Bored Marketing Idea #1 - Fast Food French Fries

McDonald's might be the most popular of the bunch, but fast food burger operators know that the quality (and uniqueness) of their french fries will be a motivating force for repeat business.

I've moved! To read the rest of the post, check out the article on my new site: zacksimpson.com.

Here's the specific french fry marketing idea post.

Thanks for reading!

Your Brilliant Marketing Means Nothing

Fun fact: all the clever marketing in the world won't make up for a shitty product or poor customer service.

Despite the best efforts of marketing, branding and advertising, an organization simple cannot overcome ineffectiveness within it's core competencies.

Although this would seem to be a common sense business ideology, many businesses fail to invest in product refinement and customer service training. Why is that?

How many companies can you think of who have made their service the marketing message? Off the top of my head: Southwest, Zappos...and that's about it without spending much time considering it.Want to guess where these companies rank in their respective industries?

Modern Consumers Demand Satisfaction

Our world is globally connected. We carry the power of the internet in our pockets. It is simply too easy for consumers to find your competitors if you do not provide them the service they expect.

What's more, they're more likely than ever to take to a virtual soapbox and decry your company. Why give them any reason to?

Companies must make money to exist, and I'm not suggesting businesses bow to the threat of virtual strong-arm tactics. However, most customer requests or complaints are usually well within the margin a business operates.

I used the example two weeks ago about Hainan Airlines and their shocking lack of customer service. I don't believe my requests were unreasonable (I was asking for their online quoted price over the phone, when their website went down), yet I didn't get my issue resolved, and I moved on to their direct competitor (Korean Airlines). It seems irrational that a business would operate in this way. What's more - I had heard nothing but POSITIVE things about Hainan Air. Perhaps it was an off-week for them.

To keep this short, businesses (particularly small to mid-sized businesses) need to invest more resources into their CRM, and in product/service refinement. If you sell ceiling tiles on the internet, invest in nothing but the highest quality tiles.

If you sell concert tickets online, then make sure customer relations management is a top priority. Positive customer experiences will lead to repeat customers, increasing their lifetime value. What's more, their virtual soapbox becomes their place to serve as a brand advocate. Which would you prefer?

The bottom line: Invest in strengthening your core competencies before opening up the marketing budget. If your customer experience is shoddy, you'll only do more harm than good by marketing to new consumers.

The Necessity of Understanding Customer Lifetime Value in Marketing

I wrote recently about online retail marketing after the recession, and since then, a thought has occurred to me: while the global consumer landscape is now different (expectations have shifted, etc), fundamental marketing research is still valid.

Today, I'm talking about the concept of customer lifetime value (CLV). In marketing, this means how much the average customer is worth to a business over the lifetime of the relationship between the business and the customer.

Of course, this is a highly variable thing, and not easy to calculate. It varies for each business type, industry and model. Contractual businesses (think real estate, subscription-based companies like insurance, cell phone service providers) rely on customers to renew a contract on a periodic basis. The reverse is called customer migration. Either a customer buys Product A from a business, or they do not.

If a customer doesn't renew a contract with a subscription-based company, they are considered lost. If a customer doesn't purchase Product A from Customer Migration Business A, they still might in the future. Determining the CLV metric for each business type is quite different.

In my opinion, drilling down CLV for customer migration businesses is much harder, as the marketer is not always certain when the relationship is over (from the customer perspective).

Once a business understands its CLV, it can use this metric to determine how much investment to make on customer acquisition, per customer. Example:

Ted's Toys Co. sells toys, and on average, customers spend $185 over the course of their relationship with the company. Marketer Jane from Ted's Toys knows that their products have an average 30% profit margin. This means, of the $185 spent per customer, $55.50 of it is profit for the company. Therefore, Marketer Jane must spend less than $55.50 to acquire each new customer, for the company to remain profitable. The lower she can get that number, the more profitable the company is.

Customer lifetime value is considered a long-term metric. It's not used for short-term goals, and generally emphasizes customer service and customer satisfaction as key barometers. Since we know that customer purchase behavior and expectations of value are now greater, CLV goes hand in hand with marketing to our post-recession world.

