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Saturday, October 19, 2013
Friday, October 18, 2013
Jedi Mind Tricks: How to Get $250,000 of Advertising for $10,000 Written by Tim Ferriss
These are not the prices I’m looking for. (Photo: hellochris)
Let us never negotiate out of fear. But let us never fear to negotiate.
-John F. Kennedy
-John F. Kennedy
In December 2008, well-known marketing consultant John Jantsch asked me what my small business predictions were for 2009. This was my answer:
2009 will be the year for small businesses to get advertising at 70-90% off. Recessions mean budget cuts for larger corporations, which means advertising cancellations, just as in the “dot-com depression” of 2001 and 2002. There will be fire sales on remnant advertising, whether print, TV, radio, or online. In 2002, I bought $250,000+ of radio advertising for $10,000 because a big pharma advertiser pulled out a week before the ads were to go live. If you play your cards right, you can cut your CPA (cost-per-acquisition) in half.
The following sample dialogue demonstrates exactly how someone can buy $250,000+ of media for $10,000, and how you can reap the rewards of an advertising collapse.
If you’d rather acquire profitable customers for pennies instead of dollars, this article is for you…
Jedi Minds Tricks: How to Get $250,000 of Advertising for $10,000
Life is not fair. For those who understand the few rules that matter in negotiation, this is good news—it’s possible to get much more than others expect to offer you.
Negotiating is, for most, an uncomfortable attempt at impromptu haggling. For the experienced “dealmaker”, a more useful term, it is a planned sequence of predictable objections and responses that can be orchestrated to produce the desired outcome. It’s like planning three or four moves ahead in chess, forcing an opponent to put themselves in check-mate.
Some of the most effective strategies and set-ups are illustrated in the following sample dialogue for a print advertisement. The dealmaker (D) in question has planned the entire sequence and all questions in advance.
Note: Even if you don’t practice all of these common gambits, some of which can end up being games of mutual make-believe, it is important to recognize them or you cannot counter them.
To preserve the flow of the dialogue and its usefulness as a template, the principles are put in parentheses ( ) when used and then explained at the end of the article. I have used three of them alone (1, 5, and 7) to get more than $250,000 of radio advertising on 150+ stations for $10,000, $20,000 full-page print advertisements for less than $4,000, and 50% off of car purchases, among others.
Negotiating is predictable and learnable. Simple phrases and questions can be used over and over again to reap huge dividends.
Practice small, practice often, and view it as a game—it’s a game worth winning.
First introductory call:
D: “Hi, may I speak with someone about advertising in your magazine?” (Transfer to Cheryl) “Hi, Cheryl, my name is _______ and I’m Director of Marketing at ________ Company. We’re considering advertising with you but are also looking at [competing magazine A] and [competing magazine B]. When does the next issue close and go to print? Can you please e-mail me your rate card and current discounts?”
June 20th at 3:30pm (1):
D: “Hi, Cheryl, we’re deciding today which magazine we’re going with. You’re competing against [competing magazines] and we can only choose one. We’re looking to do a full 12-month roll-out but are doing a one- or two-month test first. What is the best price you can offer on a full-page four-color ad?” (2)
Cheryl: “Hmmm… well, I suppose we could do $2,500.”
D: “$2,500?!! Yikes…” (3)
(or “$2,500?!! Wow. Based on the other mags, I was expecting a lot less…”)
(or “$2,500?!! Wow. Based on the other mags, I was expecting a lot less…”)
30 seconds of excruciating silence later:
Cheryl: “Uh…It’s possible we could go as low as $2,300, but I’d have to speak with my boss.”
D: “What else could you add to that? Could we write a product review, add in a 1/6th-page ad, a classified? Perhaps we could get a one-time mailing to your subscriber mailing list? It’s important that we make this first time a homerun.” (4)
Cheryl: “I’d have to check.”
D: “OK, well I need to get on the phone with my board [partner, supervisor, etc.] in 15 minutes. I’ll tell you now that $2,300 isn’t very competitive. Can you call me in ten after speaking with your boss?” (5)
10 minutes later:
Cheryl: “We can do $1,850 but just this once. I can also give you a product review of 300 words and a classified.”
D: “Is that really the best you can do?” (2)
Cheryl: “I think so.”
D: “I have authorization right now to pay $1,200 (6), but I’d need to go through my [superior of some type] otherwise. Can you ask your boss now if we can do that?”
Two minutes later:
Cheryl: “She said that we can do $1,500.”
D: “I have to speak with my [superior]. I’ll call you back in five minutes.”
Five minutes later:
D: “Hi, Cheryl. Here’s the situation. I have them on the other line and they want to decide on one magazine now. I want to go with you guys but you’re higher than the other two competitors. We’re not that far apart here. If we can just split the difference and do $1,350, I can fax you the insertion order now and have a check FedEx’d overnight to arrive at your desk tomorrow morning. I have 20 minutes before FedEx closes. Can we split the difference to $1,350 and I’ll get the check off? Let’s just do it and call it a day.”
