IT’S PROBABLY A vast understatement to say that
small-business owners don’t have money to burn. But
according to Costco member and business author
Sean C. Castrina ( www.newbizcoach.org), there are
some areas in which it doesn’t pay to cut costs. An
entrepreneur and business coach, Castrina outlines
these areas in which cheapness doesn’t pay.
Paying the bare minimum. Excessive
tightfistedness on payday sends a very clear message
to your employees: “I place a low value on you and
what you do for my company.” That message sends
skilled employees running, costing you money in lost
productivity, turnover and customer dissatisfaction.
Using an in-house bookkeeper. Many
boss-designated bookkeepers don’t completely know
what they’re doing. For instance, they may use unnecessarily broad headings or classify items incorrectly.
Sooner or later, your accountant (or worse, the
Internal Revenue Service) will charge you to correct
these mistakes, saving you nothing.
Skimping on legal services. For general
matters, hire young, new-to-their-firm attorneys
whose rates are low and who are really trying to earn
your business. But for matters in which your company’s survival is at stake, hire the best lawyer you can.
DIY-ing branded materials. We’ve all
seen businesses that made a poor impression
because their employees weren’t wearing uniforms
or whose signage, forms, business cards, stationery
and websites were made with do-it-yourself kits. If
you want to be paid like a great company, you need
to look like one.
Relying on word of mouth. Castrina
says, “I’ve never owned or worked with a company
that owed more than a third of sales to word-of-
mouth business. The rare exception being Costco.
For them, it is a strategy that has been very successful.
But for most businesses, the fact of the matter is, if
you try to save money by not budgeting for market-
ing, you’ll save your way right out of business.” C
IF YOU SEND the exact same emails to all of your
subscribers, you’re gambling that recipients will
find something inside that interests them. And if
they don’t? They may start ignoring your messages
or even unsubscribe.
A savvier approach would be to break your
email list into segments and send those segmented
groups email with individually tailored subject lines,
content and images they are likely to find engaging.
“Consumers want information that’s relevant
to them as an individual and expect small
businesses to understand their individual needs
and preferences as a consumer,” says Costco
member Ron Cates, director of new market
development at Constant Contact, an email
You can gain that knowledge through
customer data. You probably have access to more
of it than you think. For instance, your email
service provider can show you how subscribers
have interacted with your messages. You can
figure out which individuals have frequently
opened your emails and which have made
purchases because of them.
“You can create emails to target the people
who are very engaged in your business or in the
information you’re sending,” says Jill Bastian,
community education and training manager at
the email service provider VerticalResponse. For
those who aren’t as engaged, she says, you could
change it up, perhaps altering the subject line
or an offer, for instance.
Another popular way to segment is by
customer interest. You can ask customers about
their interests when they sign up to get your
emails, and you can include other segment-build-ing questions around data points like job title,
gender and location. (Remember that the tidbits
may need to be updated over time.)
“Above all, be a data hound,” says Meagan
Moughty, director of Internet business for Legacy
Publishing Company, the creator of The Total
Transformation Program, which helps parents
handle child behavioral problems.
Her company uses data it collects through
customer touch points like its call center and
email sign-up form to send targeted messages.
Over time, it creates even more-refined segments
by meshing that data with information Legacy
gathers from its email service provider.
Using a segmented approach has helped Legacy
boost its email open rates, click-through rates and
revenues. Moughty says, “We see it time and time
again that when we send more-relevant messaging,
we get a higher return on our investment. C
More in archives
On Costco.com, enter
“Connection.”At Online Edition,
search “Mindy Charski.”
on Twitter) specializes in business journalism.
Five necessary expenditures
JUST AS THE human body bene-
fits from fitness, so too does
information technology, advises
Costco member Adam Stern,
founder and CEO of cloud server
provider Infinitely Virtual (www.
your IT implementation on a
‘fitness’ regimen is an extremely
helpful metaphor, largely
because it’s not just a meta-
phor,” he observes. “Small and
midsize businesses can benefit
from treating the information
technology machine as a living,
Stern offers the following
tips for getting your IT in shape.
Assess your fitness level.
Take a close look at that
creaky, aging server in your
office. When was the last time it
was backed up? Is it up to running the apps you have now and
those you’ll need to install during
the coming year?
Enlist a trainer. About
that IT guy you’ve been using:
When does he show up? Is she
around when you need her?
Are they earning the figure at
the bottom of those invoices?
Work on defense. Your network needs to be able to defend
itself. How do you determine if
someone is trying to break into
your network? Who handles
password administration, and
monitoring who’s logging into
your system? Who or what handles intrusion detection and prevention?
Derail the roller coaster.
Yo-yo diets have their counterpart in the so-called “IT roller
coaster,” the practice of investing in hardware, software and
services every three to four
years. Migrating to cloud computing breaks that cycle. C