If you're prepared, and you know what it takes, it's not a risk. You just have to figure out how to get there. There is always a way to get there.
__ Mark Cuban
In developed countries, most of us, at some point, will end up buying a car. In the past few decades, car dealerships have expanded and evolved dramatically. In this article, we will explore sales tactics that dealerships have been using to increase their sales, and to satisfy customers, hopefully.
1) Test Drive Similar to the jewelry industry, the common sense is that the more customers try/experience the product, the more likely they will purchase the item(s). Please note I still encourage to try out the car(s) you consider buying. However, if you have absolutely no intention to buy a particular car (usually more expensive than your initial budget), then you should decline dealer's test-drive offer(s). 2) Base Price and Upgrades Base price or starting price are used to build interest and lure in customers. Once customers come to the dealers, they will be shown and talked into various possible upgrades (most of these upgrades are not necessary/essential). I would recommend you go through the upgrades by yourself at home before seeing dealers (you can simply look up upgrades on dealer's website). Then you should take note which upgrades you truly need/want. This preparation gives you a good direction of upgrading and avoids impulsive overspending. 3) Same-Day Deal Closing The golden rule in the auto industry is to close deals within the customer's first visit. Dealers will literally do anything to not have you leave. Hence, sales staffs are usually quite aggressive in terms of approaching and pushing buyers. You should be aware of this fact and keep your composure under pressure when sellers push you to make a decision. 4) Extended Warranty When you buy a car, you usually get a certain manufacturer/dealer warranty, which is quite decent. At the same time, dealers will try to persuade you to buy an extended warranty. It's another way for dealers to generate revenue. Note that I am not arguing that all extended warranties are bad. Rather, I suggest you to carefully review extended warranty's details and benefits to determine if you truly need it. Another good practice is also to compare extended warranty offer to your car insurance to see if there is any overlap. 5) Extended Payment Terms Capitalism has a massive credit system, which includes financing. Car buyers, especially those with low-mid income level, are not only concerned about the total cost, but also about the monthly payment amount. Dealers know this buyer's weakness and hence, they usually try to lower the monthly payment amount by extending the total payment term from 5 to 7 years. Besides making the payment period dramatically become longer, this would also increase interest rate, and hence, increase total cost. Conclusion. Buying a car is as simple as buying a microwave or a pair of shoes. Nonetheless, by understanding those listed facts and recommendations above, you will be more prepared and happy with your future car purchase. Happy Learning, The Kid
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Costco has been around since 1976, and the concept of discount warehouse retail is not new. However, in the recent years, Costco has been dominating its competitors, and its popularity has exploded. So what makes Costco become such a phenomenon? How Costco attracts and retains its loyal customers? This article will dive into Costco's strategies.
1) Ingenious Membership. This is the core foundation of Costco. Customers are required to sign up for different types of membership before shopping. The concept is similar to the gym's membership. Customers will engage in sunk cost fallacy, that they already paid for the membership whether they've used the service or not. Hence, it encourages more shopping. 2) Warehouse Pallets. Instead of using traditional retail shelves, Costco intentionally uses mostly warehouse pallets to display products for two main reasons 1) to help save money on purchasing displays 2) by using warehouse pallets, Costco primes its customer to notice/believe they would get best possible deals from literally a "warehouse" with no middle-man cut. 3) Free Samples. Costco uses this classic technique that almost no other grocery stores would even consider. Free samples not only allow customers to try out new products, but it also create a sense of guilt from customers if they decide not to buy the products after trying. Hence, it increases the likelihood that customers will buy a product after trying, especially if there is an actual person serving samples. 4) Member-Only Gas Station. In 1996, Costco was one of the earliest grocery chains to open its gas station. At the time of this writing, Costco offers a discount around 25 cents per gallon, which is extremely good. The idea behind this is to increase customer's frequency of visiting Costco. Instead of waiting for your household to run low on grocery, you will more likely go shop as soon as your car runs low on gas. 5) Powerful Word of Mouth. Costco is one of a few large companies (Tesla is another example) that do not spend money on advertising. Costco replies on the powerful word of mouth from its loyal customers to spread our its reputation, which is the most effective method, not to mention it's FREE! By no mean this list is all what Costco has revolutionized. Costco is a classic example of a disruptive innovation that has fully bloomed. We are both excited and curious to wait for a new disrupter, or perhaps Costco will maintain its top spot in the future? Happy Learning, The Kid We cannot deny the important role of the physical jewelry stores. Internet has come a long way, but the majority of consumers still prefer the brick-and-mortar jewelry stores, where you can feel, touch, or even smell the jewelry pieces.
