Here’s wishing you a very Merry Christmas and Happy Holidays from New Lantern!
Welcome to the New Lantern blog. Our goal is to shine light on leading innovators and creative artists, and how your business can learn and profit from them. Companies large, medium, and small can benefit from employees who think more creatively. New Lantern may be just the source of inspiration your company needs to spark more innovative products, services, and processes.
Shoppers appear to be opening up their wallets a bit more widely this holiday season much to the delight of retailers.
Two factors account for this year’s uptick. First, shoppers feel somewhat better about the overall economy. Despite an unemployment rate that’s been stuck in the mud near 10% for more than a year, the 90% who are employed have probably seen their paychecks rise in recent months for the first time in a couple of years.
The second factor for an improved holiday retail season can be attributed to the retailers themselves. There’s nothing like two years of a bad economy to help get the creative pricing juices flowing.
Many businesses have found ways to trim margins even further, while passing on those savings to the consumer in the form of lower prices and/or other enticements, such as free shipping. And shoppers seem to be responding.
Good old-fashioned price trimming appears to be the new fashion this season. Clearly, a business cannot survive indefinitely on charging less for products or services. Yet, a short-term price cutting strategy that allows a business to move products, reduce inventories, increase cash flow, attract new customers or all or some of the above can indeed pay dividends.
So feel free to take a page from both the brick-and-mortar and the online retailers this holiday season, and think about dropping a price or two on some of your company’s products or service offerings. Or, put your heads together on any other creative pricing strategies that could serve to spark additional sales.
It may help put a new pep in your company’s step and usher in some holiday cheer as you head into the new year.
This month’s Fortune Magazine named Netflix CEO, Reed Hastings, as its 2010 “Business Person of the Year.” Hastings beat out some pretty stiff competition, including Ford CEO, Alan Mulally, and Apple CEO, Steve Jobs.
Under Hastings’s leadership, it seems that Netflix is doing everything right these days. For starters, its stock is up 200 percent in 2010, fueled by its new push for customers to stream more movies over the web vs. its traditional DVD movie-by-mail. According to Fortune, it costs Netflix five cents a movie to stream over the web, compared to $1 a movie to send through the mail (including labor).
It doesn’t take a Wharton MBA to figure out the enormous upside for any business that can save 95 cents on the dollar.
In fact, this shift in its distribution model is what makes Netflix and Hastings so impressive. Basically the company disrupted its own business model. First, it drove the former rental movie king Blockbuster into bankruptcy – literally — with its blistering growth in recent years with its movie-by-mail business featuring no due dates or late fees. Today, Netflix is increasingly calling the shots with movie studios, who are trying to figure out whether to partner or compete (or both) with Netflix and their 16 million subscribers.
Contributing to its success has been Netflix’s decision to license its streaming software to scores of device companies. Walk into a Best Buy today, and you’ll find the Netflix logo on numerous brands of flat screens, Blu-ray players, gaming consoles, iPads, and smartphones – over 200 electronic devices and counting.
I must admit that I am a Netflix enthusiast, although I still get my movies from them the old-fashioned way – through the mail in their trusty red envelopes. Although I’ve not yet upgraded my television or DVD player to be able to stream movies over the web from Netflix, I do stream them on my computer from time to time.
In its latest move, Netflix announced its $7.99 a month all-you-can-eat streaming download option. That sounds pretty appetizing to me, but not to the cable industry, which has seen a drop of subscribers for the last two quarters thanks to more video content now available via the Internet.
What’s that you smell? It’s the popcorn I just put in the microwave. It’s “movie night” at my house.
In Businessweek’s November 24, 2010 story, “What’s in Amazon’s Box? Instant Gratification,” BW reporter, Brad Stone, writes that “Amazon Prime may be the most ingenious and effective customer loyalty program in all of e-commerce, if not retail in general.”
For an annual fee of $79, Amazon.com customers can get free two-day guaranteed delivery on any product it sells. Customers who sign up for the Prime program tend to increase their purchases on Amazon. One customer cited by Stone increased her Amazon buying from 82 items in 2009 to 150 items in 2010 as a result of the Prime program. Even if she finds an item on a competitor’s web site, she’ll come back to Amazon to purchase it so she gets the free delivery.
Analysts point to the Prime program as one of the main factors for Amazon’s 30 percent increase in sales during the recession, while other retailers suffered. That’s why competitors like Wal-Mart, Best Buy, and Target have recently followed suit with their own free shipping promotions.
So you’re probably thinking that it was some high-priced management or marketing consulting firm, which helped Amazon come up with its best-in-class loyalty program. Au contraire.
In fact, it was Amazon software engineer, Charlie Ward, who first cooked up the free shipping idea via an internal web-based corporate suggestion box. Credit then goes to CEO Jeffrey Bezos and Amazon board member, Bing Gordon, for taking the idea and running with it.
In numerous blog posts over the last two years, we have made the point here at New Lantern that a company’s own employees are its single best resource. Your employees possess the talent and creativity that could in fact lead to your organization’s next blockbuster product or service.
I bet there are dozens of Charlie Wards who sit in your company at this very moment. And most likely, they are getting paid for doing a specific task, like writing software code, but are given no incentive for thinking up creative approaches that fall either inside or outside their bailiwicks.
This is an opportunity lost indeed. You owe it to your shareholders to leverage every bit of talent and creativity that exists within your company. Promote creativity and innovation across every part of the company, and at every level.
Incentivize your employees to not only think outside the box, but to forget there is a box in the first place. And seek to identify and nurture these talents via innovative training and other cost-effective, cutting-edge methods.
In doing so, I predict you’ll soon create a shareholder loyalty program that will be second to none.