I’ve Always Been Afraid to Raise Prices
Introduction:
This week, Jay Goltz, Dana White, and Laura Zander have a wide-ranging conversation that starts with the challenge of pricing. Do you set prices based on what you think the market will bear? Or do you set prices based on your own rising costs and what you need to charge to make a profit? And how much profit should a business expect to make? Along the way, the owners also discuss why Laura wants to keep buying businesses (don’t tell her husband, Doug), what Dana needs to do to get her new salon open at Fort Bragg, and why both Dana and Laura are going all-in on influencer marketing. Jay, on the other hand, isn’t entirely convinced that social media marketing works for his picture-framing business. Plus: Should a business owner know every employee’s name? What if you have 130 employees?
— Loren Feldman
Guests:
Dana White is CEO of Paralee Boyd.
Laura Zander is CEO of Jimmy Beans Wool.
Jay Goltz is CEO of The Goltz Group.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Full Episode Transcript:
Loren Feldman:
Welcome, Jay, Dana, and Laura. It’s great to have you here. On last week’s episode, we had a really good conversation about what Shawn, Liz, and William are doing differently with employee compensation. And I thought maybe we could kind of continue that thread by talking about various things, maybe including compensation but other stuff, too, that you guys are doing differently this year. It’s been a pretty turbulent last few years, and I’m wondering where you guys have landed. Let’s start with you, Dana. You picked up and moved to another state. So I’m guessing you’re doing a lot of things differently. Anything in particular come to mind?
Dana White:
Absolutely. So with Paralee Boyd, I’ve decided to take appointments in our Texas location. I’m also paying higher per hour, and I’m paying a higher hourly salary. And I’ve also decided to charge more, which has been amazing.
Loren Feldman:
It’s working.
Dana White:
It is working. And I cannot encourage anybody enough to raise your prices. [Laughter]
Loren Feldman:
We talked about that a lot when you were in Detroit, Dana, and you were nervous about doing it. How much did you raise your prices in Dallas?
Dana White:
Fifteen dollars.
Loren Feldman:
So that’s a significant percentage.
Dana White:
And it’s still low for down here. I think our average ticket is around $88 to $90, even on a base price of $65. I’ve always been afraid to raise prices. I’ve been afraid to pay more—not because I don’t think my staff is worth it. I’ve been just thinking they won’t pay it. And I’m afraid that if I have high compensation, we just won’t have the money. And the whole thing has been, I never want my staff to worry. I don’t want them to think, “Oh, small business, I have to deal with this drama.” But you raise prices, you have more money. You can pay people more.
Loren Feldman:
Dana, did you raise the price when you opened initially in Dallas? Or did you open at $50 and then go to $65?
Dana White:
I opened at $65. I was going to open at $70, which is similar to other salons around here. Stylists are charging way more. I could have opened at $80. But I didn’t want to open at that price point. And because I’m such a believer in raising your prices, I know when I will raise our price to $70.
Jay Goltz:
So here’s the reality: Being in the custom picture-framing business, this is the perfect place to learn this, because we don’t have prices posted, because everything is different. And the fact is, half the customers when you tell them the price, they go, “Oh my God, that’s a lot of money.” And they complain about it. And they think that everyone complains about the price.
And the problem is, no matter what business you’re in, somebody’s going to complain about the price. And that gets in your head like a worm, and it gives you pause, and you start to think about that person. And the part that you haven’t figured out is: If you’re charging, in your case, $90 to do their hair and you get 10 customers, if you lost two because of the price, you’re still going to make more money than if you charge eight people $50 or $60. Like, you’re gonna make it up. You gotta charge what you gotta charge.
Dana White:
You gotta charge what you’ve gotta charge. And then with Fort Bragg, that was a huge price concern. Because on base, they’re used to paying below market. And I was just trying to make the numbers work. You know, everything was based on volume. And I just didn’t think that volume was realistic, understanding that people didn’t know the brand. “What is a Paralee Boyd?” I’m keeping it at $65. And those that see the value in it, the beauty of it, the consistency and the care, they will pay it on base.
Loren Feldman:
Dana, are you open at Fort Bragg?
Dana White:
No, I’m not. We just finished the floors, and so we’re getting ready to move in. So once we can find an electrician and a plumber—and that is a challenge, because you have to be able to get on base, and unfortunately, a lot of the service workers have records, and getting on base is an issue. And then the other thing is, my job is so small. I don’t need an electrician for a big electrical job. I don’t need a plumber for a big plumbing job. Is it worth their time to come on base? Right now, we’re trying to sort through that so we can get going.
Jay Goltz:
So one question I have is: Loren said to you, “Did it work paying people more?” And you said yes. And my question is: What do you mean work? Are you getting a better employee now because you’re paying more? Are you getting more applicants now? Are the people more qualified who you’re paying more?
Dana White:
I think what it means that it worked is that I saw the ripple effect across my competitor. When I moved here, my competitor was paying her people $12 an hour. I advertised, when I was hiring, $15 an hour. And then shortly thereafter, she’s paying $15. That’s one way.
The other way is, yeah, we’re getting young ladies who are coming out of school. We’re getting stylists who aren’t getting the volume of people on their own. And they’re like, “You know what? I can get a steady paycheck.” We’re not only just paying hourly. We’re also paying commission. So once you see so many heads per hour, you go from $15 an hour to $24 an hour. You’re on commission now—not to mention commission on upselling on services and selling products. So having that $15 base has been really helpful, as far as getting great candidates.