So what tricks the jewelry stores use to make us spend more money? Are these tricks legal or ethical? Below are the most common tricks that jewelry stores use to make more money, and hopefully, makes customers more happy: 1) Free Stuff. The classic marketing trick comes in again. Similar to many other retails, jewelry stores usually offer free products/services such as free cleaning, free inspection, free consultation, etc. The idea is to get you into the stores from the very beginning. Also, similar to Costco's strategy of free "food samples", this "free-stuff" strategy creates a sense of being beholden, the feeling of buying something to pay back the favor. 2) Try Things On. It has been confirmed by many studies that the more consumers to try (on) something, the more likely they will commit to the purchase. This applies to most industries from auto to cosmetics, and jewelry is not an exception. Hence, the jewelry salesperson will attempt to have you try on different things to prime your mind into buying. 3) Financing. As humanity involves, so does credit system. Most jewelry stores offer very flexible financing services, which require almost no credit history. The catch lies in the big interest fees. 4) Merchandising/Pricing. Retail industries are famous for their studying of the consumer's psychology. In the jewelry industry, items are placed in careful patterns and priced accordingly. The idea is to either present some items are cheaper than others (feel like more saving from the customer's view); or to make certain items seem "special" with high premium, marked-up prices. 5) On-Sale Items. Things on jewelry stores are always on sale. It does not matter if it's Black Friday or Saint Patrick's Day. I repeat, things are always on "sales". It is rooted in our psychology, as consumers, that we prefer to hear a marked-up price with some percentage off, rather than a non-marked-up price. Now you've discovered some tricks from the traditional jewelry stores. You can factor these tricks in your mind before committing to a purchase. Bonus point, as I am writing this post, I have been a jewelry store general manager for almost a year. Happy Shopping, The Kid Opening a business a one of the most challenging tasks a man or a woman have to do (only if you have their will). Getting a basic understanding the autonomy of a business will increase your chance succeeding with your new or current business. Three components are the technician, the manager, and the entrepreneur:
1) The Technician. This "guy" only worries about the present. He wants to get things done as soon as possible regardless the costs. He only focuses on his narrow scope of tasks. Being/Having the technician is mandatory since without him/her, a business will not be able to pump out any product/service. The technician may have advanced degree and certificates; nonetheless, he cannot lead others very well. The problem with (small) businesses is that the technician thinks since he understands the products/services, he can run the show on his own. Example: a cook, who has never steps out of the kitchen, opens a restaurant; an accountant, who barely leaves the cubicle, open a CPA firm; or (I save the last one for the best), a management consultant, who has never managed a fruit stand, opens a tech start-up. 2) The Manager. This "gal" only worries about the past. She cares a lot about how she looks or sounds to the "upper level". She also thinks deeply about numbers, metrics, surveys, and any analytical things she can use to evaluate subordinates. The manager typically has some higher degree, detail-oriented, and unfortunately, a hunger for meetings. The manager herself cannot open a new business on her own as well since she does not fully understand how products/services work or has a long-term vision. Example: a restaurant manager, who always brings his/her diet lunch and never tries the restaurant's food, opens a new restaurant. 3) The Entrepreneur. This folk only worries about future. He is the master of path finding for innovations and creativity. He will do experiments, ignore failures, and repeat until success blooms. Nonetheless, he/she may not have much experience in the business's front line or actually see how products/services rendered. The entrepreneur along cannot open an effective new business as well. Example: professors with Nobel Prize, who write theoretical business books and think they are entrepreneurs, open a failed hedge fund (LTCM). The three components go together wherever they go. None of them can form a complete business; hence, it is critical to gather members who have diverse skills to fill in "the three alphas". In rare cases, some extraordinary individuals might have all these three qualities (Elon Musk, Mark Zuckerberg, Steve Jobs, Jeff Bezos, etc.). However, in many cases, finding right partners and continuous learning are critical steps towards starting/building a successful business. Happy Exploring, The Kid Sales is critical to any business, period. Without sales, businesses would not exist. During my time with start-ups, big corporations, and non-profits, I heard many myths about sales. Below are a few and how to respond to them:
