Why so gloomy

2006 got off to a bad start for New Zealand business owners. Job lay-offs, factory closures, a dismal business confidence poll, rising fuel costs and even mention of the ‘R’ word by National Party leader Don Brash all contributed to a good deal of doom and gloom in the business community.

So, not surprisingly a press release put out by Sean D’Souza of PsychoTactics in January stating that "New Zealand doesn’t need to be the land of the long, black cloud," piqued my curiosity enough to arrange an interview.

"Bad economies have come and gone, and some businesses grow faster even in a so-called bad economy," says D’Souza. "You just have to know how."

I decided that for the sake of SME owners everywhere it was time to find out more.

The first response from D’Souza is the suggestion that the business community is ‘psyching’ itself into a pessimistic outlook.

"Once you’ve decided you’re having a bad day, all the sunshine in the world is not going to help you out of it," he says. "In effect business owners are getting a branding exercise via the media – if they’ve heard about the poor economy enough times, then, well, it must be true." He says it’s the difference between believability and credibility.

D’Souza says business owners should really ask themselves if they are directly affected by the downturn – probably not – and direct their focus to their own business results.

"When the economy is good it’s actually harder to sell. Because profits are going up, many business owners believe they don’t have to try very hard.

However, when times are tougher and SMEs are on a higher state of alert regarding their performance, there has to be much more accountability – and certainly delivering on promises to valued customers is of paramount importance.

Clearly in 2006, a business must look after its customers like never before.

How your customers think

PsychoTactics is based around a popular website which dispenses all manner of useful business information based on psychological marketing ideas (or knowing exactly how your customer’s brain ticks).

D’Souza has written several business books on the subject of the human psyche, but his latest effort Crunch Times: How To Succeed In A Gloomy Economy should especially interest business owners wondering how they are going to survive the current economic downturn.

This book covers such topics as: how to generate leads that convert into paying clients; how to get customers selling for you; how to increase profits without getting even a single new customer; how to increase profits by at least ten percent in less than 10 minutes (said to work 98 percent of the time); and the secret to learning what your customer is thinking and then give it to them.

No doubt the ten percent instant profit increase pricked up your ears. Yes it sounds all too easy, and D’Souza says this is the typical reaction of business owners who are perhaps looking for more complex solutions. However his ‘Yes-Yes Factor’ really is that simple, and it works.

Yes and Yes

The concept applies to both products and services and is all about giving your customers two choices, similar to the way software vendors offer a ‘Version 1.0’ and ‘Version 1.1’ of a product, or standard and premium editions.

Price the second option at least ten percent higher (don’t be too greedy) and more often than not customers will opt for the higher-value product. Then add bonuses to both options – the second option bonuses must be especially enticing.

"Random tests have revealed that when faced with a ‘Yes and Yes’ option, 97.5 percent chose the second option," says D’Souza. "Even when it was more than obvious that option two was clearly more expensive."

The key is to be consistent, and ensure that there are triggers (prompts) in place for your staff to up sell.

But keep it simple – a choice between yes and yes. As D’Souza points out in his book, provide too much choice and customers will decide on nothing at all.

Also, keep the ‘Yes and Yes’ upgrade offer logical. Make sure it is timed correctly (when the customer is relaxed and ready to buy), and that all the visual elements are in place.

D’Souza uses the example of coffee, and a coffee with chocolate brownie. It’s logical, it’s timed well when offered at the point of sale, and having the yummy chocolate brownies clearly in sight at the point of decision is the clincher.

Remember, customers will always opt for the best that’s on offer; otherwise they experience a tremendous sense of loss.

If you’re concerned about the cost of providing bonus products, D’Souza points out that it costs less to give a bonus than to give a discount.

"A discount is hard cash. When you’re giving away a ten percent discount on a $1000 computer, you’re doling out $100 that could be in your pocket. But when you give a bonus, it may cost you far less to purchase. So you make a very clear profit."

The ‘Yes and Yes’ approach also prevents sales staff from being jittery about revealing prices.

"Instead of answering the customer’s query, you’re asking another question," says D’Souza. "When the customer asks for the price, you ask the customer ‘do you want the basic or the premium option? The $5000 bed or $3000 bed?’

Now the customer isn’t debating the price any more – the next question is ‘what’s the difference?’ says D’Souza, which leads you on to discuss features and benefits.

"You have now officially been given permission to give the customer the full enchilada of information. And as we all know, the more information the customer has, the more they’re likely to make a decision that delivers greater value," he says.

Greater value equals greater profits, equals good reason to be optimistic when gloom and doom abounds.

For more tips on how to succeed in a gloomy economy visit

There are six free copies of the e-book Crunch Times: How To Succeed In A Gloomy Economy available to NZBusiness readers, along with a copy of the report "Power of Opt-In". Total value $74.

To enter the draw email editor@nzbusiness.co.nz

Note: EVERY entry will be eligible for the "Power of Opt-In" Report (pdf) which shows you how companies waste thousands of dollars each year, by ignoring this simple concept. This report is normally worth $30, but is free if you send an entry to the email address



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Magazine Issue 
NZBusiness March 2006