Hacking hackers

I’ve been toying with the idea of expanding the subject matter of this blog, and I’ve decided to take the plunge. This week will be an exception, but on Monday-Wednesday-Friday I’ll take on business topics as usual. On Tuesdays, Thursdays and Saturdays I may slip in something else that’s on my mind.

I’ve been watching Sony’s troubles with the PlayStation Network with great interest. My business partners and I have no great love for Sony (They’ve vowed to put an end to the used game market, after all), but what’s been happening to Sony we wouldn’t wish on our worst enemy.

In case you haven’t been following it, Sony’s PlayStation Network (PSN) has been broken into by hackers, who shut down the site and stole a great deal of personal user information. It was later discovered that they had also managed to get into an obsolete database and get credit card information as well. Since then PSN has been hacked again at least once.

The reported cause for the attacks was because Sony has decided to sue a hacker who figured out how to hack the PlayStation 3 and then published the information for anyone to use.

A fairly lively debate has sprung up around this one our business’ Facebook page, where we’ve been posting regular updates on the situation. The issue divides out largely into two camps–those who believe that Sony had it coming and are completely at fault, and those who believe that the hackers bear the majority of the responsibility.

As I said, my partners and I are no Sony fans, but fair is fair. While it’s evidently true that the security on PSN was rather feeble, and it’s true that Sony are rather heavy-handed in their public relations, to blame them entirely for this attack is like blaming the victim of a robbery for failing to lock their door. Had the hackers not determined to do something that is very obviously illegal there would have been no attack, and no inconvenience for millions of Sony customers.

Now it appears Sony is considering offering a bounty for information on who is responsible for the attack. The anti-Sony crowd feel this is just more heavy-handed bullying, but I disagree. In fact I applaud their turning this around, if that’s what they do. They’d be fighting the hackers with a “hack” of their own, only this one attacking on a psychological level. Sony has enough money to throw at this to make the bounty worth picking up. It will likely be a race among the hackers to see who can rat out the others and collect the money. Just as the hackers exploited weaknesses in Sony’s security, Sony could exploit weaknesses in human nature and hacker personalities.

What the hackers did was illegal, and whatever moral high ground they felt they held disappeared when they started publishing some of the stolen personal information on the Internet. I cannot condone illegal means to punish even the most heinous (but legal) corporate behavior. And my personal interest in human nature, psychology, and public relations will be watching intently to see how this plays out over the next weeks and months.

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Marketing ideas from unexpected places

My mother recently came to see us for a few days. That same weekend my daughter had a dance performance in another town, so the three of us took the trip together. It was not a short drive, and it gave me a chance to catch up with Mom a bit.

My mother is, as any good mother, always concerned for her children, and I’m sure my employment situation has caused many of her gray hairs to double-down. To her credit, though, she doesn’t ask worry-loaded questions, but takes an active interest in what’s going on with my recent business venture.

Even your dog could give you good advice on occasion!

We got to talking about some of our varied attempts at marketing on the cheap, and she proposed an idea I hadn’t considered before: high school newspapers. I own a video game store, and while we’d considered (and rejected as too expensive) the local college paper, I’d completely forgotten about high schools.

I did some research and found out that advertising in their student newspapers is actually fairly inexpensive. We’re giving it a try this month, and I’ll likely let you know how it goes.

But the point is that while many people, when they know you run your own business, have lots of free advice to offer. Much of it is worth precisely that, but listen anyway. Some of them may have a perspective you don’t, and may have some legitimately good ideas to offer. And free good ideas are the very best kind!

Where have you found some unexpectedly good business advice in the past? Drop me a comment below and tell your story!

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Giving radio another try

I may have mentioned previously that when we first opened our store we paid for three months of radio advertising which, from what we could tell, didn’t accomplish much. We got some customers who mentioned they’d heard our ads, but largely it seemed as though we got more traffic from our sign out by the road. We dropped the advertising, figuring there were better places to spend our money.

We recently decided it was time to try again. But this time we discussed at length what we thought had gone wrong with the last attempt. For the most part we had to conclude that the station we had picked was not a good match for our target demographic. Male gamers between the ages of 15 and 35 are probably not listening to the pop station playing Katy Perry, Kee$ha, Justin Beiber, and the like.

So this time we made a concerted effort to advertise with a radio station that seemed to have worked well for a similar company my partners and I had worked for in the past. And it was an effort. Would you believe it was hard to get the station to come ask us for our money?

To their credit, once they did finally pay attention to us they hit a home run with a package that gets us exposure on two stations covering both our primary and secondary demographics for about half the price we were paying for the previous station. I was also a bit more reassured to see our account executive take an active interest in our studio session when we got our commercials ready for air.

