Isegoria

Robert Levine of Business 2.0 calls them the kopy kat kids:

The Samwer brothers never been shy about borrowing ideas. The first company the Cologne-born trio founded was a German-language version of eBay. Later, as venture capitalists, they invested in European startups that were direct knockoffs of YouTube, Facebook, and Twitter.

The brothers Samwer (Alexander, 36; Oliver, 34; and Mark, 32) are unapologetic about their fast-follower tactics — mostly because they work. Alando.de, the eBay clone they launched in January 1999, was snapped up five months later by eBay itself — for a cool $50 million. And they had early money in StudiVZ, a two-year-old European Facebook clone that reportedly fetched more than $100 million when it sold to publishing company Holtzbrinck earlier this year.

BusinessWeek asks, Will A Google Phone Change The Game?

Imagine your cellphone as a mini marketing machine. As you head into your car after dinner, a text alert pops onto the screen of your handset announcing the 9 p.m. lineup at a nearby cineplex. You choose the Jodi Foster flick The Brave One and a promo video for the next Warner Bros. release, a George Clooney movie, starts running. Afterward, more text appears, prompting you to launch the phone’s Web browser so that you can click through to buy the movie’s ringtones and wallpaper.

That kind of 24/7 advertising engagement–on a phone, no less–may sound like a nightmare. But what if you could determine the kinds of products you get pitched? Or, when your flight gets canceled in a faraway airport, text messages pop up for the best hotel deals in town? No random insurance ads or airline deals for trips to places you never visit. Best of all: Watch or read the custom ads, and your phone minutes are free.

For big cell carriers, that’s the real nightmare.

When you go to fund an enterprise with outside money, you have two basic options, which you can mix and match: debt, where you have to pay your lenders spelled-out payments, or equity, where you pay your shareholders their share of profits — when you have profits. Debt is inflexible. Equity is forgiving.

When you go to buy a house, you typically borrow money — you take on debt — which means you win big if your house goes up in value, and you lose big if it goes down in value. If you put 10 percent down on a $400,000 house, that means you’re putting in just $40,000 of your own money and borrowing $360,000. If the house’s value goes down 10 percent, you lose 100 percent of your initial investment — it’s worth $360,000, and you owe $360,000. If, on the other hand, it goes up 10 percent, you double your initial investment — it’s now worth $440,000, and you owe just $360,000. That’s why debt is called leverage.

Leverage is great on the upside, but most people are risk-averse, which is why I was surprised that something like a Real Estate Equity Exchange agreement wasn’t already popular:

Now a San Francisco firm called Rex & Co. (the name stands for “real estate equity exchange”) is offering a new option, known as a Rex agreement, that can be used both to draw on a home’s equity and to hedge against declining property values.

Rex gives homeowners, interest-free, a portion of their house’s market price in cash — up to 15 percent of the appraised value of the home, topping out at $300,000. In exchange, Rex gets the right to share in up to half of the future increase in the home’s value. The more homeowners are willing to let Rex cash in on future profit, the more money they get up front. If a home declines in value — and many homeowners nowadays are worried about just that — Rex shares in the loss. “It’s a way to make the equity you’ve earned more liquid,” says Rex CEO Thomas Sponholtz.

A homeowner and Rex agree on how much money the property owner is to receive, as well as the percentage of the future change in the value of the home he or she is willing to share. (The homeowner also pays back the cash advance when the property is sold.) The home’s value is assessed by a third-party appraiser.

The fact that they pay “up to 15 percent of the appraised value of the home,” but get the right to share in “up to half of the future increase in the home’s value” implies that they’re not just buying equity in the house though. It implies they’ve set up some kind of derivative that their customers won’t understand.

Here’s Why Richard Branson Should Be Delta Airlines’ Biggest Fan:

Last week, Passenger X arrived at the Orlando airport with a first-class e-ticket for New York City. At the airport, the ticket machine spat out a boarding pass for a seat in the back of coach. Why?

The plane, he was told, had been “downsized” from a large jet to a smaller one. There was no first-class section on the smaller plane, so all first-class passengers had been reassigned to coach.

Passenger X asked the Delta agent why the change had been made.

“Mechanical,” he was told.