Teach CLV, Or Lose Business

This week I was shopping for a round-trip plane ticket to Beijing, from Las Vegas. This isn't the first time I've been to China, and it probably won't be my last. I had done some research since my last trip, and had discovered Hainan Airlines. From what I've read, Hainan Airlines is an exceptional company. They are rated 5-stars by some publications, and the customer reviews I've read are largely positive.

With credit card in hand, I visited their website to purchase my plane ticket. Except, their reservation system wasn't working online, and I only received error messages. No problem…I called their 1-800 number. However, when I tried to make the exact same reservation over the phone, I was quoted a price 40% higher. When I expressed shock and mentioned the price on the website, the agent advised me the higher price was the best she could offer.

I got off the phone and sent a friendly email the customer service department of Hainan Airlines, expressing my disappointment in my experience. I said I had heard good things about the airline, that I was a ready-to-buy customer, and could they honor their online price. I even included a screenshot of their online quoted price.

It took about 24 hours, but I received a response, inquiring about my contact number. I responded with my cell phone number, and promptly called the manager who had sent me the email. Voice mail; message left. No response. I sent a message to their Twitter account. Nothing. I waited two more days, and opted to make my purchase with a different airline. Three days later, I still have not heard back.

The cost difference on the plane ticket was about $500 – significant to me. I have no doubt that if I flew on HA, my experience with the company would have improved, and I would make them my first choice when I fly to Asia. Surely that $500 has some margin built in to it. Surely the airline president would want my business at the online quoted price, if it meant I was more likely to buy again in the future.

This brings up several organization and marketing points:

• Marketing and customer service need to work hand in hand to understand each other.
• Marketers should be aware of common objections and front-line CS staff should understand CLV and be given leeway to assist customer acquisition.
• Concepts like CLV need to be organization-wide knowledge.
• Maybe it’s not necessary for shipping personnel to know what CLV is, but maybe Joe Boxmover has a brilliant idea for packaging coupons? Innovation can come from anyone, and SHOULD be encourage throughout the organization.

Bottom line: Understanding key business metrics, like customer lifetime value, will help online retail marketers make better investment decisions in customer acquisition and retention.

Stock Follow-Up from May 2009

I was re-reading some of my old investment articles (it's still something I believe in very much), and I decided share what the results were from some of stocks I had picked.

First, let me say that I am not at all an expert at this stuff. I dabble for personal pleasure and my own financial gain, but I make ZERO promises anything I say about stocks will pan out. These are just musings.

With that said, let's turn to my post from May 1, 2009 titled "Are the Stock Markets Downward Ho?". This was May 2009 - of course they were!

At the end of my rambling, I highlighted a number of stocks I owned or was interested in. These included: AUY, VGZ, TGB, MPEL, GSI, EPD, AOB and GLBL. I also mentioned ITLN and ACTU, but they are no longer traded.

My worst performer was easily AOB - American Oriental Bioengineering. It's a Chinese pharmaceutical company, and I (thankfully) sold the stock a while ago. Since May 13, 2009, the stock is down 52%. Ouch. I managed to sell long before that, but my predictions about a populous increasingly turning to medicines has so far been wrong.

Apart from AOB though, I've managed to do quite well. Taseko Mines (TGB) has managed to reward me beyond my dreams, and is up nearly 570% since my post! We had a bit of a snafu in October when the Canadian mining company lost on an environmental concession, but things are back on track now.

Similarly, my bet on gold has panned out nicely. I thought Vista Gold Corp (VGZ) and Yamana Gold (AUY) looked attractive, and they've grown 108% and 32% respectively.

I've been generally disappointed in General Steel - a Chinese steel company - but it's still up 22% overall. However it is down 62% from it's high over a year ago, and I feel like the market may be missing something here. Or maybe *I* am.

In 2009, I felt strongly that the oil and gas industry still had some real strength to it. I picked a couple two different players in the field: Enterprise Product Partners (EPD) and Global Industries (GLBL).

