BERKONOMICS – Business insights from Dave Berkus

Author Archive

Some great coaches are younger than you are.

by on Oct.16, 2014, under Depending upon others, Surrounding yourself with talent

Especially for social media-based businesses, we all need to recalibrate our thinking about who is the teacher and who is the student.  There is nothing wrong with a manager slowing a conversation to ask for more background when speaking to an often-younger and more involved associate.  You know what I mean… The conversation goes something like this: “We found it on x site and using y app with z as our data object.”

GameSpy LA Times colorFirst, managers could not be paid enough or have enough time to stay entirely current with all of the details each employee or associate deals with daily.  Yet, many times that other person tries to explain an important finding or breakthrough, or make a significant comparison, using names of destination sites or apps or tools we have never used or heard of.

Yes, age often has something to do with it.  And occasionally, a manager has to work to join the club by trying new things, learning new tasks and using new language to relate to those already in the know.

[Email readers, continue here...]  I recall vividly one such experience.  I helped to found an Internet game company, playing the role of founding investor, chairman and even temporary CFO.  The company was destined to grow into a large, very valuable enterprise that we sold for many, many times our investment.  But that first day with the new employees was a test for
me.  Many years older than any of them, their initiation was to insist that I spend no less than forty-five minutes playing for the first time first person shooter games against Internet-based foes.  I had to acknowledge the difficulty of achieving high degrees of skill, and the size and terminology of the extended gamer community.  But most of all, I had to gain acceptance as “one of us” in an environment where my CEO coaching and my money did not count.

That was a lesson for me.  Taking the time to be taught by those able to master a skill or have extra knowledge is an important step to show respect for everyone at all levels in an organization.  And that respect flows in both directions, worth so much more than the time it takes to learn a skill or terminology or meaning.

Leave a Comment more...

Two very powerful words: Great job!

by on Oct.09, 2014, under Depending upon others, Surrounding yourself with talent

The best managers we all know are the ones who take the time to praise good work in public, before an employee’s peers.  Most of us have a monthly award for the top person in a group of employees. And if we are big enough to formalize the process in a regular meeting, we make it a regular part of that meeting.

If you haven’t already discovered this fact, such a process quickly becomes routine and predicable.  Small companies have trouble finding new people to honor after a while.  Some employees even disingenuously consider the process an exercise in pandering, discounting the effectiveness of the award, and disenchanting those very managers who thought they were reaching out to do a good thing.
2014-0329_OxyTEDx-0276For all of us, we should remember that the best possible way to honor great work is to do so immediately.  A “Great job!” coming at the right moment from the boss is valued as an honest recognition of good work, especially if done in front of an employee’s peers.

[Email readers, continue here...]  At times, it is an entire team that deserves the recognition, again immediately after doing a great job.  I found a formula that worked for me where most of the employees were in several buildings on the same campus.  First arranging for my assistant to obtain the appropriate amount of hundred dollar bills from the bank, and then to follow me around checking off names, I had my own personal holiday celebrating each individual in the team with a handshake, words of thanks, and a C-note.  With lots of laughter and thanks, the celebration and words “Great Job” made for a completely memorable event.  And those pop-up thank you visits from the boss certainly contributed to the culture of the company.  Word does travel.

Remember to reward those not present at the moment, and remember that the amount should be grossed up to take care of taxes and be entered onto the payrolls of the employees so rewarded.

I’m sure you have your own way to making “Good job!” work for you and your team.

1 Comment more...

“Over-welcome” your new employees.

by on Oct.02, 2014, under Surrounding yourself with talent

A CEO friend of mine who manages her one hundred person remote workforce as a virtual company told me her story of how she welcomes new employees as she grows her firm. Strike that. She over-welcomes her new employees.

Days before the official start date, she makes sure that the new employee’s business cards arrive in the mail, that the employee’s phone and Internet services are up and running, and that an email account is already established. But many of us do that, maybe not so timely.

Managing_forceThen she topped her explanation with: “A few days before the start, a package arrives from us at the employee’s home with a welcome letter, a copy of the CEOs book, and a giant fortune cookie, with the fortune cookie message streamer clearly visible.”

[Email readers, continue here...]  “You will be successful at our company!” the fortune states.

What a great touch – especially for someone expected to be self-motivated enough to work long hours from home, to get to know fellow employees through Skype and texting, and to be productive immediately when hitting the ground.

It started me thinking. How many days or weeks or even months do we expect a new employee to take in becoming acclimated to our company and its culture, to the marketplace, and to our ways of doing business? For example, most of us expect a salesperson to be truly productive only after about six months of building a territory or client base. But isn’t there a better way to approach this expensive process of acclimation?

