Saturday, January 31, 2009

Boulder Small Business Fighting Effects of Recession

The Rocky Mountain news featured Colorado small businesses in the front line of recession battle. There are two businesses and their approach particularly stood out. They are, Wheatridge based Vibrant Solar and Boulder based, Boulder Ice Cream. Vibrant stands out for its marketing strategy and Boulder Ice Cream for its operational efficiency.

In times of recession it is all the more important to invest in marketing and develop customers and that is exactly what Vibrant Solar is doing:

"When things are tight, you need to work harder to find customers," said Mark Simmons, Vibrant Solar's vice president of sales and marketing. "This is the time to increase marketing costs, not decrease them."

The company has virtually doubled its marketing budget. It is mailing postcards with personalized messages to potential customers, asking them to contact the company online.

Operational efficiency is no something to achieve just for the recessionary times. It is about keeping the costs down and continuously driving them downwards to keep more of the revenue the business brings in. Boulder Ice Cream has been focused on keeping their fixed costs, costs that are incurred regardless of the sales volume, down. This helps them to manage the low sales volume without making further cuts:

Boulder Ice Cream was careful to not increase its overhead along with its sales. The company doesn't provide health or retirement benefits and uses contract workers to ramp up production during peak selling season, allowing the company to hold steady with six full-time production workers.

What do you think?
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Friday, January 30, 2009

What is your Willingness to Pay?

I recently wrote about a new pricing scheme, "Pay all you can afford" adopted by a Boulder Spa, Sensorielle. The underlying premise is customers will disclose (willingly) how much they are willing to pay for a service. In the case of Sensorielle spa, they will disclose it after they have had a chance to consume the service. Getting everyone to pay their maximum willingness to pay is every marketer's dream. The hard part is, a rational customer has no incentive to disclose their willingness to pay and would want to pay as low as possible. For a longer discussion on this topic see this article I wrote awhile back.

While the consumer behavior could be acting to maximize their benefit when making a product purchase with no possibility of repeat interaction and with comparatively less human touch, their behavior is bound to be different in a high touch (no pun) service exchange environment like in a Spa. In a spa after a hour or so of interaction with the service provider people will feel less inclined to capture all the value for themselves. When the services they received is effective and useful the customers are also bound to use them again in the future. Paying a token amount for the service makes no sense as they know they may not receive the same value from the service provider in the future.

The main question, will such pricing schemes bring back customers who decided to cut down on spa expenses due to economic downturn? I will talk more on this in future posts.

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Sunday, January 25, 2009

Social Networking Within The Organization

Broomfield Colorado based engineering firm MWH is profiled in The Wall Street Journal on its use of Social networking to map out the relationship between employees.

To boost productivity at engineering firm MWH, executive Victor Gulas asks employees which colleagues they talk to, and whom they turn to for help. Then he draws a "map" of the connections, which reveals dark patches around employees who work closely with others and lighter areas where there's little interaction.

Mr. Gulas says the map shows communication gaps, information bottlenecks and underutilized employees. "It's making the invisible visible," he says.

I wonder if the density of connections alone indicate the state of the social map and the informal network with the organization. The questions I have with these social maps are
  1. Do these maps indicate direction of information flow?
  2. Is the information flow even in both direction?
  3. Are the links graded based on frequencies of interactions?

Friday, January 23, 2009

Boulder Layoffs Near 30% in the past six months

In our continuing discussion of the recently concluded poll on Boulder Employment, close to 40% reported a change in their status in the past six months. The margin of error is 9%. Even then this is a high number. If we look closely at the reason for the status change

30% of the Boulder professionals reported being laid off in the past six months
This explains to an extent the high number of people , 25%, reporting unemployed. The breakdown of 30% shows that 19% laid off and still looking, 8% found a job already and 3% became self employed.

Another nagging data point is 7% reporting they expect their business to do layoffs in the next six months.

