marketing chaos

[trofeo]

Hi All,
I was at a marketing seminar today, trying to learn how to tip my business over the "unprofitable" line, to the "at-least-semi-profitable" line... and the consultant talked about many things that made sense, but one big one was that the idea for micro-businesses is that we need to reach higher end clients and do less work for more money. (I agree, although I wouldn't put it in those exact words.. ) I feel that in order for my business to increase, I would need more "big" clients, not just more business.

How do you all manage to reach people that have expendable income, in way that doesn't cost too much, if you don't mind sharing???
Any thoughts much appreciated..

[Ron Eggers]

For what it's worth, my best customers, over the long haul, were not the ones at the highest income levels, but the ones who appreciated art and framing.

Framers sometimes complain about school teachers, but many of my best - and steadiest - customers were teachers. Many of them came in regularly for twenty years or more, and they talk to their fellow teachers.

You don't 'reach' these kinds of customers. You nurture them and it takes some time and patience.

[Richard Darling]

While I would say there is some definite value to spending some of your marketing resources toward courting high end clients, I'd be really uncomfortable with that as my primary strategy. Unless, of course, I found myself in the middle of a huge, untapped pool of high end clients! (don't we all wish)

I recently went to an internet marketing seminar (really a cover for a company selling e-commerce websites) and the whole pitch was virtually the same: "You can make a lot of money, and not have to work hard for it." I'd be wary of such approaches to business.

In the situation of trying to tip myself over the "unprofitable" line, I'd be looking for volume opportunities, even if they were lower margin. Volume helps to stabilize cash flow, keep employees working instead of sitting idle while on the clock, and get lots of my work out where people can see it.

I'm sure there's lots more that can be said, but that's my 2¢.

[Cliff Wilson]

The one thing I'd say is be visible to the people you think are your potential customers!

That doesn't necessarily cost you money.

I recently gave talks to a local town art society and a different town's historical society. They paid me! not much, but I got a check. Then, I got good solid business from both talks and it's still coming in.

I make sure I give gift certificates to the local symphony's fund raising auction, the private school's fund raisers, etc. I mat and frame the gift cert in a photo frame I make. If allowed, I give them a stack of business cards to put near the auction item.

GO to those kind of events. The basic idea is ... be visible! And, it doesn't have to cost much!

[Jay H]

At best I think your marketing will effect the "quality" of your customers third.

The two factors that way out weigh marketing are.

1. Quality/visibility of your store. Customers will develop an idea of you long before you say, "Hello how can I help you." When you get to that point they have already decided about what think your services are worth.

2. Your attitude. This might be the single hardest thing to overcome. If your customers come in and think "wow this is nice" and your attitude matches their expectations, they will turn lose of money with less resistance. My confidence level is constantly improving. No so accidentally, so are my average tickets.

3 Marketing. I don't have anything to add here because I'm skeptical that marketing will even effect sales third. I know of several that have done 1 & 2 so effectively that they don't do ANY marketing.

Carry on.

[Cliff Wilson]

Jay, I think you're defining marketing too restrictively. Note my post above. That's all marketing and it didn't cost me a dollar. Marketing is the art of being visible. It isn't necessarily advertising.

I agree that the marketing of store location, signage, and merchandising plays a huge role in the kind and number of customers. Probably the biggest role. But, there are other methods that can be quite effective if pursued well. Of course, anything done in a mediocre or poor way will not produce results. (that wasn't a dig at you or anyone, just a comment.) Everything takes practice, trial and error, and analysis.

[Jay H]

Of coarse your right Cliff. I guess it did seem that I was defining it to narrowly but I wasn't specially speaking of paid advertisement (but mostly).

If your looking for a long term winning solution, I don't think beating down the road will work. You can only donate so many gift certificates, give so many talks, and shake so many hands before you just become annoying. Go to any chamber event and you will see what I'm talking about.

If you are going to "market" long term, location and attitude will have more stable results.

The types of events you’re talking about maybe should be incorporated into the scheme. However if you’re not profitable, I'm skeptical that any amount of those events will turn things around especially if you’re overlooking 1 and 2. I'm sure we are all guilty of that at some point.

[Bob Larson]

Originally posted by Richard Darling:
In the situation of trying to tip myself over the "unprofitable" line, I'd be looking for volume opportunities, even if they were lower margin.I agree with you, but it's still a matter of tracking down these volume customers and getting them to get framing.

Any suggestions on that?

[Jim Miller]

Originally posted by trofeo:
...the consultant talked about many things that made sense, but one big one was that the idea for micro-businesses is that we need to reach higher end clients and do less work for more money...Gosh, that sounds familiar. :D Your consultant was right.