For a salesperson, how about paying an override commission to another sales person for a short period to help find and close new business? Or how about helping the employee gain confidence by handing the first several accounts to the new person ready to close? How about assigning a big brother or sister to each new employee to show them the culture and process? How about teaching a class in corporate culture yourself to one or more new employees? Some of us have done one or more of these things. But what could we have done better to launch a new employee successfully?

Maybe we should start with a surprise fortune cookie with a personal welcome message.

3 Comments more...

Lighting the match – going viral

by on Sep.25, 2014, under Finding your ideal niche, Positioning

It doesn’t happen by accident.  Not every new game site is a Club Penguin or Minecraft.  Not every social network is a Facebook or Instagram. Not every texting application is a Twitter.

What are the elements needed to focus upon in making the attempt to take a product viral?  Intrigued by the thought, I recently made a list. It was as much in reaction to my getting blank stares from entrepreneurs when I asked that question as it was for me to better understand the problem itself.  Here is my list.

First: Planning. Retail or end user web sites do not even receive limited notice without being discovered through a real marketing program, aimed at finding the flywheel effect (the moment

Dave's syndicated cable show: The Berkus Report

Dave’s syndicated cable show: The Berkus Report

of going viral that makes all the difference between failure and success.) In today’s world of social marketing, it takes someone knowledgeable if not expert in understanding how to use available resources in promotion and marketing.

[Email readers, continue here...]  Second: channels.  I am past chairman of a company that distributes its product through over one hundred fifty retail Internet travel channels, all websites where someone else spent the money attracting their users and attempting to go viral. We could not have begun to reach a fraction of that audience with any amount of money if we did not reach through these channels.  Sometimes, it is just the right idea to brand your product inside that of a known presence.

Third: cost. Even a great marketing plan to gain an audience fails if there is not enough money to prime the pump.  And of course sometimes that requires a large amount, far beyond the capability of small companies looking for its initial audience.

Fourth: measurement. If you can’t measure the results of your attempts to gain a viral response, how can you know when to focus upon reinforcing or changing the effort?  Well-tuned metrics are an absolute must. And the tools for most are available, sometimes free, for the educated marketer.

Fifth: reaction.  If everything goes right in finding the right plan, channel, cost and measure of success, and if you do nothing to reinforce the success or change the focus, the rest of the effort can easily die a slow death.

And sixth: the pivot.  A reaction is not often enough. Many times, it takes an intelligent repositioning of the entire offering to try again from the start with revised ideas based upon learned experience.

It’s a cycle that must be learned and followed in order to successfully maximize an opportunity in any industry and for any company.  So, where in that cycle are you today?

Leave a Comment more...

Embrace the right to pivot!

by on Sep.18, 2014, under Finding your ideal niche, Positioning

Plans don’t often work as devised. We are not always smart about the market or the product. Great teams are not bound by their original product or marketing plan. Greatness finds one definition in management’s ability to “pivot,” or change the plan in reaction to its early response from the marketplace.

Investors celebrate teams that quickly find the flaws in the original plan and reallocate resources in another direction before more wasted effort. Even the term, pivot, seems to call up images of a light-footed dancer able to move so very quickly in any direction.

My favorite example of a world class pivot comes from the CEO and board of one of my most successful investments. Green Dot Corporation was formed by an DB Concordia2entrepreneur in the year 2000 to create a product to permit those without credit cards to purchase items on the Internet. Think of it: to shop on the web, you must have a card, not a nine digit routing and bank account number. The young, inexperienced entrepreneur had two assets that attracted me – rights to use the MasterCard name on this new product, and a laser focus to make this work in any form possible.

[Email readers, continue here...]  Over the years, that vision changed dramatically several times as the world’s first debit cards were invented by the firm, positioning the card to be used by the un-bankable, those unable to obtain credit cards or in some cases even checking accounts. The firm grew to dominate its new field, create an infrastructure to allow any of its 70,000 retail stores to simple activate or load the card with money from any cash register. It replaced Western Union as the preferred way to send money across great distances. And it built a billion dollar market and then some – where it might have been restricted to a small percentage of that.

And we who held early stock celebrated together the ringing of the NYSE opening bell the day that often pivoting company went public.

1 Comment more...

Use “switching costs” to your marketing advantage.

by on Sep.11, 2014, under Growth!, Positioning

Know the cost to move from your existing platform, and estimate the switching costs for moving from a competitor’s product or service to yours. Offer incentives to existing customers to stay, and for competitor’s customers to switch. Protect your base with incentives to stay that are intangible – such as membership in an insider’s club, access to special deals not available to others, and attention from the executives at the top.

