Isegoria

Will Five Guys overtake In-N-Out? They’re making their move on the west coast:

Like In-N-Out, Five Guys’ menu is focused on single and double hamburgers and cheeseburgers, along with hand-cut fries. And like In-N-Out, Five Guys restaurants are red and white, with perky employees in red-and-white uniforms.

And Five Guys is coming on strong.

The privately held chain, which has 770 locations in the U.S. and Canada, began moving into California two years ago with a handful of shops in Orange County and the Inland Empire.

Now there are 27 locations in the state, but Five Guys has sold the rights to open 200 more in Southern California alone — nearly double the number operated here by In-N-Out. Next up is a Culver City location, set to open in mid-April.

But to really make inroads here, Five Guys will have to get past a major hurdle: the intense loyalty of In-N-Out customers.

Yes, both chains focus on burgers and have red-and-white decor, but Five Guys does not have perky employees — at least not with In ‘N’ Out’s remarkable consistency.

By the way, perky correlates shockingly well with middle-class — in the same way that sullen correlates with not middle-class.

As cruise ships have become more crowded, cruise lines have seen a need for the return of the class system:

Like first-class airline passengers, guests staying in the private complexes pay premiums for their perks. Depending upon the time of year, a three- or four-night cruise to the Bahamas on the Disney Dream, for example, costs $439 per person double occupancy in a regular stateroom with balcony. A balcony room on the concierge level is $2,159 per person.

While cruise lines must invest in the extra amenities and staff, these guests also tend to spend more when they’re onboard.

Royal Caribbean began what it calls its “suite enhancement program” two years ago after it noticed that guests staying in suites were giving their staterooms high marks in guest feedback surveys, but were rating the overall cruise less favorably than other passengers. Focus groups showed that these high-end guests “weren’t feeling like they were special when they left their suite,” says Lisa Bauer, senior vice president of hotel operations for Royal Caribbean International.

The top amenity the guests wanted was separate spaces reserved for them alone. So the brand added private pool-deck areas, reserved seating at the theaters, private cocktail parties with the ships’ captains and priority boarding and disembarking. “The ratings soared,” Ms. Bauer says.

A major perk of being a ship-within-a-ship guest is getting to skip the lines.

Before launching 37signals, Jason Fried worked as  a freelance web designer:

I charged clients by the hour. I work quickly. But I soon realized that charging hourly penalizes efficiency. If I can finish something in an hour that might take someone else three or four hours, why should I be penalized?

So when he launched his company, he decided to charge by the project:

It worked great. But as the projects started getting bigger and costing a lot more, I noticed that clients became more reticent about signing on. Big numbers and long time frames make people nervous. More money and more time mean more risk, and risk is something all companies would prefer to avoid.

I thought about the problem and decided to try something new. Instead of doing long, expensive projects, we’d do short, affordable ones. Instead of billing $50,000 for a 15-page website redesign that would take three months, we’d charge $3,500 per page and offer to complete the page in a week. If you want another page, it’s another $3,500 and another week. We called it 37express.

It took off. It took the risk out. It let companies try us out before committing to something big. And it was a lot more fun for us — fewer meetings, less stress, fewer decisions to be made. Just a quick one-week project for a fixed price. If you want more, we’ll sell you another.

Jason Fried suggests charging real money for real products:

Around my senior year of high school, I started getting interested in computers. I also liked music. My collection of tapes and CDs was growing, and I wanted a better way to keep track of what I had and what I’d loaned out to friends.

This was before the World Wide Web. So I tossed one of those junk mail AOL CDs in the computer, installed the program, and convinced my parents it was worth the monthly fee. (“It’ll help me research and study!” I argued.) I started searching for tools to help organize a music collection.

There were a ton of them. Most were made with software called FileMaker Pro, a program that makes it easy to create simple databases without really knowing how to program. FileMaker also lets you design your own interface, so you can make things look any way you’d like. Most of the music-organization programs were free and pretty lousy — ugly, hard to use, loaded with unnecessary features.

I decided to figure out how to make my own. I got FileMaker Pro (I paid for it with the stash I’d saved up selling stuff to my friends) and started messing around. After a few months, I had solved the problems I had with organizing my music. I knew what music I had, where it was, whom I had loaned it to, how much I paid for it. The solution was elegant and easy to use. I called it Audiofile.

Most of the music-collection products on AOL’s file section were freeware. Download them, install them, and you don’t owe the author a dime. There were a few shareware options (you pay if you use them, but it’s mostly an honor system), but most were free.

I’d already learned that I really enjoyed making money. And I thought that Audiofile was good. And even then, I thought that if something was good, then it was worth paying for. So before making it available to other AOL users, I added a limit in the program — people could file 25 CDs for free; after that, it would cost $20 to unlock Audiofile and remove the limit.

I remember my first customer. One day my parents gave me an envelope. It came from Germany and had those airmail stripes at the top. I opened it up, found a screenshot of Audiofile printed on a piece of paper — and a crisp $20 bill. More envelopes rolled in. Over the next few years, Audiofile probably generated $50,000 — not bad for a kid in college in the early ’90s.

The lesson: People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.
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When you put a price on something, you get really honest feedback from customers. When entrepreneurs ask me how to get customers to tell us what they really think, I respond with two words: Charge them. They’ll tell you what they think, demand excellence, and take the product seriously in a way they never would if they were just using it for free.

Jason Fried of 37signals explains how to make money, starting with a lesson he learned at his second job, as a teenager:

I was working at Shelby’s Pro Shop, a golf and tennis retailer in Deerfield, where I grew up. I sold shoes and tennis rackets. I didn’t play tennis, but I learned how to be a very good tennis-shoe and tennis-racket salesman. That’s because I made the discovery that people’s reasons for buying things often don’t match up with the company’s reason for selling them.

Manufacturers used to dispatch reps to the pro shop to educate us on their latest and greatest technologies. They’d tell us about the new ethylene vinyl acetate midsoles that made shoes more comfortable; the Goodyear-brand rubber outsoles that made the shoes more durable; the new variation of Nike Air that was miles ahead of the competition.

They thought they were arming us with facts that would impress the customers. But, it turned out, none of that stuff mattered. In fact, it had a negative effect. When you describe things in terms people don’t understand, they tend not to trust you as much. Trust is important. You can bluff your way into money, but for only so long.

Once I stopped slinging the technical terms, I realized that when customers shop for shoes, they do three things. They consider the look and style. They try them on to see if they’re comfortable. And they consider the price. Endorsements by famous athletes help a lot, too. But the technology, the features, the special-testing labs — I can’t remember a single customer who cared. I sold a boatload of shoes and tennis rackets that summer.

Understanding what people really want to know — and how that differs from what you want to tell them — is a fundamental tenet of sales. And you can’t get good at making money unless you get good at selling.