Loren Feldman:
Dana, you had a rare opportunity to raise your prices without any of your customers knowing it. You opened in Dallas at the price you’re at now. You didn’t tell your customers that they had to start paying more. Will you be able to do that next time it’s time to raise prices?
Dana White:
Yes, because I’m still lower than the $95 or $100 they’re paying to go to somebody in a private suite. I’m still lower than the market.
Laura Zander:
I mean, you could train these new customers that every January—or whatever, pick a month—is when prices rise. And so then they just know. They always know that it’s going to go up 10 percent, or 5 percent, or whatever. And they expect it.
Dana White:
Yeah, my dear friend, when she raised prices for her bakery, she broke it down in a pie graph. She literally showed it on a cake.
Jay Goltz:
No pun intended?
Dana White:
No pun intended. But no, she did. She had a graphic of a cake. And she said, “This is how much goes to flour. This is how much goes to sugar. This is how much goes to vanilla. This is what’s left. And in order for us to stay open, I need to open that percentage up. And so that means the price of this cupcake now goes up to this.” And she didn’t get any problems with people paying the price, because they understood why. So I believe, the plan going forward is, if—not even if, but when—I raise my prices, it’ll be an understanding. And it’ll go toward compensation, really.
Loren Feldman:
Laura, how about you? Are you doing anything differently this year?
Laura Zander:
Yeah, a lot actually. In our industry—so the yarn, the fiber industry—we’re seeing a huge shift. A number of businesses—especially wholesale—a number of wholesale businesses have gone under and/or are going under. We’ve got legacy businesses, businesses that were family-started and family-owned being sold, and the founders are stepping away. And so the entrepreneur in me is just seeing this huge land of opportunity right now with all of this transition, and things changing so much.
So, actually, tomorrow I’m spending the day with—I rehired a mentor, a consultant, a friend of ours, who we’re just going to sit down and strategize. We’ve been strategy-planning for the last couple of weeks, and just looking at, “Where do we want to be in three years? Where do we want to be in five years? What new businesses do we want to take on? What do we want to open? What do we want to double down on? What do we want to invest?” Again, there are just so many opportunities. I had four legit, large companies come to me last month, looking to sell their businesses. And so just figuring out: What do you move forward with?
Loren Feldman:
Are these yarn shops or suppliers?
Laura Zander:
Mostly suppliers.
Jay Goltz:
Listen, part of what you’re seeing is—it’s what’s driven this economy for the last 50 years. It’s the Baby Boomers, and you’re getting to the last third of the Baby Boomers. Baby Boomers finished in ‘64. So the youngest Baby Boomer is now 59 years old, and they’re still cycling through. That’s why there are so many people moving to Florida and Arizona. It’s just a huge retirement thing going on.
Laura Zander:
There’s that, and then within our industry—and I’m sure it’s similar to others as well—but the exhaustion of the last three years. It’s the Rocky thing. So a lot of people are just sick of getting hit in the head.
Jay Goltz:
Wait a second. Rocky didn’t get sick of getting hit in the head. That’s a bad analogy. In Rocky III, my favorite line is he just went through a brutal round. He looks up at Mickey, and he goes, “I ain’t going down no more.”
Laura Zander:
No, I know. It’s Rocky. I’m Rocky. So I’ll keep getting up, but—
Jay Goltz:
Ahhh, okay, you’re not going down no more.
Laura Zander:
Yeah, but a lot of people, they’ve hit their limit.
Loren Feldman:
Laura, you’ve told us that your favorite thing is checking out businesses to buy. Are you gonna buy any of these businesses?
Laura Zander:
Probably. I mean, you know, don’t tell Doug. But yeah, realistically. [Laughter]
Jay Goltz:
Don’t tell me. I mean, really? Really? You need more businesses?
Laura Zander:
No, I don’t.
Jay Goltz:
Do you not make enough money? You can’t buy anything you want now? You spend too much time with your kid? You’ve got nothing to do? You’re not stressed out a lot of times? Really?
Laura Zander:
I will, that’s why I’m taking a step back. I’ve been doubling down for the last four months. I’ve gained 10 pounds. I’ve been traveling. I haven’t been working out as much. And I’ve been focused, focused, focused on foundational work with the businesses that we have, and training and training and training and getting processes in place and getting systems and scorecards and everything so that if we do, when one of these opportunities comes up, it’s not me. I can hand that off.
And that sounds really fancy, and blah, blah, blah. Or that sounds very simple, and I’m simplifying it. But I’m trying to get us in a position, and trying to build a good solid process and system and all that kind of stuff so that we can make good decisions that don’t end up being emotionally exhausting, and resource exhausting, and all that kind of stuff.
Jay Goltz:
Good luck with that. [Laughter]
Loren Feldman:
Let me jump in here, Laura. I highlighted a piece in the Morning Report this week that I gathered spoke to you because you emailed me about it. It came from a book called Leading the Leaders, and it talks about entrepreneurs who just can’t resist taking on more challenges, whether it’s good for the business or not. The piece cited Elon Musk and referred to these entrepreneurs as “arsonists.” The idea being that you just get used to succeeding at challenges, and you get a high from that, and you just can’t stop. And you emailed me, “Yep, I’m an “E,” which is the term the author used, “and a pro arsonist. What do I do about it?” Is that part of what’s going on here?