The momentum from an old decision that took lots of effort to implement is worth something to a marketing professional. To keep an existing customer, even if by offering discounts, is much less expensive than the cost of attracting a new one. To reduce switching cost from a competitor is to lower the barriers to a quick decision that might have been otherwise much harder to make.

From Basic Berkonomics: Available Amazon, B&N,  berkus.com and booksellers everywhere.

From Basic Berkonomics: Available Amazon, B&N, berkus.com and booksellers everywhere.

Increase the barriers to your customer’s switching, not just with excellent service, but with some form of personal touch. Recognizing a longstanding customer with an appropriate gesture from the top is best of all.

[Email readers, continue here...]  Recently, I received a hand-written letter from two co-CEOs of a company I had helped out with a few hours of time. They accompanied the letter with a customized gift of their product that contained the logo and name of the college where they knew I was a trustee.

First, I have not received a hand-written letter other than a greeting card from any business associate in what feels like decades. I was in such shock, I did not respond in kind. What should I do? Pull out a piece of stationery that had been sitting unused for over a decade and write in longhand? You aren’t supposed to respond using a less personal vehicle than the original one. So email was out. A phone call might have done it, but not with the elegance of the original correspondence. Now, every time I turn from my desk to the credenza behind, I see that letter and gift. I am not willing to just file the letter or put the gift on the shelf. That’s the power of a great outreach from the top.

And that’s a lesson for all of us in marketing. Find the right way to reach existing customers that stands out from the usual. Find an offer that makes switching easy for others. Pay attention to opportunities to differentiate yourself from the rest.

Someday I will file the letter and put away the customized gift. In the meantime, those two guys got many more miles from a relatively simple gesture than I would have thought possible.

2 Comments more...

Only those in the fight can win.

by on Sep.04, 2014, under Positioning

By Dave Berkus

Entrepreneurism is all about risk. Sometimes, you can reduce your personal risk by taking in other people’s money, starting with a contract from a customer, purchasing a going business, or spinning off an existing revenue-generating portion of an existing business.

Even then, the risks of having enough cash to fund daily operations or growth can be daunting. The same is true about marketing. If you don’t directly engage the potential customer at the right time, place and mood, you are at a disadvantage from the start. There are too many competitors for a customer’s time and money to make an error in your approach and offer.

But the truth is in the headline. If you don’t chose to enter the fight, it is impossible to win it.   And entering the fight without the proper resources usually 376687_416014868434477_303445418_nassures defeat. Resources such as money, experience, statistics about your target, experienced marketing and sales talent, and especially a compelling need and attractive product are all important to the ultimate success of an enterprise.

[Email readers, continue here...]  So ask yourself: Are you ready to enter the fight? Do you have the resources necessary to at least give you a chance to win? If not, what do you need to do so, and how can you get those resources?

I am often surprised at the inexperienced executive’s estimates of time to breakeven for a product or a company, about the time and cost to market, about the expense in overhead needed to stay in the game.   Most of all, I am surprised at that typical person’s inexperience in the marketing arena, and understanding of the importance of marketing to the success of the product.

You may have all the other ingredients. But without an excellent marketing plan and a way to execute upon that plan, the best product and the most cash reserves won’t bring in the customers. Since great marketing means addressing the wants and needs of the customer, about distancing the product from any competitor, about getting the message out to the most people possible, you’ve got to commit resources and energy to the fight in order to have a chance to win it.

2 Comments more...

Use video whenever possible.

by on Aug.28, 2014, under Growth!, Positioning

Ninety percent of all traffic on the Internet is in video form. Yes, most of that is from NetFlix and YouTube and others delivering entertainment content. But an increasing amount is now coming from web sites and YouTube videos created by companies looking for an edge in their marketing efforts. The average time spent on a static website, one without videos linked to the home page, is under a minute. That time more than triples when videos are positioned to be delivered with just a home page click.

Dave’s Top Ten Trends workshop promo video   Check this example by clicking on the link to the left – from my www.berkus.com site.

Videos are no longer expensive to produce, even though a poor amateur effort may be much worse than none at all.   One way to create great company videos inexpensively is to contact your local college or university and ask if there are interns signed up for such work with local companies. Another is to combine clips you’ve accumulated into a professionally edited video without creating any new shots.

[Email readers, continue here...]  Each video, especially those on the front page of a site, must be compelling, to the point, and short. If you are selling a product, a one to two minute demo that is well edited will work wonders for viewer retention. If you are promoting the corporation as opposed to the product, short clips of the company’s previous projects with comments from enthusiastic customers would be appropriate. Finally, content does not last forever.

Videos should be replaced or rotated at least annually to be effective over time. No matter how many videos you have to offer on your site and on your YouTube channel, videos will increase your marketing awareness.