The key is to focus on growing profit dollars, not revenue dollars. That focus will lead you toward stronger customer relationships, higher average order values, and it will lead you to reduce costs in every direction, as well.

[Richard Darling]

Originally posted by Bob Larson:
but it's still a matter of tracking down these volume customers and getting them to get framing.
[/QB]The volume doesn't necessarily have to come from a single customer. Sometimes, a single contact can produce a handful of customers or more. For instance, I offered a discount to all the teachers at my kids' private school. (I've got better examples, but some of my competition reads the Grumble too. graemlins/smileyshot22.gif ) Sometimes they pan out, sometimes they don't. The point is that with one offer I can reach dozens of people and potentially return a volume of business.

But I agree strongly with other posts about visibility. You never know what any contact might return in business dollars, so making sure I'm visible to potential customers is a must. I've made a lot of contacts that have produced nothing (so far), and a lot that have produced maybe $100 or so. But I've made other contacts that have produced far more, including one that has brought me more than 20 pieces in 6 months.

I think it's a mistake to try to filter out who the "high dollar" prospects might be, and only go after them. I'd rather get a steady stream of customers coming to my door first.

[DTWDSM]

All this talk about increasing profit and nobody has mentioned buying better and increasing prices.

You said in your first post that you want to make an unprofitable line into a semi profitable line. Increase your price by 5% and there you go, 5% more profit and you didn't spend a dime doing it. Now if you want to buy better..talk to Bob.

[Jim Miller]

I think it was Marc Lizer who once opined that he would like to build one $10,000 frame per month. Three would be my goal.

"All this talk about increasing profit and nobody has mentioned buying better and increasing prices....<

Am I missing something here? Wouldn't increasing profit involve at least both of those tactics?

[B. Newman]

Jim, I think he's refering to the (mistaken) idea of just selling more of those "1.00 watermelons" rather than buying them for less or selling them for 2.00.

[RozR]

Increasing sales is the goal. Having a good profit margin should follow. But if your expenses are increasing as well - we do need to buy better. I know a retailer whose business is up only 2% but it is up; the catch is his expenses (out of his control - heat, lights, insurance, etc) are up 10%. So what do we do?

[Cliff Wilson]

Ok, let's go back to the original post for a second ... "do less work for more money" that was the goal from his seminar. I think the presenter (or the attendee) has a mistaken assumption. The assumption is that "higher end" (read higher ticket) sales produces more money for less work.

Huge assumption! If (for ONE example) you're using the sliding scale for moulding in use by many, this could well be wrong. It could be that you make more in less time selling three $100 frames that one $300 one. The answer relates directly to your MARGIN! Your margin % will be LESS on higher tickets if you are using a sliding scale. PLUS, the work invovled in complicated projects will increase considerably! You need to calculate YOUR true margin dollars!

Also, trofeo mentions the need to get profitable ... let's try a simplified discussion ...

Profit = (Gross_Sales - COGs) - Expenses

Ok, (Gross_Sales - COGS) yields gross margin dollars. (remember we're simplifying)

1) you can increase profit by decreasing expenses (eg, get a cheaper insurance policy, or telephone provider)

2) you increase profit by increasing margin dollars --- You do this by:
a) decreasing COGs -- buying better
b) increasing Gross Sales -- you increase Gross Sales by
i) getting more customers
ii) raising prices.

There is NO simple answer, but the FIRST thing is to understand YOUR existing equations! Then attack!

If I wasn't profitable, I'd be attacking ALL of the options!!!!

[Richard Darling]

Well said, Cliff.

[Elaine]

Ditto Cliff!

[Bob Larson]

Not to say I have all the answers, but I think my prices are on the high end of the 'reasonable' part of the spectrum (as in, if I were to bump them up anymore, I'd probably need to start doing weekly 1/2 off sales.) I also came from a much busier shop, so now that I'm on my own, I've managed to haggle with my reps and get (what I think is) some very good pricing.

So the issue isn't how profitable the business is, but how much business I'm doing. This whole area has been slow, but I've been exceptionally slow. Part of that was opening at the wrong time, but I'd like to get some ideas to corral more business through the door (more than just giving my business card to everyone I meet, which is basically just an expensive way to give them my phone number)

[B. Newman]

Oldies but goodies - Have you read "Guerilla Marketing" lately, or better yet (yes, better) "Knock-Out Marketing" by Entreprenuer Magazine.

[DTWDSM]

Jim,

You are not missing a thing. The "experts" say that you can make more money by doing less work at a higher price (ie high end framing). The thing is that you end up ignoring a majority of the market, the mid to low end. And you could be stting around with nothing to do at times.