Thursday, January 22, 2009

Pricing Experiment by a Boulder Spa Sensorielle

One of the Boulder Net member, Jewl Petteway owns and operates Sensorielle spa in Boulder. As Jewl describes it,

We have been around for 4 years. We are a natural/organic holistic, wellbeing spa... Our treatments are based in nature. Our spa was built with non-toxic paints, and sustainable materials whenever possible.
What is interesting this time and differentiates this spa from others is their introduction of new pricing. Starting February 1st of 2009 Sensorielle is starting a daring pricing experiment they call, Pay-all-you-can pricing. In the recently conducted Boulder Employment Poll, around 25% reported as being unemployed. As the economic conditions deteriorates people starting to cut back on their spending. Even the de facto necessities like cable and Internet are getting cut, so it is no wonder that people will be cutting back on personal grooming and other spa expenses.

In the recent New York Times article it was stated that more of the tasks that are typically outsourced like coloring your hair and walking your dog are coming back home. While the upshot is people saving money on these tasks, every such service people do it themselves it takes away contribution to economic output.
All of these consumers could praise themselves for their newfound frugality in the midst of an economic downturn. But every step they take toward self-reliance — each shrub they prune themselves, each cupcake they bake from scratch — hurts the people and small businesses that have long provided these services professionally.
Sensorielle's Jewl says she realized that people will cut back on spa and related expenses. So she is trying to entice customers to come back by asking them to pay for the service what they value and what they can instead of the posted prices.
Let us help you feel great by offering our loving sanctuary to you.

We[Sensorielle] offer you professional, quality therapists and estheticians at a price you can afford. We offer a healing sanctuary where you can relax, get stress-relief, upliftment, beauty, happiness, and feel a great sense of overall well being. We ask in return that you pay what you truly can for our services.

It is a tricky pricing scheme but it is better than lowering prices to attract customers, because from what I see and read Sensorielle is a premium service and hence it should be offered at a premium price. Any price reduction now will not only signal inferior quality but also will make it very difficult to return to normal prices when the economy turns around.

We understand that a rational person, as defined by Microeconomics, will pay nothing more than the absolute minimum they have to. But as the field of behavioral economics show, people are not rational, they are Predictably Irrational. If the pricing and promotions brings about customers to the Spa, I bet that most will still pay closer to the list price.

What do you think? What will you pay when you visit their spa?

Wednesday, January 21, 2009

When 50% in Boulder say they are looking for new job

In the recently conducted poll of Boulder professionals, more than 50% were reported to be searching for new jobs and 25% reported unemployed. For one thing it indicates that even those with a job are not sitting safely and believe a change is needed. This makes the job search more difficult for those who are unemployed. Not only do they have to compete among themselves but also with those who are trying to switch jobs. Macroeconomics says that those who are already employed stand a better chance of getting jobs because of many reasons including the networking opportunities. This competition is not different from any other time but what makes it difficult is the high numbers of both groups.
What is your take?

How do handle requests from LinkedIn members with 0 connections?

I see a new class of LinkedIn members who send requests to join the Boulder Net group. Their profile say, their location is Greater Denver area. Most time their profile is empty but other times has few parts filled out. One thing that stand out however is their number of connections. It is 0.
I wonder if some create a different profile with different location.

In any case I do not see a fit for those in the group. I think I have been meticulous in looking at new member requests but if you see any 0 connection members let me know.

Tuesday, January 20, 2009

High Unemployment Rate Among Boulder LinkedIn Members

I recently posted the complete results and preliminary analysis of the poll results. One data that stood out is the 25% of the people reporting as unemployed. The US Bureau of Labor Statistics numbers are far below this for Boulder MCA, a about 4.6%. So why one in four in LinkedIn reported unemployed?

There are two possible reasons

  1. People more actively use LinkedIn when they are searching for jobs, especially in between jobs.
  2. Since respondents self selected the poll is over represented by unemployed
So we cannot say that LinkedIn members who work and live and Boulder area have a higher unemployment rate than the rest of the population.

Monday, January 19, 2009

Boulder Metro Employment Status Poll Results

Please use full screen mode to view the details.

Lower Unemployment Rate Than The Rest of the Country

The United States Bureau of Labor Statistics (BLS) reported the November 2008 unemployment numbers for US cities. The overall number stands at 6.2%, but the number for Boulder is significantly lower at 4.8%

Sunday, January 18, 2009

Targeting the Right Segment for Boulder Net

In one of my previous post I analyzed the membership information of Colorado related groups in LinkedIn. I defined the the total addressable market for Boulder Net group as professionals within LinkedIn who work within 50 mile radius of Boulder. The top ranked group has less than 1% of membership. One way to increase Boulder Net's membership could be to target these members of top ranked groups but the most the Boulder Net group can achieve is to be the same as those. Besides what is the unique value add from this group if the people in this group are already in another Colorado group.