Global has exceeded my expectations, growing 228% since May '09. However my real love has been Enterprise Partners. It hasn't grown quite like Global, and the stock is up "only" 135% - but it's the dividend I love. Since May of 2009, EPD has paid out $4.51 per share in dividends to stock holders. The best part? The amount has steadily increased each quarter - from 54 cents/share to now 59 cents. It's really hard to be upset with that.

Lastly we come to Melco Crown Entertainment (EPD). This one is my baby. It's the second stock I ever purchased and it's one that I believe in for many decades to come. Melco operates a couple of high-end casinos on the Cotai strip in Macau. It's one of only six companies who has a license to do so, and their City of Dreams facility is arguably the most grand.

Despite some ups and downs, Melco is up 199% since May '09, and I will probably hold onto this one for a long time. Of course, I plan on holding on to most of the stocks I own, unless I'm ready to liquefy or the fundamentals of the company change.

So I suppose the moral is to pick companies you believe in, and hold on for the ride.

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Online Retail Marketing in a Post-Recession World

In our post-recession economy, it's becoming increasingly important to seek efficient, profitable growth and adapt to changing consumer behaviors.

From a marketing standpoint, it's unlikely that past methods will yield efficient returns on spending. The downturn has fundamentally changed consumer expectations in a lasting way. Tricks and gimmicks are a thing of the past – replaced with an expectation of product quality and customer service.

These changes in consumer mindset will require online retailers to improve and adapt their efforts across each marketing channel, with a new focus on engagement with the consumer. Marketers must also increase the efficiency at which they spend their budgets and leverage key technologies to earn consumer loyalty.

The rest of the article can be found on my new site: www.zacksimpson.com/online-marketing-in-a-post-recession-world

I've moved just a few of the posts from this Blogger account over, and this is one of them. Thanks!

Conclusions drawn from Accenture research report.

The Next Hot Stock is In Your House

Being a successful investor means picking the right companies. Who could have guessed how big Microsoft (MSFT) would become in August 1987? Did you correctly predict Apple (AAPL) would explode upon the scene in July of 1997? Or how about General Motors (no longer GM, now GMGMQ)? Did you start buying put options four years ago because you saw the writing on the wall?

If so – then you’re probably wealthy beyond belief, and there’s little reason for you to be reading this.

But if you’re like the tens of thousands of people out there, from their early 20s to their late 70s, who would like to do something with their money, but haven’t a clue where to look, read on.

When I first started investing, roughly a year ago now, I was simply sticking my paychecks and tips I was earning as a waiter into an account with Sharebuilder and trying to read up on the latest hot-stock trends.

I didn’t know any better – most of us don’t! If we get a phone call from some brokerage firm telling us that stock XYZ will double in price in the next two months, but we’d better hurry, some of us might buy! (Note: I didn’t buy Helix Wind (HLXW) when Bellwether Research called me, pitching that stock).

After all, what’s the option? Learn about the stock markets and investments?! That sounds incredibly boring – right?

Wrong.

This isn’t just your money we’re talking about. The money only represents the hours you put in at the office, or the time at the construction site. The money represents the years you spent furthering your education, or the years you spent working to support a young family. Your money isn’t what defines your life…but it’s a representation of your efforts.

You owe it to yourself, and your future financial stability to learn at least a little about personal investments. I’m not saying that everyone should manage their own money. Most people (including myself) don’t really have the time that it would take to nail down all there is to know. But before you blindly hand over your hard earned cash to a money manager (think Bernie Madoff), take a little time to read up about the markets.

Where to Start

I didn’t know jack about personal investments when I first started buying stocks. The first company I put money into was actually several years ago, and it was a real estate investment trust (REIT). The company, whose original name no longer exists, is now called Bimini Capital Mangement (BMNM) and I have lost about 96 percent of the original $85 I originally put in. Whoops!

Fast forward to summer 2008, when I was earning “real” money and wanting to invest it for the future. I spent a bunch of time on the Motley Fool website, picking through the latest top picks that the Fool and its members were recommending. I settled on Melco Crown Entertainment (MPEL), a Macau-based casino company as my first investment.