Betty had it right, buy the watermelons at a better price and/or sell them at a higher price. I say buy better and sell higher.

[Baer Charlton]

That's all well and good, but doesn't answer Sara's question.. 'how to attract better paying people'.

Lets look at her situation. She's not on the "main" street, she's one block over..... and the main street is 35mph traffic street.

The neighborhood is a good mixed one, but is a rabbit warren type that is split down the middle with a viaduct.

So how does she attract people in?

[DTWDSM]

I believe this is the original question:
Originally posted by trofeo:

How do you all manage to reach people that have expendable income, in way that doesn't cost too much, if you don't mind sharing???
Before anyone can answer this question we need to know what this means..."Does not cost too much"

[AWG]

Random thoughts on the subject....
Kassandra and I have had this discussion for some time now - how to get ENOUGH of the RIGHT people. We've changed our moulding mix a bit to have something to offer the mid-low end, while keeping our upper-middle and high end stuff.
HOW DO WE REACH THEM???

We've tried direct mail to our existing clients - works to keep us "top of mind" - but let's face it, most people only need custom framing once or twice a year. Trying to expand that need - offering other products and services - give us reasons to keep sending them stuff.

We're targeting NEW ones this year - mailing lists are not that expensive, and we just bought a color laser printer to print our stuff in-house -- better looking and less $$ than inkjet. We'll put together a couple nice postcards and mail the out TO THE RIGHT PEOPLE. Not terribly expensive ($400 for the printer) and can do these things on our time - there's lots of down time in many shops that go strictly high-end (since we're only building one or 2 frames per month at $10K each ;) )

We're also active in the community - gift certificates come back frequently (and many become regulars) and the added visibility WORKS; having a good website is critical (ours attracts new business regularly, even from out-of-market customers); it's a good idea to have your work vehicle lettered/signed so people see your name and logo; it's agiven, but all the greatest marketing/advertising is worthless if your location is poor.

Jay is right - so much of marketing/branding/advertising is an attitude - check out Donnie Deutsch(sp?) - it's all about attitude. "YES, I'm Great and here's why" Professional attitudes, appearance, and behavior go along way in creating the image of a shop.
Creating (and living up to) a image of professionalism and creativity is an important part of our branding and image.

Tony

[Jim Miller]

Originally posted by Cliff Wilson:
... "do less work for more money" that was the goal from his seminar. I think the presenter (or the attendee) has a mistaken assumption...that "higher end" (read higher ticket) sales produces more money for less work.
I guess we all assume things. In this thread, the definition of "money" may be taken differently.

Cliff's suggestions seem to assume that "money" means revenue. And by that assumption, his comments make some sense.

Since my business revolves around profit, I assume that "money" means profit. So to me, "do less work for more money" means to do less work for more profit.

[Cliff Wilson]

Actually Jim, if you follow the rest of the second post I made I think you'll find I had the same notion. Profit is clearly the goal! (or should be)

[MnSue]

Little has been added in the area of referrals. I once spent over 2K on a mutli-line marketing course, regarding building your business "by referral"

Example 1: hand out one gift certificate for your customer (a), and one "for their friend" (b). When the friend (b)redeems it, they get two certificates, one for them (b) and one for a Friend (c). The original bearer of the gift certificate (a) gets a thank you note and a NICE "appreciation" gift certificate to the local coffee shop, bakery, etc. dont' always make it a framing certificate.(This system requires tracking, think a family tree.) Person A gets a nice surprise in the mail and calls B.... Lots of good will and "chatter".

The idea is to reinforce "the chatter" of where you are referred to, of from. "I got that framed at...." You can get with some other "quality" business and barter yours/theirs gift certificates.

Example 2: Send out a mailing, as we just did, to offer a "special" incentive to them if they bring a friend (person living in at a different address). Our was a special drawing to win 2 large gift certificates - but it could have been anything like a free custom 11x14 frame package. We got 10 NEW customers thru the door by piggy-backing the "bring a friend" theme.

Example 3: Give out 2-3 business cards to everyone who does business at your store. Hand them out with the receipt. "Here's our card for you, a one to share."

Word of mouth business building is inexpensive, easy, and a by referral customer already edcuated about YOUR buisness, quality of work, prices, etc because of WHO they were referred from. When youask "how did you learn of us" I was referred by.... then follow up with the thank you note & gift certificate to "whom" referred them.

The circle of life...

This was the type of program I was beginning at the frame shop I was at. I know it works. It isn't immediate, but it is sustainable. Stay consistent, it works.

Hope this helps.

[Bob Larson]

Hmm... Okay, I'll be the first to admit that business isn't nearly as busy as I'd like it to be (it's not even as busy as it probably should be) Honestly, I don't have a lot of customers, and things look like they're content to stay that way unless I do something about it.

