gabriellen6xf: About Making Money

The path of least resistance is the path of the loser.” H.G. Wells

Wells’ above quote could be applied to a multitude of things. For myself as an investment manager, the risk of falling prey to confirmation bias and shallow analysis can be dangerous. In the confirmation bias, people tend to favor/believe information that supports their current views & hypotheses.

Being intellectual honest about our thesis and rationale for investments is critical to success. How can we become better investors if our thought process isn’t consistently challenged? Are we taking the path of least resistance in our analysis and analytical rigor? Here are a few signs to watch out for:

Scouring for confirming views: Jason Zweig once wrote that, “…people are twice as likely to seek information that confirms their beliefs then they are to consider evidence that contradicts them.” Do you carefully considering opposing views?

Easily shaken out by fluctuations: How can you have faith to ride out short-term fluctuations without the confidence of a full vetted idea? While there is nothing wrong with having tight stops and loss disciplines, it is a whole lot easier to be shaken out if you don’t trust the idea.

Lack of conviction: What is the point of holding a stock that you don’t have high conviction in? I’d rather own an index fund than a stock I don’t love. Investors lukewarm on a holding end up becoming “long-term investors” as they are inevitably under water.

Loss Aversion: Does your original investment thesis still hold? If not are you only holding as you are reluctant to take a loss? Cut bait and get out. These situations lead to investors taking on more risk due to their loss aversion.

Obviously a well vetted idea doesn’t guarantee success, however a lack of reasonable diligence is inexcusable. Making money is too difficult to lose it on stupid decisions. Take a look at your holdings today and ask yourself why you are still holding it? Does it still meet your original criteria?

Rick Cesari (@cesaridrtv) is a regular guy who did what every businessperson is supposed to do and talks about doing but rarely does. He spotted a trend, turned it into an opportunity and created millions in sales. And now, he’s sharing his stories, insights and experiences in his book, Buy Now: Creative Marketing That Gets Customers to Respond to You and Your Product.

I received a review copy from Rick’s team and also had the opportunity to chat with Rick and ask him a few behind the scenes questions. I found him to be extremely engaging and fun to talk to; he was full of ideas and stories that made it hard to hang up!

How Rick Cesari’s Story Changed Direct Marketing

Rick’s story begins like many of ours. He went to college and got a summer job as a lifeguard. One of the ways he could make extra cash as a lifeguard was to sell suntan lotion. This is where he learned to use a winning formula to make extra money: Present a problem, offer a solution and then explain how his product was better than anything else out on the market today. It wasn’t just a winning formula for selling suntan lotion, it was a winning formula for selling some of the most successful products of the last 30 years.

In the late 1970s, Cesari got involved with real estate. Rick produced real estate seminars that ended up making more money for the real estate gurus than their real estate strategies ever did. And when Ronald Reagan deregulated television in 1982, this changed everything. Before 1982 advertisers could only purchase 8 minutes of advertising an hour. But after deregulation, they could purchase an hour of advertising time! Cesari knew he was on to something. He would use the lessons he learned by selling suntan lotion and real estate to revolutionize direct response marketing.

Buy Now is a terrific combination of real life case studies and lessons in direct response marketing. Just because you have no intention of creating an infomercial doesn’t mean that you have nothing to learn from this book. In fact, the core principles behind each and every example such as SoniCare Toothbrushes or the OxyClean brand has something wonderful to offer for every entrepreneur, business owner or sales and marketing professional.

Take the Time to Test for Increased Profitability

Here is a terrific example from Chapter 14 titled, “The Offer Is King.” If you think that the price level drives the offer, you would be wrong. Selling product is more about the offer than the price. Rick recommends having a variety of different offers to test. “You will always be tempted to test an offer that makes YOU the most money upfront. That’s not smart and it’s not accurate.”

Cesari goes on to share a powerful story of a piece of exercise equipment that was in the $200 price range. Of course they had a payment plan. First they tried three payments of $79. They couldn’t break even. Then they tried six payments of $39 – that did even worse. Finally they did something completely different. They offered a trial payment of $14.95 for the first 30 days. They used the increased call volume to research other price points and actually settled on $700!

As it turned out, when the consumers saw the $200 price tag, they assumed the machine was low quality – and didn’t buy. But once they had it in their home, they were able to justify a much higher price.

Another of my favorite sections is the discussion about why everything is priced at $19.95 and $39.95. Would you believe that this isn’t true – it just seems that way!

After running many tests, Cesari found that consumers see product price in terms of $20 increments; $19.95, $39.95, $49.95 and $59.95. In fact, when tested, consumers see very little difference between $29.95 and $39.95. The same is true at the $49.95 and $59.95 price points. Consumers just didn’t see that much of a difference in price – but you bet your bottom line will. This section alone can change your profitability almost immediately!

Who Should Read This Book

Buy Now is an ideal book for sales and marketing people, business owners and inventors. This is a book you will want to read with pen and paper by your side. My copy already has plenty of dog-eared highlights and underlines. The Cesari Direct website contains a video with a quick introduction to the book by Rick himself.

Cesari’s focus on the basics of tripping customer emotions and focusing on benefits that resonate with customers will inspire you to look at your marketing a whole new way.

From Small Business TrendsRead Buy Now and Get Profit Making Tips From a Direct Response Marketing Master

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gabriellen6xf

Monday, August 1, 2011

About Making Money

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