Where is the money in that?

Copyright 2011 Dennis S. Vogel All rights reserved.
This blog post was transferred from another service.

Author: Jay Abraham protégés

Some of us have been trying to figure out what Mac Ross meant when he told Jay Abraham’s protégés to ask “Where is the money in that?” three times. It seems wither there’s money in it or not, why the redundancy?
We know earning money is important for being successful marketing consultants.
Reaching Jay or Mac would probably be expensive if they’d even take our calls.
Please clear this up for us if you can.

Subject: Where is the money in that? Let's Find It
In reply to: Jay Abraham protégés 's message, "Where is the money in that?"

Thank you for the question. It caused me to more deeply about what Mac said.

I think I can clarify this for you. Disclaimer: This is just my interpretation.

I think Mac meant asking where is the money in that? 3 times as a 3 step process. Sometimes, asking it 3 times may not be enough. Each time the question is asked about the previous issue.
Example: Are there enough prospective buyers? Where is the money in that? Can you reach enough of them to buy your whole inventory?

Even if I misinterpreted his message, my interpretation is valuable for anybody in a business (not just marketing consultants).

Something to consider: Whatever you plan to buy, by the time you can pay for it, the price may be higher. If your budget is $900 but the end price is goes up to $1,000, you may miss your chance to enjoy the benefits of what you wanted. If your budget is $1,000 but the end price is only $900, you can be happy.

Another way to express it is: You should avoid bringing a nickel only to discover your dream come true costs $1.

I added more details to more fully explain where the money goes & how quickly. I tried to answer other questions that may come up as people think about the issues in Mac's advice.
Now for the main lesson, here is an example: A retailer considers stocking new 2-way radios.

Step 1: Where is the money in that? Who would buy a 2-way radio?

Step 2: Where is the money in that? If people want & can afford to buy a 2-way radio, how much will they pay?

Step 3: Where is the money in that? How many people would buy 2-way radios?
Would there be enough demand to create profitable turnover?

If a small store stocks 100 units, will those be purchased in a month or would it take a year?
Having a product consuming storage &/or display space is expensive. (Space is valuable resource.) A common retail metric is sales per square foot. Old inventory doesn't increase sales per square foot.

Having money stuck in slow moving inventory decreases cash flow. Profit isn't enough when creditors demand money NOW.

Breaking even means a product stops being a liability (lowers resources) & becomes an asset (increases resources).

Opportunity cost is something to consider also.

Step 4: Where is the money in that? Where are those prospective buyers?
Which media would reach them?
Can the retailer afford to use at least one medium that may reach those prospects?

Step 5: Where is the money in that?
Which would be more economical, efficient & effective - 1) sales copy that's long enough to persuade people to buy or 2) sales copy (probably a relatively short message) to persuade people to inquire about the product (go to the store or call via phone)?
It depends on the situation.

In some media, a long enough message to sell a product may be too expensive. If a retailer can only afford to run it 4 times, those 4 times better be when many prospects will pay sufficient attention to create interest, desire & action.

The figures I have below are quite low for an advertising budget. In some markets, publishers & broadcasters charge so much, a small business can only afford to buy a little space or air time.

Newspaper Advertising: If a retailer can only afford 500 column inches of print advertising per year & a full sales message would require 50 column inches, it wouldn't take long to use the whole budget.

Would it be realistic to expect enough profit from 50 column inches of advertising to offset the cost of using up 10% of the budget?

The price depends on the circulation & may depend on the page position & the newspaper section. You can usually get a smaller price per column inch by contracting for a larger number of inches.

Radio Advertising: Depending on the number of syllables per word, 70-90 words should be about the maximum for a 30 second radio commercial. If a radio advertising budget will only buy 500 minutes of commercial air time, the number of spots that business could buy would be minimal.

If a full persuasive sales message requires 2 minutes, would 30 seconds be enough to achieve action, interest, desire & action (AIDA)? The action could be an inquiry - calling or coming in to see the product & ask questions? After inquiring, hopefully people will buy.

Considering how quickly 30 seconds passes, 500 minutes of air time may not be enough to achieve enough reach & frequency.

Many times another matter is - 12 one minute spots may cost less than 24 of the 30-second spots.
Example: CLASS A 12 times per week 5 am-7 pm Sun $26: 60 second $20: 30 second
On Sunday, 12 one-minute spots would cost a total of $312. 24 of the 30-second spots would cost a total of $480. The total broadcast is 12 minutes for each option.

I use low numbers to emphasize how quickly an advertising budget can be consumed.

The price will depend on the station's Designated Market Area (DMA) & Daypart. You can usually get a smaller price per minute by contracting for a larger number of minutes.

Is the budget big enough to pay for a marketing effort that will achieve the desired results? If not, a different method should be used. Preferably the less expensive alternative method will be at least as effective as mass media advertising.

Step 6: Where is the money in that?
Have a realistic way to sell a product/service before committing to it.

Considering how popular phones & other communication devices are, why would people choose to be limited by the short range & lack of privacy in using 2-way radios?

How many people need to listen to one person to talk? Is it necessary to talk to many people at a time & ask them to respond?

Are there enough groups who would need/want the benefits & limitations of 2-way radios compared benefits & limitations of other communication options?

Thank you for using my blog. Please let me know if I should clarify anything.

Copyright 2011 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/