I have a good location (about a 8 out of 10), so I know it's not that people can't find me or don't see me. I'm across the street from the major mall in the area, in a large suburb of St. Paul (the capital city of Minnesota)

I do have some competition that's very nearby, including a Michaels that opened up about a block from me, and another frame shop that relocated to be about 5 blocks from where I am. (Orignally about a mile away)

I send out postcards ( www.regalgalleries.com/mailing (http://www.regalgalleries.com/mailing) - that's the one I was going to send out for May, but decided to hold off for now) but I haven't gotten much response. I know people are getting them and reading them, because for a few days after I send them, website visits always jump way up, (about 100 unique visitors per 1000 cards I send) but only a very few people actually come into the store off of the mailing (although a few do, but not nearly enough to pay for the mailing)

I tell people about the store all the time, my friends and relatives recommend me to people, but the fact of the matter is, I just don't get enough people through the door, and my customer base isn't big enough to see much benefit from a referral program yet (I'm here by myself 4 out of 6 days that I'm open)

I recently sent a $25 gift card to everyone who got framing before Christmas, along with a "Thanks for your business, we haven't seen you in a while, and we'd like to invite you back to see all the new artwork and framing styles" letter, hand addressed and stamped.

I've also made a habit of shopping at local small businesses more, chatting with the people there, and letting them know that I'm also a small business owner, and I invite them to stop in sometime, and give them a business card.

I know there's more that I can do, I just don't have any new ideas right now. Anyone else have any ideas?

[Jim Miller]

Originally posted by Cliff Wilson:
...It could be that you make more in less time selling three $100 frames that one $300 one...Your margin % will be LESS on higher tickets if you are using a sliding scale. PLUS, the work invovled in complicated projects will increase considerably! You need to calculate YOUR true margin dollars!...That might be possible for some framers, but there is no way for my shop to make more profit building three typical $100 frames instead of one typical $300 frame.

The killer is labor. In my business it takes an average of about 1.75 hours for a simple framing job. That is, 55 minutes to build the frame from scratch, put away the leftovers, package it, and contact the customer. The other 50 minutes are spent on design (38 minutes average), and administrative tasks like checking stock, ordering, receiving, accounting.

At $18.00 per hour (wages plus taxes & benefits), that's $31.50 labor per simple frame. For three typical $100 frames, labor cost amounts to $94.50.

Let's say a complicated frame takes an average of 33% more time than a simple one, which is pretty close to reality in my shop. That is 2.3 hours, or $41.40 labor cost. That's a labor savings of $53.10 to build one $300 frame instead of three $100 frames.

The difference in material cost, as Cliff said, certainly is a factor. If I buy parts for three frames instead of one frame, my COGS per frame could go down almost 20%. But let's assume, hypothetically, that I could save a whopping 30% of COGS by tripling material purchases.

With my average COGS of 17%, parts for one typical $300 frame cost me about $51.00. Assuming a 30% cost advantage if I triple my frame sales and purchases of materials, the COGS drops down to about 11.9%. (WOW -- who wouldn't love a COGS like that?) So, COGS for three $100 frames would total $35.70.

The COGS savings would be $15.30, and the labor increase would be $53.10. My old-fashioned calculator says I save $37.80 by building one $300 frame instead of three $100 frames.

Another shop's COGS and labor rates might be higher or lower. Note that the higher the labor cost or COGS percentage, the more savings would result from building one frame instead of three. For example, with a COGS of 25% for one $300 frame ($75.00), and 17.5% for three $100 frames ($52.50), the COGS difference would be only $13.13 instead of $15.10.

The advantage clearly lies in building fewer frames for higher prices, even if COGS is 30% higher and all other costs remain constant.

But that's just how it is in my shop. Others may be different.

[Jay H]

The market is elastic. The higher your tickets the less work you will do.

Ramp up your expectations high enough and labor won't be a problem because you will be playing solitare all day.

It's near impossible to go after group "A" and not exclude group "B". To be unprepared to cater to both is a recipe for disaster.

We don't "choose" to do this kind or that kind of framing. There are other factors, some out of your control, that decide that. To fight that is also a recipe for disaster.

Carry on.

[Bob Larson]

There's another added benefit to doing more work that nobody has mentioned...

If you're doing the work, you look busy, not to mention you have more customer, which, even if you're just playing percentages, means more referrals.

Yes, price, profits, etc, all play a role when you're looking at how much money you're making, but look at stores like Best Buy (big box electronics store) - they only make a few cents on most of the items they sell, but they sell enough to make piles of money and keep expanding.