1) Sell to as many people as you can. You heard this before "call one thousands, one hundreds will pick up, and ten will buy". First of all, making a thousand (cold) calls is painful. Second, if you do have a thousand names and you cannot tell which clients are worth calling, you have a business process problem. Save your time and try to filter valuable contacts. Avoid calling every single one in your phone list, especially toxic clients. 2) Be aggressive. I am not sure what it means since sales is not wrestling. I am not saying sales cannot be aggressive, but being overaggressive will alert your clients as you being a potential fraud. In financial consulting, I usually get to know my clients very well before offering any service. Sales is very subtle; that's why sales titles are usually not clear: account manager, account executive, business developer, etc. Remember, being aggressive is good to a certain point, and try not to be aggressive right at the first minute seeing new clients. 3) It's all about the numbers. Let's say you are selling a robot with impressive specs. You prepare a good Power Point and a highly detailed pitch. Unfortunately, your clients show no interest in your robot. Research have shown if you target people with numbers and figures right at the beginning, they will not buy it. Instead, target their emotions, pride, ego, etc. and you will make your first sales in no time. Now you have cleared some common misconceptions of sales. Learn what not to do first is more critical than learning some wrong tricks, no matter in sales, business, or other aspects. Happy Hustling, The Kid Okay, I apologize, this might not be the most dangerous pitfall of business (since nothing is absolute); however, you can waste a large junk amount of time doing this pointless task: Forecasting.
What is forecasting (for those who are still lucky enough to not know its concept); It is an attempt (or rather endless attempts) using mostly historical data or created theories to predict future. The concept was very attractive back in the old days when fortune tellers took advantage of it, and it is still very popular for analysts and other like-minded "geniuses". Here are the reasons why it's a waste of time: 1) Can't fit in enough historical data. To be able to accurately predict future, you need a massive, massive amount of data to begin with. With the current technology and human capacity, it is impossible. For example, if you want to accurately predict a possibility of a tornado in Hawaii, you will need data showing the magnitude of a butterfly moving its wings in India. 2) No theory is 100% correct forever. The only theory that still hold validity is Einstein's general relativity. When building a model, scientists (or in the worse case, analysts) use models which are built based on certain theories/hypotheses/assumptions. The problem with building theories is the more complex it is, the more likely it will fail, and most theories are very complex (it makes analysts look smarter). We can find countless example from Long-Term Capital Management (exploit price difference using math) to Enron (star-system reward). 3) The applied environment is dynamic. Theories only work in static and non-random environment such as academia. The reality is mixed with thousands of unknown unknowns (psychology, non-probable events, innovation, etc.); hence, theories should only belong in textbook, not a company's business plan. So, what you should do instead of forecasting? You should focus on something your business can control such as budgeting, managing staffs, etc. I'm not suggesting you should ignore the future 100%; it is perfectly fine to have a rough estimation in some aspects, but if you are obsessed with precise forecasts, your business is doomed for failure (also, you will get kicked out in the middle of your Shark-Tank pitch if you manage to get on the stage). Happy Learning, The Kid What is your favorite grocery store? Walmart? Target? Trader Joe? or Costco? We all might have been in situations where we love the store so much that we go on a spending spree. Would it be nice if we know some strategies that grocery stores use to lure us into buying things that we don't need or at least, staying in the shop longer than we're supposed to? Below are very subtle tricks that help us to shop better:
