hit from market analysts that see it as a cost driver, not a page view generator. 

While Facebook focused on getting big, Zuck gave Murphy the resources to help it learn to to make cash along the way. This is why they secured another round of funding. The company's ten billion dollar valuation gives it a fair shot at independence, at least up to an IPO in 2010 or 2011.

Back in the day, when Google was rising, making money was as important as gaining market share. Back in early 2003, Google had a self-service ad platform (they called it R2D2) that brought in cash for paid search -- lots of it over time. Then the company built a great ad sales team and fostered agency relationships. This was the key to its IPO success and valuation rise over time. 

While Oprah and Ashton are all a Twitter, my money is still on Facebook over time. For the average, non-promoter, Twitter will eventually be a time waster for a vast majority of its users. The company will need to launch other spin offs (think Google Maps) to stay relevant and engaging over time. To do that, they'll need money. To get the smart money, they'll have to demonstrate viability.  

Don't forget to bathe in all the Happy Talk

For all you bad-news-junkies -- today was a good news day. 

With the market up almost seven percent (#2 best gain day since the meltdown started), there's a lot of happy talk going on.  Some pundits think too much so. 

Regardless, a little happy talk might help overcome your recent case of scarcity think. It would balance out all the gloom and doom talk you've subjected yourself to over the last few months. 

Me personally, I've turned off the cable talking heads and refreshing stock ticker'd web pages. I'm consuming an information diet of solutions instead of problems.  Today, though, I'm turning it all on to bath in some positive news -- if only for today.  

You are what you eat, and that applies to the relationship between information and outlook.  

War of the mediums: Who is the real winner?

Yesterday, March Madness kicked off online and offline. 

Three groups are competing your your eyes and dollars:  

Direct TV March Madness On Demand 

CBS Broadcast 

NCAA.com  

The incumbent, CBS Broacast, offers high resolution, no fast connection required.  Good old fashioned Free TV.  If a game gets close, they cut to it and return to the scheduled game when it's over.  You also have TIVO capability.  If your favorite team isn't featured or in a close game, you are out of luck. 

Direct TV offers all the games in HD format. It's pricey, but if you are a fanatic (and don't work much), then it's a great way to enjoy the front end of March Madness.  But it is 2009, and this is pretty expensive.  BTW -- Call them now and they will prorate charges.  

NCAA.com, for the first time, offers all the games on demand. They stole my business from Direct TV this year.  Why not?  I can watch CBS and have NCAA on at the same time. I can cut to any game (although my internet connection requires me to lower quality settings).  I don't have TIVO capability with NCAA.com, but that's ok.  I'm sure that Direct TV is bleeding to this upstart offering.  Expect millions of dollars to be moved from TV On Demand to the free model.  This is a core concept behind Chris Anderson's upcoming book (Free: A Radical Price, July 2009).  Check out his article about the future of free. 

This battle has evolved over the last few years.  When I was @ broadcast.com, we offered Free Audio Internet and later...pay for.  It was, at best, a break even business (ad revenue VS bandwidth costs). It was important to us, as a startup, to have the content. We could leverage it to build the audience. That fed into the exit strategy of selling to a portal (like Yahoo!).  Good strategy for the times.

NCAA.com is not a startup with an exit strategy, just a media property.  So they need to make money on giving away the tourney online.  As Mark Cuban often points out on his blog, the difference between broadcasters and netcasters is that there is an incremental expense to netcasters for each user. Netcasters have to pay the outgoing bandwidth charges, unlike broadcasters that merely upload it once for all to pull down.  

NCAA.com is swapping out commercials, so it makes incremental money for every view. State Farm is the named sponsor for this, getting a little button on all the website pages.  Given the economic climate and the conservative ad market, I doubt that NCAA's sales team is getting a premium for their "eyeballs delivered".  Hopefully State Farm's sponsorship covers the bandwidth and production fees, giving NCAA some razor of margin. Otherwise, we are provisioning NCAA to avoid Direct TV charges.  

