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Can Capitalism Save Us?

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

Few in America would argue against a free enterprise system when opportunity appears. For the disenfranchised—those that are and those that like to believe they’d share the fruits of their labor “equally” with the less fortunate—free enterprise becomes reality the moment they choose among identical products with different pricing. The lowest price is typically that choice. Once done, this group has exercised the “free enterprise system,” proving that demand sets the price of goods and services. Think gas pump prices. As demand rises so does price if the goal is profits, unless a volume model multiplies profit faster and beyond the ability of exclusivity markets to grow it. Think amazon.com.

The natural tendency in the human condition is to extend one’s influence and gains to the fullest. In other words, it is to take advantage of opportunity when it presents. The opportunist sees opportunity in most everything (read: how can I take advantage of this?)—a false positive. In a world bent toward discovering another’s weaknesses (to exploit) it is small wonder that so-called “have-nots” often “feel the weight” of another’s thumb.

Weekly, theologians present an age-old alternative: namely, service to others. In fact, the Good Book states that … we are “to do nothing out of selfish ambition or vain conceit, but in humility consider others as more important than yourselves … Each of you should look not only to your own interests, but also to the interests of others … ” (Philippians 2:3-4)

Cooperative commerce and communities, so seldom the blush in a “Postmodernist” world, remain the driving force in community growth and wealth building. Post-modernism means to “ … dissolve the merging of subject and object, self and other, and a radical, anarchist rejection of all attempts to define, reify or re-present the human subject.” An example is the non-gender reference to “they” for all who will not accept defining by anything, including gender.

The freedom to control the means of production (by our choices) presents unusual opportunities for cooperative societies: namely, free-enterprise systems only slightly akin to capitalism in its strictest sense. Freedom is the natural underpinning of well-being, a spirit of completeness that brings order and fulfillment to our lives. We are most content when we feel competent in the things we do, authentic in our lives, and connected to others in shared lives—the model of self-determination theory.

Equally, enterprise is the natural tendency to put our best into things, to make things happen by the expressions that uniquely qualify us as individuals working together for a common good. The two are prodigious in their outcomes, but the distinction between free enterprise and capitalism must be clear.

Aleksandr Solzhenitsyn, contemporary thinker and author, clearly measured American capitalism as better than his homeland Russia’s communism or Europe’s varietal socialism, but it still leaves us wanting, he concluded. American capitalism was more concerned with “Is it legal?” than “Is it right?” according to Solzhenitsyn. What he saw may have been more a model of CYO that defines expedience, and not ethics. Similarly, he saw its culture more concerned with “Is it profitable?” than “Is it good?” The outcome is a nation that is “more materialistic than spiritual, more interested in superficial success than genuine human progress,” in his view. Not coincidentally, his criticisms don’t apply to the model of free-enterprise that has only supply and demand as catalysts, and little or no government regulation.

Thus, a free market system tends to be privilege blind, accepting all equally, according to one’s needs and willingness to pay. The means of production are “not so much owned,” as they are “granted” by the same math in supply and demand, largely without the constraints of regulation. The result is a population of buyers and users and sellers and builders of products and services that go to those with need of them and at the market price; a cooperative model that engages others to serve their needs while joining to grow sustainable local economies and communities.

If we call this model of free enterprise, Community Capitalism, the vision of it clears; that which places a priority on the well-being and sustainability of the entire community, not just the privileged. This is not a new idea, but takes on a fresh scent when practiced in countries like Australia, Germany, and Denmark; and in U.S. markets such as Kalamazoo, Michigan and the E2M Community Capital project. We see clearly the seeds of the approach as we consider the key focus of community resources on place, capital, infrastructure, talent and education. The model suggests that viable communities must successfully address all five concomitantly. Further, it joins with organized philanthropy and investment to grow commerce and communities cooperatively, already in practice across America.

Creative Applications

Few local organizations can develop the funds necessary to fuel even moderate growth objectives. Local, regional, and state governments can. Starting businesses and community organizations that fill local needs, then turning them over to private enterprise for sustainable growth accomplishes more than to provide a shoemaker or donut shop for communities without them. It is the clearest demonstration of tax money at work for community good. Simply, commerce builds communities, and local towns and small cities offer the best opportunity to provide the needed capital to fuel growth. The obvious question asks if locals will buy into communities with empty storefronts lining its streets, or towns with character and successful small businesses. The local level is where “community capitalism” (conscious, family capitalism) has the greatest impact and growth opportunity, because towns can use tax funds for growth and not just service additions. In fact, community capitalism has a better chance of funding both than the typical tax model.

