The Pit - IMI Trust

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!

Approximately 4 years ago I was looking at Corus Steel shares on the London Stock Exchange.  They were at the very low price point of 9p per share.  Earlier in the year they had been down to 5.5p.  Analysts believed then the company was going to go bust because there was little demand for steel in the market.

As Corus was the new identity of the formerly government-owned British Steel I believed that it was unlikely to go bust as the government would step in at some point if the situation got really bad.

I then moved house, moved country, started up in a different industry, spent some time with my wife and forgot all about the stock.  I was planning on a Buy and Hold strategy especially for stocks who have been affected by bad news.

I was browsing the newspaper today and lo-and-behold, Corus caught my eye.  As at close of trading 10 January 2007 it sat at 536p.  A 59.5x appreciation or a 5950% rise in that time.  My ‘dipping-the-toes’ investment of approximately $12,000 would have been worth around $800,000.

March 21 2003 - Corus Group - 9p. 
January 10 2007 - Corus Group - 536p.

I really should have bought shouldn’t I?

“Microsoft is the only company in the world that removes features to create a great new product”

- Anon

Da Vinci Code was one of the highest grossing movies of 2006 and it came from one of the best selling books in the last 30 years. However, this post is more to do with the man and than the Dan Brown legacy.

It is a quick guide as to what made Leonardo Da Vinci, a man that will be remembered throughout time.  He was always considered a great artist but few have ever viewed Da Vinci as a businessman… and yet he was exactly that.

Leonardo was a genius in many different ways. He was an inventor, an artist, an engineer, a scientist and a brilliant sales person.  The Mona Lisa is one of the most famous paintings on the planet and a priceless piece of art. There are so many things that could be written about Leonardo Da Vinci but we will focus on his incredible ability to sell and market himself.

To fund his work, Leonardo had to generate an income which would be able to pay for himself, his students and his side projects in which he would work on.

Da Vinci knew exactly where to go. He went to the “Warlords” of his era and propositioned them. His idea was simple ‘Go where the money is!’ Now you may ask… how does an artist get a gig with power hungry and ruthless “warlords”?

It is recorded that one of his employers killed his own brother, committed incest with his sister and would regularly poison his dinner guests. A meal to savour to say the least. This man was the most hated, feared and envied man of his time and known for his bloodthirsty mentality.

And beside him, working for him was one of histories greatest men. Imagine one of Adolf Hitlers artists being regarded, as one of the greatest that ever lived. This same man was that deluded, that he would hire historians to search his bloodline, to prove he was from the bloodline of the Gods.

Leonardo was smart… he knew what the “Warlords” valued and he gave it to them. Leonardo would not pitch them on his ability as a painter. No… He would pitch them on his ability to create War Weapons and then artwork which would appeal to their Vanity.

He was able to satisfy some very powerful motives! He was able to satisfy the desire for Power, Wealth, Social Status and through his art… vanity.

He also created for his employer one of the most powerful tools he could ever offer a war lord. It was absolutely revolutionary for his day. This tool came in the form of a detailed and exact “MAP”. This gave his employer vision and power… and for Leonardo… it gave him money!

He would play stage manager and conductor to some of the greatest parties of his era. He became renowned throughout the wealthy and powerful as the master orchestrator of parties.

He moved to Venice… a city of new money at the time and also a city in crisis.  Leonardo used this opportunity to sell his invention - the idea of an underwater army complete with armour. Yes… the first recording of the idea of scuba diving equipment.

He used his ideas and art to generate income, as well as to protect his own interests! This idea was far fetched, but studies today on some of his exact designs have been tried, tested and proved to be successful.

What was brilliant about this is that without his ability to promote his services, he would not have garnered the reputation he did. The interesting thing is that Leonardo was completely against war, but yet he designed some of the most brilliant war weapons. He designed the first tank. Something which was not first used until WWI.  Now this was not designed to be a motor powered tank, but a man powered tank! His design is ingenious! It wasn’t until World War I, that a tank would be designed and used in a war.

This work allowed him to fund his studies into nature and the human body! More then that, it allowed him to create art pieces. Whilst working for the Vatican during the day, Leonardo would be performing autopsy’s in the evening. One of his discoveries was that the aging process was linked to excessive nutrition of the blood.