1 Comment more...

The “drop dead” question for a customer survey

by on Aug.21, 2014, under Growth!, Positioning

Sean Ellis, the marketing guru behind DropBox and other successes, advises clients that “The most important question on a survey is, ‘How would you feel if you could no longer use this product?’” He goes on to quantify the response. If more than forty percent of the respondents say they would be “very disappointed,” the product should go viral and be a great success. Conversely, if less than ten percent say this, those companies or products would have a hard time getting traction in the marketplace.

2014-0329_OxyTEDx-0276What a great test. It reminds us that our customers, especially early adapters, must want to continue to use our products to the extent that they “would be very disappointed” if unable to do so in the future.

What other questions could we wrap around this critical one to form a great survey that is both short enough and powerful enough to be relevant to our marketing effort, let alone our R&D and production efforts?

[Email readers, continue here...]  Using Sean again as a source, we might ask: “How did you discover our company?” and provide several checkbox answers, including ‘friend or colleague.’ Again, it is a sign of a viral marketing effort to get more than forty percent checking that box. Then “Have you recommended our company to anyone?” Use just ‘yes’ and ‘no’ as possible answers, and look for more than fifty percent ‘yes’ responses.

And there is always the great open door question: “Would it be OK if we followed up by email to request a clarification to one or more of your responses?” If more than fifty percent say “yes” you have a real hit on your hands. It means you can use this respondent as a resource for case studies and marketing quotes in the future.

Keep your survey very short to insure a large number of responses. But do include at least one specific question about your product to be sure the respondent is an actual customer.

3 Comments more...

Do you really want to be the first to market?

by on Aug.14, 2014, under Positioning

Over the years, as I managed my several computer companies as CEO or executive chairman, I made the decision to go to market with a brand new product that had never before been exposed to my customer’s marketplace. In each case, after overwhelming publicity, certainly noticed by a great number of potential decision makers, and after record-breaking sessions at industry trade shows to introduce these to the potential buyers, the products failed in the marketplace.

I recall the introduction of artificial intelligence into the hotel reservation process, a “one-up” on the airline method of yield managing the price of airplane seats. With the cover story in the industry trade journal, record-breaking overflow education sessions at the international trade show, and even glowing reports from the first hotel user’s management, the product failed to attract more than two customers and had to be withdrawn from the market, even though it was an unqualified success for the first users.   As a side note, we returned to market with the application as a software-only product without artificial intelligence and without some features, reduced the price from $150,000 to $8,000, and had a subsequent hit on our hands.

[Email readers, continue here...]  In another instance, we introduced the first kiosks for hotel lobby check-in. They were large, a bit clumsy looking, and gathered cobwebs in the lobbies of some great hotels.

Cover story for industry magazine.  Best possible press: too early to market.

Cover story for industry magazine. Best possible press: too early to market.

These and other efforts to be first over the years have led me to ask my current crop of CEOs as I serve on various boards, “Do you have the resources to evangelize the market, educate your potential customers, AND sell your product?” The answer is invariably ‘no,’ because the cost of evangelizing a new product is completely unknown. A marketing professional or the marketing department certainly can work to obtain good press, appealing to curious journalists and early adapters. Early meetings with potential customers will yield enthusiasm for a “free test” of the new product. But if it is a radical departure from the comfort zone, the cost of promoting and marketing the new product will be beyond the capability of most small or medium sized companies.

Even Apple rarely attempts this, with all its resources. Apple is well known for building upon the work of early adapters. After failing with its early Newton tablet, Apple waited for fifteen years before reinventing and repositioning the tablet as a much friendlier consumer device. The same occurred with the iPod. Apple was not first or second. They just added the infrastructure needed to seamlessly purchase and download content to their offering, and produced a friendly way to use a product that previously required early adapters to manually download songs to their devices.

I will readily admit that the half million I spent on the artificial intelligence system that failed generated the greatest positive press we ever had. As a corporate promotion, it was a hit. As a product marketing effort, it was a failure.

If you are going to be first in a market, plan on a very long time from introduction to acceptance. Triple the time you estimate for the effort, and add four times the cost you estimated for marketing.

Does anyone know how much Toshiba lost with its HD DVD format marketing effort? First to market over blue ray with what some say was a better product, Toshiba dropped over a billion dollars into that one and lost it all. There are numerous examples like that one.

You might be an exception. Chances are that you’d do much better by inventing a better mouse trap, and marketing it for its advantages over a product that the consumer already understands. But there is always a winner at a table with the odds stacked against the player. It just doesn’t happen often enough to expect success.

 

5 Comments more...

Looking for something?

Use the form below to search the site:

Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!