March 3, 2017 |

Winning the Customer, Part VIII

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

Readers of this column have read that sellers’ exchange with customers turns on four things: who they are; what they sell; what the customer wants, needs, or is in the habit of buying; and finally, what you deliver. Quality, convenience, price, peer recommendations, and service are the spindles of this wheel of engagement between buyer and seller. Very often, and perhaps even most effective at engaging customers, are the seller’s values. Think L.L. Bean, Lands’ End, Henry Rifle, OshKosh children’s clothing, Chick-fil-A, Hobby Lobby, amazon.com, and its child, Zappos. This last company, like its parent, amazon.com, sees itself as a customer service company that also sells shoes. Values matter!

Studies show that consumers are not very loyal to companies, but they are loyal to what they stand for. Often called “cause marketing,” the things important to a company are also important to many that would buy their products. Simply, we connect with others out of an inborn need to belong and for the gratification in joining with like minds. Notice how many executive teams share a common love … of a sport, organic foods, boutique breweries, a particular author or musician, a business guru, etc. Meaningful work is always more enjoyable when those with whom we work are brothers under the skin. Note how much more time women with twins spend with each other on the job.

Who we are can make all the difference in maintaining a loyal customer base and is often the reason we attract customers. It’s the thing that makes us attractive to a buyer. We might buy our caviar from Mote Aquarium because of their extraordinary preservation efforts on behalf of whales, sea turtles, manatees, and other wildlife. The caviar is also excellent and fairly priced. During the years when IBM and Microsoft owned the personal computer business, Apple maintained its presence having convinced the world that Apple was “the computer for the rest of us.” IBM trades on the idea that “nobody ever got fired for hiring IBM.” This view has meant more revenues for IBM than are counted, but often is the reason those looking for enterprise computer solutions go to IBM. It’s a safe choice for those unwilling to risk their reputation or job in taking a chance on a lesser-known quantity.

A key question asked of me by startups is what to name the company. After toying with the serious and the playful, I found a good answer. Understanding what you do and the value perceived in it is critical to a quick connection to customers. Ever asked someone what “they do,” only to scratch your head after their telling you they’re an OD (Organizational Development) expert? It happens every day. When you imbue your company name with two things you go a long way toward answering the key question about what you do. Simply, choose a name that associates with some industry and communicates something of value. Everyone knew that GE makes refrigerators and AC units, so when they added the slogan “We bring good things to life” in 1979, the company introduced the buying public to the breadth of products and technology that defined GE. When L.L. Bean says its return policy is a simple two-word statement—100% Satisfaction—we learn they mean: no questions asked. Ever been twice to a store that gives only a store credit, and then only if items are returned in thirty days? Shame on you! Most consumers won’t return to stores (Jennifer Furniture) with such policies—nor should they.

When sellers openly support causes, they are giving notice to those with like minds to come together. It works! So, too, do values such as “the customer is always right—no questions asked.” Speak plainly and often with customers about your company’s values. They may be enjoying the driveway you just paved for them, but the most loyal customers will appreciate most what you stand for—that you’ll return to fix cracks or heaves, no matter when they occur. Values matter!

February 24, 2017 |

Winning the Customer, Part VII

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

The opportunity in our uniqueness is often the “fanaticism in orthodoxy.” We naturally look for others to relate to well before joining with them or their initiatives. We are more likely to trust a policeman’s urging to protect ourselves in taking cover, than a passerby that offers the same. In both polite and heated discussions over differing opinions, we are inclined to position the opposition in a poor light in comparison to ourselves. The tactic is even clearer today as the nation divides over the iconoclastic model of governing that our new president prefers. Effusive overstatements result—positioning the opposition as grossly negligent. It would appear, after the dust settles, that neither side is without sin. So it goes, when seeking advantage is the only goal.

We warn combatants in the game of commerce: “If one does not establish a position in the marketplace, the competition will willingly supply it.” Effective positioning is the sine qua non of market distinction. We have it either, by our own making, or another’s.