So we’re once again giving radio a try. Our ads start airing on “100.3 – The X” and “105.1 – Variety Rock” this week. So if you hear any ads for VIP Gamestore, please leave a comment below and let us know. We’re very interested in seeing if we’re getting the coverage we need. Meanwhile, I’ll keep you posted on how it seems to work out from our end.

Have you used radio before in your business? What worked well? What didn’t work so well? Drop me a comment and let us all learn from your experience.

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Abundance thinking in business

As I mentioned in my last post, my business partner has a philosophy of helping the customer get what they want, even if it means sending them to someone else. I mentioned the positive impact it has on our customers and customer loyalty.

But there’s another benefit to it–our competitors often return the favor. Sometimes it’s because my partner has worked for those companies before, and they trust him. But even stores that don’t know us have become friendly as they’ve come to realize what we’re doing.

The abundance mentality is the opposite of the “pie mentality”, which says I can’t take a bigger piece of pie without yours getting smaller. The abundance mentality says there’s enough to go around, and growing all the time.

Is there enough for everyone?

Referring our customers to other stores shows them that we’re operating from an abundance mentality–that we don’t want our success to come at their expense. Rather, we view them as partners in the bigger game of taking care of the customer.

Not that everyone gets this. There are a few stores who seem to view us as a threat. We’ve had them get upset at us when we call to see if they have something, and refuse to tell us anything. We shrug it off, and still refer customers there, but as it’s a blind referral (not knowing if they do indeed have the item), I doubt the customers are likely to go there.

What’s more funny is that many of the competitors who do cooperate with us usually have no qualms about sharing information, even if we’re blatantly spying. We’ll call and ask them what they’re selling certain items for, and they tell us.

We don’t screen our calls, either. What’s the point? If they really want to know our “secret pricing” they can come over and look. Why not be friendly about it? In fact, one of our competitor’s employeesdoes shop our store regularly. We’ve got nothing to hide, and can talk shop for hours.

I’d go so far as to say this open, abundance attitude does wonders for our psyches as well. We don’t have to waste energy fretting over our competitors, because they’re not strictly competitors in our minds. Sure, we do our best offer our customers more when we can, but it’s hard to dislike someone who sends you business. Positive feelings toward your competition can be…well, liberating.

And, dare I say it, it makes for a more delicious pie.

What do you think? Are we crazy? Have you seen it work with your business? Leave a comment!

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“Macy’s sending customers to Gimbels! I just don’t get it!”

One of my business partners has an interesting take on customer service, which is one of the reasons I went into business with him. His take is nothing new–he and I both got it from “Miracle on 34th Street”. The idea is this: When you enter my store, my job is to help you get what you want, even if it means sending you somewhere else to get it.

And he means it. If we don’t have it, he’ll get on the phone or the internet and check with our competitors to see if they have it. If they do, he’ll refer the customer there. A majority of the time they do go elsewhere, though seldom without insisting that they’ll do all their shopping with us in the future.

"I don't get it! I just don't get it! Macy's sending people to Gimbels!"

But even more interesting are the customers who, knowing they can get what they’re looking for that very day, will nevertheless special-order it through us, even if it costs a little more. That is the power of customer service. Few things build customer loyalty faster than proving that they are more important to you than their money.

Have you had similar experiences with businesses you’ve encountered? How did you respond? Or do you think we’re naive? Drop a comment below.

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Computing in a cloud

I have to admit I’m somewhat ambivalent about cloud computing, in which a company’s websites, data, and applications can be spread out among several web servers across the internet.

In some instances it makes sense–most companies can’t afford their own data centers. My company, for example, pays a hosting service to host our website. We’re also taking advantage of some free data hosting sites to serve as an off-site backup for our critical data. This, however, is only an experiment at this stage.

Clouds

Is cloud computing a beautiful solution or a gathering storm?

You see, there are advantages to hosting your own sites and data. In my company’s case we’re probably too small to attract the attention of hackers. It’s the big companies they go after (such as Sony, whose PlayStation Network was knocked offline by hackers last week). And when you control your own data you know exactly what it happening with it and what you’re doing to protect it.

Even as I’m writing this I’m thinking about what might happen if our backup data were hacked into. My first thought was “nothing”. It’s a backup, and the chances our server crashing irreparably at the same time our web storage service goes down are pretty slim. For example, Amazon.com’s web services crashed recently for most of a day, and I never even noticed.