There's more to making money than squeezing the most out of just a single turnip - you need enough turnips to squeeze, too. It's a balance; don't overwork, but don't price yourself out of the market, either.

[Cliff Wilson]

No arguement with your figures for your shop Jim.

Now, do the analysis for a shop that is under capacity. Like most of the one-man shops asking these questions.

There is NO question labor needs to be calculated and figured in. (You should be charging enough to cover it in EACH case.) But, in a shop trying to "get profitable" capacity isn't the problem and "material margin" (made that term up I think) becomes the key contributor to profit.

[Jerry Ervin]

Originally posted by Jay H:


It's near impossible to go after group "A" and not exclude group "B". To be unprepared to cater to both is a recipe for disaster.

Amen!

That is why you have to have a broad range in pricing. I offer mouldings from $2 per ft retail to $170 per ft retail and all points in between.

[trofeo]

I Love the Grumble.. I am so glad to know about this.. (Bear.. thanks!)
OK, so to clarify my situation so you can all really sink your teeth in:
-I managed a shop in a VERY high income area for over 5 years. I think I started out with some unrealistic expectations. Most of my clients said they "would follow me anywhere", which only a few did. Im no longer in their neighborhood.. out of sight out of mind... I guess.
-I opened my shop almost 3 years ago, and I think that any increase of clientele is due to word of mouth and the monthly art openings we have, (and not the ads, yell.pages, donations, volunteering etc that I have done). I by no means feel like I have tried everything, or even have that capacity. I dont have any employees, so I am doing this alone, until I can afford it.. I don't have great exposure, like Baer said. My shop is a beautiful space, on a corner, but no foot traffic and the area's a little bit risky in that it'll be cool in few years, but not now. There's a great little shopping district that is super busy and boutiquey VERY close by, but i am just far enough for people to still say to me all the time "I had no idea you were here!". BUMMER.
-Although my orig. post may have sounded that way, I am not looking for an easy road to riches... I love hard work, and am 100% dedicated to framing as an art. Most of my clients, once they come in the door, come back, and usually say it's because a) the shop's nice, and b)I treat them very, very well..

-As a luxery business, we all compete with all the other "necessary extras" people will use their money on.. (massages, haircuts, dinner out, artwork, new paint job, etc..). How do I put across my level of committment and what makes me different from other shops in my city, (which there are many), without "dissing" any other shops or types of businesses?
-I am also not saying that I don't want or need small jobs, because I do need them, and love them just as much as the high end ones. I guess for me it just is a question of being smart, and since I have been doing this for only 3 years, i thought I'd borrow from your wisdom about what works and what doesn't.. which you generously gave me! thanks!

- I have close competition that has the "do it yourself vibe", (they have stacks and stacks of redimades for sale, framing in 1 hour, etc..), so I thought I should go in the opposite direction.. so that different needs are being served in the same area. Sad thing is, they're pretty busy, so it gives me more of an idea about the needs of the neighborhood.

Am I making any sense. Do I just sound like every young business owner trying to muddle through the first few hard years? I was hoping I would be at least profitable by now. I sank all my 401K savings into this, as I'm sure you all di, but now I feel dumb in that I have no retirement or savings. Maybe i shot myself in the foot by trying to do it for short money?

Whew.. well, if you got to this part of the message you're a champion. I should give out a prize for reading this whole thing!! smile.gif
Any other words of wisdom would fall on open, appreciative ears..
And thanks again...keep it coming..
Sara

[AWG]

Sara:
Let's look at a few things. WHO do you want for your customers? HOW are your reaching those people? Does your shop reflect the tastes and personalities of your targets? Where do your best customers come from?

These are just a few things to think about. If your best customers are older, established, upper-crust types it's probably not best to have a shop that's too young, hip, and kewl (don't know a thing about your shop but you see what I'm getting at here)In other words, you and your shop (look, personality, design,EVERYTHING etc) must reflect who you want to become your customer.

What neighborhoods do your best people come from? Could a mass-mailing to those zip codes bring in more of the same? T What you should be trying to do is "clone" your very best customers - and you'll find more. Unfortunately there IS NO QUICK FIX - just try everything and eventually something will stick.
A referral program will work (slowly, but effectively).
A great website is ABSOLUTELY critical - upper-income folks tend to use the web over YP more and more - it's by far the best $$$ we've ever spent.
Being on the wrong side of a shopping center, much less "close by" can be a problem too - is it feasible to move closer to the boutiquey area you spoke of??

Tony

[Bob Carter]

I think shop time is one of those areas that, for most, never reaches capacity. And for most time is a little like that cruise ship that sails with empty cabins

Filling in time between $300 orders with some $100 orders seems to work well for most. The problem comes from not getting to those $300 orders because we have too many $100 orders

Am I dreaming or does that problem not really exist?

