The Pit - IMI Trust

This blogging thing seems relatively easy.  Every once in a while you post some commentary about what you want, the news of the day, some story you want to re-tell or just shoot the breeze about something banal. 

However, many companies that are adopting blogging are struggling to post.  They are getting writer’s block.  Is the subject worthy of commentary? Will readers laugh at my attempts at communicating?  Is there even anyone out there?

‘Blogophobia’ seems so prevalent that major corporates are paying bloggers thousands of dollars a month to write 3 or 4 posts.  To the average blogger that seems like a dream.  To a company, that seems scary that the going rate for a blogger is so high.  Well, there is an alternative…

PayPerPost is a start-up based in the US that is connecting writers with companies that need content.  Bloggers can get paid and companies can pay for content.  Blogger purists are turning there nose up at the idea that you can outsource such a personal form of communication.

For us, this is further evidence that you are able to outsource even the most minor of functions to free up time for yourself and the people at your company.  Many companies in Australia are still doing accounting, archiving, book-keeping, word-processing and other support functions all in-house. 

Companies choose not outsource these functions because they like maintaining control, however, by outsourcing these functions you can give each action a unit price.  A cost-per-word, the price per pdf, the record keeping costs all have unit value.  If you know that it costs $20 to process a document and you can be certain what you need to do to make the process profitable. 

And everyone likes profit…even bloggers.  Well most of them, anyway

Unless you have been hiding with the weapons of mass destruction this week, you would have noticed that Microsoft have released Windows Vista.

You have to love the hard sell. Not many corporates really do it to consumers anymore. Not Apple, not Google, not the oil companies, not the car manufacturers. They are all into the brand.  Microsoft have allocated US$500million to marketing their new operating system and it shows.  Come back Crazy Frog all is forgiven.

Actually, Microsoft, well done for bringing back blanket coverage in marketing and sticking it in my face everywhere I look. It is a good reminder as to why you are a $300 billion company.

The truth is the only companies persistantly doing the hard sell is the credit card companies and the banks. Can’t understand why they keep on announcing record profits.  Probably because if you put a product in front of a consumer that services a need then they consume it…

When I checked out the Microsoft site to read the Vista marketing, i was stunned to see 100 reasons as to why Vista is so great. If you were absolutely insane… that is perfect for you to discover all of Vista’s benefits. if you are a bit more human, they had the highlighted benefits. From a marketing perpective, this warmed my heart.

The truth of the matter is I am going to Harvey Norman, or similar electrical retailer, and ask for a PC that is loaded with XP.  I know for a fact they will be fire-sale-ing that stock so I can get one or seven really cheap.  That is only one reason but better than the 100 reasons Bill gave me for getting Vista. 

Experts have come out of the their holes to comment on Vista.  Us included. The reality is in 2 to 3 years time, we all know we are going to be using it. This should impact their share price of (MSFT) Microsoft significantly. Will its recent bull run continue until then?  Maybe.

PS. Bill, I dont care that you have copied Apple, nor do I care that they will release something even more impressive with Leopard. Which they won’t because I’m over operating systems named after big cats.  Just please be taking notes when they do. Look forward to my Wow beginning Now!

Henry Paulson, former CEO of investment banking giant Goldman Sachs and now US Treasury Secretary is the man that the US financial markets are pinning their hopes on to stimulate the market for US exports to China.  The US is in a massive hole to China in its balance of payments.  Consider…

• Most junk found in street markets is ’Made in China’. 
• Most middle-order and high-end, manufactured items that are commonly known as ‘US Brands’ are Made in China
• In the US market alone, Chinese investors have around $1trillion in US Currency

The US is not happy with this and want to redress this imbalance.   They believe in ‘Hank’, as he is known, that Ben Bernanke, Chairman of the US Federal Reserve has deployed a dedicated to team to facilitate this ‘mission’.  If Hank can’t do it, no-one can. 

Henry Paulson is known for his ties in China. His relationship with the Government and Corporate Enterprise, is seen as the fundamental reason Goldman Sachs has strong credibility in China. But there is more to it than that.  John Thornton, his second in command while at GS, was the first western business leader to take up a full-time teaching role in China.  Tsinghua University is China’s leading business university and is producing 1200 MBA’s per year.  These link led GS to be Lead Manager in the ICBC IPO and numerous other domestic listings. 

