The Dynamic Manager’s Guide To Marketing & Advertising:
How To Grow Sales And Boost Your Profits
By Dave Donelson
Donelson SDA, Inc., Publishing, Smashwords Edition
Copyright 2010 Dave Donelson
All three eBooks, The Dynamic Manager’s Guide To Marketing, The Dynamic Manager’s Guide To Advertising, and The Dynamic Manager’s Handbook of Sales Promotions are contained in this edition of The Dynamic Manager’s Guide To Marketing & Advertising: How To Grow Sales And Boost Your Profits.
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Section One - Marketing: How To Create And Nurture Your Best Customers
Chapter 1 Marketing With A Capital “P”
“Before you make any decisions about price, or which products to sell, or what ads to run, take a good hard look at your customers as people.”
Chapter 2 How Many Baskets For How Many Eggs?
“An emotion-free analysis of each segment of the business is a good place to start.”
Chapter 3 Case Study: Conwin Carbonic Inflates An Industry
“Conwin transformed itself from a product-driven industrial operation to a customer-driven marketing company.”
Chapter 4 How Niche Is Your Market?
“Serving a special market successfully requires paying particular attention to customer communication.”
Chapter 5 Seven Ways To Wow Your Customers
“Surprises work really well when they come later, after the customer has started to forget the last time they did business with you.”
Chapter 6 Specialty Market Case Study: Selling To Off-Roaders
“The amount of time we spend with the customer is our competitive advantage.”
Chapter 7 First Impressions
“Take a look around and try to see the place the way customers see it.”
Chapter 8 Welcome All Newbies
“Remember what it was like when you went onto the field for your very first Little League tryout?”
Chapter 9 Beat The Big Box
“Because you know your customers as people, you better understand exactly what turns them on.”
Chapter 10 Case Study: Schweser’s Little Stores On The Prairie
“In today’s big-box world, the 125-year-old chain of women’s clothing stores has beaten the odds by staying true to its roots.”
Chapter 11 The Magic of Pricing
“Setting prices is part art and part science with maybe a little management magic thrown in for good measure.”
Chapter 12 Specialty Market Case Study: Artists And Their Prices
“There may be a price so high the customer won’t pay it, but patrons seldom buy a piece of art just because it’s cheap.”
Chapter 13 Two Ways To Compete Without Chopping Prices
“As long as we’re promoting quality and being fair about pricing, I don’t worry too much about our competitors.”
Chapter 14 Specialty Market Case Study: Sportswear, Speedwear, and Other Profitable Threads
“Making a profit in the rag trade isn’t automatic.”
Chapter 15 Marketing in Cyberspace: Not A Buck Rogers Idea
“The website is essentially another complete business location.”
Chapter 16 Blogging And Social Media—Other Online Marketing Options
“If putting your business into cyberspace has seemed like more trouble than it’s worth, maybe now is the time to reconsider your decision.”
Chapter 17 Social Media Marketing Three Ways: Facebook, Twitter, and LinkedIn
“Your business can establish a two-way dialogue with customers that reinforces your marketing message.”
Chapter 18 Specialty Market Case Study: Automotive Aftermarket
“You can use tried-and-true marketing tactics like showing off your work to car owners at neighborhood cruise-ins but the main thing is to go after the business.”
Chapter 19 Specialty Market Case Study: Sports Team Sponsorships Rewards and Regrets
“The marketing essence of sponsorships--whether you put your money into race teams or the PTA bake sale--is the endorsement value that the investment gives you.”
Chapter 20 Business To Business Marketing - Beyond the Price Sheet
“You should market to other companies much the same way you market to consumers: with a combination of advertising and personal selling.”
Chapter 21 Speaking Up For Your Business
“It’s good for business because the more information and knowledge you give your customers, the more they appreciate it.”
Chapter 22 Tune Your Company’s Publicity Machine To Stay In The News
“Dealing with paparazzi and signing autographs is a small price to pay for frequent press coverage that will help build your company’s business.”
Section Two - Advertising: How To Grow Your Business With Ads That Work
Chapter 23 The Advertising Conundrum
“If you stop promoting, your customer base melts away like an ice cream cone on a July afternoon.”
Chapter 24 Advertising Goals, Part One: Your Image
“The goal isn't to enhance the image--it's ultimately to affect the bottom line.”
Chapter 25 Advertising Goals, Part Two: Your Sales
“Advertising is about sales, sales, and more sales.”
Chapter 26 Advertising Goals, Part Three: Positioning Your Business
“Once the consumer puts an advertiser in a position in their mind, it generally stays there.”
Chapter 27 Where To Find Advertising Ideas
“The best approach is to be as specific as possible in the claims presented.”
Chapter 28 Five Rules For Effective Advertising
“You must know what matters to your customer before you can produce advertising that appeals to them.”
Chapter 29 Effective Advertising Is Local
“Like politics, all good advertising is local.”
Chapter 30 Say It Over And Over Again And Again And Again
“Advertising works the way the grass grows. You can never see it, but every week you have to mow the lawn.”
Chapter 31 Case Study: P.C. Richard
“Even in tough times, P.C. Richard generally doesn't cut back much on advertising expense.”
Chapter 32 Pay Attention To Attention
“Don’t be afraid to try unconventional tactics to get attention.”
Chapter 33 Advertising's Four-Letter Word
“When you tell someone something they already know--or think they know--they stop listening. Just ask anyone with teenage children.”
Chapter 34 Just A Little Reminder
“Advertising works more like a directional arrow. It tells the customers where to go to get something once they've decided they need it.”
Chapter 35 Should Price Be In The Picture?
“There's generally no reason to use price advertising since few purchase decisions are made on that basis.”