This finding is what we know today as cholesterol.

The ability to promote your service is a powerful skill. The ability to market your services and products determines how your clients remember you. Sometimes… you need to sacrifice for the sake of your long term vision, exactly as Leonardo did. Leonardo always tried to make sure that everything he did, generated a uniqueness.

Even though he painted objects, scenes or portraits which had been done many times before… Leonardos unique touch would not be rushed, and would have him known by millions of people after his death.

So as business owners, how can we make what we do unique?
How can we have our clients remember us?
Do we create grand ideas and grand plans but in the background put together lots of small jobs to make it all work?
How can be satisfy the desires of our cleints through our business and through our website?
What are some of your ideas about how you build loyalty with your clients?

These are all modern issues and Leonardo Da Vinci had it figured nearly 500 years ago.   

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.

The newspapers and investment magazines around Australia seems to be hooked on trading CFD’s (Contracts For Difference) on the ASX (Australian Stock Exchange). Actually, there is very little editorial coverage of the CFD ‘phenomenon’. Most of the ink is on advertising the platforms on which to trade this relatively new instrument.

An analyst on CNBC claimed that approximately 50% of trades on the London Stock Exchange are CFD trades now dwarfing all the other instruments in the multi-billion dollar derivatives market. Australian investors are trading just a fraction of that number but the figures are anticipated to explode over the coming months.

Because of this, many players are scrambling for market position. How do you get ahead when there are so many people vying for market share?

We have recently been engaged by The Sharemarket College to assist marketing the SMC Trader online trading platform. One of the challenges we have is competing in a very competitive market.

A few months ago at the Melbourne Traders Expo there are booths 3×3 in size with companies all attempting to sign you up. As an investor how do you choose which CFD provider to go for?

The Sharemarket College is fortunate enough to have a brilliant product that offers investors state-of-the-art tools to facilitate their investment. In addition, they have over a decade worth of testimonials from their clients that have been through their investment education courses. But how else can you appeal to the average investor?

Do you look at the advertisements in Personal Investor, AFR Smart Investor and Intelligent Investor and think ‘That deal looks good, where do I sign up’? Do you read the ‘advertorials’ in Wealth Creator Magazine or Your Trading Edge and think they contain the right information to make an informed buying decision. Do you ask the man standing in the middle of the Sydney Investment Expo wearing an ‘I Hate CMC Markets’ T-shirt what his opinion on who’s the best CFD provider? I don’t think he will be trading CFD’s with CMC.

As an investor, the choice can be difficult. As a CFD provider trying to claim ‘that’ investor, the road is even more treacherous.

IG Markets, judging by their front-page advertisement on the Australian Financial Review, are offering a good deal. Low commissions on trading they advertise. Low commissions sound good but you’ll find that the discounted rates only apply if certain trading criteria are met. They are making a cut somewhere that’s for sure. They have to. That one advertisement would have cost around $15,000.

There are a dozen other entities all trying to earn your dollar and most show great examples of how NOT to go about your marketing. If you ever want to see poor marketing in action, you will commonly find these two elements.

1. Reduce trading commissions.
2. Throw amazing amounts of money at blanket marketing which offers no real benefits, but mentions your discount trading.

Sounds similar to the IG Markets marketing plan. Effective? Probably. But it may not be as efficient as it should be.

Other domestic players like Macquarie, Sonray Capital Markets and Tricom use a more corporate model. Day trading, online trading, full service brokerage and whitelabelling and referral plans. This is in own right is effective and profitable but they want a slice of the ‘mum-and-dad’ pie too.

The CFD trading revolution has fully hit Australia. Funnily enough, the centre of global trading, the US, doesn’t allow its citizens to trade CFD’s. The rest of the world can trade CFD’s on the New York Stock Exchange and Nasdaq with no problems.

And we will… The Online Trading industry in Australia is going to massively expand over the next few years. CFD’s are going to play a major role in that expansion and we look forward to enjoying the ride.