Passenger X then asked when the change had been made, and wondered why Delta hadn’t phoned or e-mailed to alert passengers to the change — which would have given them time to perhaps fly first-class on a different airline.

The Delta agent responded that she did not know when the change had been made.

Passenger X flies frequently and tries to get work done on planes, so a first-class seat is far more desirable to him than a coach seat. He was disappointed with Delta’s change, but if they’d pulled a faulty jet out of the air — well, plainly, that was a good thing.

Once past security, he asked another Delta representative about the change. This agent, too, did not know when the plane swap had been made, but agreed that Delta should have alerted its first-class passengers. “You paid for the steak but you got the hamburger,” he said. This agent couldn’t have been kinder. He even offered to give Passenger X the customer service number at Delta so that he could arrange for a refund of the difference between the first-class fare and the coach fare.

To which Passenger X said: “Thank you, and no offense, but I’d be surprised — and further disappointed — if you weren’t already doing that on your own.” In other words, should the customer who pays for the steak and gets the hamburger then have to go scrambling himself to recover the price differential?

The Delta agent, still kind, acknowledged that yes, this too was not great Delta policy, but it was the best he could do.

At the gate, a third Delta agent, perhaps even kinder than the first two, looked at Passenger X’s boarding pass and offered to put an empty seat beside him. Very thoughtful! As it turned out, this was a pretty easy task, since the plane was only about 40 percent full, which made Passenger X wonder if the first Delta agent’s story — that the original plane was pulled for “mechanical” reasons — was even true. If the smaller plane was only 40 percent full, then the larger plane was probably only 20 percent full. As such, was it possible that Delta had changed planes because of an economic reason, and not a mechanical one?

Passenger X inquired as to this possibility, and was greeted with blank stares. He did learn, however, that the flight attendants had just flown down on this same plane, from New York to Orlando. At the very least, this meant that the smaller plane had been in service for quite a few hours, certainly enough time for Delta to let its first-class passengers know that their steak was now a hamburger.

In the end, the flight was fine. Two seats in coach are just as good as one seat in first class. But if it had been a jammed-to-the-roof flight, Passenger X would have been one sad puppy.

I can confirm Passenger X’s story because Passenger X is me.

OK, that last line isn’t quite a Twilight Zone ending, but he makes his point:

Stories like this one are very good news, however, if you are in the VLJ (very light jet) business, since that is where business travelers are moving. It could also be good news for Richard Branson, who is on an all-business-class binge at the moment, and is rumored to be thinking about offering all-business-class flights in the U.S., the absence of which I have wondered about before on this blog.

Joe Sugarman, in Triggers, uses his Ice Cream Ordering Sequence to explain a sales technique:

In the late 1950s I was working in New York selling printing equipment. One day after dinner, I decided to stop by a small ice cream parlor to have a dish of ice cream. I sat down at the counter and the waitress asked me for my order.

I requested my favorite dessert, “I’ll have a dish of chocolate ice cream with whipped cream.”

The waitress looked at me with a puzzled expression, “You mean a chocolate sundae?”

“No, I want a dish of chocolate ice cream with whipped cream,” was my response.

“Well, that’s a chocolate sundae without the syrup,” replied the waitress.

“Isn’t it just chocolate ice cream with whipped cream? What’s the difference?” I inquired.

“Well, a sundae is 35 cents and plain ice cream is 25 cents. What you want is a sundae without the syrup,” replied the waitress, with a rather smug expression on her face.

“OK, I want chocolate ice cream with whipped cream, so if you have to charge me 10 cents more, go ahead,” was my reply. (This took place in the ’50s when a dollar was worth a lot more than it is today.)
[...]
And for the next few weeks, each time I ordered my favorite dessert, regardless of the restaurant, I’d still go through the same hassle.One evening, after having worked really hard during the day, I was finishing my meal in a restaurant in mid-town Manhattan when the waitress looked at me and asked, “Would you
like dessert?”

I really wanted my favorite, but I just didn’t feel like going through the entire verbal routine that I had been experiencing for the last few weeks. “I’ll have a dish of chocolate ice cream,” was my response. I didn’t ask for the whipped cream. This was a simple request — one I didn’t expect a hassle over.