Chapter 36 Four Rules For Buying Advertising
“You really shouldn't hide in the back when a media sales person comes into your business.”
Chapter 37 Case Study: Lehman's Hardware
“The Lehman family of Ohio sells butter churns and washboards--via the Internet.”
Section Three - Promotions And Ad Campaigns You Can Use
Idea 1 – The Distance Discount
Idea 2 – Neighborhood Bulletin Board
Idea 4 – The Hands-On Marathon
Idea 8 – The Weekend Media Extravaganza
Businesses come and go and there are plenty of reasons for their success or failure, but the ones that thrive almost always have one thing in common: they are good marketers. What does that mean? It means they make all their business decisions based on meeting their customers’ needs. Which products or services they sell, where they sell them, how much they charge for them, how they encourage customers to buy them, and all the other hundreds (if not thousands) of business decisions a good marketer makes start with a simple question: how will this affect my customers?
This customer-first business philosophy isn’t something I invented. It’s been around since early in the last century when the dynamic managers of their time realized that supplying the kind of widget the customer wanted was more important than how many widgets their factories could produce. In other words, the manager who wanted to grow his business turned his eyes away from the factory floor and started looking outside—at the customers—to figure out how to succeed. Thus began the study and practice of marketing.
Like many people, my introduction to marketing came in college. The classic approach divided the discipline into four elements—the four “P’s”—Product, Price, Place, and Promotion. While plenty of academics and others have tried to update, enhance, and expand on this simple scheme, I still feel it’s pretty solid. It’s probably obvious to you, but here are what the four terms mean:
Product is the “what” of the business—as in “what should we sell?” You probably know that the best answer to this question is “what the customer wants to buy,” but you’d be surprised at how many companies try instead to build a business around “what can we make?” When you ignore the customer’s needs and wants, you suffer the fate of the apocryphal buggy whip manufacturer or, to cite a more modern example, you become pets.com, home of the hugely irritating sock puppet mascot and proof that just because you can sell kitty litter online doesn’t mean you should.
Price is market-driven, too, regardless of what your accountant tells you. Sure, you have to cover the cost of your product or service (as well as the overhead of your company) with enough left over to provide a profit, but you won’t be able to do that unless the customer is willing to pay for it in the first place. Individual customers don’t set your price, but as a group—when they become the market—their judgment of whether you’re delivering fair value can’t be ignored.
Place deals with the “where” of the business, as in “where does the product come from and where does the customer get it?” This includes topics like supply chain management and product distribution that are a little outside my areas of expertise, so I’ll just touch on them lightly in this book.
Promotion covers all the ways you communicate with the customer—from advertising and public relations to how your sales people interact with them in your store, office, telemarketing center, or online. The personal selling facets of marketing are so important I cover them separately in The Dynamic Manager’s Guide To Creative Selling, but a great deal of this book is about other forms of promotion based on good marketing practices.
My first job in advertising was as a copy writer for a radio station. It didn’t pay much, but I learned a ton. Over the years, I produced TV commercials, designed print ads, and planned many media budgets. But you never saw my TV spots on the Super Bowl or my print layouts in Vogue. My clients weren’t gigantic multinational brands like Coca-Cola or Chevrolet. Instead, I created ad campaigns for Casey Meyers Ford and Soda Boy (whose still-memorable slogan was “Oh Boy! Soda Boy!”), advertisers in St. Joseph, Missouri, the small town where I grew up. My ads were for local businesses, not national conglomerates. In other words, they promoted businesses just like yours.
Working in local media as I did is a great way to learn a lot about all kinds of businesses. Car dealers, grocery stores, clothing retailers, and home improvement contractors all have different advertising needs. Some are looking for more store traffic, others want to expand their market area. Attracting new customers, building loyalty in the existing clientele, encouraging repeat purchases or introducing new product lines each require different tactics. There are a few principles that apply to them all, but there really is no such thing as one-size-fits-all advertising. Please keep that in mind as you consider the concepts in this book.
When you mention advertising to most people, they immediately think of the behemoths of the airwaves—companies like Procter & Gamble, McDonald’s, or Wal-Mart. But big spectacular national ad campaigns like theirs have little in common with advertising the way it’s done by small businesses—the kind of advertising you do. In most respects, advertising your business is harder.
Mostly, of course, that’s because you don’t have a gazillion-dollar advertising budget. You probably don’t have a lot of expensive research to precisely define your market or a dedicated psychometric laboratory to test your ads before they run. Your copy writer may double as your store manager most of the time. Your art director most likely spends most of her time freshening merchandise on the shelves. Your media planner? Probably the person who writes the checks—you. In other words, your advertising isn’t designed and executed by a team of Madison Avenue gurus, it’s the product of the good-hearted people who help make your business a success.
That certainly doesn’t mean it isn’t effective. Quite frankly, somebody who spends 90% of their time talking to your customers (like your store manager does) is going to have an infinitely better understanding of what they want than some clip-board-toting psychological profiler or white-coated lab technician. You don’t need a super computer to calculate your media efficiencies to the fifth decimal point when you’re trying to decide whether to promote this year’s Father’s Day Sale in the Weekly Inkspot or the TV-49 Six O’Clock News. What you probably do need, though, is a better understanding of what makes advertising effective and how to make it work better for you.
That’s where The Dynamic Manager’s Guide To Marketing & Advertising comes in. This book offers you some basic rules that will help increase the return on your marketing investment. Some of them come from my experiences creating ads and watching customers react to them as I stood in my clients’ stores and offices as the campaigns ran. Others were drawn from the lessons learned by small business owners themselves, from auto repair shop owners to nursery retailers, clothing stores to insurance agents. As in all the books in the Dynamic Manager series, much of this material was drawn from my conversations with thousands of small business managers and owners. I filtered their stories through my own experiences as a manager and entrepreneur to distill some sound guidelines on why and how you can market your products and services in the real world. In other words, this book isn’t about theory—it’s about the real world of small business marketing.