Cheryl: (after a pause and speaking with someone in the office) “OK, $1,350 it is. Where should I send the insertion order?”
—
That is how a hypothetical dealmaker gets a $5,000 package for $1,350. How $5,000? In addition to the main full-page ad, he or she secured a 1/2-page product review worth at least $1,500 and a classified ad worth $500, bringing the total package value to $5,000, purchased at 73% off.
Here are the principles in order used:
Principle 1: Negotiate just prior to the other side’s deadlines. If purchasing advertising, find out when the space or air time must be filled and negotiate last minute. No one will sell you hard goods such tractors for $5 to get rid of them, but this happens all the time with ad space, as it is worth $0 if not filled. It expires like food products on a shelf. The same approach can be used for cars if you find out when new models come in or when sales quotas are calculated. In this dialogue, assuming the deadline for ad submission is June 30th and the rate card for a full-page ad is $3,000, the follow-up call is around June 20th at around 3:30pm your time (just prior to FedEx drop-off deadlines).
Principle 2: Make them negotiate against themselves. Give them multiple chances to lower their own price before making an offering yourself. People will often offer less than you were planning to ask for.
Principle 3: Use a “flinch” whenever someone mentions their first discounted offer. Recoil in shock and then be silent. DO NOT speak, even if the other side says nothing for minutes (I often check e-mail during this battle of wills). The tension is uncomfortable, and the salesperson usually fills this void with a concession.
Principle 4: Increase value while lowering price. Ask for bonuses as you negotiate on the original dollar amount. Most people across the negotiating table let these slip while too focused on negotiating a single price. Our goal is to get the most advertising per dollar, so add to the package as you cut price. This also gives you items to later concede or remove for further discounts.
Principle 5: Never be the ultimate decision maker. Having partners or superiors, often imagined, with veto power allows you to negotiate hard and make impossible demands without being viewed as a bastard and damaging the ongoing relationship with the other side. This is the same reason business people perfectly capable of negotiating their own deals use lawyers as go-betweens: to blame points of disagreement on “legal” and create a non-hostile bargaining environment where egos don’t collide.
Principle 6: Use intelligent “bracketing.” If the list price is $2,000 and I want to pay $1,500, for example, I’ll offer $1,000, creating a $500 buffer on either side of the target price. The other side will offer $1,750, I’ll compromise at $1,250, and then we’ll settle at $1,500. “Let’s just split the difference” creates the illusion that they are getting a concession from us when, in fact, it was all pre-planned.
Principle 6: Use intelligent “bracketing.” If the list price is $2,000 and I want to pay $1,500, for example, I’ll offer $1,000, creating a $500 buffer on either side of the target price. The other side will offer $1,750, I’ll compromise at $1,250, and then we’ll settle at $1,500. “Let’s just split the difference” creates the illusion that they are getting a concession from us when, in fact, it was all pre-planned.
Principle 7: Practice using the “firm offer.” This is when, rather than asking the non-committal “Can you do $___?” you make an if-then commitment such as “If you can do $____, we will pay you now.” The latter is an offer of payment rather than idle haggling. To circumvent this entire phone conversation, it is possible to use a pre-emptive firm offer and send an e-mail stating that you are prepared to immediately pre-purchase one ad—whether full-page, half-page, or 1/3rd-page; whichever they prefer—at 30% or 40% of rate card. To make this “firm offer” even harder to resist, FedEx them three signed checks for 30% of each of those ad sizes and tell them to cash one, whichever preferred, or rip them all up.
—
Negotiate once per item (whether a one-page ad or a 12-month radio campaign) and do it hard.
Once a price is agreed upon, do not renegotiate the price again. Be tough as hell but be fair. A deal is a deal.
Here are a few other tips for purchasing media:
Here are a few other tips for purchasing media:
1. If dealing with national magazines, consider using a print or “remnant ad” buying agency such as Manhattan Media or Novus Media that specializes in negotiating discounted pricing of up to 90% off rate card. Feel free to negotiate still lower using them as a go-between.
2. Ask for a 15% “mail-order discount” or “first-time advertiser discount”.
3. Ask for a discount for paying upfront vs. net-30 or ask for the standard 2% discount for paying net-10 instead of net-30. This can often be negotiated with their accounting after settling on the ad price with a sales rep.
4. Once you have strong cash-flow and know ads in a certain magazine are consistently profitable, offer to pre-pay 3-12 issues at a time for an additional 30-40% off. Don’t ask—make a firm offer to show that it’s not window shopping.
8 Home Remedies That Actually Work
Nobody is naysaying the wonders of modern medicine—what would we do without a medication like penicillin to treat infections? But, as it turns out, everyday items have secret curing powers, too. Next time you don’t want to fork over money to get a common wart removed, consider using duct tape. Already popped two aspirin but can’t get rid of the headache? A pencil could do the trick. Below, get medical explanations behind a few bizarre—albeit brilliant—MacGyver-esque home remedies.