[JbNormandog]

Sara,

Your post mirrors me exactly.

Everything from the area, high end customers, unrealistic goals, etc.

I am trying to muddle through as well. I keep thinking if we have growth over where we were last year we are doing well.

This may be the second month where we had no growth over last year. (We haven't been open 2 years yet so I only have a limited track record to compare with)

I have been compiling a list of new marketing strategies to implement and will start the new push on tuesday.

Typical adds didn't work, neither did tv so I am rolling up my sleaves and getting ready to drag them in however I have to.

Don't quit, I won't either and at some time in the future we could be the ones that explain how we toughed out the framing drought when we opened.

Good luck to you!

[trofeo]

Tony, I thought about moving, good idea, but the retail spaces are limited at best down there, and the rents have gone up so much that many long term businesses have moved out. I missed a few opportunities due to my lease, and I also hesitated due to the lack of parking down there, and also how everyone who comes in my shop comments on how beautiful the space is. i didn't wnat to give up on one thing I am proud of, I guess, maybe to my detriment.
B.Carter, the problem of ignoring the high end complex jobs to get the $100 jobs done is part of my situation here. I look at my list of things to do, and always wind up saying "oh I'll just get these done today, really fast, and then work on that crazy thing tomorrow. trouble is, the phone rings, an ad rep comes in, the local jabbermouth comes in next, and by the time the day's over, I've finished only 6 of 10 "fast and easys" and haven't gotten closer to working on the high end piece that needs a whole day. I work on my days off too, sad sad sad.
Normandog.. I am glad, (somewhat) that I have a partner in this crime that is the doggie paddle we're involved in. I feel too like I got to this point where I was like, I need to be more involved in the success of the business.. and the marketing of it. I will for sure let you know of anything I find that works, b/c whatever I've done up to this point hasn't tipped me yet, and I've spent money and so much time it makes me crazy.
Tony I sright, there are no quick fixes.. we just need to stick it out..
I like the referral program idea, and will start being better about using my exisitng customers to gain more. Maybe that's the direction I should go? It's sounds almost free, and it honors those that have got me this far.. which can't be a bad thing at all smile.gif
THANKS EVERYONE!

[Jim Miller]

Cliff, having slow or no revenue growth after 2000 is what forced me to operate more profitably. I had to make the most of my finite revenue. And since then, I have learned that when revenue does improve, having better profitability doubles the pleasure.

The issue, as I see it in this thread, is where we focus our attention as business operators. Businesses run on profit, not revenue. But let's be clear about this: The only way to get profit is to have revenue.

Who among us would turn away business that is profitable? Who among us has that choice? When the Cherished Customer brightens my doorway, I must take full advantage of that rare opportunity to build a buyer/seller relationship that lasts, and earn a profit. All other things being equal, I can serve those goals better by selling a $300 order than I can by selling a $100 order.

Trying to fill a shop to capacity is a good goal, so long as profit is maintained. But when revenue growth is difficult, selling more for less is probably not the key to success. For every frame shop that operates at half-capacity profitably, there may be ten that sell twice as much and barely break even. The worst case is to operate below capacity and, in hopes of growing revenue, sacrifice profitability for revenue that never comes.

Doing more for less does not necessarily improve the fiscal health of a business.

[Bob Carter]

Everyone wants the $300 orders and those create excitement; both for the framer and the client. And, given the choice between taking more of those or the $100? Sure, No Brainer

But, is it really our choice?

Shouldn't we attain to strengthen more of each segment? To ignore either is not wise. To ensure that each segment is as profitable as possible is my suggestion

Remember that Jack in the Box ad where there is a young man sitting in a Trade Show Booth with just a table and folding chair? He had a sign that said something like "Fast Food Taster, $50,000"
Jack went up an started talking to him and asked him if he had any takers. he replied that no, he hadn't "But, all he needed was One"

Most of us need more than one

As a side note, at PMA in Orlando I was doing some work at the VersaLaser booth. Right across the aisle was a booth that the vendor failed to show up. I rested my weary bones by sitting down with my wife, but took the booth sign and wrote on it (ala Jack)"Business Advice $10,000. I actually had two guys ask me what was up. Didn't close the deal, though

[Cliff Wilson]

Funny, Bob & Jim, I think this is one of those times when we are "violently agreeing." It happens sometimes. It's also one of my very minor frustrations with the G.

We sometimes seem to gear our posts to a particular previous post and what we assume their situation is.

It's interesting how we each view our fellow participants in this industry. Is there really as much ignorance as we seem to imply with our posts?