We’ll be working on promoting the SMC Trader until the end of 2007 so we’ll definitely give you updates on how it goes. If Commsec and ETrade, start issuing statements that they’re numbers are falling then assume we are doing well.
That should happen anyway as both are really limited in both functionality and product offerings. It’s true.

To view the SMC Trader go to http://www.smctrader.com  and to view the SMC Cafe, where traders meet, go to http://cafe.smctrader.net  

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.

With all the popularity surrounded the Davinci Code, we thought this would be a post most would enjoy.

This has nothing to do with anything regarding the movie, but it is designed to guide you through what made Leonardo Da Vinci, a man that will be remembered throughout time.

I do not believe I have seen anyone refer to DaVinci as a businessman… and yet he was!

Leonardo was a genius in many different ways. He was an inventor, an artist, an exhibitionist, an engineer, a scientist and a brilliant sales person.

The Mona Lisa is one of the most famous paintings on the planet, and is a priceless piece of art. There are so many things I could write about Leonardo Da Vinci, but I want to stick to his incredible ability to sell and market himself.

To fund his work, Leonard had to generate an income which would be able to pay for himself, his students and his side projects in which he would work on.

DaVinci knew exactly where to go! He went to the “Warloards” of his era and propositioned them. His idea was simple ‘Go where the money is!’ Now you may ask… how does an artist get a gig with power hungry and ruthless “warlord.”

One of his employers killed his own brother, committed incest with his sister and would regularly poison his dinner guests. A meal to savour to say the least! This man was the most hated, feared and envied man of his time and known for his blod thirsty mentality.

And beside him, working for him was one of histories greatest men. Imagine one of Adolf Hitlers artists being regarded, as one of the greatest that ever lived. This same man was that deluded, that he would hire historians to search his bloodline, to prove he was from the bloodline of the Gods.

Leonardo was smart… he knew what the “Warlords” valued and he gave it to them! Leonardo would not pitch them on his ability as a painter! No… He would pitch them on his ability to create War Weapons and then artwork which would appeal to their Vainity.

He was able to satisfy some very powerful motives! He was able to satisfy the desire for Power, Wealth, Social Status and through his art… their vainity.

He also created for his employer one of the most powerful tools he could ever offer a war lord. It was absolutely revolutionary for his day. This tool came in the form of a detailed and exact “MAP”. This gave his employer vision and power… and for Leonardo… it gave him money!

He would play stage manager and conductor to some of the greatest parties of his era. He became renowned throughout the wealthy and powerful as the master orchestrator of parties.

He moved to Venice… a city of new money at the time and also a city in crisis.

Leonardo used this opportunity to sell his invention (the idea of an underwater army complete with armour). Yes… the first recording of the idea of scuba diving equipment.

He used his ideas and art to generate income, as well as to protect his own interests! This idea was far fetched, but studies today on his exact designs have been tried, tested and successful.

What was brilliant about this is that without his ability to promote his services, he would not have garnered the reputation he did. The interesting thing is that Leonardo was completely against war, but yet he designed some of the most brilliant war weapons. He actually designed the first tank. Something which was not first used until the first world war.

Now this was not designed to be a motor powered tank, but a man powered tank! His design is ingenious! It wasn’t until World War 1, that a tank would be designed and used in a war.

This work allowed him to fund his studies into nature and the human body! More then that, it allowed him to create art pieces which are now recorded in history. Whilst working for the Vatican during the day, Leonardo would be performing autopsy’s of the evening. One of his discoveries was that the aging process was linked to excessive nutrition of the blood. We know this today as cholesterol.

The ability to prmote your service is a powerful skill. The ability to market your services and products determines how your clients remember you. Sometimes… you need to sacrifice for the sake of your long term vision, exactly as Leonardo did. Leonardo always tried to make sure that everything he did, generated a uniqueness.

Even though he painted objects, scenes or portraits which had been done many times before… Leonardos unique touch would not be rushed, and would have him known by millions of people after his mortal death.

So as business owners, how can we make what we do unique? How can we have our clients remember us? How can be satisfy the desires of our cleints through our business and through our website?

Leonardo mastered this nearly 500 years ago!

What are some of your ideas about how you build loyalty with your clients?