Versions of some of these chapters previously appeared as articles in various national business and trade publications you’ll find listed in the bibliography; others were taken from my seminars on marketing. I’ve also included several case studies of companies that depend on solid marketing to succeed—often against great odds—as well as a few chapters about companies in specialty markets that I found illustrative of good marketing practices. This book contains the full text of two ebooks, The Dynamic Manager’s Guide To Marketing: How To Create And Nurture Your Best Customers and The Dynamic Manager’s Guide To Advertising: How To Grow Your Business With Ads That Work as well as additional material in the third section, Promotions And Ad Campaigns You Can Use.
The book is organized to encourage you to sample, think about, and try out different concepts in the daily operation of your business. It’s not a narrative or a text book; there isn’t a step-by-step organization but rather a collection of useful articles that address practical problems in marketing for small business managers and owners. My goal is simple: to give you some helpful tips and perhaps even some inspiration to become a successful marketer.
-- Dave Donelson
Marketing: How To Create And Nurture Your Best Customers
Marketing With A Capital “P”
“Before you make any decisions about price, or which products to sell, or what ads to run, take a good hard look at your customers as people.”
Before you begin applying the four P’s of marketing to your business, you need to understand the most important “P” of the discipline. The other four, product, price, place, and promotion, all intersect at one point: People.
“People” as in customers. “People” as in the folks who buy your product or service. It doesn’t matter if you are a manufacturer, a retailer, a wholesaler, an inventor, an insurance agent, banker, restaurateur, doctor, lawyer, butcher, baker, or candlestick maker. Without customers, the auto manufacturer’s cars turn to piles of rust. Without customers, a farmer’s corn rots in the silo. If you don’t have a customer, you don’t have a business.
And customers, of course, are people. Attracting their attention, persuading them to buy from you, and ensuring their satisfaction with your product or service all require good people skills.
Doing these things really well is how small businesses grow to be big ones. If that is your goal, I urge you to invest your time, energy, and yes, some money, in learning everything you can about the people with whom you do business—your customers. The more you know about what makes them tick, what they want out of life, why they get out of bed in the morning, the more you will know about things like why they buy your product or your competitors’, what price might make them change their purchase intentions, and which services they think are important and which ones they find a colossal bother.
The behemoths of marketing, companies like Procter & Gamble and Pepsi, have legions of market researchers to find, dissect, and analyze their customers. They can pay for consumer surveys, finance test products, assemble focus groups, and use dozens of other relatively scientific tools to determine the kinds of things a good marketer wants to know about his customers. As the owner or manager of a small business, you probably don’t have those kinds of assets at your disposal. That doesn’t mean you have to operate in the dark, however. You can learn almost as much about your customers as they do by turning to that acknowledged expert on almost any subject, your mother-in-law.
Seriously, information gathered through what is known as “mother-in-law research” can be just as valid as the reams of data gathered by P&G’s army of white-coated market researchers. It will also be a whole lot cheaper and, even more importantly, it will be much more timely and specific to your business.
Your market research department
“Mother-in-law research” is pretty simple: look around you at your customers and try to spot some patterns in their behavior. If you are observant and objective, you can learn a ton about who they really are and why they act the way they do. As the term implies, you can also learn some interesting things about your customers by asking people who know them—if not your mother-in-law, then your friends, vendors, and employees.
You can get started by making a simple tally of who comes into your store or office during a given week. Are they men or women? How old are they? What would you guess their household income to be? Their education? Blue-collar or white? Are there any other salient facts that might pertain to your particular business like how many cars they own or whether or not they have children? You can often tell a lot by spending some time in your parking lot and watching the people come and go. Keep in mind that you don’t have to ask the customer a bunch of questions. Use your powers of observation to make some educated guesses—they’ll be close enough.
Another good method is to look at your sales records for a given period. If your data allows, rank individual transactions by profitability (not by gross margin percentage, but by gross profit in total dollars). If gross profit data by transaction isn’t available, use the gross sale figure for each one. Credit card transaction records are a good source, although you’ll get a more complete picture if you can reconstruct single cash or check transactions as well. Even if you don’t have transaction records available, you can use inventory turnover data as a substitute. In that case, rank items by profit volume and try to connect specific customer names to them.
Now make a list of the top 20% of those customers ranked by the size of gross profit they produce. Those are your best customers. According to the justifiably popular 80/20 rule, eighty percent of your gross profit probably comes from them, making them your most profitable customers.
Profile your best customers
Next, do a little above-board sleuthing. Compile your best customers’ street addresses from credit card records, phone numbers, delivery destinations, etc. Plot them on a map and look for clusters of them. Good marketers know that birds of a feather flock together; similar people tend to live in similar neighborhoods. Once you’ve figured out where your best customers live, you can look for other birds of that feather—they’re your best new prospects.
Now drive through those neighborhoods. Guesstimate the value of the homes and look at the cars there to get a rough idea of income. Check for kids and/or their bikes, swing sets, and sports equipment (or lack thereof) to get an idea of their parents’ ages. Don’t limit your surveillance to weekdays, either. Take a few minutes on the weekend to drive through to see how many residents are doing their own yard work or washing their own cars. These things will also tell you a lot about their lifestyle. The more you know about your best customers, the better marketing decisions you will make.
If you are a business-to-business marketer, your research job is actually a little easier. You probably have fewer (but bigger) transactions with fewer customers than someone who sells to the general public, which simplifies your data-gathering. What may complicate it, though, is the tendency for businesses to have multiple decision-makers in their buying processes. Don’t be daunted by the details, though—just gather data on one person at a time until you’ve got a clear picture of who they are and what their role is.
