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December,
2006

Thinking Outside the Cigar Box

There’s no time like now for your marketing overhaul.

By Joseph Finora

Can you make your store bigger, stronger, faster… and more profitable? Absolutely. For starters, look at what some other large, successful companies are doing. For one thing, they’re innovative. Who could’ve predicted the success of such phenomena as e-mail marketing and gift cards? It’s hard to find a large retailer today that does not rely on such items to increase business. They’ve become standard retail business-building tools because they work. And as they’ve grown in popularity, their prices have dropped so most retailers can now get in on this action. Another item no successful business should be without — a formal business plan. Don’t have one? Then now’s the time to start devising it.

Many think a business plan is strictly for getting a loan or grant, but it’s a good tool to use to measure your own progress and see if your business is reaching its goals. If it’s not, a plan can help you examine why. It’s also worth noting that a business plan isn’t just a formality required by loan officers. It is a guide to help your business succeed.

One of the greatest misconceptions about business plans is people feel they’re “too busy” to plan. “Planning saves time over the long term,” says business consultant David Rendall of Goldsboro, N.C. and author of “The Four Factors of Effective Leadership.” As small-business owners generally don’t have a boss, a plan can help keep them accountable. And keeping things in writing can help avoid misunderstandings or settle disputes in the future.

“A plan can help develop discipline, chart progress and help you know when to change,” says Rendall. “Not achieving goals can be a sign you need to change course.”

The next most common objection — a business plan will cost too much. It doesn’t have to cost anything, actually, as there are many free sources of assistance such as local colleges and the Small Business Administration (www.sba.gov). “Regular people write business plans every day,” says Rendall. “Any plan, no matter how basic, is probably better than no plan.”

And while there are many plan formats available, as well as experts who can help you craft them, one’s business plan should be as unique as the company it’s suited for but most include:

  1. A business philosophy /mission statement;
  2. A concise company summary or overview including a description of key personnel, their background /credentials, and main responsibilities;
  3. Number of employees, noting special credentials, awards etc.;
  4. Your facility: square footage, shipping capabilities, marketing, technology;
  5. Financial forecasts including a look back at the previous year and look ahead to the next one.

It’s the first and last points that are often neglected or minimized — those in between are fairly straight-forward. First scan to the bottom of the list and look at number five — it’s easy to add up the numbers and see whether or not you’ve reached your goals for the past year or suggest a “target number” for the new one. “I’d like to increase sales by 15 percent,” is an easy mantra to espouse but is this a reasonable, reachable number?

Your business plan must contain “believable financial projections with key data explained and documented,” notes Stanley R. Rich author of “Business Plans That Win $$$: Lessons from the MIT Enterprise Forum.” “The business that runs by the ‘seat of its pants,’ usually winds up with torn pants,” he adds.

Arbitrarily demanding a 15 percent uptick is not enough and will probably backfire. Ask yourself why you’re pursuing 15 percent. Is there a better target? Then ask how you’re going to get there. Are the right tools in place to make this happen or will you simply rely on “more hustle?”

How will more prospects learn about your products, services, business improvements, and upgrades? Clarify your expectations and don’t be shy about noting how you’ll provide new services or meet new goals. Think about motivation. Will those who do meet the new goal(s) be rewarded with a bonus or extra vacation time? Will you be implementing a print or direct marketing plan? How about an e-mail campaign? Will you be attending trade shows? Investing in new equipment? Hiring the personnel that can help you get there? Will you be working with a media relations representative, marketing pro, or business coach?

Also, ask your staff for feedback on a confidential level. Have formal give-and-take discussions at least annually where notes are taken so staff learns that their ideas and experiences are valued. If you make someone’s suggestion a reality let others know about it and if it turns out to be a good idea, give him a bonus. This will motivate others to do the same.

Back to the first point. Your business’ mission statement — do you have one? Your mission statement can be very simple, highly complex, or somewhere in the middle. It should be a clear and succinct representation of your business’ purpose for existence and incorporate socially meaningful and measurable criteria addressing such concepts as the moral/ethical position of the enterprise, public image, target market(s), products/services, the geographic domain and growth and profitability expectations according to the Center for Business Planning in Austin, Texas. “A good mission statement is so easily communicated and understood that a 12-year-old can repeat it,” says Laurie Beth Jones, author of, “The Path: Creating Your Mission Statement for Work and Life.” This serves as a moral anchor or compass to keep staff grounded when things get confusing.