But then I started thinking about what data is in our backup files. We have personal identification and financial data on our customers. The loss of the data might not be a problem, but theft of that data could be catastrophic to our customers and our business. I am going to remove that data as soon as I finish writing this and go back to our previous physical storage solution. It’s not worth the risk.

In the end that’s the question we all need to ask ourselves before engaging in the various solutions cloud computing has to offer. Can we afford the risk? In the case of hosting our company website, I think we can. In the case of our company’s sensitive data, I don’t think we can.

If you’re using hosted services in your business it might be a useful exercise to consider what risks you might be exposed to, and if your business can afford that risk.

What do you think? Am I too paranoid? Do I not appreciate the risks enough? Leave a comment.

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The fine art of resource allocation

In a the previous entry, I discussed the Project Triangle and how it can be applied to building a business as well. With a business your three corners are Product, Marketing, and Delivery. You can expand your business at any of these three corners, but chances are you’re going to need to also devote resources to one or both of the other corners as well.

The trouble is that pushing any of these corners out farther usually requires a significant commitment. Adding a small amount of inventory probably won’t bring more than an incremental improvement in sales. Marketing mediums that don’t cost much don’t usually have much reach, and most require consistent investment over time to achieve results. Adding a few hours to payroll or adding some minor equipment isn’t likely to achieve much, either.

Since often a significant “tweak” is required at one or more corners to achieve noticeable results, the trick is determining which corner will most benefit from the larger gamble. Anyone who knows me can probably guess what I’m going to propose as the solution. Yup, analysis and planning! As an analyst-type, that’s my golden hammer.

But seriously, even if there are other ways to figure out where to invest, you would do well to consider some of the following questions before you act:

  • How much growth do you expect as a result of investing in one of the corners?
  • How do you plan to measure that growth?
  • What would achieving that much growth mean to the other two corners?
  • How quickly might the growth occur?
  • How much would you need to spend to expand the other corners to meet that growth?
  • How soon would you need to do so? What warning signs should you look for?
  • Do you have enough resources to meet the expanded demand?
  • What happens if you achieve double your expected growth? Triple?

If you haven’t thought through these questions you shouldn’t be surprised if even success becomes your enemy. I’ve heard horror stories of companies failed to anticipate the level of success brought about by one of their initiatives, and their company reputation took a serious hit as a result. “Catastrophic Success” can be just as lethal to a company as failure.

We recently had a conversation at our business about what we would do if our business suddenly tripled. We tried to convince ourselves we would take it in stride, but I remain unconvinced. I remember other conversations we’ve had about times when store traffic picked up substantially for one reason or another and we weren’t prepared. There were far too many customers who we’ve not seen again.

As I said, I’m a firm believer in planning, even if it’s just having a few conversations about “What if…?” I also believe in reviewing your plans and your metrics to determine how effective your plans were. Your business may be able to absorb a mistake or two, but there is no reason to keep making the same mistakes. Planning, measuring, and reviewing will help you recognize mistakes more quickly and learn from those mistakes.

Plan your growth. Investment may be a gamble, but it doesn’t have to be a risky one.

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Business constraints and resource allocation

Anyone who has been near the project management discipline has heard about the “Project Triangle“. That’s the rule of thumb that essentially says that when you’re building something you can have it good, fast, or cheap–pick any two. You can make a good product quickly, but it won’t be cheap. You can build it good and cheap, but it won’t be done quickly. Or you can build it fast and cheap, but it won’t be very good.

The Project Triangle

The Project Triangle

This same concept applies to building a business. Good businesses can be built either fast or cheap, but not both as a general rule. There is the occasional exception–a service business, for example, that has very low overhead and just happens to tap into an unexploited market–but for the most part you’re going to need either a lot of money or a lot of time (and patience) to build a good, solid business.

This same concept of balance can be useful in looking at resource allocation within your business, as well. In this instance we replace the three corners with Product, Marketing, and Delivery:

  • Product: The goods or services your business sells, including the people who give the service.
  • Marketing: The means by which your business attracts buyers for your goods or services, including the people who seek buyers.
  • Delivery: The means by which your business delivers the goods or services to the customer, also known as capacity or infrastructure, and including the people who support the production and marketing of products and services.
The Business Triangle

The Business Triangle

In this model you have capital to invest into your business. While you can invest in just one corner of the triangle, such expansion in that direction will often require expansion in one of the other two corners as well. For example, expanding your company’s ability to deliver goods or services will only be effective by itself in the long term if that particular corner is currently lagging behind the other two. Expanding delivery by itself generally results in a lot of unused capacity unless the demand for the product also increases.

