Slashing prices is the only way to incentivize your customers and compete against the mass merchants and chain stores, right? Look at Starbucks and other coffee shops for the answer. When was the last time they held a sale on coffee? They don't have to, and neither do smart photo specialty retailers. Price wars are designed by unimaginative marketing combatants.
Marketing studies identified that a one-percent cut in price reduces operating profits by eight percent. So when we base our photographic imaging services on value, rather than on what the cost of goods are, we create higher profits.
Many suggest that independent retailers are under assault from the big-box stores. But it is the latter who have long supply chains and many middlemen. While their buying power is considerably greater, rather than being more efficient, they have broader expenses. Today's new imaging technologies enable us to wreak havoc on the big-box chain stores' business model. Our fractional infrastructure investments and Internet online ordering presence enable us to level the playing field.
Digital output, like prints from film, is an art, not a science. It requires trained specialists rather than clerks who just learned how to operate the lab equipment earlier in the day. Customers should be able to order online, get in their car and pick up the completed order within moments, not hours or days. The chain stores inherently lack viability with customers, which is to our benefit. Constant technological shifts cause them to fumble and often take months or several quarters to notice results; look at Phogenix and a three-year, one-hundred-million-dollar mistake. They analyze, research, deliberate and ponder, while we act and change on a dime. We've survived the double onslaught of economic woes and mountainous technological changes, and we can also seize on our expertise to take on the chain stores as well.
To paraphrase a Chinese proverb: The person who says it can't be done (that photo specialty retailers can't compete against chain stores) shouldn't interrupt the person doing it. This should be a lesson for us all. Here's how to do it:
Recipe of 18 Magical Ingredients to Take on the Mass Merchants:
- Create Value and Do Something Special. Imagine including a spiff within each order, much like the surprise included within a box of Cracker Jacks. We add Hershey's candy bars, gift cards to Starbucks and a host of other treats within larger online orders. The word-of-mouth value from a five-dollar gift card to Starbucks is worth hundreds in free advertising.
- Coalition Building. Reach out to special groups by offering complimentary 5x7 enlargements for charitable golf tournaments and sponsoring community events. An example is the emerging segment of my business, which involves celebrities and well-known political leaders who use our confidential online photo services. Example: During a recent gala event for California's Governor Schwarzenegger at the Century Plaza Hotel in Los Angeles, I was collecting one-time-use cameras from guests, including from U.S. Congress members. My reputation for having the governor as a client preceded the offer to process their pictures. The next morning their completed orders were e-mailed back; their photos and custom enlargements posed with the famed governor were printed and in the mail. They trusted me because all along professional photographers were also shooting those handshake poses that afterwards are transmitted to our secured online digital service at www.30minphotos.com.
- Get Personal. Do your homework on new customers. If a wedding photographer comes into your lab, check out their website to learn about their specialities. Make sure you comment on what you notice. If they specialize in sloppy borders or black-and-white portraiture, mention how you can help them. Are they experts in a certain area, such as in event photography? If so, let them know that you will refer clients seeking that specialty.
- Get Emotional. Tell a story and make people laugh. Large companies are known for having considerable egos, being bland and not listening very well.
- Use Your Products. Rather than having a copy shop print up paper flyers, use your lab and digital department to create eye-popping, four-color, glossy 4 x 6-size photographic sales materials. Insert photographic promotional pieces within each order to promote your portrait studio, scanning from slides to CD services, online ordering, etc.
- Know Your Business. If Smith Corona thought itself in the business of word processing, it would be around today as their business evolved from typewriters to computers. We are more in the communications business today, rather than just being a photo lab or camera store. Today your business includes film and digital output from kiosks, Internet and in-store services; tomorrow, camera phone Wi-Fi technologies will broaden your services.
- Read. Keep your head out of the sand and take threats from the competition seriously. Always be many steps ahead of them. You should be constantly learning and surfing the Web for new trends.