Laura Zander:
Yes, and no. Yes, absolutely. The difference is, now in my elder years, I’m catching myself. And so I’m noticing those tendencies to just create chaos, to jump on something new. And so I am not being as impulsive about it. And I am really thinking through: “Do we want to start this fire? Is that the right thing to do? Are we in the right spot?” Because, as Jay said, we’re doing great. We’ve got a good, solid business. I’ve got a good, solid team. So we don’t have to do it. We should only do it if we want to, if it’s interesting, if we don’t have any other opportunities already that we’re working on. So I’m trying to be very, very—
Jay Goltz:
“Selective” is the word you’re looking for. How about “selective?” You’re being much more selective. You’re only going to do a deal if it’s just too good to pass up.
Laura Zander:
Yes. Here’s an example: So there was a business that we really looked into buying around Thanksgiving. So it was late November, all through December. They were gonna go bankrupt. They were gonna go out of business. We could pick it up for pennies on the dollar. For three weeks, four weeks, I’m like digging into it. “Can we handle it? Can we do it? Blah, blah, blah.” We decided to say no.
And then what that turned into is we ended up buying some of the assets from the business that was going to go under that we will then turn around when we have time and when we have the capacity. And we can re-engage those assets and reactivate some of those things. So instead, we just went ahead and let the business die, and then we will pick up some of the things from it. So we bought the URLs. We bought some of the pages. We bought the vendor list.
Dana White:
I also think that Laura’s situation—like, I’ve been to Madelinetosh. Like, I’ve seen it. And it’s a well oiled machine. Laura, you really just don’t give it any justice. I was in shock and awe when I walked through. She literally has this amazing business that operates on so many different levels. She is deciding to control from the beginning of the process of sales to the end. So how and where it’s made, and owning that all the way to the website by which you purchase her stuff on.
So I’m not surprised that when you have a macro mindset of your business—and I’ve been inspired by it. Even in franchising, having this, “Okay, wait a minute. I could actually own the operations company, that people will pay me to operate the franchise. Who better to operate Paralee Boyd than the operating company that I will put in place?”
Loren Feldman:
Wait a second, Dana. Are you back to franchising? I thought you put that aside for a while.
Dana White:
So the representative from the mayor’s office in Dallas has reached out to me, because of my story and whatever. We’re going to start looking back into it in 2023. I was frustrated, because I’m like, “I can’t believe”—and he has been looking at minority-owned franchisors for a while. And he made the case and said, “You’re not delusional. This is why this isn’t happening. And you’re not alone.”
Loren Feldman:
Is the mayor’s office in a position to help you with that?
Dana White:
Absolutely. Absolutely. Because Dallas is, if not the largest franchise city in the country, they have more franchisors and franchise corporate headquarters here than anywhere. So I told them what I want, and we’ll see. But when I said, “Okay, so I got into this. This is what I’m seeing. Why is this the case?” He’s a franchise attorney. He doesn’t want my business. He doesn’t want to represent me. He’s just really passionate about minority franchisors.
And considering that I’ve already gotten through the hurdle of, now I am a franchisor. He’s like, “Okay, there’s no reason. There’s a reason why Allie Webb took off and yours didn’t. And you’re not imagining that. But I’m here to help you, and the mayor’s office is here to help you to remove those barriers.” And so that’s it.
But back to Laura, and Jay, and what I’ve heard with her buying other companies, I think it’s brilliant. You know, with my product line, it’s like, “Okay, wait. Why am I paying somebody else to do this? Is it possible for me, and is it cheaper or more efficient for me to do it?” So kudos to Laura. Laura, you really should talk about—we should do a show from Laura at Madelinetosh.
Loren Feldman:
What did you see there that so impressed you, Dana?
Dana White:
Man, where do I start? So you pull up. You see the big Madelinetosh logo, and you just say, “Oh, Laura, yay!” But then you go in, and specifically the rooms of wool and listening to Laura and the care and the deliberateness of how she picks the product. Then, you go into another room, and you see the workstations of all the people who work there—so the dyers—and that could be an awful sweatshop. It could be an awful place to work. But it’s not.
I felt, looking at each of those people’s stations, I knew a little bit about them, just by walking through and having this space. And even though the work isn’t easy, it’s not oppressive. I didn’t get that. I got, “Oh, okay, wow.” And that was at everybody’s workstation on the front-end and on the back-end. And they’re there to work with Laura to build Madelinetosh.
Laura Zander:
Something that was new, when we took over, was we gave everybody a little bit of money to decorate their space, to personalize their spaces.
Jay Goltz:
Wow.
Dana White:
And they did it, and it shows who they are, and it shows the type of work environment. Then they were having—I don’t want to say a meet and greet but it was like—people were actually there. I think it was retailers and some customers were coming to Madelinetosh.
Laura Zander:
Like an open house.
Dana White:
Like an open house. And to overhear the people talk about the level of what they expect from this brand. Whereas most people work for it, like, “Okay, we’ve got to try to do this.” Because they care about the quality of product they’re putting out, this kind of comes naturally. So people—I don’t want to say they take it for granted, but it’s like—”Oh, we expect that. It’s Madelinetosh. We expect that.” But it hasn’t always been that way. It’s almost like, “Oh, I’m glad it’s there now.”
And it’s a huge space. I really like seeing the wool. I really took pride in watching my friend walk through her business, and the pride she takes in how everything is unfolding in the acquisition of Madelinetosh. It’s just really cool. I was so proud of her. I was skipping on the way out.