You may also think that personal information like education and lifestyle choices aren’t relevant to business buyers since their job is to make rational, profit-oriented purchases. Nothing could be further from the truth. Corporate buyers are people, too, and they allow plenty of emotion to influence their decisions. In fact, a personal, human reaction to a vendor’s marketing approach may be the only factor that separates two competitors. The more you know about that business-to-business customer as a person, the greater your chances of tipping their decisions in your favor.
So, before you make any decisions about price, or which products to sell, or what ads to run, take a good hard look at your customers as people. Identifying your best customer takes some work. The end result, though, is marketing that works better, costs less, and generates greater profits.
How Many Baskets For How Many Eggs?
“An emotion-free analysis of each segment of the business is a good place to start.”
One of the most difficult—and important—decisions any business operator has to make is whether to specialize or to generalize. Should you try to be all things to all customers or seek out and serve only a specific market niche? It may seem so, but it’s not an easy choice to make.
In some ways, the route to specialization is easier to follow and the reasons to take it are more compelling. You may have particular skills and experience that lend themselves to one type of service work, or a real eye for style and fashion that makes you a genius when it comes to buying merchandise, as well as a reputation in that market that will help you bring in the business. You and your crew may have superb expertise in fine cabinetry, for example, and the tools and inventory to compete with the best in turning dowdy kitchens into visual masterpieces, but lack the practiced touch of a master glazer (not to mention the shop space and equipment) necessary to create custom ceramic tile. If that’s the case, it only makes sense to play to your strengths and concentrate on the cabinet business.
The payoff of specialization can be large because, if you work at it, you can grow to dominate your niche by trading on your reputation for outstanding workmanship. As your dominance grows, you’ll probably be able to charge slightly higher prices and amortize your fixed costs over a larger revenue stream, two factors that will substantially increase your profitability. In an ideal world, your small competitors won’t be able to economically compete, and you’ll have all the business you can handle.
Specialized dangers
Few of us operate in an ideal world, however, and there are downside risks in becoming too specialized. Consider the cabinet maker again. That is, after all, a type of fashion business with all the marketing uncertainties that word implies. What are you going to do with all those hand-forged hinges and handles if the rough-hewn rustic look goes out of style next year? Or what will happen to your Italian marble counter top monopoly if most of the home owners in your market decide they prefer faux granite?
Like more and more businesses these days, yours is also probably driven by technology, which changes relentlessly. The business owner or manager who doesn’t keep up with the latest technological advances is going to find him or herself with empty aisles and a storeroom full of unsold inventory. The problem, of course, is that technology mutates exponentially, making it harder and harder to keep up with what’s coming down the pike and making forecasting errors more and more expensive to correct. If you think it can’t happen, ask yourself whatever happened to all those CB radios, eight-track players, and avocado-colored appliances.
So, to return to our cabinet shop example, should you strive to be a full-service home remodeler? Sure! All you need to do is find a 5,000-sq.-ft. building and fill it with tools and equipment, hire plumbers, painters, carpenters, upholsterers, electricians, designers, glass cutters, a few general gofers, and some really wild creative types of unknown expertise, finance a 10,000-sq.-ft. warehouse full of specialized inventory, hang out a shingle, and you’re in business! While you’re at it, why not throw in a retail showroom and a few good salespeople? Simple, huh?
General confusion
Generalization has its drawbacks, too, obviously, including high set-up costs that can be difficult to amortize. An auto body paint booth that is used once a week costs the same as one that is used once a day, which makes the profit on that once-a-week job pretty slim. And let’s not even talk about the salary of the guy who wields the spray gun. How does he contribute to the bottom line when he’s standing around waiting for the next job to pull in?
It’s also tough to be really good at a lot of different things, which makes it harder to totally satisfy every customer. That, in turn, can lead to a reputation for less-than-stellar service and the resultant lukewarm word-of-mouth that goes along with it. The daily management headaches multiply with generalization, too, along with the wider variety of employee skill sets required, not to mention the greater number of project problems that can arise. The solution for most business owners lies somewhere in between.
The middle path
The smart operators don’t put all of their eggs in one basket, as tempting as that may be, nor do they spread themselves too thin. A business that focuses on one type of work or stocks particular, related lines of merchandise probably has the best chance to combine the advantages and minimize the drawbacks of both approaches. You can diversify your business enough to cope with the vagaries of technology and style while specializing enough in one area to have a good run at dominating the market for it.
An auto shop that concentrates on interiors, for example, can combine several disciplines that have inter-related skills, tools, and equipment. Upholsterers can generally handle carpeting while audio installers may also be able to put in instrumentation and gauges. Such an operation can also be very successful at selling add-ons because the customer is pre-disposed to upgrading that area of their vehicle already. Plus, of course, the shop owner can probably show the customer some price advantages of doing multiple jobs simultaneously. Selling a set of dash and door inserts to the customer who’s come in for new seat covers should be an automatic.
Homegrown or outsourced?
Even the most dedicated general we-do-it-all companies nearly always send at least some of their work out to subcontractors. In fact, as the technology in some fields becomes more demanding, outsourcing is often the only way the job can get done economically.
That strategy can help the specialist perform more like a generalist, too.
A sunroof installer, for example, might sell a customer new seat covers, too, by contracting the upholstery work out to a strategic partner. He doesn’t need to deceive the customer about where the work is done, either, since the main things most of them care about (after quality) are that the price is right and the work is guaranteed.
The principal contractor (the sunroof installer in this example) should be willing to stand behind the upholstery job, which means finding another subcontractor if necessary, and should price it at no more than what the customer could get it done for if bought directly. The upholsterer, in other words, is going to need to forego some profit in return for getting additional work.