Similarly, you can invest in acquiring more inventory or developing more service offerings, but without increasing the demand your services will go unused and your added inventory will gather dust. Or you could invest in marketing, but run into trouble when you have neither the supply to satisfy the demand nor the capacity that deliver the increased demand.

You may be able to focus on just one corner of the business for awhile without touching the others, but eventually it will catch up with you. You could increase marketing, resulting in a higher demand. You may be able to meet that demand by letting stock levels get low, or by getting your service providers to work harder, but eventually both will hit the wall, unable to give any more. Without some follow-up effort to bolster one or both of the other corners any growth will be short-lived.

That is where many businesses get into trouble. They think only about one corner, invest in expanding their business in that direction, and then have no plan or no resources (or both) to implement to shore up the other corner(s). If you have $10,000 to invest, and you invest it all in marketing, what will you do if you are suddenly selling through your inventory much faster while your collections are lagging farther behind, resulting in a negative cash flow? Sure, it’s a nice problem to have, but you’ve likely just swapped one problem for another just as bad, if not worse.

What to do about it? I’ll offer some ideas next time.

What do you think of this model? Leave a comment! I doubt I’m the first to think of this. If you’ve seen this somewhere before, also drop me a comment to say where.

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Everyone’s an expert–and a critic

Last week I mentioned an encounter with a customer who offered us some unwanted business advice. While this gentleman was a more extreme example of the know-it-all customer, he was by no means the first. When it comes to small business, everyone has an opinion, from your landlord to the Fedex guy, and every customer in between.

People are going to have opinions about how you selected, set up, and run your business that goes far beyond your inventory or your customer service. Some will phrase their questions and advice very well, and you’ll likely have an enjoyable chat with them. Some will be rather abrupt with their criticism. And since they’re your customer, you grin and bear it.

Don’t dismiss your customers’ opinions out of hand, though. Besides the obvious benefits of keeping a customer, some can also be a good source of feedback. Feel free to bounce a few thoughts off them, or explore their suggestions in more detail. Find out what their background is. It may be that they really are your town’s Warren Buffet.

If they’re a store owner themselves, ask them what things have worked for them. If they’re a reasonably informed customer use them as a one-man focus group and try some of your ideas on them. Good feedback can be hard to find.

Of course it could just be that they’re a boorish know-it-all and you don’t really want to engage them any longer than necessary. Wrap up the conversation as politely and diplomatically as you can and move on. Do what you can to keep them as customers, but don’t encourage them to become your regular unpaid consultant.

Before long you’ll learn who is good to talk to and who is not. Value good input when it is given. Business is lonely enough as is.

How do you politely deal with your local, regular critics and still keep them as customers? Put your ideas in a comment below!

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Be a good customer

I had an interesting encounter with a customer today that got me thinking more about how I act in public. Our store’s custom is to call out a greeting to a customer as they enter to let them know we know they’re there and so that they know who to talk to with questions. We’ll then usually follow up with them personally within a few minutes to see if there is anything specific we can help them with. For 99% of our customers this is just fine.

For this gentleman it was not. I’m not sure what he was expecting, but he felt he was being ignored, and expressed his displeasure. I won’t debate right or wrong, because the maxim “the customer is right” is generally true. He had an expectation, and we didn’t meet it. And once we apologized he seemed eager to let it go. He was looking for something we obviously didn’t carry, and we directed him to several nearby stores that did.

But then he decided to stay and talk business with us for awhile, and immediately started to come across as a bit of a know-it-all, and implying that we hadn’t thought things through before making certain decisions. I can assure you (and him) that on the point he raised we deliberated longer and harder than any other decision we made. We knew the risks and the benefits of our decision, and have worked quite hard to mitigate the shortcomings.

It also came out in during the discussion that I’d met this man before, though I don’t think he recognized me. He’d come to my door recently selling a book he’d written. I couldn’t buy the book at the time, but had been impressed enough that I have been considering interviewing him for this blog, and perhaps buying a copy of his book some day. But after our encounter today I’m reconsidering. Just as much as he’d caught my interested then, he’d turned me off today. I know he was trying to be helpful, but it came out wrong. And I admit, I was still defensive over his earlier rebuke.

But there is still a warning for us all, here. Store clerks and salesmen are so ubiquitous in our lives that it’s easy to think of them as not existing outside the stores they serve. It’s easy to be the type of customer to them that you hate to get yourself, assuming you’ll never see them again. Be a gracious customer. Be polite, undemanding (not to be confused with wishy-washy, mind you), and appreciative. Leave everyone in the store with a positive image of you.

You never know when the tables may be turned.

Anyone else experience this sort of thing from either side? Tell me about it in the comments!

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