Jay Goltz:
You had me at, “It didn’t seem oppressive.” No, I’m gonna tell you the interesting perspective. I’ve never been there, and all I’ve heard about are the problems trying to get the air conditioning working and getting them in, because that’s what we do. And she talked about all her problems. So I’m glad to hear that, because she never talks about the good stuff. She’s talked about all the issues she was having, which she worked through.
Laura Zander:
Yeah, cause I’m moving on.
Jay Goltz:
No, no, I got it. But that’s interesting, because this is all new information. Because when I think of it, I think about the problem you had trying to get the place air conditioned for a long time.
Laura Zander:
Yeah, I totally forgot about that. Nobody quit this summer.
Dana White:
Exactly. But there’s a reason why. We went on a hot day, and nothing was being dyed. I can only imagine how hot that room gets when it’s up and running at 2, 3, 4 o’clock in the morning. That’s why I said, “What time are they here?” And she told me it’s really early in the morning, and they’re done by a certain hour in the early afternoon. But still, it’s hot. But you can tell the care that goes into making sure that people are calm. I’m not surprised she has a waitlist to work for her. Not at all. No surprise.
Loren Feldman:
Jay, what are you doing differently this year?
Jay Goltz:
Well, I’m spending a lot more time on just figuring out projections, because my business model has changed a little bit. My real estate taxes have just gone up dramatically. I’m paying half a million dollars a year just for real estate taxes. That’s a lot of money. And like, where does that come from? And I’ve got to relook at my pricing and my budgets and figure it out. And then slowly but surely—and I’m not complaining about this—
Loren Feldman:
You’ve mentioned your pricing before.
Jay Goltz:
I’m still working on it. Yeah, I’m going back to ground zero, which I have a handwritten formula from 30 years ago that we were working off of. So I’m having to relook at the whole business model, because the minimum wage in Chicago was going up to like $15.80. And you know, it’s gone up a lot. And I’m not complaining about it. It’s fine. And now you get five sick days per year, that’s built in. So my cost of labor has gone up, and the cost of the real estate taxes have gone up, and the cost of maintaining the buildings keeps going up. And it’s got to come out of somewhere.
Laura Zander:
But those real estate taxes are your responsibility personally, right? It’s not the business—just to be clear?
Jay Goltz:
No, no, it’s the same difference. If I was a third party, you’d still end up paying the taxes. Someone’s paying the taxes. That’s what they call a triple-net lease. So the tenant always ends up paying the taxes. I have to really look at all of my pricing, because just keeping my heating going in the building. Every time the guy comes out, “Oh, I had to replace the valve.” You know, $2,300. It’s expensive. And then for Jayson Home, for shipping stuff around the country, I’m paying out tens of thousands of dollars every month for white glove delivery. And I’ve gotta make sure that’s covering it.
Loren Feldman:
Do you charge him for shipping separately, or do you build it into the price?
Jay Goltz:
Yeah, yeah, I do. And then you’ve got stuff shipping from all the containers coming over from Europe. So it crept up on me, but I’m really spending a lot of time. And then, I’ve got my kid in my head when I’m looking at the budgets. And I hear him going, “Gee, is that really enough money to make?” And he’s not wrong. I mean, it comes down to the basic question of, “What should the bottom line of a company be?” And I’ve been in lots of business groups over the years, and it’s always a nebulous number. How much can a company make? And there’s no quick and easy answer to that.
Laura Zander:
Your CFO doesn’t answer those questions for you?
Jay Goltz:
My CFO has been here a year, and she’s got enough on her plate to just take over the antiquated computer system and work on getting—no, she’s just got too much on her plate. And she doesn’t understand the business. She doesn’t understand the business at all. I mean, she’s just been here for a year. I’m the one who knows how to frame a picture. So yeah, I’m working on it.
Loren Feldman:
Jay, I’m curious, to what extent are you basing your pricing on what it costs to make your stuff or to get your stuff? And to what extent are you basing it on what you think the market will bear?
Jay Goltz:
I put zero energy into what the market will bear, because there’s no way of knowing. And this is an old thing of mine, doing speeches at frame shows, talking to framers, so like, “Oh, I can’t charge that much.” Well, if you’re not making any money… You gotta charge what you gotta charge. End of the story. You need to charge what you need to charge. I can’t start, “Oh, well the customers won’t pay that.” A) You don’t know that, and B) what are the other options? Don’t charge enough and not make any money?
Laura Zander:
When we’re done with this podcast episode, I’m heading into the office, because we’re starting on a private-label-line brand of yarn. And today is the day that we’re going to work through pricing. So we’re getting it manufactured right now. And so now we’re trying to figure out like, “What will the market bear? What’s the top down? What’s the bottom up? Blah, blah, blah.” And, you know, Jay, I always ask you, I’m like, “What is my job? How involved should I be in this kind of stuff?” And I don’t have a CFO. So I guess I just always assumed that that CFO was your silver bullet. And you could just say, “Hey, CFO, tell me what we should be charging for this stuff.”
Jay Goltz:
No, way more complicated. No, this is absolutely one of your jobs, as far as I—
Laura Zander:
I mean, I love it.