- Stick to Your Principles. While some online direct mail services-void of a retail operation-are slashing prices by 40 percent, you should ask the question about whether their business models are viable.
- Selling Is an Art. When you control the agenda, you dominate and champion your services. Think of the implied value of a work of art. The price really has more to do with the presentation and skills of the curator. The atmosphere, gallery design and expert communication skills enable them to demand a higher price.
- Brag and Toot Your Achievements. Rather than telling people you meet that you own a minilab, embellish by explaining you are the founder of a national Internet business-which you are if you have an online photo service presence; your orders should be coming in from across the nation. When The Chicago Tribune wrote an article profiling www.30minphotos.com, we let our national customer base know. From The New York Times to local media coverage, we always use the exposure as an opportunity to share the news with our customers and thank them for being part of such an entrepreneurial success story. We make our customers know they are valued and part of the magic.
- Public Relations. Be in constant contact with your customers via e-mails with opt-out management software. Let them know more than just your latest sales pitch-send advisories and sizzle brimming with information on taking better pictures and how to improve the results from their digital cameras. When you read industry-related articles, contact the reporter and provide commentary. I first became an imaging industry expert and source for entrepreneurial news over a decade ago because, quite simply, I said I was one. Soon, financial market-makers covering Kodak and other public companies began using me as a reliable source for commenting on breaking news. The industry trade publications, business and consumer media all knew they could get educated, candid and unfiltered quotes 24/7 from me because I am always accessible to them.
- Become the Expert. Can you imagine a picture-taker handing over their four- or eight-gigabit memory card to a clerk at a chain store? They comfortably give us their media cards but are reluctant to do the same elsewhere. Rather than fighting the customers who bought their digital camera online and then ask you to train them how to use it, embrace the opportunity to win them over. Earn their business for prints-from-digital, capture their e-mail address and sell them accessories, frames and supplies. Design banners advising: "Even if you bought your camera elsewhere or online, we are happy to teach you how it works…we're full-service and want to make you smile!"
- Publicize a Problem. Years ago, when the controversial musical rapper Eminem was big, we pulled our cable TV ads from the MTV Video Music Awards and contributed the 11 local spots to several groups who promoted tolerance and education. The exchanged public service announcements made national news and more exposure than our commercials ever would have.
- Social Responsibility. My company is nationally known for its commitment to diversity and inclusiveness within corporations. We have hundreds of Google links for our years of involvement. We take on many causes because it's our passion, but a benefit is that employees within the Fortune 500 companies we work with become familiar and cheerleaders for our involvement; in return, they become our advocates and refer people across the nation to order Kodak-quality photos online from us.
- Hot Trend-Setter. Find special niches to differentiate and support local community events. When the legalization of gay marriage became international news, we were the first (and still only) national online photo service marketing directly to the GLBT community.
- Differentiate Your Services with Higher Prices. Think of the perfume, automotive and spirits categories-the more expensive the price, the more exclusive and in demand are their products. It is about perception and image. The value of a $750 bottle of Chateauneuf du Pape Hommage a Jacques Perrin is much different than a two-dollar bottle of Trader Joe's Charles Shaw wine. Coco by Chanel perfume is valued differently than the Costco Kirkland Signature alternative, and your product must be perceived as superior to the chain store's imaging services.
- Keep It Simple. Use the 80/20 rule to identify what your highest marginable items are and which services customers most often order. While the chain stores have thousands of SKUs, photo specialty retailers should identify what makes the most money and is most in demand.
- Become a Superstar. Everyone likes to link up with a celebrity and leader. Get onto the other side of the sales counter and become a community leader, get involved in organizations and treat your customers as an extension of your family to create loyalty and admiration.
If you have any ingredients you'd like to add, please let us know at email@example.com.
Mitch Goldstone, president & CEO of 30 Minute Photos Etc., also co-owns www.30minphotos.com. Goldstone is a city commissioner in Irvine, CA, and champions his dedication to promote the imaging industry.