The Sale’s in the E-Mail
Tom Holownia, principal and brand strategist at Blended Thinking, a San Francisco Bay Area marketing and brand-consulting firm says put yourself in the consumer’s shoes. Many are “overwhelmed.” To succeed study those who’ve succeeded.

 Brands periodically “up-end” the traditional rules of marketing and win. Look at who’s doing that in cigars, advises Holownia. “What’s the tradition and where can it be messed with to the benefit your store?”

Cigar enjoyment engages too many senses for an e-mail message to adequately address, but what it can do is have the recipient recall the “experience.” Similarly, wineries use wine clubs to stay in touch with visitors. “E-mail can also target people through significant events like cigars at weddings. Tying a cigar brand to a memorable life event, such as the birth of a child, may help keep a customer for life.”

An e-mail list can be used to contact customers each time a big event is on the horizon, such as the Super Bowl or Father’s Day. Consider utilizing a version of the following message: “The last time the Giants won the pennant you celebrated the occasion with an XYZ cigar. XYZ cigars still have the same great flavor and we’ve got them for a great price.”

Including a special offer, i.e., buy-two-get-one-free, will help get any recipient to open the e-mail. Consider the following: “Father’s Day is almost here. [date reminder] Help your Dad relive his memories with a box of ABC cigars. [personalize message] Fresh from the Dominican Republic, they’ll deliver a taste that will put a smile on Dad’s face. [Give some information on cigars and promise satisfaction.] We’ve got them for a limited time at Charlie’s Tobacco Hut. [‘Limited time’ conveys urgency.] For every ABC purchase before Father’s Day, we will give you a free cutter.” [Include a special offer.]

An e-mail list can be purchased from a list broker. To build your own, ask patrons to write their e-mail address in a notebook left on your check-out counter or drop a business card in a fish bowl. List important information in any marketing communication such as street address, credit cards accepted, hours of operation, special events, web address, telephone number, and if you provide special services such as free or overnight shipping.

It’s in the Cards, Here’s Why
Josh Rosen of Business Payment Systems (BPS), the largest independent sales organization for Bank of America, which provides merchants across the U.S. with gift card programs says “More companies are choosing customized gift cards over the old-fashioned paper gift certificates. Though the difference between paper versus plastic may seem obvious, several benefits of a gift card program for retailers are not quite as apparent.”

Gift cards are more profitable than their paper predecessors — that’s good. Customers typically spend more than they would to use the amount remaining on the card or may spend less than its value, leaving the balance as retailer profit.

Nearly 60 percent of consumers asked for gift cards as presents this year according to the National Retail Federation’s 2006 Holiday Consumer Intentions and Actions Survey which also reported that gift card sales totaled $18.48 billion in the 2005 holiday season. The average consumer spent $88.03 on gift cards during the holidays — 15.6 percent of their holiday gift budget. More than 75 percent polled said that they plan to purchase at least one gift card, and more than 50 percent would like to receive them for the holidays.

Also note that gift cards give a retailer the advantage of product placement. “When placed in point-of-sale displays by the cash register, gift cards can trigger a customer to purchase, just from visibility alone,” says Rosen. “Gift cards act as a ‘mini billboard’ in the customer’s wallet, creating retailer awareness each time a cardholder sifts through her wallet.”

Gift cards also help with record-keeping. “Since they’re processed electronically, this enables us to easily generate reports, track sales growth, and determine how much gift card value is currently outstanding,” says Rosen. Cards can be purchased directly from a gift card company or though a credit card processor such as Business Payment Systems (www.BPSmerchant.net). First-time orders are $700 for 500 cards. After the initial purchase the fee is $400. After ordering costs, every time the card is swiped, it costs the business 15 cents. The card is usually swiped three times — the merchant swipes to activate it and the customer generally comes in one to two times. Fifteen to 18 percent of cards are never swiped.

There’s a lot to do when growing a business. The ideas here can help you do it better.


SMOKESHOP - December, 2006