Goldman Sachs, is one of the only US companies freely doing deals in China. Obviously, George Bush noticed the respect he received with his Chinese dealings, all this without the rigmarole of actually having to go to war. 

The US want him to make the US position in China stronger.  The first step is to encourage China to float their currency, the Chinese Yuan, to enable the massive trade deficit to close.  China’s approach is ”We will… eventually!”.  Without Hank on the case, it would have been a definite ‘No’. 

Hank Paulson is a faciliator of business.  He realised long ago you can’t just ‘take’.  There has to be a balance.  In order to receive you have to give. Funnily enough, as the US consumer ‘gave’ for Christmas, the Chinese manufacturers ‘received’.

There are some huge tech success stories around the world.  Many that started with a few people with vision and now household names.

Steve Jobs with Apple Computer, Larry Ellison with Oracle, Sandy Lerner and Len Bozack were the brains behind Cisco Systems and Jerry Yang & David Filo made Yahoo! stratospheric.  More recently, Larry Page and Sergey Brin made Google synonymous with search, Chad Hurley and Steve Chen did the same with YouTube and Online Video.

All these companies have been helped along by the capital corporation with the midas touch, Sequoia Capital.  Without Sequoia Capital it is likely that Google and YouTube may have fallen to oblivion. They needed help to get off the ground.  Genius only gets you so far.  Money takes you to the next level. Not just money, but business acumen and experience in finding ‘the next big thing’.

Sequoia Capital have sunk money into many companies that have become hugely successful.  After searching on Google, you discover that 10% of the value of the NASDAQ is made up of companies which have had some sort of business involvement with Sequoia Capital.

They promote themselves as the entrepreneurs behind the entrepreneurs.

The world of capital raising can be highly lucrative and very risky. And many capital raising companies raise capital for the sake of taking a cut.  Sequoia Capital have backed their deep pockets up with great results.  They have ensured that entrepreneurs are able to grow their dreams.

How many Google’s have we not seen?  How many other tech nerds with a passion have missed out on a multi-billion fortune?  Without the seed funding, and without the business guidance, where are these guys today with Page and Brin and Hurley and Chen?

Behind every great success story there is a depth that is rarely explained or mentioned.  We see the end result, nothing else. Companies like Sequoia Capital make it happen.

The reason they are successful is because they are passionate and have a believe in the value of ‘The Idea’ and ‘The Culture’ underpinning the idea.  In business, the support is what you need to succeed.  That and billions of dollars.

Whether it occurred by design or coincidence it is hard to say but the Commonwealth Bank has a smart, new advertising campaign.  An advertising campaign that other companies have utilised in the past - Making good news out of old bad news.

Their current campaign highlights the fact that their staff ‘Open Doors’ and they are recruiting new staff all the time to help you.  This is, of course, great news for you as a consumer because you are probably fed-up with inefficient systems and long delays to carry out even the most rudimentary of tasks like paying in a foreign currency cheque.

However, what the advertisement doesn’t highlight is that the Commonweath Bank has presided over 20,000 or so job losses over the previous decade.  This reduction in staff numbers has served a purpose.  To create this ‘new’ era of job creation.  It works very well in the public eye as the average punter has no idea or want to find out about a company’s track record.

This strategy has worked with other banks around the world with Natwest and Lloyds Bank in the UK closing huge numbers of branches over the 90’s, that inevitably turned into glossy wine bars and eateries, and then, some time after, opened new branches with large advertising campaigns promoting the fact. 

Having worked in large financial institutions for the early part of my career I recognise the banking ethos of ‘Making Hay While The Sun Shines’ and ‘Cutting The Fat When Necessary’.  In periods of recession or slow growth, banks readily chop uneccessary, unprofitable arms and when they are profitable, the money they make they spend recklessly with huge bonuses, frivolous spending and increased staff numbers.