1) Green on the right. Do you notice that 98% of shoppers start from the right? We usually start off with buying vegetables on the right side. The reason is it makes us believe that we have been shopping enough healthy food. Hence, when we get to the back-end (where I usually bought bacon as a poor college kid), we are likely to purchase less healthy products. 2) Hotel grocery. Why the heck is it so relaxed in a typical grocery store (except holidays)? Oh right, the music is always calmed and slow. Studies have showed shopper's speed is accordant with music tone. The longer shoppers stay in the store, the higher chance they would make more purchases. 3) Hide the treasure. I just wanted to buy some milk and eggs, why do I have to walk 2 miles to the back-end. I think now you have realized grocery stores put necessities in the back, so before you hit your dream land, you have to walk through all non-necessary items first. Also, on-sale items are usually located in the middle of store with the same concept of forcing you to encounter full-priced items. Create a fixed shopping list helps. 4) It's on the house. It is so nice to have get some little snacks or drinks for free when we shop at Costco, eh? The concept is simple. When you accept these freebies, it creates a sense of guilt if you don't buy the item. Hence, a couple free samples can likely turn into real purchase. Only buy a product if you truly like it. 5) Best deal ever. Many stores, including Costco and Ikea, intentionally design their store as a warehouse. This tricks customers into the belief they are getting wholesale deals, which may or may not be true. 6) Winners stay low. Buying bread is probably the hardest decision. Which one to buy? So confusing with so many options. Producers pay more money to put their product on top shelves where we normally pay attention. Look for items at the bottom shelves, they will be likely much cheaper. 7) Just one last buy. Feeling annoyed while waiting in line for checking out? Oh look at these candies, drinks, and magazines! So attractive. Last-minute items are placed conveniently right next to you at checkout. Convenience equals over-priced, so be ware. Go back to the aisles to get your chips, much cheaper! Happy Shopping, The Kid My girlfriend's family has a tradition of being chefs. They love cooking. They moved to America from Vietnam. They started working for other people, but soon they wanted more; they wanted their own restaurant. So in 2010, they finally saved enough money plus bank loans to open up their shop. No surprise, they lacked customers in the beginning but gradually gained some. I was a young student who knew nothing about management or marketing, but with common sense, my suggestions helped them to double their customer base: 1) Slow-Calmed Music. Studies has shown that music with fast tone makes customer rush through their purchase. The longer customers stay in the store, the better chance they will buy/consume more. Next time you put up your favorite song from Enimem (I love this guy), remember the background music was meant for customers. 2) Moderate lighting. Do you remember the last time you've been to a restaurant where the lighting was odd, either too bright or too dimmed? There is a reason behind it. In my situation, we put up dimmed light so it would cover up the potential lack of freshness in the ingredient (likely vegetable). Do some research or talk to a specialist before you put up your lighting. 3) "Auto-Clean Man Bathroom". I gave the method this name because it sounds as some future tech. There are some companies selling 3D stick of fly (insect). Users would put this sticker into man restrooms and trick them into "aiming" the target, which ultimate reduces spillage. If you find fly to be somehow disgusting for restaurant, you can make/buy other sticker with attractive animation. 4) Smart menu. Now we get to the fun part. It is quite simple to craft a powerful menu with these tricks: a) Include a description. This triggers food images in customer's mind and makes the food seems to be personalized for only them. b) Do not use the dollar sign ($). This reduce the effect of price consciousness and they will likely to order more. c) Keep the menu short, but seasonal. Ever been to a restaurant with 200-item menu? Pretty annoying to not know what to order. Starbucks does a great job of keeping their menu concise but seasonal. If Starbucks does it, then it is probably not a bad model. d) Price high the most expensive item. Let's say we go to Red Lobster and see a lobster cost $50, you decided to order chicken salad for $15 instead thinking you have saved $35. Well... the restaurant actually makes more profit selling chicken salad than lobster. This strategy lures customers into saving thinking and the restaurant, hence, benefits. 5) Use color red. If you notice, most famous restaurant has some sort of red theme, from Wendy's to Burger King. The reason behind this is color red triggers consumer's hunger and is a very attractive color to help increase traffic (even Shell, gas station, has red color). So it is probably a good idea to decorate your store with some redness. 6) 15-minute staff. I personally assigned each staff to come in every 15 minutes. Why? because they would likely have a chance to chit chat in the locker room. This helps increase efficiency. 7) We are a poor business. It feels bad at the end of day, you work hard, put money in your bank, but your store get broke in anyway. This costs you repair expenses and time. Simply take out all the cash and pull out all register's draws so when the bad guy scouts before "action", he/she would see that you have no cash; hence, no reason to break in. Happy Learning, The Kid |
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