As the waitress was walking away, I thought to myself, in what must have been a fraction of a second, how much I really wanted chocolate ice cream with whipped cream and that I should not let myself be intimidated by a waitress. “Hey, miss,” I called, as the waitress was still walking away, “could you put whipped cream on that ice cream?”

“Sure,” was her response. “No problem.”

When the check came, I noticed that I had been charged just 25 cents for the ice cream and whipped cream — something that I had been charged 35 cents before.

How is this used in sales?

A good example of this can be seen at car dealerships. The salesperson tallies your entire order, gets approval from the general manager, and then has you sign the purchase contract. As she is walking away to get the car prepped and ready for you to drive it away, she turns to you and says, “And you do want that undercoating, don’t you?” You instinctively nod your head. The charge is added to your invoice. “And you’ll also want our floor mats to keep your car clean as well, won’t you?”

Once a commitment is made, the tendency is to act consistently with that commitment. The customer nods his head.
[...]
One of the important points to remember is to always make that first sale simple. Once the prospect makes the commitment to purchase from you, you can then easily offer more to increase your sales. This is very true for products sold from a mail order ad or from a TV infomercial. I have learned to keep the initial offer extremely simple. Then, once the prospect calls and orders the product I am offering, and while the prospect is on the phone, I offer other items and end up with a larger total sale. An additional sale occurs over 50% of the time, depending on my added offer.

Joe Sugarman, in Triggers, uses his Ice Cream Ordering Sequence to explain a sales technique:

In the late 1950s I was working in New York selling printing equipment. One day after dinner, I decided to stop by a small ice cream parlor to have a dish of ice cream. I sat down at the counter and the waitress asked me for my order.

I requested my favorite dessert, “I’ll have a dish of chocolate ice cream with whipped cream.”

The waitress looked at me with a puzzled expression, “You mean a chocolate sundae?”

“No, I want a dish of chocolate ice cream with whipped cream,” was my response.

“Well, that’s a chocolate sundae without the syrup,” replied the waitress.

“Isn’t it just chocolate ice cream with whipped cream? What’s the difference?” I inquired.

“Well, a sundae is 35 cents and plain ice cream is 25 cents. What you want is a sundae without the syrup,” replied the waitress, with a rather smug expression on her face.

“OK, I want chocolate ice cream with whipped cream, so if you have to charge me 10 cents more, go ahead,” was my reply. (This took place in the ’50s when a dollar was worth a lot more than it is today.)
[...]
And for the next few weeks, each time I ordered my favorite dessert, regardless of the restaurant, I’d still go through the same hassle.One evening, after having worked really hard during the day, I was finishing my meal in a restaurant in mid-town Manhattan when the waitress looked at me and asked, “Would you
like dessert?”

I really wanted my favorite, but I just didn’t feel like going through the entire verbal routine that I had been experiencing for the last few weeks. “I’ll have a dish of chocolate ice cream,” was my response. I didn’t ask for the whipped cream. This was a simple request — one I didn’t expect a hassle over.

As the waitress was walking away, I thought to myself, in what must have been a fraction of a second, how much I really wanted chocolate ice cream with whipped cream and that I should not let myself be intimidated by a waitress. “Hey, miss,” I called, as the waitress was still walking away, “could you put whipped cream on that ice cream?”

“Sure,” was her response. “No problem.”

When the check came, I noticed that I had been charged just 25 cents for the ice cream and whipped cream — something that I had been charged 35 cents before.

How is this used in sales?

A good example of this can be seen at car dealerships. The salesperson tallies your entire order, gets approval from the general manager, and then has you sign the purchase contract. As she is walking away to get the car prepped and ready for you to drive it away, she turns to you and says, “And you do want that undercoating, don’t you?” You instinctively nod your head. The charge is added to your invoice. “And you’ll also want our floor mats to keep your car clean as well, won’t you?”

Once a commitment is made, the tendency is to act consistently with that commitment. The customer nods his head.
[...]
One of the important points to remember is to always make that first sale simple. Once the prospect makes the commitment to purchase from you, you can then easily offer more to increase your sales. This is very true for products sold from a mail order ad or from a TV infomercial. I have learned to keep the initial offer extremely simple. Then, once the prospect calls and orders the product I am offering, and while the prospect is on the phone, I offer other items and end up with a larger total sale. An additional sale occurs over 50% of the time, depending on my added offer.