Of course profit is the goal. And, there are a number of ways to set up to make a profit. As Bob has pointed out in other threads, sometimes the "low end" can have the most margin. Sometimes just the pure dollar value of a large gross margin on large orders can turn the trick.

Calculations for EACH operator has to take into account capacity and their own buying practices and markup models.

Seems there are operators in this industry that are afraid to charge a sufficient margin. They are the most likely to be hurt by too many small orders. They better get over it or they're gone.

Seems there are operators not operating to capacity and still trying to be "high-end" and disdaining the low-end. They better get over it or they're gone.

Now, there are a few (Jim, William?) who have set up their business to be profitable by emphasizing and targeting the high-end while not ignoring the "low-end" they treat it as nice add-on. This works if other activity (market presence) maintains the shop at capacity with the "high-end" work.

There are a few (Bob, Warren?) [I understand your models are different, but for this example you are similar] that are more geared to make a nice profit at the "low-end" and (don't fight me too hard on this, I'm trying to make a point) treat the "high-end" as nice add-on business. These businesses are working toward volume and work toward filling capacity.

I would not have believed it before I entered this industry, but it seems there are more in the previous two examples than in the later two. But, I think more seem to "get it" than maybe did five years ago.

Now, the hard part for "beginning operators" or those in the first two categories is figuring out (and this is HARD!) who/what they are? Who/what they want to be? and how to get there. Unfortunately, the successful operators of very different models often offer conflicting advice based on what "problem" they think their listener has. This causes the "violently agreeing" kind of posts.

Newbies first need to do some very hard self analysis, then figure out which advice from each operator pertains to them. This is not easy!

[Jay H]

Originally posted by Cliff Wilson:
Now, the hard part for "beginning operators" or those in the first two categories is figuring out (and this is HARD!) who/what they are? Who/what they want to be? and how to get there.

Newbies first need to do some very hard self analysis, then figure out which advice from each operator pertains to them. This is not easy! I think you’re really onto something there Cliff.

I'm not sure you can "think it out". Much of that will be prescribed for you and some of it you can alter. I have changed my mind on this as many times as I have relocated my store. After 6 mind changes and 3 locations, I'm just now reaching a certain comfort level with exactly what this market can and won’t support.

So I guess to the original poster, if you haven't decided EXACTLY who and what you are, you are putting the cart far in front of the horse by thinking that marketing will alter your customers. I think your customers will dictate your marketing. It’s foolish, futile, and expensive to do it backwards.

Carry on.

[Bob Carter]

Hey Cliff-I truly understand your comment about we sometimes "perceive" each other

I particulary thought it interesting that you "view" Warren and I as "low end". Now, I take no offense, but must tell you that I probably do more "high end" framing than most framers.

It's just that it doesn't stop there

I guess I probably do more "low end" framing than most (and probably do more "tonnage" or middle ground)

The point is we do offer a very full wagon approach that attempts to do as much as possible in each category in attempt to satisfy as wide a clientele as we can

I have a point it is to embrace as wide a scheme as your market dictates. I get the High school kid up to the NBA star.

"Low end", "High End" ?

Is it too simplistic to say I want it all?

[Cliff Wilson]

"Is it too simplistic to say I want it all?"

Not at all Bob! And, I think Warren would say the same thing. What I was trying to do was contrast that philosophy with say William Parker's of targeting and going after "the high-end." What Vivian Kistler called the "Urns and Ferns" market.

I recognize your sales mix from other posts. But, you tend to argue? pursue? recommend? a mix which usually means more "low-cost" than say William or Jim for that matter.

I'm not actually sure if the end results are that different, but the stress you each put on advice is radically different.

I attribute that to a difference in how you each percieve your audience (the other framers).

Let's face it, a reliance on stictly "high-end" would bankcrupt most of us, and unplanned discounting and reliance on strictly "low-priced" sales a lot of others.

Jay probably has the best answer which I'll rephrase as we each must know our customers!

[Julia]

Put in terms of an exact dollar amount, what do you consider an average "high-end" project price and what do you consider an average "low-end" project price?
Thanks,
Julia

[Cliff Wilson]

Sorry Julia, I don't think it works that way. Price points vary with markup policy, market conditions, etc. Also, a $300 wrapped mat with fillet and leafed frame on a 3 x 4 photo might be considered high end and a $300 oversized poster dry moutned with simple black frame might be considered low-end.

Bob tried to use some definitions in a thread a few months ago and as I recall people jumped all over him!

You kind of have to come up with your own feeling for what they mean.

dry mount poster, fill a readymade --- low end maybe

double mat, uv glass, "average frame" --- "middle," bread-and-butter

soemthing special be it fillets, triple mats, "better" moulding, hand retouched frame?? --- high end.