There is no one prescription that applies to every business when it comes to deciding how much specialization is enough and how much generalization is too much. An emotion-free analysis of each segment of the business based on actual sales and profitability data is a good place to start, though. That should be followed by a similarly-objective inventory of skills the staff currently has and a hard look at the potential market for each service or product line under consideration. Once the facts are on the table, then it’s time to make a decision.
Case Study: Conwin Carbonic Inflates An Industry
“Conwin transformed itself from a product-driven industrial operation to a customer-driven marketing company.”
Many companies change direction when they transfer control from one generation to the next, but few turn the steering wheel as sharply as Conwin Carbonic. Once an industrial gas supplier in the Los Angeles market, the company is now a leading player in balloon entertainment around the world. In its early days, Conwin sold prosaic CO2 regulators used in restaurant beverage dispensers; today they shower party-goers with confetti from exploding balloons. Under the leadership of second-generation-owner Michael Wing, Conwin transformed itself from a product-driven industrial operation to a customer-driven marketing company.
Even though it eventually involved nearly every aspect of the company’s business, Conwin’s transformation wasn’t the result of heavy number-crunching, in-depth market projections, or extensive financial analysis. “It was a very evolutionary decision,” Michael says. “Knowing this was going to be my company, that’s the direction I wanted to go.”
The changes began innocently enough when founder Al Wing, an insatiably curious engineer, invented a device to inflate large numbers of balloons more precisely and efficiently. To Al, it was just one more engineering problem neatly solved; to Michael, it was opportunity incarnate. “Dad didn’t just build a better mouse trap,” Michael says, “He invented the mouse trap.”
Helping people scratch their nose
In a way, Conwin got its start in adversity. Not long after Al received his degree in civil engineering from USC, he came down with Guillain-Barré Syndrome, a disorder of the nervous system that can cause paralysis of the legs, arms, and other parts of the body. He entered Rancho Los Amigos Hospital where he became fascinated by the devices used in rehabilitation. After he overcame his illness, Al went to work with the institution’s research group making what he terms “artificial muscles powered by carbon dioxide” to assist invalids, many of whom suffered from polio. “We gave people an opportunity to do some basic things for themselves like scratch their nose and comb their hair,” Al explains.
Regulators that control the flow of gases were important components in such devices, but they had other applications as well. Al secured distribution rights for a regulator and started Conwin Carbonic with his wife, Alberta, in the garage of their Whittier, California, home in 1960. With Alberta managing the office and Al running production, they sold regulators and CO2, largely to restaurants for beverage dispensers. Over time, they expanded their product line to include high-pressure cylinders and other gases including helium, oxygen, and nitrogen. Dry ice grew into a big part of the business and Conwin became a major supplier to nearby Hollywood studios, where tons of it was used for special effects. “Ghost Busters” was one of their biggest projects, according to Michael.
The Wings’ eldest daughter, Patty, introduced balloons into the family lexicon in the 70’s when she opened her own business, ‘Balloons by Patty,’ one of Los Angeles’ first balloon decorating companies. The balloon industry was in its infancy and Al recognized a challenge as Patty described her struggles with existing technology. “We saw that there was a need for equipment that would be more user friendly,” he says. “The regulators that were used at that time were borrowed from the welding industry. They performed the function okay but they didn’t lend themselves to balloons very well.”
Million balloon extravaganzas
Al’s first innovative breakthrough was the Dual Split-Second Sizer, a high-speed multi-nozzle inflator that reduced the time needed to produce large-scale balloon displays. The product revolutionized the industry by making it possible to stage million-balloon extravaganzas at conventions, parties, sporting events and concerts such as those for Bette Midler and The Rolling Stones.
Patty was killed in a tragic auto accident with a drunk driver, but her foray into the balloon business had already left its mark on Conwin. Michael, ten years younger than Patty, recalls having great fun as a boy helping her out on opening day during the balloon release at Dodger Stadium. When he graduated from Pepperdine University in 1985, he joined Conwin as its first VP of Marketing with a head full of aggressive ideas for growing the balloon business. At that time it still represented less than half of the company’s total revenues, but it was growing rapidly.
Al says with pride, “I didn’t develop the business like Mike has. He has the vision and the energy.”
Balloons were the future for Michael. “The industrial side of our business was easy, but there wasn’t much growth potential,” he says. “It was pretty much tapped out.” They sold the dry ice business, which provided a third of their revenues at the time, to a competitor in 1987. Michael says the low-growth, labor-intensive dry ice operation didn’t fit his vision of the future and diverted time, energy, and funds from the growing balloon business.
Conwin still serves the industrial gas industry and provides specialized but low-volume equipment like nitrogen dispensers for wine bars, pneumatic regulators used in vineyards and auto racing, and medical devices like the insufflator, which pumps carbon dioxide into a body cavity to give the surgeon room to work during laparoscopic surgery and other procedures. Today, that division represents about twenty percent of total sales. Products are designed and manufactured for other companies, who market them under their own labels.
“We never made a decision to not market to the industrial side of the business,” Michael explains. “It is very turnkey in many ways. People come to us and ask for something with this connection and that setting and this style gauge and that output pressure. It’s just that more and more of our energies went into the balloon industry.” Conwin didn’t turn away from the industrial gas business; the balloon business simply outpaced it.
Innovation from customer feedback
Growth in the balloon business was fueled by a stream of innovative products Al designed based on feedback gathered by Michael from balloon decorators, party planners, event coordinators, and other participants in the rapidly expanding industry. Balloons may be the ultimate non-digital one-piece toy, but the products that put Conwin on the map are anything but simple. From automatic shut-off foil balloon inflators to pneumatic balloon exploders, low-temperature fluorescent balloon light bulbs, and pneumatic cannons that spew more than a pound of confetti in one blast, Conwin’s equipment raises balloon “fun” to a higher level. All products are manufactured in the US, although most production is outsourced to provide greater response to spikes in demand and preclude the necessity to invest in expensive, high-tech machine tools. Conwin employs about 40 people.