The right approach I believe is to target the rest of the market, those who are not in any of the groups, which is about 94% of the market. That is the target segment. If this is the only group that has members who cannot be found in other groups, then that is an attractive value proposition for other members to join this group. In addition this group has a popular blog and significant web search engine presence. But I am looking for more ideas to improve the value add to the members. Please send your ideas to my email or post as comment.

LinkedIn Recommendations - It is not how many you have that counts

LinkedIn signals us that without recommendations our profiles are incomplete. It tells us to add two more recommendations to make it go from 95% to 100%. There is no obvious math behind this. Why 95%? If having 2 more recommendations will make make us go to 100%, why not keep adding more? Will adding more make our profile more than complete?

Many jobs posted on LinkedIn also state that the poster wants to hear only from applicants who have recommendations. Why would they base their decision to look at applicants based on whether or not they have been recommended? Probably if someone has not convinced anyone to write a glowing recommendation for them the it could be an indication of their influencing skills? Not really.

Do recommendations signal anything at all? Since LinkedIn requires the recommended to approve the recommendation before adding to their profile, any recommendation you see is only going to be positive.

In the movie Wizard of Oz, near the end the wizard would say to Tin Man, "Remember my sentimental friend, your heart is not measured by how much you love but how much you are loved by others".
Flipping that a bit,

" Your professional status and influencing skills are not measured by how many recommendations you have but how many have sought yours"

If you are nobody and your evaluation and opinion of others does not matter and hence no one sought your recommendation, then what does that say about you?

Sunday, January 11, 2009

The Boulder Net Growth Chart

Does this growth chart point to the left tail of the growth curve with big jump waiting to happen? The total addressable market is 350,000 LinkedIn members who are stated to be within 50 mile radius of Boulder, CO.

Tom Peters on Is Your Job Safe

Here is an article I found through blog in Tom Peter's blog. The blog post is by author Raj Shetty. I do not agree with this approach of questioning yourself, more on that later. But now here is the link to the article and some of the questions

  1.   Is your job core to what the company stands for?
  2.  What will the company/department lose by eliminating your job?
  3.  What is the assessment of your "value" in the eyes of the stakeholders?
  4.  Is your job "offshorable?" 
  5.  Can you handle office politics well?

Membership Information for Colorado Based Groups In LinkedIn

The total addressable market size if 350,000 people who are within 50 mile radius of Boulder. Here is the information on membership of top 5 groups and of course the Boulder Net group. You can see that this group has just over 1/10 of 1% of addressable market. But compared to other groups it is 12% of top ranked group. That said, the Boulder Net group is not open enrollment and I still take the time to verify that there is some Colorado connection before accepting members.

Saturday, January 10, 2009

Networking Before The Hard Times Hit

As the official unemployment rate hitting a sixteen year high of 7.2% there is concern in the minds of everyone, even those who have a relatively secure job. The Government numbers on job less count are an understatement of the real unemployment count which the Barrons editorial this week says is around 750,000 as opposed to 560,000.  Many businesses have announced layoffs but have not carried them out yet, as the layoffs roll in, typically the week before or after Super Bowl, the numbers will increase.

Naturally  people are joining networking sites and groups at a higher rate. But joining these sites and having 300+ connections is not an assured way to get jobs in a short period. Networking should be more about establishing a genuine conversation with the peers in your professional circle or in your locale. You may have to invest more in your network, tending it, helping others before you can make a withdrawal. That means the time to network is not when the layoff rumors float in your office corridors but long time before that. Building your network cannot be done in an on-demand basis but rather as a continuous process.

The members of Boulder Net LinkedIn group are connected by the locale. The group brings together diverse professionals. If you have not considered connecting with people in Boulder Net group for a professional conversation it is time now.

The Next Milestone 400 Members

The Boulder Net LinkedIn group has now reached 400 members milestone. Join the group to collaborate with professionals who are local to you. If you are thinking of relocating to Boulder, network now with local professionals to ease your move.