Duct Tape to Remove Warts
In 2002, a group of doctors compared duct tape’s effectiveness with liquid nitrogen in removing warts. After two months of wearing duct tape on a daily basis and using a pumice stone about once a week to exfoliate the dead skin, 85 percent of patients' warts were gone, whereas freezing only removed 60 percent. “The question is whether there is something in the chemical adhesive itself, or if the occlusion (suffocation) causes the destruction of the wart,” says New York City–based dermatologist, Robin Blum, MD. “The other thinking is that the duct tape causes irritation, which stimulates our body’s immune cells to attack the wart.” Photo: Thinkstock
Vapor Rub to Cure Nail Fungus
While there are no studies to prove coating infected toenails with vapor rub once or twice a day is an effective treatment for nail fungus, a basic Internet search results in a number of personal testaments to the medicinal ointment's fungus-killing powers. “I’ve heard many patients say that vapor rub does help, but I’m not exactly sure why,” Dr. Blum admits. While some argue it's the menthol in the balm that kills the fungus and others say it’s the smothering effect of the thick gel, if used consistently, vapor rub has been shown to get rid of not just the fungus, but the infected toenail, too, which will turn black and eventually fall off. When the new nail grows in, it should be fungus-free. Photo: Thinkstock
Oatmeal to Soothe Eczema
“This is absolutely true, as oats have anti-inflammatory properties,” Dr. Blum says. Whether it’s used as a paste or poured into a bath, most experts recommend choosing colloidal (finely ground) oatmeal and soaking the affected area for at least 15 minutes. In addition to reducing inflammation, oats are thought to have an antihistamine effect, Dr. Blum says. By lowering levels of histamine, which triggers inflammation as part of the immune system’s recovery response, she explains, oats prevent or reduce the redness. Photo: Thinkstock
Yogurt to Cure Bad Breath
Bad breath comes from a number of places, the two most common being the mouth and the stomach. The neutralizing powers of yogurt and other probiotics treat the latter cause. “Yogurt shouldn’t have any effect at all on the bacteria that live on the tongue because it’s not there long enough,” says Robert Meltzer, MD, a New York City–based gastroenterologist and attending physician at Lenox Hill Hospital. However, it likely has a neutralizing effect on the acid that resides anywhere between the mouth and the stomach, including the back of the throat and the esophagus, he explains. “I think almost any milk product or food that contains live cultures would have the same effect." While yogurt can get rid of bad breath that results from gastrological conditions, like acid reflux, it won't have any real effect on bad breath that is the product of gum, liver or lung disease, says Ohio-based dentist Matthew Messina, DDS. Photo: Thinkstock
A Spoonful of Sugar to Cure Hiccups
In 1971, Edgar Engelman, MD, conducted a study to find out if a spoonful of sugar really is an effective cure for hiccups. He assembled a group of 20 patients who had been experiencing intractable hiccups for more than six hours, eight of whom had had them anywhere from a full day to six weeks. Each of the test subjects was given one teaspoon of white granulated sugar to swallow dry, and for 19 of the 20 hiccup patients, the cure was immediate. André Dubois, MD, a gastroenterologist in Bethesda, Maryland, noted in The Doctors Book of Home Remedies that “the sugar is probably acting in the mouth to modify the nervous impulses that would otherwise tell the muscles in the diaphragm to contract spasmodically." Photo: iStockphoto
Bite a Pencil to Cure a Headache
While doctors aren’t sure why we do it, clenching our teeth is a common side effect of stress. According to Fred Sheftell, MD, director of the New England Center for Headache in Stamford, Connecticut, when we clench up, we strain the muscle that connects the jaw to the temples, which can trigger a tension headache. By placing a pencil between our teeth—but not biting down—we relax our jaw muscles, which eradicates tension and reduces pain. Just remember, the remedy really only applies to tension headaches—not migraines or headaches caused by sinus pressure, etc. Photo: Thinkstock
Olives for Motion Sickness
According to the National Library of Medicine, there are a number of symptoms that present themselves as a result of motion sickness, including increased salivation, which is the body’s way of protecting the teeth from the high doses of acid accompanied by vomit. Enter olives, which contain tannins that, when released in the mouth, work to dry saliva—first eliminating the symptom and then the body’s instinct to follow suit. However, the treatment is only effective during the early stages of nausea, when the salivation changes first appear. Photo: Thinkstock
Gargle Salt Water for a Sore Throat
When you were a kid and had a sore throat, your mom likely made you gargle warm water with salt in it...and she was definitely on to something. According to Douglas Hoffman MD, PhD, author of the website The Medical Consumer's Advocate, a sore throat is an inflammatory response of the infected tissues, and the salt helps draw out the excess fluid to temporarily decrease swelling and the pain it causes. Most remedies call for a ratio of 1 tablespoon salt to 8 ounces of water, but it's always better to opt for more salt rather than less. Just keep in mind that you are treating the symptoms—not the illness. As Dr. Hoffman notes on his website: “The relief is very real, but also tends to be short-lived, since the gargle has done nothing to remove the cause of the sore throat.” Photo: Thinkstock
Read more: Health Tips - Home Remedies That Work at WomansDay.com - Woman's Day
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