Presenting the enemy for comparison is no scrim or fog to obscure one’s own weaknesses. Rather, it is to establish a rivalry that more clearly distinguishes one from another. Achieving a preference for one’s brand is money in the bank. Whether by “who we are,” “what we sell,” “how we satisfy the customer’s wants, needs, and habits,” and “what we deliver,” positioning is the ne plus ultra of this market math, and creating a rival (for comparison) one of its very effective methodologies.

The discriminating mechanism in humans, largely the work of the prefrontal cortex, relies on two separate networks that inform value judgments (risk vs. reward), and cognitive control that provides a check on ultimate behavior. We may like to eat all of a tasty dessert, but choose not to when considering its potential effect on us.

Goods and service providers seek to create an “in-group,” what we might call customers. Customers find “themselves” in your products, services, or approach, and quickly form mutual bonds that build long-term relationships. Your products may appeal to them on several layers, such as design or peer excitement. They may also satisfy an important need. However, when there is seemingly little advantage to offer, it may be useful to create a physical enemy.

Many small businesses decry the advantages of “big box stores.” They have great inventory, variety, and attractive pricing. They also have poorly trained people, customer indifference, and an impersonal feel, as the turnstile at checkout is in stark contrast to a small business with similar products. The fact is that any small business can find an enemy to position for its disadvantages and easily compete by honing its own unique approach. When we join in liking a product, service, or provider, we form huge biases for those in the group and against outsiders. The enemy can be a belief system, such as “organic,” “sustainable” product, or a model that warms customers, such as a “no-questions-asked” money back guarantee. The purpose in this approach is not to spear the competition, but to associate certain models of likeness with customers while putting distance between you.

Apple Computer was first “the computer for the rest of us,” which created a strongly bigoted following (against giant Microsoft) among youthful, computer literate types. To prove that we can reinvent ourselves to satisfy the needs of customers, Apple refocused on unique, qualifying design and user-friendly products to outdistance the competition. They were qualifying you, the consumer. It led them to become the most valuable company in the world. It could happen to you.

February 17, 2017 |

Winning the Customer, Part VI

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

When hungry, nothing satisfies more than to see food on the table. Americans are often referred to as the “McDonald’s Society” for our insistence on having our food when we want it, how we want it, and where we want it. We have been prepared (by design) to wear this habitual tracking wherever and for whatever we are shopping. This gratification response most easily and quickly overcomes the pain threshold in the buying process. (see Part Ill of Winning the Customer.)

Not coincidentally, efforts to excite “instant gratification” in us are rooted in science. Brain activity rises quickly when anticipating pleasure. When stimulated by a quick meal, or any form of quick delivery, the frontal cortex is very active waiting for the object of the stimulation. The mid-brain, or mesencephalon, ignites when we expect the thing we want to appear right away— the “instant gratification” we respond to best. Our desire for things, driven by want, need, or habit, leads us to consider the route to satisfying them. The process encourages anticipation, which in turn forms the imagery of receiving the “thing” in mind, including its delivery, unpacking, first sight, and exploration. When all take place in the moment, we give ourselves over to a purchase, the deal is “sealed.” This is the very process that prepares both the seller and buyer for a “good customer experience,” and relationship—the two most influential elements of a “retention revenue model.”

Clearly, so-called “brand companies” know the model well. Why else would amazon.com attach a “2-day FREE delivery” to every “Prime” purchase? Their system design to first sign you up is a kind of loyalty program. Using fundamental behavioral technique, they engage the customer in a “value exchange” with the promise to “deliver” on the promise, to his satisfaction. Consider the model: “wide choices, near 100 percent inventory, quick and free delivery, and guaranteed satisfaction.” It is so simple and prodigious a model that most believe it is uniquely an amazon.com creation. It is not! The early days of catalog mailings brought us the Horchow catalog, D.A.K. Innovations, Hammacher Schlemmer, Lands’ End, L.L. Bean, and countless others, that helped perfect the model and prove the elemental nuance that ensures success. Add store pick-up, where 40 percent of Home Depot’s online products are bought. Walmart, Lowe’s, Sears, etc., all make a trip to the store an easy way to get product faster; a system that provides benefits far beyond the pick-up of an ordered item. Few leave these stores with only the item they came for.

Why does this model work so well for sellers and buyers alike? Simply, we are problem solvers by nature. When confronted with a problem, the mind and body join on the path to solving it. When we present a want, need, or habit to a seller they do well to start the process of satisfying it, and quickly. Nothing works as well. Thus, the pain thresholds we are hoping to manage in the buying process are much better informed the moment we “believe” our needs are near at hand. Punto y final!