Jay Goltz:
Well, first of all, you’re giving the heart and soul of the company to a third party. If that gets messed up, you’re out of business. And who knows it better than you do? Now, here’s an interesting part people should be thinking about, which I’m thinking about: You’ve got two people in a business group. They both have businesses that do, whatever, $10 million a year. And one says, “Oh, I’ve got a 10 percent bottom line.” Wow, that’s great. A million dollars. And the other person says, “Oh, I only have an 8 percent bottom line.” Well, you really have to know how much money’s invested in the business to decide who’s in better shape, because it’s return on investment.
If the person making 10 percent on the business has $3 million of inventory, and the person who makes 8 percent has $200,000 worth of inventory, their return on investment is dramatically better. So you do have to factor that in. And then the question is—and this question isn’t that nebulous—what your bottom line should be. There are a lot of factors. But what your return on investment should be, it certainly shouldn’t be 10 percent. You can almost make that in the stock market and not work.
Laura Zander:
That’s a great question.
Jay Goltz:
Should it be 20-some percent? Yes. Should it be 30? It certainly should be north of 20 percent. Or otherwise, it’s too much work. And I know real estate. I’ve learned that if you do real estate properly, and you leverage it properly, and you charge the right rents, you can make 15 or 16 percent a year on real estate, which is why people get rich with real estate because 15-16% is a lot more than 8 or 9% in the stock market.
Now, when you do what I did by accident, and I did SBA loans, and you only put 10 percent down? Oh my god. Your return on investment could be 30 percent. Because you’ve got very little money in it of your own. So you really need to understand the concept of return on equity versus return on investment.
There’s a difference between how much money you have in the business and how much money is actually your money versus leveraging the bank money. So there is a difference between return on investment and return on equity. We can do it with your business when we’re off the podcast, is take your bottom line, and what is your business worth? What is the inventory worth? And that would be interesting to see.
Loren Feldman:
What do you mean after the podcast?
Jay Goltz:
Okay, well, does she want to share her real numbers?
Laura Zander:
So let’s just say they’re basically the same. Let’s say that my inventory is about the same as what the bottom line is. Let’s just say they’re both a million dollars, just for round numbers.
Jay Goltz:
Okay, well, that’s phenomenal. Then you’re making 100 percent return on investment.
Laura Zander:
So one of the questions I was going to ask was, 20 years in, I’ve burned off all the sweat equity. I mean, those first five years, I didn’t make much money. I didn’t pay myself anything. So part of my investment, obviously, was sweat equity. Now, at this point in the business, I mean, I think that is pretty much gone.
Jay Goltz:
Listen, the whole EBITDA times a multiple, that’s really what the core of it is. They’re figuring out: What’s the cash flow? And if someone put money in, how much money are they going to make on your money? And that’s really where the whole concept of EBITDA times a multiple comes from. No one’s going to put money into a business, and then think, “Oh, I can make a 12 percent return.” Why would you take the risk to do that?
Laura Zander:
That’s a great point. Okay. So let’s say my inventory is worth a million and my bottom line is $500,000. So then I’m making 50%.
Jay Goltz:
Okay.
Laura Zander:
That’s good?
Jay Goltz:
I think so. Sure. What else would you do with the money? You couldn’t go and invest it somewhere and make that kind of money. Yeah, so I think that’s a good exercise for people because, like I said, just looking at what your bottom line is, it really depends on how much money you have in the business.
I did a bus tour one time when I got into the home store. I was selling a lot of plants, so I went on a tour with people who own nurseries around the country. And you know, I’ve got a big mouth, so we’re on the bus, and I’m talking, and I said, “You know, after seeing some of these places, it’s an unusual industry, in that many of the people in it, their grandparents bought it, or great grandparents. They own the land.” And we’re going through some really rich neighborhoods, and there was a plant store. And I said, “Do you actually make enough money on this business to justify tying up the land here?” And the answer was frequently, “No.”
And I said, “In this kind of industry, there are a lot of people who really aren’t making any money, but they think they’re doing fine. But they left off the fact that their great grandfather bought the land for next to nothing, and now it’s worth $12 million.” And a guy got really mad at me and he goes, “We’re doing God’s work!” I said, “Okay, I’m not telling you not to do it. I’m just suggesting, perhaps you should factor in the cost of the land when you do your pricing, so you’re getting a return on your investment.” And I know for a fact that a lot of businesses, they pay off their building, they stop charging themselves rent, and they make their business worthless.
Loren Feldman:
I want to go in a slightly different direction. I asked you guys what you’re doing differently, and none of you mentioned marketing. And I’m wondering if that means that you’ve all kind of got it figured out, and you don’t have to make any changes because you’re in such good shape. Laura, how about you? Do you have it all figured out?
Laura Zander:
Yeah, have you met me? Do I ever have anything figured out?
Loren Feldman:
What’s working? What’s not working for you with marketing?
Laura Zander:
We’re taking a slightly different approach, in that we have reached out—I am starting to outsource more of the marketing in some ways, in that we’ve decided there’s so much talent out there. With all of these businesses going under, this is part of the opportunity pie that I recognize, or that we see. And there are a ton of talented, creative, analytical people across the country who want work. And so we’re starting to partition out some of the stuff that we’re doing. So like I mentioned, the private-label line, the private-label brand that we’re going to launch. So we have a guy in Rhode Island who we’re paying a couple thousand bucks a month to take that on and to run with it.
Loren Feldman:
How did you find this person? How did you vet him?