What Conwin brought to the industry was efficiency. The revolutionary products Al designed enabled balloon artists to create intricate, large-scale displays using thousands of balloons and spectacular special effects. Before he invented the multi-nozzle regulator with a foot pedal control, for example, each worker inflated one balloon at a time from a cylinder of gas. Gas cylinders are very heavy and awkward to handle, so you don’t want to haul around any more than you absolutely have to. “One worker tying up one tank doesn’t make a lot of sense,” Michael says. “The three-operator regulator was the home run.” It allows three people to work from one tank of gas simultaneously.
“It was a huge breakthrough,” Michael continues. “Generally on a balloon job, one of the constraints is time. The wedding or the party is in a public facility like a country club or banquet hall that’s booked with back-to-back events. There will be just a little time in between to set up. You can’t build these large balloon structures off-site because of the logistics. With equipment that’s very efficient (and fast and easy) producing consistent results, you can have an inexperienced worker do it.”
Balloon decorators don’t have big staffs. They might have a small party one weekend where they need two extra hands and a wedding the next where they need ten. The workers are often inexperienced friends and family, so the precision needs to be built into the tools, not trained into the workers.
Al’s inventions also improved architectural effects like balloon columns and arches. According to Michael, these are created by tying two balloons together with a square knot. That’s called a duplet. You twist two duplets together, then keep stacking them on the line and you can build anything, he says. If the balloons aren’t inflated to exactly the same size, though, they look like a bad ear of corn with different-sized teeth. “We use solenoid valves that are very, very, very precise to the tenth of a second,” Michael explains. “You can set it and work really quickly.” It takes about two seconds to blow up an eleven inch balloon. One person can inflate while another one ties them together.
Launching an industry
These innovations helped launch a cottage industry that Entrepreneur Magazine calls one of the top self-employment opportunities available. “One thing I’ve always felt good about is that we have given all kinds of people opportunities,” observes Michael’s mother, Alberta Wing. “For a few bucks, they can get a cylinder and a few balloons and they’re in business! I’ve seen plenty of people who start out in that very small way—working with church groups and such—and now they’ve got great businesses. I take great pleasure in that.”
By 1988, Conwin was a major distributor of balloons as well as a manufacturer of the equipment used to inflate them and produce special effects. They moved into a new facility devoted almost entirely to what was then their principal business, balloons. Michael’s wife, Dee, a visual merchandiser by trade, designed a store-like space to streamline the growing traffic. “It’s a wholesale store with aisles and shopping carts. It’s visually pleasing,” Michael says. Big bins hold the merchandise and colorful displays encourage decorators to touch and see the product. “When a balloon is flat, it’s nothing,” Michael observes. “When you blow it up, it takes on a whole new dimension and life. You’ve got to have a lot of products on display.” The entire facility is 40,000 square feet, with 6,000 devoted to the cash-and-carry side. There is also a big display window. There are about 3,000 SKU’s in the store. Ribbons, decorating accessories, and other special items round out the inventory.
There is some retail trade, Michael says, but Conwin is not geared to it because products are sold in large lots, like bags of 100 balloons, although they do offer some rental equipment for schools and other groups. Pricing is also tiered to encourage volume purchasing. The store caters to buyers in a 15-mile radius in the LA area, where they have over 5,000 customers. Conwin works through a network of 40 distributors in the US, most of whom are in the party goods business, and sells an ever-increasing amount of merchandise over the Internet through two websites, www.conwinonline.com and www.laballoons.com. The domestic sales staff consists of four people who handle in-house support for distributors.
Conwin dominates the small but growing balloon industry. The market includes paper and party retailers, entertainment and corporate event coordinators, rental outlets, florists, and entrepreneurial balloon designers. Balloons are used for event decor, gift bouquets, sculptures and installations, and in spectacular special effects using confetti, synchronized explosions, and mass releases. There are also the ever-popular balloon animals made from twisted wiener-shaped balloons. There is even a niche in the fashion industry devoted to apparel made from balloons. According to Party and Paper Magazine, balloons and balloon accessories are the top two product categories in the $8.5 billion party and paper industry. “It’s a small, niche market,” Michael explains. “From a competitive standpoint, we estimate we have over a 70% share of the market worldwide.”
The domestic market is growing about five percent annually, Michael says, but the international market is just developing. Since Conwin sells products that will help the growth of the balloon industry in other countries like it did in the US, it’s well-positioned to profit from that expansion. To develop the international business, Michael hired fulltime employees who live and work overseas. The international accounts manager and her staff is based in London and manages all sales in Europe. He worked out a warehousing deal with a partnering manufacturer in England to serve as a fulfillment center. A third of revenue comes from international customers now. “I foresee within the next five years, it will be forty to fifty percent of our business. The potential overseas is tremendous,” Michael says. The company has a sales manager in Kuala Lumpur for Asia and another in Guadalajara that handles Latin America.
Customer-centric innovations
Other efficiencies for both Conwin and its customers are found online. “The Internet is playing a huge role in our business,” Michael says. “In January, we launched a DVD in six languages and put it on the web as well as packing hard copies with key products. People can go right there and watch the product in action.” The web has also cut down on the need for staffing. “You can download instruction streets, warranty information, service and support. It’s streamlined so many things,” he says. Outstanding balloon artists are showcased on the website, too.
