July 19, 2010
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Business Forecasting 2012
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Mandy Graessle
I spent last week in a tiny seaside village on the coast of Maine. I could probably sit for months on end at the beach, parked at the edge of the water, open book in my lap.
But kids can get a little antsy. So after a few days of the beach, my tween-age daughter and her friend made a pitcher of lemonade and set up a stand.
What I thought would occupy them for an afternoon turned out to deliver more than that. In fact, it turned out to serve up some interesting business lessons.
1. Deliver the best product you can. The kids started out selling better-quality lemonade they mixed from frozen concentrate. But when that ran out, they abruptly switched to some leftover powdered stuff with artificial sweetener scavenged from some forgotten corner of a kitchen cabinet.
Guess what happened? Sales—which had been brisk—floundered. The pair went back to their old recipe, this time adding slices of real lemon and crushed ice to help signal a product upgrade.
Lesson: “Crystal Light isn’t very good stuff, and the good stuff sells.”
2. Location, location, location. This real estate mantra applies to retailers, as well. The pint-sized entrepreneurs originally set up in the town square. Business was okay, but they suspected that competition from the soda fountain across the street—which sells a killer Lime Rickey—might be depressing sales. So they moved their setup to the head of the boardwalk leading over the dunes, and created their messaging around their unique value proposition, scrawling in marker on poster board: “Last stop before the beach!”
Lesson: “People will buy if they walk by you and then start to worry that they might get thirsty on the beach.”
3. Brand extensions can kill your brand. If lemonade is selling like hotcakes, why not add… well, hotcakes? Or chocolate chip cookies? And corn muffins? And why not sell dog treats to dogs?
Because you can easily dilute your brand as well as increase your overhead exponentially, and you might bankrupt your enterprise if you don’t carefully manage the brand extension and market it sufficiently. In other words, it’s better to offer one great product and market it really well than haphazardly roll out a mish-mosh of things that drain resources and confuse your messaging without producing results.
Lesson: “No one eats corn muffins with lemonade. It was just a bad idea.”
4. Develop an integrated marketing plan. The kids rolled out a multi-pronged marketing effort, which included low-budget outdoor advertising (they taped creative to nearby telephone poles), display (they posted a notice on the town bulletin board), and word of mouth, which is always free.
(“Tell your friends!” they said cheerfully to each customer; meanwhile, a third friend rode her bike around the streets, shouting, “Lemonade by the beach! Lemonade by the beach! Get yours today!”)
The kids could have rocked Foursquare and Twitter, too: Creating demand, and sharing news and updates, like
so many cash-starved small businesses like theirs. But these are kids, remember: I wasn’t about to risk my iPhone getting dropped in the sand.
Lesson: “You don’t have to spend money on advertising to get customers.”
5. Humanize your business. The girls can sometimes be shy with strangers, but still they chatted up each customer who happened by, asking them how long they were in town for, or where they were from, or whether they were having a nice time on vacation. In return, they shared a little of themselves, too.
They felt awkward at first, they said, but they made an effort to be personable and real. They revealed a little bit about the people and personalities running their small stand, allowing their customers to connect with them on a human level.
Lesson: “It was weird at first, but it got easier as the day went on. Anyway, it was more fun talking to people than just standing there.”
6. Speak the language of your customers. The Maine village where we were attracts a lot of French-speaking Canadians. As it happens, my daughter’s friend was born in Montreal, and still speaks French with her parents at home. The pair would great each would-be customer in both English (my kid) and French (the other kid), and then continue the conversation from there.
Literally, then, these two were able to speak the language of their customers. But the concept applies less literally, as well: Communicate with your customers in the words and language they use to describe your products and services, not the words and language you use or prefer. For example: Is your company a telemarketing outsourcing company, or an outsourced call center? Knowing which makes a difference for both your marketing and search engine efforts.
Lesson: “We got more customers because we could talk to everybody! Even the Canadians!”
7. Have an exit strategy—or not. But at least know where you are going. I suppose each business owner makes a personal choice of how aggressively to grow a business: Ultimately, it’s a personal choice of whether to reinvest in the business and grow it, or to create more of an ongoing lifestyle enterprise that funds a solid living with the occasional extravagance. (Or, of course, something in the middle.)
By the end of the first day, the girls had earned $32 and (after paying their supplier who had fronted them the raw materials on credit—aka me) decided that the long-term growth option didn’t interest them all that much. Instead, they decided to cash out right then and there, splitting the profits down the middle and blowing it all in a heady, single swoop at the local candy store.
They effectively dissolved a promising partnership—one which (you could argue) would have paid off consistently in the summers to come. But with waves to ride and sandcastles to build, the girls had other plans.
Lesson: “That was fun. But it was a lot of work. I’m glad it’s over.”
*****
Ann Handley is the Chief Content Officer of MarketingProfs and the co-author of the upcoming Content Rules (Wiley, 2010). Follow her on Twitter @marketingprofs.
Photo credit: Daquella Manera
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Mandy Graessle 10 months ago
Hi Anne! I was so excited to find your article in my research on "Lemonade Stand Lessons" for Lemonade Day [lemonadeday.org], that I included it in our Caring Adults Guide to help parents and adults guide their youth in their first business venture, a lemonade stand.
Thank you!