Laura Zander:
It’s a small industry. I mean, it’s somebody we’ve known forever, and somebody knows somebody, and it’s somebody who we’ve worked with in different capacities over the years. So all referral stuff. It’s not us searching for anybody. It’s people coming to us. So right before the podcast, I had a call with another woman. She was a former engineer, she was a designer, she’s worked for another brand for a while, and blah, blah, blah. And she’s looking for some projects to take on. So this is going to be a new approach. It’s something that we haven’t done before. So we’re going to focus more on management of various contractors and resources to take on different projects.
Loren Feldman:
Are you leaving it to them to decide what platforms and what strategies?
Laura Zander:
A lot of it, yeah. I mean, they’re more in-the-know. And they understand the relevancy certainly more than I do. You know, I’m not even on social media.
Loren Feldman:
You used to be.
Laura Zander:
I did. Once COVID hit, it didn’t make my day better. So I’ll pop on every once in a while to look at, you know, my new football team.
Jay Goltz:
Certainly, what you said is true. There are a lot of those people out there. Would you agree, there are also a lot of extremely untalented and incompetent people who do marketing, who manage to make a living somehow? And I’ve hired some of them.
Dana White:
Absolutely.
Laura Zander:
Absolutely. I’m a little stuck up, I guess, probably, or maybe a little arrogant.
Jay Goltz:
Let’s say you have high standards.
Laura Zander:
I have really high standards, yeah. And I don’t like lowbrow marketing. And I don’t like to do things the way everybody else does them. Or, I mean, I just never have. So I’m not looking for marketing people. I’m interested in engaging with people who are smart, driven, relevant, understand the landscape. And then, I mean, marketing’s easy. That’s the easy part. It’s more, “Okay, how do we get our brand in front of these people? And let’s not do it in traditional ways.” So I’m taking a slightly non-traditional approach. And that’s what we’ve always done.
Loren Feldman:
Can you give us an example? How are you getting your brand in front of people?
Laura Zander:
Yeah, sure. For example, for this new brand that we’re going to launch, we’ve hired a guy who actually is a hand dyer. So he’s got a company dyeing yarn. So he quit his day job. He was working at the university. He quit his day job to come work for us part-time.
Jay Goltz:
Wait, wait, wait. He’s working at a university and he’s a hand dyer? Which one is he?
Laura Zander:
Both. And that’s very common. That’s very common that a lot of people who do hand-dye stuff, and they sell on Etsy, they have a full-time job. And then on the side, they have a creative job. But he’s a person who knows everybody. So what he’s doing is, he’s going and reaching out to various influencers, various designers, people who can move the needle—no pun intended—with this brand.
So he’s exposing them to the brand, because people trust him and value—because he’s a respected member of our community. So he’s an influencer among influencers, I guess, in some way. So he’s going around, and he’s spreading the word. He’s getting people to work with this yarn of ours.
Loren Feldman:
So that’s kind of the big-picture strategy that you’re talking about, then. The people you’re reaching out to around the country are influencers who know other influencers.
Laura Zander:
Yes, exactly. You nailed it. Wow. You can just edit all that other stuff out.
Dana White:
I find that influencer marketing is the way to go. That’s something I’ve done differently, Loren.
Loren Feldman:
You struggled with it at first, when you got to Dallas, you told us, Dana. How’s it going now?
Dana White:
So it’s very important that when you put on an influencer event that people who are organizing understand your market. And so there was a young lady there who realized that the event wasn’t going well. And she said, “I’m not confident. I know how much you need this, because I know how much I need this to be here. And I know how important it is that this gets out, because what you’re offering is needed in Dallas. So I will put on another event for you for free. And it will be well attended, and you will be able to get ambassadors from it.” And man, it went gangbusters. Most of our customers right now are coming from TikTok, and we don’t even have a TikTok account. That’s something that we’re going to be working on in the new year.
Loren Feldman:
You’re just reaching out to people who do have TikTok accounts, and are you paying them to promote you?
Dana White:
So what we’re doing is, we gave them a bag of our line of products, all five. And we offered them free services. They came, they tried, they videotaped their experience. They did these blogs and reviews—it was amazing—their before and afters, how the salon looks, pictures of me, videos of me, and they just put out all this content. And everybody loved it. And so now, without even doing any other marketing, we’re seeing our numbers have gone up. Where I thought we would be in March, we’re there now.
And so, I’m like, “Okay, this is great.” And so now, I have to get ready to put myself into it. Everybody I’ve met ever since I’ve owned this business has said, “The business is Dana, the business is Dana.” And the only way I’ve had it be me is by being there in the salon talking to customers. Well, you can talk to customers, and you don’t have to be in the salon. So what I’m working on right now is a way for me to talk to the staff, a way for me to talk to the customers through video, through our social media, through a Facebook Live group. A lot of our customers have a lot of questions about hair care, about what truly is healthy hair care. And there are a lot of myths out there.
So I’m going to dispel all of that, because what we do works. So my marketing is not only going to be geared to getting butts in seats, but it’s also educating my market, as to what is healthy hair, what do you need to do to make your hair grow and thicken? Just because you’re 70 doesn’t mean you have to have thin hair. There are ways in which you can take care of your hair today that will pay off benefits in your future. And then there are also things that you’re doing today that are going to cost your hair health in the future. And they don’t know what those things are. And so our marketing is going to be geared more towards Dana talking to the customer.
Jay Goltz:
Well, here’s an interesting question: In the olden days, if you put an ad in a magazine, and it cost you five grand, you’d have to say, “How many customers do we want to get back that we spent the $5,000?” In this case, what’s the cost of doing TikTok? What’s the cost of doing some of these things? And that’s all relevant. It’s back to the same old thing: return on investment. The question is: What do you need to generate from this to say, “Yeah, that was a success, period”?