And then all hell broke loose. That first investment was only about $600, but we all know what happened to the stock market in the latter half of 2008. Suffice to say I was a bit surprised, but still determined to make investing work for me.

If you go back and read some of my older posts, you can follow along as I’m buying into other companies and adding to my positions, even throughout the worst of the recession.

These days, those original investments are pretty much even. Some are down a few percentage points, some are up a few. But that wouldn’t be true if I hadn’t continued to add to my positions when the price dropped.

I haven’t picked the next Microsoft or Apple, but along the way I learned something about investing.

The Goose with the Golden Egg is on Your Nightstand

I read all about Best Buy (BBY) on the Fool website, but I hadn’t ever purchased the stock. Anyone who knows me very well knows Best Buy is essentially my biggest weakness. I can’t enter those stores unless I leave my wallet in the car! But even though I loved the stores themselves, I hadn’t translated that into owning stock – owning part of the company.

In November of 2008, Best Buy hit a 52 week low of $16.42 a share. Today the company is trading at $32.08 – nearly a 100 percent return, despite the ongoing recession.

I didn’t buy into the company then, and I still haven’t yet – buying my house is consuming most of my money these days. But I’m still keeping an eye on the company. The stock is still 34.5 percent below its 52 week high, and I still believe in their business model.

Let’s look at another company I know and love - Hewlett-Packard (HPQ). I have owned an HP computer exclusively for nearly a decade. I personally have never had any problems with their computers, be it a desktop or a laptop (I’m typing right now on an HP laptop). But even though I knew all about the company, and I used and loved their products, I have never bought any of their stock.

In November of 2008, Hewlett-Packard was trading at $29.34 a share. Today the company is trading $37.85 a share – a nice 28 percent return. There have been two dividend payouts from the company, for 8 cents/share as well.

I haven’t bought into HP yet, although I’m keeping an eye on them. I don’t believe in Dell, and no one I know that uses a Dell likes the computers. The mainstream isn’t going to buy an Apple, simply because most don’t know how to use a Mac – plus they’re significantly more expensive. Sure, there’s Lenovo, Sony, Acer, etc. for competition, but HP has a good share of the public mind. Plus the current share price is still 23 percent below its 52 week high.

Okay, one more example, just to prove a point.

How about the auto industry? We all know that the Big 3 American manufacturers have been sunk by the recession. Chrysler, GM and Ford have all been hammered, and even the foreign manufacturers have been hit as well. It’s a terrible time to own vehicle stock, right?

Not so fast…

I have never owned a Honda. My first car was an ’84 Mercury Grand Marquis, followed by an ’84 Oldsmobile and then a ’02 Nissan. But I have long been a fan of those cars and their reputation for being incredibly long lasting.

Oh, and they get notoriously good gas mileage too – right? In fact, whether you’re a diehard Ford person or not, have you ever really heard anyone complain about their rice-burning Honda? I know I haven’t.

But even though I liked the company – and I’m looking at a Honda for my next car purchase – I have never translated that into owning part of the company.

In early December of 2008, Honda (HMC) hit a 52 week low share price of $17.35. Today it trades at $26.30 – almost a 40 percent gain! And dividends? You betcha! There have been two dividend payments from the company since then.

So What’s the Point?

My point is that your best bet for finding quality, sound companies to invest in are to investigate the things you use and love in everyday life.

Are you glued to your iPhone? Then maybe you should buy Apple stock. Or maybe you could do a little research and see that there’s a small cap stock called Arm Holdings (ARMH) that makes the microprocessor going into every single iPhone, along with a slew of other leading phones. You would also see that Arm Holdings is up almost 75 percent since January 2009.

Are you, or is your girlfriend/mom/wife a huge fan of Coach (COH) handbags? Do you hate shopping at the mall while dozens of girls pawn over the latest Coach this and that? Are you amazed that there is never an empty seat to rest because other guys are impatiently waiting on the women in their life? Then you may want to look into Coach as an investment. The stock is up over 91 percent since November 2008!

Do you have wireless internet in your home or apartment? Chances are if you do, you have a NetGear (NTGR) wireless router. NetGear is usually a bit more expensive than competitor Belkin, but the company is better known and generally more trusted (I own a NetGear router too).