I don't think it is a definable price point thing.

[Julia]

Hi Cliff,
Thanks, I appreciate how varying markets dictate the spectrum of high and low end.
I have a good feel for what I think would be an average for both high and low end, but the reason I ask is I took a class with Meg Peters and we were comparing what we expected as an average in comparable markets. My motivation in asking was to find an industry benchmark and intrepret it myself, much as I do with any framing survey I come across. I have found averages in sales volume for frame shops in strip centers and in malls (courtesy Mr. Carter) and was hoping there might be similar information.
But you are right; as I found out from my discussion with Meg, her average ticket and mine are different. It just motivates me to raise the bar.
Regards,
Julia smile.gif

[Cliff Wilson]

Julia,

What I wish we could get to the bottom of is ...

If Meg's average is higher than yours, is it because she is getting more per component, or because she is selling more involved designs?

Then, you can ask questions regarding your market demographs versus hers. Is she in a better location allowing for greater margins? Or, is she truly selling "better?"

It all tends toward the same kind of problem as trying to answer your "low-end / high-end" question ... end data without the causal data to validate it against PROBABLY yields erroneous conclusions.

Don't misunderstand me, I want any data available. BUT, without the casual data behind most of these statistics, I think it is important to use it as a "check" against local analysis and NOT the driving force for decisions.

[Bob Carter]

Julia-I'm with Cliff. Comparatives are interesting, but not sure how important in the case of this type of average

Person A may have a higher average per piece, yet i sthat the goal?

The local Burger guy may have a higher "ticket" but no where near the sales (or profit) of the well run Golden Arches

We all should be striving in building profitable tickets and increasing your averages, but do not loose sight of the overall picture.

Try and grow each of the three distinct categories found in every frame shop for a more "total" picture would be my suggestion

Imagine that you are Nissan

You certainly want your overall average to go up, but grow it through growth in increasing both sales and averages of Altimas, then do the same for Camrys and for Avalons. If we focus simply on The Acura, we might easily lose sight of those customers at the Altima level who easily can be vertically integrated into a Camry, and up the line

Did I keep my car lines straight? Rest assure that some bright eyes wil lose sight of the point because one of them is a Toyota. I used to ue GM cars until someone had to mention their Bond Ratings

But, you get the point

I would be much more interested in improving my sales and averages of MY own categories

[Cliff Wilson]

Oh No Bob! graemlins/icon45.gif You mixed 3 car vendors! There goes the discussion! graemlins/faintthud.gif

But seriously, to "Try and grow each of the three distinct categories" seems to be (for me anyway) incredibly hard! When I try to build my "value" offerings to keep the "entry level" framers from going elsewhere, the "Hand gilded custmers" seem to think I'm becoming a "discount shop." Then, when I displayed my 22k frames too prominantly and tucked the metals away, I got too many walkers! I'm cosntantly tweeking and feel pretty good about my current merchandising style, but boy this is HARD!

[Bob Carter]

Hey Cliff-No one said it was easy, did they?

Maybe if you define what each category really wants from you and attempt to merchandise them accordingly

If you go into a high end jewelry store (and I am on shaky ground here) the good stuff is dominately displayed, but I'll bet that today you can go into a Tiffany's and buy something for the "Grad" for under $100

And, let's face it, the average client walking into Tiffany' has a much different level of expectation than your client

I have absolutely no problem with any shop focusing on the exclusive limits of high end. For us, that air is to rarified

But, I do think we too casually "eliminate" some of the offerings that many of our clientele do want (and expect)

I mean I expect that the Ferrari dealer should start his unit sales at several hundred thousand dollars

But, they have established that level of expectation. I scarcely doubt that a Hyundai customer will make that mistake.

Yet, if you have clients that walk in with a poster under their arm, the you better be able to meet their expectations. And, if you see them regularly then they probably don't think of you as high end as you do

Many, many more of us ought to embrace a wider range than what we feel ourselves

Marketing Chaos?

Self Induced for many

[Cliff Wilson]

Yep, what a learning curve that was!

When I opened I wasn't going to stoop to displaying metal frames! I was going to keep a few under the counter in case someone made me pull 'em out. Lot's of walkers that I didn't even get a chance to talk to! They'd come in take a look around and pronounce (as they were leaving) "this place is clearly too expensive." They DIDN'T EVEN ASK! Now, I have an extensive display of metals at one end and closed corner gold at the other. Took a few years to figure that out! Guess I'm a slow learner.

Now I just have to figure out how to convey my "one stop capability" to people I haven't got in the door yet!