Laura Zander:
Yeah, and the opportunity cost. I mean, I’m a big fan of talking through what else could you have done with that time?
Loren Feldman:
Jay, forgive me, but I’ve gotta ask. Both Laura and Dana have just told us that their marketing is basically, top to bottom, influencer marketing. Do you have a good feel for what influencer marketing is?
Jay Goltz:
Sure.
Laura Zander:
Oh my god. Are you asking him that because of what year he was born?
Loren Feldman:
No.
Jay Goltz:
No, no.
Dana White:
Jay has been anti-social media. Jay is like, “Social what?” It’s not his lane.
Jay Goltz:
Not true. No, I certainly am not personally involved though we’re doing it. You have to factor into this that I’m a retailer. I just told you I spend half a million dollars a year in real estate taxes. There’s a reason for that. I’m on some major streets with major frontage with major signage. So that’s an important piece of getting new customers. And then I’ve got a website, and that’s a major piece. And we do the social media, but I can tell you from just tracking it, I would not be—
Laura Zander:
You just said “the social media.” [Laughter]
Jay Goltz:
Yeah, whatever. I would tell you that I have the numbers. And I can tell you that’s not the big number. We ask customers: “Oh, you’re a new customer. Where did you hear about us?” I can tell you for a fact that’s certainly not outshining drive-by business and website business.
Laura Zander:
But you also have a very high end, right? I mean, as far as Jayson Home—
Jay Goltz:
Jayson Home I’m less familiar with because we can’t ask every customer, “Where did you hear about us?” With framing, we have their name and number. We know if they’re in our computer. Here’s the big word for the day: “attribution.” It’s much harder for attribution for Jayson Home than it is for framing.
Loren Feldman:
But Jay, you just said you know for a fact that social media isn’t driving a lot of business your way—
Jay Goltz:
For framing.
Loren Feldman:
For framing. I don’t think you know for a fact what you’re doing on social media for framing.
Jay Goltz:
We’re doing stuff.
Loren Feldman:
That’s what I mean.
Laura Zander:
On the social media.
Dana White:
I follow you. I totally follow you and Jayson Home.
Loren Feldman:
Jayson Home is different. For Jayson Home, you have a fabulous Instagram.
Dana White:
Beautiful Instagram.
Jay Goltz:
I think I gotta go. I gotta go. My bus is coming. I’ll talk to you later.
Loren Feldman:
Laura or Dana, do you guys think there is an influencer play for Jay and picture framing?
Dana White:
Absolutely.
Laura Zander:
Always.
Jay Goltz:
Listen, when I hear them saying this, I’m thinking, “I’m not arguing with anybody.” Sure. And when I finish the podcast, I will go and find out. And I’m not arguing with that—that the world’s changed. I’m absolutely not arguing that. I’m just saying, in my case, there are other ways of getting business that are simpler, that I’m doing everyday with doing nothing—just having a storefront. Whereas Laura doesn’t have a storefront selling yarn that’s driving most of the business. It’s different.
Dana White:
I have a storefront driving business. And to me, getting the word out now, I’m a word-of-mouth business. And so I need to put the words in the mouth, and the only way to do it is to go to the people who they’re listening to. I think by following you on Instagram, if you ever decided to do influencer marketing, your people are artists.
Jay Goltz:
We are doing it in Jayson, I know, for a fact. There’s a huge difference between what I do and what you do. Everybody who you’re going after has their hair done. I’m gonna guess 2 percent to 3 percent of the population has ever been into a frame shop, period.
Loren Feldman:
Yeah, but that might be a reason to do influencer marketing, not to not do it.
Jay Goltz:
Listen, I’m not arguing. I said we’re doing it. I can’t do everything. And that’s not my hands-on thing. I’m the pricing guy this month.
Dana White:
I’m with Jay. It’s not my thing. Social media is not my thing.
Loren Feldman:
Don’t defend him, Dana!
Laura Zander:
Yeah, I’m with Jay, too.
Dana White:
I don’t like it. It doesn’t make me feel good. I needed somebody to come to me and say, “Hey, I will help you with this.”
Jay Goltz:
Loren’s just trying to be hip and cool and show us old folks that, “Oh, look”—
Dana White:
Jay, you’ve had an influencer in your store. One of the reasons why I followed you was—
Jay Goltz:
I had Martha Stewart here.
Dana White:
Queer Eye.
Jay Goltz:
Yeah, he buys from us. Yes.
Dana White:
Exactly.
Loren Feldman:
And you know that, Jay, because I told you. [Laughter]
Dana White:
Loren told you that.
Jay Goltz:
How I find out doesn’t matter.
Dana White:
People went and bought that lamp because he bought it. And so to me, that’s more valuable than drive-by traffic.
Jay Goltz:
Wait, wait. You can’t make a statement like that, that it’s more valuable than drive-by traffic, for God’s sake. I mean, I’m sure it’s valuable, but you can’t ultimately go, “It’s more valuable than drive-by traffic.” If that’s the case, why do I have a store? Why not just work out of a warehouse?
Dana White:
But listen. Because in time, that influencer had over 100,000 followers. Those are people on Instagram who are gonna look at that lamp and say, “Because he had it, I’m gonna buy it.” Over time—
Jay Goltz:
It’s valuable. I’m not arguing with that. It’s valuable.