So, what is the end result for the consumer?  Nothing really.  As long as the end experience is the same they don’t care.  If it isn’t they notice and they may be motivated to switch to a different provider.

As a business owner, you should look to bad news in the industry or within your company to create opportunity and good news.  The banks have demonstrated how this is done and you can too.  It doesn’t have to be a monumental story, just something that is a point of difference for you and how it can be exploited.   And yes, the use of the word ‘exploit’ is deliberate…

Marriott International Hotels has annouced that its website Marriott.com will shatter its revenue record in 2006 by generating nearly $4 billion in sales.

The have a world-class brand and world-class facilities but thousands of other companies don’t have the online penetration they do.  How did they achieve these online sales?

Simply put, they have made the website compelling for the user to make a purchase.  Marriott have conditioned the user to make their purchasing choices through the website.  They have done this by having these features:

• Easy browsing of the website so users can pick dates, locations, iteneraries very easily
• Good photography of the locations so people can visualise each place
• Favourable rates from offline purchases
• A variety of different rates with different inclusions so there is no need to call an operator for ‘non-vanilla’ requests
• Immediate reservation / ticketing so there is immediate purchase satisfaction

All this and there is a great email marketing campaign where discounts are offered to hotels within your specified region and there is continual cross-selling and upselling of products that would interest you.  City and Destination Guides provide ample information for the location of travel and there are options to book events at your destination too.

Easy Decisions To Make

The consumer is armed with all they need to make the right buying decision.  There is no reason to phone to make an enquiry or go to a travel agent.  All the necessary information is at a click.  So people are comfortable with this system. 

The hotel booking service by Marriott has conditioned the user to believing their website is their main, and most useful, shopfront.  This is where the travel industry has go it so right with online airline ticketing is also massively popular.

Don’t be fooled into thinking that because you have a finance business or a florist or a funeral director that you can’t condition your users to think the same way.  Give them options and information to make their buying decision and they will. 

This is why online stock trading has become so popular.  Many investors conduct their own research and are comfortable making the trading decisions themselves.  They can do this because the end-to-end process is all covered online.  Technical tools, research, immediate pricing, comparison pricing and so on, is all immediately available to the user so they can make a buying decision. 

With the internet and your website the principles are that simple.

For as long as financial service providers have been operating there has been debate on fees.  The focus in the trade press has been on keeping fees ultra-low for the ‘public interest’.  To highlight how interested the public are Newspoll conducted a survey recently identifying that 60% of investors had no idea how much commission they pay. 

The current market sentiment is that fees they pay have to be low.  Fund managers, financial advisors and superannuation managers are striving to keep their fees low because ‘high’ fees are perceived to not represent value.  However, this philosophy is misguided.

Low fees mean that service, diligence, research, endeavour, expertise, good management and a host of other desirable qualities have to be sacrificed. 

The supporters of low fees, time and again, use the arguement that high fees erode returns massively in the future because of compouding and low fees give you, the investor, the service user, the client, more money in your pocket. 

This though is making the incorrect assumption that both services, the high fee service and the low fee service are delivering the exact same product.  They are not.

I Couldn’t Believe I Was Able To Buy A Convertible For Under $5000

We specialise in web and marketing for the financial services industry.  So here are a few questions about web costing. 

• Would you expect the same value or performance from a website that cost $1,000 to a website that cost $100,000? 
• Or a website that cost $100,000 to a website that cost $1,000,000? 
• Or a website that cost $1,000,000 to a website that cost $10,000,000? 

In all three cases the answer would be a clear and resounding ‘No’.  If you pay more money for more features, more scope and more functionality your results end up being a lot different.  In terms of marketing, here are a couple of other questions:

• Would you use your marketing budget to make one television advert that appeared once?
• If you answered Yes, how would you then market to people who missed that advert?

Again, with marketing you have to spend time and money on strategy, management and research to get optimum results.

How can a financial service provider operate with such restrictions?  They can’t.  Not well enough to for you to be confident that you money is being managed well.  The square peg doesn’t fit in the round hole in this instance.

And if you are the discount chaser and you want low fees, are you disappointed when the value delivered is low and performance less than expected?  You should be but really you only have yourself to blame.