In your appeal to customers, use words like quick, instantly, free, new, in-stock, at your convenience, etc., etc.; keeping in mind the formula that excites buyers to action—choice, inventory, quick and free delivery, and satisfaction guaranteed. If you’re writing ads for others be sure to include a compelling (value) offer to encourage a visit to your website or store. This is where the magic begins. “Nothing happens until something moves.” (Albert Einstein)

February 10, 2017 |

Winning the Customer, Part V

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

Little is better understood than the simple model of market demand by the buying public, its essential influence on trade, and the fundamental equation that joins buyer and seller. Scarcity may be first among the six pillars of market influence, ensuring that buyers will follow market shortages and attractions with the gyro and determination of a carrier pigeon. Another of its essential planks—urgency—has long been the market catalyst to greater sales. Though a well-worn tactic of advertisers, too many lack the behavioral nuances that make this philter work best. The result—buyers sense the false sense of urgency in many products and services, causing a kind of Peter and the Wolf syndrome that has the effect of encouraging them to exit the exchange.

Done well, imputing urgency to the advertising message can add twenty-five percent to sales when the message of concern it raises also includes both “how” and “where” to go to solve the problem. For instance:

Snow is on the way!

Don’t be caught without a good shovel and a bag of ice melt. The following stores have what you need, and some guarantee they will not run out,  even if they have to buy it from a competitor.”

No matter the level of urgency, poor results follow unless the details on how to solve the problem are included. Also, “solutions ads” engage buyers more fully, increasing the memory for ad details. The reason is simple. People dislike threatening news, so they naturally put it out of mind, preferring to believe it won’t affect them. We are not different from the ostrich in this way. When presented with the antidote, we are quick to relieve ourselves of the pain and uncertainty in the threat. When we can take action against the things that threaten us—“Act now or face the loss of product should you decide later,” we put the threat in the path of relief. When I have difficulty finding shelf foods I like to use, I buy them quickly when found, and often buy extra to relieve the panic in a short supply of them.

Consider the casual health offerings of Walmart and drug and convenience chains across the land. At a recent stop at a CVS store in NYC, I was greeted at the door by an employee, whose friendly invitation included an offer to direct me to the shelf location where whatever I needed was waiting for me. The interruption was a welcome efficiency at finding what I needed, without delay. The items I sought were exactly where she said they’d be, which made my stop quick and efficient.

Fundamental to a successful exchange between buyer and seller is the model of “interruption, engagement, informed value, and delivery on the promise.” When accomplished, price becomes a secondary consideration in favor of customer satisfaction in the relationship between people. The method of urgency in a seller’s appeal to buyers should not be the everyday use and abuse of persuasion, nor its “moral” counterpart, suasion. Rather, it is the dutiful addressing of issues facing the buying public for self-selection, and the further information that provides real solutions to urgent alerts. In the end, we do best when able to develop a relationship between people and a good experience for both.

 

 

 

 

 

 

 

February 3, 2017 |

The Answer

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

 

Let’s all cheer for … the lottery? In a game of pitch and toss, each hurling is an all-in bet. Win and join the few that can rise above the first person singular and not lose their good judgment and good sense in the use of the windfall (the odds of bankruptcy grow astronomically among lottery winners). Lose and join the multitudes of haters who wish only the squandering of winnings by winners. We are seldom made truly of good wishes for the good fortune of others.

Last year’s Powerball (at this time) at over $1.5 billion, the largest in its history, raises an interesting question. According to the parade of presidential candidates, and most others, the nation faces unparalleled social and economic challenges. Too few citizens are prepared to compete in a complex workplace, pay taxes, afford a home of their own, and enjoy savings greater than $15,000. To revive a slow economy (even though better than most), consumption must increase. This depends mightily on wage growth and consumer confidence in the economy—now and in the future.

Politicians speak of so many ways to answer the call; each branding his model of blaming others and naming the fulfillment that obtains by their handiwork. Oddly, this dance is perhaps the most reliable activity in each—past and present. Missing are real solutions to slow economic growth, a more competitive educational model, equal opportunity, and a trustworthy electorate. Until now!

Let’s solve all of these problems with a simple, sweeping solution that turns into prodigious policy. Follow the math.