Another customer-centric innovation is the Conwin Balloon Design Academy, which offers seminars covering topics like “Wedding Décor Wonders” and “The Business of Bar/Bat Mitzvahs.” The three-hour classes draw about thirty students who pay $35 to $50 to attend. There’s always a break for student mixing and networking, which is also a big draw. In addition, Michael says, “Students get promotional coupons for the equipment we use in the classes. They go right from the classroom down to the store, which is in the same location.”
Conwin partners with one of the leading balloon manufacturers, Qualitex, who certifies balloon designers when they complete an extensive training program. The CBA designation is similar to FTD for florists, which allows customers to order balloon designs from coast to coast.
The Wing family has transformed their business from a stolid, stable concern to a company that literally manufactures fun. When you blow up a bright red balloon, a child’s face lights up with joy. Fill it with helium so it dances in the air, and their eyes fill with wonder. Release a half-million multicolored balloons into the sky, and even the adults in the crowd will clap their hands with glee. Conwin Carbonic is one of the few companies whose products bring that kind of happiness into the world. With a product that’s synonymous with good times, it’s easy to understand why. As Alberta says, “If you’re going to spend your life in a business, you should have a little fun.”
--Originally published in Family Business, www.familybusinessmagazine.com
“Serving a special market successfully requires paying particular attention to customer communication.”
The last man who envisioned the automotive market as a homogenous mass was Henry Ford, and it didn’t take him long to realize that selling one model in one color to satisfy every single customer wasn’t the best possible business plan. Most modern markets are no different, with a seemingly ever-growing list of market niches that the savvy service provider or retailer can serve.
Just like Henry Ford, though, it’s not possible for a business owner to be everything to everybody. You need to specialize, at least to some extent, in order to maximize the return on your investment in facilities, parts, and equipment, not to mention the demands on your technical knowledge.
Selling to each market requires a specialized knowledge base, too, since the customers in each one are motivated differently. If you are in the automotive aftermarket, for example, you know that the people who build and drive nitrous-powered dragsters aren’t generally the same ones who tear around dirt ovals in restored 1930’s roadsters. And the baby boomer replicating his ‘55 Chevy dream machine differs greatly from his son or daughter bolting some speed onto their first Honda Civic.
As Chris Sutton, owner of the Street Rod Garage in Grant, Alabama, says, “You’ve got people that are original equipment freaks most of the time on the restoration side of it. You couldn’t give them a street rod. But street rods guys, you couldn’t give them an original.”
Sell what you know for customers you know
Most small business owners follow their own interest into the niche markets they serve. It’s a natural choice, since they tend to know what people like themselves are going to want and have the technical expertise to provide it. Beyond that though, serving a special market successfully requires paying particular attention to customer communication.
John Pruitt, owner of John’s Rod Shop in Abbeville, South Carolina, has been studying his customer base for a long time and understands them very well. “Generally, my customer who builds a car is in his late forties or better,” he says. “They want to reach back and touch that nostalgia. They say, ‘I had one of those when I was a kid, or Dad had one of those, and I’d like to have one.’”
Pruitt’s shop builds street rods from the ground up as well as performing maintenance and repair on muscle cars, modifieds, or early model speedsters. He follows a strict routine with his customers. “The first thing I try to find out when a customer calls me is what kind of car are they looking for,” he says. “The second thing we want to know is what they want the car to do for them. Do they want a car they can get in and drive to California and be comfortable at interstate speeds? Or do they want to build a street bruiser that they can get out here and drive like a race car?”
This process doesn’t stop after the initial meeting. Pruitt adds, “As you complete the project, you have to be in continual contact with that customer so he knows what’s going on and he knows where his money’s going.”
The extreme niche market
Andy Voytilla, owner of Dream Machines in Lake Oswego, Oregon, serves a very different niche market—one that almost defines the term. He specializes in antique race car restoration and rebuilds of racing stock as old as the 1920’s—what were known, depending on the region, as speedsters or strip-downs and that often ran on borrowed horse race tracks. He draws most of his customers from the local clubs to which he belongs and has supported over the years, so he knows them well.
One of these is the Northwest Vintage Speedsters, whose members own 1934 and earlier 4-cylinder cars. These early hot rods, even those raced on dry lakes and the track roadsters of the ‘30’s and ‘40’s, were driven on the street when they weren’t racing. In the past, the club met at his shop. There are about 30 active local members, although there are about 190 members in total including many from Canada and Europe. He works on 12 to 15 club member cars per year and gets so much business from the club that he has little time to handle other work. The club does timed road races, a 100-mile race on Memorial Day and a 200-miler on Labor Day, as well as hill climbs and drag events, so repair work is often called for.
One problem with serving a niche like this, according to Voytilla, is that enthusiasts are drawn to cars about ten years older than they are (‘20’s-era speedsters appeal to gear heads well into their Social Security years), so the group is constantly diminishing.
Marketing to youngsters
Younger automotive performance enthusiasts make up a particularly difficult market for many shop owners to serve profitably. As Pruitt points out, “The Honda Civic that that teenager’s driving out there is comparable to our generation’s ‘55 Chevy. Unfortunately, usually those guys don’t have the money.”
“A lot of those guys want to buy every part over the Internet, and we can’t compete with the Internet pricing,” he observes. “These young guys are real savvy and they do a lot of the work themselves or they have a buddy do it because they don’t have the money to pay a professional shop.”
But that’s not to say they should be ignored. As Pruitt says, “That market has got to be acknowledged, massaged, and worked with in order for this industry to grow and survive.”
Voytilla says that customer communication is essential. “When a customer comes to me to build a car, the big trick is to get into their mind and see their vision, because a lot of people can’t communicate well enough to tell you exactly what they want.” It helps when the customer has some hands-on experience with cars, so Voytilla encourages them to take part in the project in some way: “I always encourage my customers to come by the shop on a regular basis. Quite often I even get them to chase parts for me because when they get involved it is easier to get their ideas into it and make it like they wanted it.”