Takeaway: Free internet may be able to beat out Pay For (and better), but the business model must be for-profit-right-now to be sustainable and upgradable. I'm not sure the price of the future is (still) free. Unless you like learning new media consumption habits every year or so...

Is the world spinning you?

There's a great article on Motley Fool/Yahoo! today that might give you a new way of seeing today. 

IS THE WORLD SPINNING ME?

I agree with the authors -- the world is not coming to an end and the sun will rise tomorrow.  Are you really going to let the doomsayers (eg. media) bring you down with the Dow? 

PS -- I wish Uncle Buffett would be more sensitive to the crisis in confidence.  His comments today didn't help anyone (but the media) and drove the market down. What was he thinking? It is as if he's on the sidelines, with nothing to lose.

Needed: A psychic stimulus package

What this country needs is a psychic stimulus package.The current focus is only part of the solution. The “system” that the government is trying to fix is comprised of a set of rules, regulations and transactions that comprise the banking system and central economy. The government’s stimulus package pours adrenalin into the system, along with a few sparks, and waits for a beating heart. Meanwhile, the individuals crumble as they conduct their in-house run on the piggy bank. They break open 401ks, and then stuff the cash into a mattress. They turn in their car and buy a bus pass. They cancel the family vacations, new fall clothes and their church tithe.

Each act of prudence on their part reinforces the gravity of the situation. The shopkeepers that served them see the till getting skinnier every day. They start to layoff the newbie’s and non-relatives. The newly unemployed turn in their cars, put off any new things like clothes and the downward spiral deepens by a factor of one family.

Eventually, all of our creativity is poured into shrinking the flow of pennies out the door. If things are really as bad as the news-folk are telling you, this is only going to stave off your bankruptcy by weeks. You think you are rearranging your finances to survive the storm. I think you are rearranging deck chairs on the Titanic.

The politics of scarcity haven’t served us well, and the nonstop fear-sell has worn us down to a spiritual nub. For the first time in our lives, we truly have to have faith to do anything: spend, lend, invest or replenish. With each passing day, the dread inside us drains energy until, at some point, we just glaze over and adopt a new
mantra: whatever.

Meanwhile, scarcity spreads from stuff to success. Jazz idols (Etta James) and blockbuster writers (Stephen King) lash out at young successful competitors in the new
world of “there’s not enough to go around.” While this example comes from the entertainment pages, you likely see this at work as the employee of the month is slagged at the break room table by forlorn office mates who’ve lost their ability to share a little success. Eventually, scarcity will spread to our concept of time as we are asked to do twice as much with half the help. We’ll go from hustling to frantic scrambling as we feel like we are sinking in the sands-of-no time. We’ll cancel meetings, special dinners, Saturdays with the kids and the summer getaway. Checking email at the dinner table, we’ll resent our employers (who put food on the dinner table) and sink further down into the spiral of helpless self-doubt.

At some point, this psychosis will snake its way into every company, city and church—until the entire nation is embroiled in personal competitions for all remaining scraps: Jobs, profits, friends, awards, lover and time. It will be dog-eat-dog.

I get that our evolution is more environmental than genetic as I again point to the need for a psychic solution to our crisis of scarcity think.

Person by person, or family by family, we need an injection of confidence and daring-do back into the collective consciousness of this nation.

We need to spread the message of abundance: that we can find enough to go around. To really stimulate the economy, we need to restore their ability to trust and dream. We must help people find a better perch or perspective, one that gives them the confidence to declare “there’s enough to go around”, even when the manna has not fallen on their yards (yet). We need to promote a new way of thinking. Currently the gurus of personal finance promote a new way of acting. But that’s not addressing the root of the issue. We’ve got to react to the outside world from a different starting point: “If we are willing to work, adapt and trust each together, I believe that there’s enough to go around.”

Over the course of the next few months, I’m going to talk about the “how”. Please join this conversation with your thoughts on how we can promote this paradigm shift
in everyone we know. I’m especially interested in your personal stories of how scarcity has impacted your life, or the life of someone you know. I’m really interested in your stories of how people are rising up like a Phoenix from the ashes, and inspiring you to believe in abundance.

This is an important conversation for the times.