Guess what? Since October 2008, the stock is up almost 65 percent.

I could go on and on with examples, but I have other things to do with my Fourth of July weekend. I hope this illustrates to you that searching for the next great investment, and next year’s hot stock, doesn’t have to mean combing through piles of financial reports.

Take a look at your life. Who makes that toothpaste you love? Johnson & Johnson (JNJ) - up 21 % plus dividend). Where do you pump your gas? Exxon Mobile (XOM) - up 21% plus dividend). How about your snazzy new LCD TV? Sony (SNE) - up 61% plus dividend.

The next hot stock may already be in your closet/kitchen/bathroom, waiting for you to uncover its potential! Starting looking and start investing in your future!

Why Small Cap Stocks?

In investing, you'll run across companies that are considered "blue chip", "large cap", "small cap" etc etc. In basic terms, this has to do with the financial size of the company.

Cap is short for capitalization which is a measurement of economic size and is equal to the number of shares outstanding times the share price. For example: at closing time on July 19, Verizon (VZ) had a share price of $29.66 and 2.84 billion shares outstanding giving it a market cap of $84.25 billion. This is a large cap company.

So why do I try to look at small(er) capitalization companies?

Potential.

Much like the 10 year old with a 38 inch vertical has a lot of potential in high school basketball, a good small cap company has a lot of potential going forward as well.

Plus, basically every large cap company today once started out as a small cap. Let's look at Ford Motor Company (F).

While the American auto-makers, including Ford, have certainly seen their market cap fall in the past year, Ford's market cap as of market closing on July 19 was $18.15 billion. Compare that to 1982 when Ford was merely a $815 million company. As you can tell, that's quite a difference - a nearly 700 percent difference!

That's not to mention Ford's peak in 1999 at $73.02 billion. Every $100 invested from January 1 1982 when Ford was a small company would have returned you over $5000 if you sold in early May, 1999. That's the kind of potential a small cap has!

So do you think you'll ever see 5000 percent gains from buying Microsoft (MSFT) and Apple (AAPL) stock these days? Dream on. While both companies have earned great returns for their investors over the years, you won't see enormous wealth growth from owning Microsoft stock.

To really pursue growth, you have to uncover the small stocks with great potential.

Let's start with a basic definition. Small cap is roughly between $250 million to $1 billion. The edges on that definition can be blurred a bit, but that will give you range to start with.

Let's look at Research in Motion (RIMM), the maker of the BlackBerry devices. In early 1999, Research in Motion was a small cap company with a market capitalization of $490 million. Today RIMM has a market cap of $44.22 billion, representing a return of over 3800 percent. Yes - for every $100 invested in early 1999, you'd now be sitting on $3800+.

Of course investing in small cap companies will open you up to more risk than investing in the sturdy stalwarts like Microsoft, Johnson & Johnson (JNJ) and General Electric (GE). But you won't see the potential for big returns with said companies.

Not to mention, guess where Microsoft started out in 1986? Yep - a small cap! It's simply risk versus reward.

Investing in small caps works best if you have a longer investment horizon - hence why I suggest getting started young. Being younger, I have (hopefully) many more years of earning and investing in front of me and I can rebound if an investment takes a dive.

But to truly ride an investment out of the park, you'll have to dig around a bit. Simply throwing money at a company because their current market cap is $300 million won't do you a lick of good.

Find a small cap company with good fundamentals like a dedicated and invested management/ownership team, a strong balance sheet and good forward earning potential. Only then can you hope to turn $100 into $23,000+ like the early investors in Microsoft have.

These days I'm investing in a number of small and large caps. It's always wise to keep some money in a safer, more stable company like Microsoft, Johnson & Johnson and General Electric (I don't own shares in any, but not because I wouldn't like to). But you should keep some money ready to pounce when you find a small cap company that you like and which has potential.

So why small caps? Because I don't want to work all my life, and with that kind of potential, I may not have to!

*Note* All historical market cap information came from using the WolframAlpha engine. I had a heck of a time trying to dig it up otherwise.