Neither Pruitt or Voytilla do any media advertising because they feel their reputation in their market niches is strong enough to pull in plenty of work. That’s not to say they do absolutely no marketing, however, because their constant attendance at car shows, cruise-ins, rallies, races, and other events serves to put their work in front of plenty of people. The drawback to that strategy, of course, is that it doesn’t reach many new-to-the-market customers.
In a way, though, that’s not particularly important to the shop owner who is more interested in serving a particular group of enthusiasts than in growth for growth’s sake. If the market niche is big enough, it can support a shop quite well for many years.
Seven Ways To Wow Your Customers
“Surprises work really well when they come later, after the customer has started to forget the last time they did business with you.”
If you want to keep your customers coming back to your business, give them a surprise. Do something unexpected for them, and your name will earn a prominent place in their mental filing cabinet securely placed with “Stores to return to” and “Service providers to recommend.”
The surprise you give your customers doesn’t have to be a big one. In fact, it’s the small touches that resonate with meaning, that make them feel like their order is more than just another job on your list. In fact, it was a little thing that sparked this idea for me. We got a Christmas card from Ed Plante Auto Detailing last year. The card wasn’t anything special, but there was a surprise inside that made it stand out from all the other business associates’ holiday greetings we received: he included a picture of our family SUV taken after his last detailing. In other words, he surprised us with a small, personal touch that made us feel just a tiny bit special.
When you do a little something extra like Ed did, you acknowledge your customer as a friend, as someone whose good feelings toward you warrant particular attention. The picture itself wasn’t any big deal either, but, as your mother always said, it’s the thought that counts.
The main factor to keep in mind is that what you do needs to be slightly out of the ordinary, something the customer doesn’t expect. That means it doesn’t have to occur at the point of service; in fact, surprises work really well when they come later, after the customer has started to forget the last time they did business with you. Secondly, the surprise should have a personal angle to it. If it’s something you do for every customer, like the book store clerk who automatically puts a bookmark in the bag with every order, it’s not going to prompt anybody to give it a second thought.
Different kinds of businesses present all sorts of opportunities to give customers great surprises. The picture Ed sent was of our clunky old family SUV with a fresh wax job. Can you imagine what kind of impact an unexpected picture of an auto restyler customer’s tricked-out rides would have? Those customers’ cars mean a lot or they wouldn’t be spending money on them. To the auto shop customer, getting a picture of his car is like getting a picture of his kids—maybe better!
Surprises online
If you want to go an extra step, you can really “wow” the customer by putting a picture of the results of your work for them on a calendar, coffee mug, t-shirt, or even a teddy bear. If you do home remodeling, painting, landscaping, pool installations, or anything else with a visual impact, a customer gift will be a real treat. Online services like Café Press (www.cafepress.com) will put your digital photo on a wide variety of merchandise for just a few dollars. There aren’t any setup charges and you can order a piece at a time, too. All it takes is a photo and a few minutes online.
While you’re cruising the web with marketing on your mind, look for websites, groups, or other online material your customer might find interesting. Then drop him or her an email with a link to the site you’ve found. If your customer is a Corvette owner, for example, send him a link to the nearest Corvette club’s website. Even if he already belongs, he’ll appreciate the fact that you were thinking of him. Just about every special interest group you can imagine is on the Internet someplace. It doesn’t have to be anything exotic, either. If you know your customer is into music, send her a link to an up-and-coming band’s MySpace site. It should go without saying that you need to know your customer to carry out this tactic.
The key factor is to make your surprise something with a personal connection to the individual customer. If your nursery sends a generic link to all the flower shows in your area to all your customers, that’s fine, but you’ve lost that personal touch that makes the surprise such a potent marketing tool. Never forget, you’re in the retail business, where you succeed by selling one customer at a time.
Speaking of websites, what’s on yours? It’s fine to have pages extolling the virtues of your experience, the value of your merchandise, and the expertise of your technicians, but you’re missing a bet if you don’t have a section devoted to your customers. For a mechanic, putting a picture of your customer’s car on the web is like taping their kid’s picture to the refrigerator door. It makes you both feel good. Just don’t post any identifying information about the customer on the web: a caption describing the car and perhaps the work you did on it is enough. And never, ever, post a picture of the customer’s kid on the Internet—with or without permission.
Once the picture is up, surprise him with the link in an email. These days, you don’t even have to pay for a website. The social networks like Facebook or MySpace, photo sharing sites like Flickr, Shutterfly, and Kodak.com or even blog services such as Google’s Blogger, are all free and can allow you to communicate with—and surprise—your customers online.
Significant Others
Another person who likes surprises is the customer’s significant other. While she (or he, as the case may be), may not be the one who decides their home entertainment center needs a new subwoofer, digital server, or gaming system, they may very well be the one who pays the bill. You want them on your side—or at least not working against you. For a couple of bucks, you can send a box of candy or a few flowers. For a few dollars less, you can give their kid a music-themed coloring book. Remember when you got a lollipop at the doctor’s office after you got a shot? For a few cents, it took your mind off the sting.
You don’t have to spend money on merchandise to give your customer a pleasant surprise, though. Another way is to do something unexpected for them at the time of service. If you operate an auto repair garage, you may or may not automatically wash the customer’s car when you’re finished—but you can. You can also take a few minutes to vacuum the interior or give the tires a quick wipe with a sidewall compound. If you really want to give the customer a thrill, call when the job is done and offer to deliver the car so they don’t have to pick it up. Or, a couple of weeks after the car is out of the shop, call to make sure everything’s all right.