One extra hour of revenue creating (sales) activity per day

This is targeted to sales, small business owners and entrepreneurs:

The best way to counter the economy's funk is to create your own oasis of good news: with a sale.  This week, you need to add five hours of "money-seeking" time to your schedule.  If you sell a service, go back to some old clients and talk about new value-oriented products you've just launched.  If you have a product with some recent improvements, suck it up and make five cold calls a day this week.  

I'm not talking about marketing or PR, either.  I'm talking about phone or face-to-face "can I write you up for a sale" pitch and close.  For many, it's a bit of a shock to the system -- especially if you've been more reactive in nature over the last few years.  

In my case, I'm reconnecting with meeting planners or bureau agents from years gone by, sharing my new speaking topic (Creating Great Relationships During Tough Times) with them.  I'm also listening to them, understanding what they are going through, and seeing if there's anything I can do to help.   This strategy works, too.  In each week I've invested five incremental hours in sales, a 2009 revenue opportunity was created.  Sure, most people are tight with money right now.  But if you've created a recession-friendly product or service, you can find someone with cash to spend and a need to solve.  

Welcome to the new sales driven world of small business success!  (PS - What else were you going to do with that five hours, graze around the net or office?)

Recession strategy: Make yourself emotionally attractive

When times get tough, the average person becomes afraid, defensive and tactical. 

This is no way to succeed in business either in the short, medium or long haul. 

I speak at over a dozen sales conferences every year, it's my fave audience to talk to (as a life long sales pro).  I've done sales conferences during two recessions, and my message is the same:  When the economy is in the tank, make yourself emotionally attractive to your clients.  This was a sage piece of advice I received from the late great Stanley Marcus Jr. (former Chairman of Neiman Marcus).  He told me that when you make yourself emotionally attractive during tough times, you become the lighthouse for customers -- and mop up while your competitors wither and die.  

He should know, he worked through several economic meltdowns.  Why is he right?  Customers buy what they need and sometimes what they want.  In many cases, even when they've been given instructions to cut or eliminate expenses (you), the Customer will fight for you -- depending on how you make them feel.  In other words, the intangible benefits you give (inspiration, positive emotions, stress relief, etc.) boost your perceived value.  

How you can be emotionally attractive to your Customers: 

1.  Humor -- Show a sense of humor, tell jokes, laugh and make it a goal to fave fun at your next sales presentation. 

2.  Inspiration -- Have a positive attitude that defies the emotional/financial gravity of the situation.  Use relevant stories or facts to inspire your Customers to believe in themselves, their business model and the future of the US economy over the long haul.  

3.  Cause/Purpose -- Sign up for a charity, community or environmental program at work.  Share your progress (and excitement about it) with your Customers and if appropriate, invite them to be a part of it.  If your Customer has a cause, and it doesn't require your precious money, join it and help them achieve their purpose driven goals.  This makes it much harder for them to fire you, because they now have to divorce product + a make-a-difference partner. 

4.  Knowledge sharing -- Become a mentor to your clients, and take a sincere interest in their business issues.  Find a great business book that addresses their needs and give it as a well-timed gift.  To paraphrase Dale Carnegie:  "You will accomplish more in the next two months, developing a sincere interest in two people, than you will accomplish in the next two years, trying to get two people interested in you. 

Drop a dime on the street with the human pay phone

I'm in Bogota for a few speeches this week. When I travel, I always try and observe how people approach entrepreneurism and marketing.

When I saw this man offering his cell phone on a chain for 200 pesos (.10 US) a call, it stopped me dead in my tracks. He is a human pay phone! He wasn't alone, there was a human pay phone on every block -- just like pay phones used to be prior to the wireless revolution in telecom. And they were busy!

You see, in Columbia telecom carriers offer unlimited usage plans, just like in the USA. Meanwhile, traditional pay phones vanished. Hundreds of out of work people innovated and bought cell phones, then made simple signs offering them to anyone who either didn't have a cell phone or had a dead battery.

This is the heart and soul of how small business operates: Leverage economic trends and gaps in big biz thinking to fulfill unmet needs.