“It’s only a dollar.”
If you look at an individual dollar, it won’t buy much. Maybe a burger or a taco from a fast food resturant, but it leaves you thirsting for more. When I participate in strategic planning meetings with my clients, I am never surprised to hear “it’s only a dollar.” After all, every other commercial touts dollar menus.
I am disappointed.
When you place “only” before any monetary value, you are missing the big picture. A dollar or even a penny standing alone isn’t much, but when you apply scale to them, they add up quickly.
Sam Walton understood this. He knew that if he negotiated better prices and passed the savings on, he would gain a loyal customer base. His philosophy has infiltrated WalMart to the point that their negotiations have become legendary. Intense discussions have ensued over a penny’s differential in pricing.
Why focus so much on a penny? Every penny saved when mailing 10,000 postcards or processing 10,000 orders is an extra $100 in profitability. It is almost like receiving free money because it doesn’t require extra work or resources.
The best way to start a penny management program is to change your thought process. NEVER allow the words “only” or “just” to be placed in front of any monetary value. Challenge every person in your organization to find a way to save a penny. One at a time.
Make it a contest with cool categories and fun prizes. Set your imagination free and create a contest that inspires. Before long, every one will be singing “Pennies from Heaven.”
Here are some tips to get you started:
- Identify 20 top selling items by volume and ask your vendors for a discount. Most negotiations are based on dollar value instead of unit volume. Vendors often have unadvertised quantity discounts.
- Ask all of your vendors for case pricing without requiring minimum orders. It allows you to improve your inventory management without increasing your item costs.
- If you send full color postcards, test mailing one or two color versions. They are less expensive and often yield better results because they stand out in the mail pile.
- Eliminate multiple copies of forms. The same form can move through your processing system and on to the customer. It reduces the cost of supplies and labor. Just think: No more filing. (Don’t forget to back up your data every day.)
- Include return information on your website, order forms, and packing lists. It reassures prospects, reduces calls, and improves customer satisfaction without increasing the return rate. (It has been repeatedly tested with the same results.)
- Post your customer service contact information on every web page. Make it easy for your customers (AKA your BFF’s) to get in touch. It won’t increase your costs unless your operational challenges are extreme. It will improve loyalty and satisfaction.
One final comment, it doesn’t matter what type of business you manage. The implementation may be different, but penny management works for every one. If your company is multichannel retail or B2B, ecommerce, or direct response, the tips above are a good starting point. If not, create your own list. Your bank account will thank you.
What tips do you have for saving pennies here and there?