Loren Feldman:
Jay, the potential number of people who could find you through influencer marketing versus the potential number of people who drive by your store—
Laura Zander:
Okay, okay, but I’m gonna say, Jay has the most successful business out of all of us. So he must be doing something right.
Loren Feldman:
Well, no one’s arguing with that.
Jay Goltz:
I’m not getting defensive. I’m not arguing with the thing you’re saying. I’m really not. You’re right. I’m just arguing with any conclusions that it’s for sure gonna be better than drive-by. It’s gonna be valuable, for sure. It’s just, this is all very complicated. And when you started off, you said, “Have you figured it out?” I’m continuing to try to figure it out. I’ll do that for the rest of my life. Anyone who says they’ve got it all figured out, I think is—
Loren Feldman:
I didn’t ask you if you had it figured out. I asked you if you knew what it was.
Jay Goltz:
Yeah, I know what it is.
Loren Feldman:
All right, we’re almost out of time. Real quickly, I’ve got a listener question I’d like you all to answer: What are you planning to do this year that you always say you’re going to do, but never get around to?
Jay Goltz:
I got one. First, no doubt in my mind, every year, especially now, I used to go to my warehouse every week for a production meeting. And because of COVID, I haven’t. I go there now, and I don’t know half the people walking around there.
Loren Feldman:
Don’t know, meaning you haven’t met them, or you don’t know their names?
Jay Goltz:
Maybe I have met them for a minute. So every year I say, “I’ve gotta get a directory with their picture, their name. And when I go over there, I can look at it. And I could walk into the mat department and know her name.” And this year, I told my HR person, “I’m telling you, I want a directory printed out. Go take a picture of everyone.” And I’m doing that this year, because I feel like it’s the least I can do. I’m not saying I’m gonna memorize them. But at least before I walk into the wood department I can look at their names and go, “Hi,” whatever their name is. And I think that’s valuable. And I think that’s the least I can do, for God’s sake. I’m not suggesting I’m gonna go and say, “How’s the kids? What are they up to? Where are they going to school?” But I certainly should know their names. So, this is the year.
Loren Feldman:
Laura, is there anything you’re planning to do this year that you always say you’re going to do, but you never get around to?
Laura Zander:
I want to have budgets fully distributed to each department, throughout all of the companies and all of the brands. And that’s something that I have not quite done yet. But that is going to happen this year.
Loren Feldman:
Because? What’s the goal?
Laura Zander:
The goal is to have people not ask me if they can buy paper clips.
Jay Goltz:
Wow.
Laura Zander:
Yeah. So, I don’t know, “Do you have enough budget left? I mean, you decide. If you want the colored paper clips, and that’s really important to you, great. Good for you.”
Jay Goltz:
Is that really about budgeting? Or is that simply about empowering them to know, “If it’s less than $50, don’t ask me. Just do what you want to do.”
Laura Zander:
It’s a combination of the two. But I think it is about budgeting—because about half of the team has budgets. And it’s really nice, because they know, “I’ve got 100 grand to spend this year.”
Jay Goltz:
You know what, you could fall into the big company problem with, “They’ve got the money, therefore, they’re just going to spend it whether they need to or not.” I don’t necessarily buy into that. Like, either you need it, or you don’t need it. I’m just suggesting, I’d rather train my people, “If you need it, buy it. If you don’t need it, don’t buy it.” To start to go, “Okay, you’ve got $5,000.” Maybe they didn’t need to spend $5,000. Or maybe $5,000 wasn’t enough.
Laura Zander:
This is why it’s taken me so long to do this, because I haven’t done it, is 20 years of data of: How much do we organically spend? So if every year we end up spending $5,000, then that’s what they’re gonna get. And then the message is, “If you need more than this—because I want you to buy it if you need it—then let’s talk. This is a guideline. This is a starting point.”
Jay Goltz:
Sure.
Laura Zander:
And this is not some big bureaucratic, “If you don’t spend it, it’s gonna go down, or anything like that.” And we start slim. And the messaging is, “You buy something if it’s going to make somebody’s life easier, if it’s going to increase efficiency, if it’s going to increase community within the office.”
Loren Feldman:
Dana, how about you? Anything you’re planning to do this year that you always say you’re going to do, but never get around to?
Dana White:
I’ve already started, and I’m actually kind of proud of myself, but I need help with: Numbers, numbers, numbers, numbers, numbers, numbers. Understanding the numbers as if it’s a ball in 3D, and you’re just rotating around the ball. Numbers from top to bottom, front to back, side to side. Also, getting my head out of the sand about the hard stuff. Realizing that because I stick my head in the sand, it makes it harder when I do come up for air.
Loren Feldman:
What’s the hard stuff? What are you referring to?
Dana White:
The hard stuff is having a hard conversation about looking at the numbers. It’s always the numbers for me. It’s like, “Ahhh!” And only feeling better about the numbers when the numbers say something positive back. If the numbers don’t, then I don’t want to look at it. I don’t want to talk about it. I don’t want to do it.
Laura Zander:
Oh, interesting. I bet that’s common.
Jay Goltz:
Absolutely.
Loren Feldman:
My thanks to Jay Goltz, Dana White, and Laura Zander—and of course to our sponsor, The Great Game of Business, which helps businesses implement open-book management and employee ownership. You can learn more at greatgame.com. Thanks for sharing, everybody. As always, much appreciated.