Let’s turn the lottery toward the people and not the government. Why? Because the government has already shown it lacks the imagination, the will, and the courage to act on behalf of its citizenry, and primarily for its benefit. If every household were a winner, each week the lottery would turn into an annuity that delivered needed funds for many.

* More would play, knowing that their money would bring back more each week. Invest $2, get back $10. Everyone would be a winner, every week. A $10 billion a week lottery would be common.

* Those that don’t need the extra cash might return it to the lottery commission for distribution to those who do.

* The distribution of wealth would occur without the assistance of government—the marketplace would take its course.

* Consumption would increase as income rose.

* Economic confidence would rise, encouraging risk-taking enterprise.

* The electorate nationwide would work harder to add programs that returned more money to citizens for discretionary funding.

* People would feel connected to an economic system that brings attention to the opportunity to grow and prosper by their own steam, aided in some part by an economic catalyst that has their best interests in mind.

Take 1.5 billion, that’s $1,500,000,000 and divide it by the number of households in America—roughly 100 million. Then send 10 percent of “households” a pro rata share of the total lottery ticket sales. Let’s assume that lottery sales would average $2.5 billion each week, since every household would be a winner over a 10 week period, and then again over the next 10 weeks. $2,500,000,000/100,000,000 = $25, or $125 over the course of a year. A $10 billion lottery would deliver a $600 windfall each year to households, a $600,000,000 shot in the arm for local economies across the nation. Over the course of 10 years a total of $6,000,000,000 (billion) would be delivered into the hands of citizens, a flat distribution to those who need it or not. Just as the Bush Tax Rebate evidenced, many that do not need it would decline it in favor of those that do.

Let’s add the interest earned from America’s retirement funds. Its accumulation over just 2 years would relieve the national debt, according to research. The point: there are creative ways to assist and encourage America to regain its economic footing—and free market systems lead the way. A life well counted is made not of what we get, but what we give.

January 27, 2017 |

Winning the Customer, Part IV

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ROI by Frank J. Rich

 

 

 

 

 

 

By Frank J. Rich

 

 

The essential element in the exchange between buyer and seller is the person. If we accept each means to express his wants, needs, and habits, no less than to present his identity and to form common ground, then getting to know the one paves the road to an appreciation of the other. Clearly, we are more impassioned of his work after we learn that Beethoven turned deaf while growing his legacy compositions. We also learned that the impediment was less a disability than thought; music is made of vibrating sound waves, and is easily felt. A “C” just sounds different than any other chord, or music would be the repetitive drone of an airplane in flight. Few would enjoy the likeness if applied to us.

It is said that “people don’t care what you know until they know that you care.” Thus, relationship derives from knowing how to enjoy another. This, in turn, requires that we work at it. Another saying: “To have a friend requires that you be one first.” So, vulnerability becomes virtue in this context. Despite the distance and formality of passersby, we feel better when the world reaches out to touch us. Walk up to me with friendship in your eyes, smile, and gait, and I’m likely to respond in kind.

The suggestions are no less the take-away from studies to determine the effect of such vulnerability on the buyer and the seller’s stock price. Admitting mistakes, misunderstandings, learned aspects of product and service to customers, or shortcomings that once accepted can improve customer offerings, etc., were consistently viewed by customers as motivation to select those who admitted their faults over those who hid them. Surprised?

We all know that the dark wind that swept over world economies in 2007 affected business. Fair enough. So, what did the enterprising do? They marched on, investing in the idea that if they did now what the competition refused to do, they would build a future in which the competition could not. Brilliant! It’s a well-worn growth model, but a scary thought in an uncertain moment. That said, when isn’t the market an uncertain reality?

When we excuse our slim inventory, constrained returns policy, price inflexibility, and limited services, though a poor economy can impose such terms on us, we may be revealing an inability to fix the problems we face. The position is not enviable, and most customers will find another to satisfy their needs. Every shop—physical or virtual—desires one thing first: to gather customers to them. This is when the magic begins—when we get to show our special brand of products, service offerings, engagement methods, and retention services. It may be the only moment we have to convince the customer he has found the right place to satisfy his needs. Indeed, to find the identity he seeks in all that he does.

We are never so attractive as when we make it possible for another to contribute to the fullness of our lives, and for us to contribute to theirs. We need only be receptive to encourage this joining. It begins with us, and the rewards are spectacular.

 

 

January 20, 2017 |
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