Busting A Myth 2 (Long Post)

[Norm_Cabana]

In my previous BAM thread I tried to bust the myth that one could simply enter a market, undercut the existing businesses and walk away with all the customers. As I said, it doesn't work that way. You can certainly enter business this way, but you won't push the other guys out of business.

In this thread I want to touch on two ideas. The first is that a company with high prices will not be able to successfully enter a business segment that has been serviced by a company that charges much lower prices. The second idea is that online sales are more attractive to customers than on-site. In other words, I am taking shots at the lone wolf idea as a business model.

This is a first hand account of what happened to us between 10/15 and 10/22 2006. I happen to do a lot of photography at Infineon Raceway which has a road course, a drag strip and a kart track. As I mentioned in an earlier message, I’m interested in photographing karts. Occasionally I would stop by the kart track to see what was happening. I have been told, repeatedly, that the kart track is covered by a photographer yet every time I have been there I have never seen one working.

Anyway, on 10/15 I stopped by the track, and yet again did not see a photographer there. I asked a few of the racers what was going on and I found out that it was simply a practice day and they didn't have anyone shooting. As things will happen from time to time to me, I ended up speaking with the guy who runs the track and it turns out that the guy who WAS the photographer was soon to be the FORMER photographer simply because he was making some very basic business mistakes…like not showing up for events! I soon found out that there were several events yet to be done in 2006, two of which were this weekend, and a new photographer had not yet been chosen.

Here was an opportunity staring me in the face but did I have the sense to go after it? Did I have a reason to NOT go after it? NO!

Well to make this long story somewhat shorter, I took the plunge and showed up at the track on Friday, 10/20/06. I hadn't been invited but I hadn't been told to stay away either. I explained to the track manager on Friday that I really didn't know if I wanted to do this and I really didn't know if his customers would accept us but I thought that this was a great opportunity to audition before a commitment had to be made for next year. If the other guy shows up, who cares? My calendar was open this weekend so I could devote our full attention to this event. The track manager showed some good common sense and thought it was a great idea. He was attracted to my position because we were...................wait for it.........different!

I sold on site and the other guy sold online. We showed samples, the other guy didn't. I was expensive, he was cheap. He required sign-ups to buy at the track, we photographed anything that moved. We had hardly ever shot karts and the other guy never shot cars. Think of a way to be opposites and we were. The track manager proceeded to bend over backwards to help us out. Prime location to set up, announcements were promised for every 15 minutes, even track power was provided, although it is against their policy. It took only 5 minutes around this track manager to see that he REALLY wanted us to succeed. The question was…would we?

My big concern was whether or not the racers would not only like the photos but would buy them at our higher prices. If most business people are to be believed, I was heading into disaster. A high priced newcomer is not going to be able to compete against a low priced entrenched business. This guy had been doing this group for three years and we were virtually unknown. Bloomingdales cannot just come into Wal*Mart’s area and expect to take away Wal*Mart’s customers. Granted, in this case the other guy was being replaced, but the racers didn’t know this and conventional wisdom says that my operation should have been rejected because low prices and online shopping rule the day, or so everyone seems to believe. My expectations were very low for this event. A few hundred dollars in sales would make us happy and we can build from there.

Saturday morning begins with a trip in the dark that, for once, leaves early. The sun rises and we are greeted with a cloudless sky and no fog. In the San Francisco Bay area, mornings like this are rare. Things are looking very good so far. We get to the track with plenty of time to spare and when the ticket people see us pull up, they have our wrist bands waiting for us. We even get to park right next to our trailer. Are these omens of success? It sure feels like it!

We open up the trailer and set up our displays. People walking by have started to stop and look and we don’t even have any kart photos out yet, just cars. I’m hearing comments about the quality of the samples. Even before the first kart starts up, I hear announcements being made for us. Our location is where the karters leave the pits so they have to come right by our trailer. Our location is across from the snack bar and near the bathrooms. It doesn’t get any better than this in my business.

Within the first hour I start getting photos in and my photographer is nailing his requirements. The track manager wants group photos and that’s just what Steve is able to get. Racers want action photos and we are seeing shots of karts with all four wheels in the air. New sample photos are made and displayed. I watch people as they come by our displays. They can’t keep their eyes on where they are walking. Several lunches were ruined when people ran into each other. Questions about when these were taken are answered and the answer stuns the racers. They are used to waiting days and weeks to see their photos and now they are available within minutes. We’ve clearly impressed them. As the day goes on we add more sample photos showing different corners and different angles. At one point we had to move one of our sample photos because so many people were looking at it people couldn’t get back to their pits. Believe me, this is the kind of reaction I’ve dreamed about!

Most of the people who came into our trailer told us that they had never encountered a set up like ours before. Yes, they know about computers, but the packaging of our operation is what surprised and impressed them. There are a lot of questions about prices, before any photos are seen, but no one seems too shocked especially after they get a look at our work. Soon these folks go away but they quickly return with their friends in tow. We hear the phrase “You gotta see this thing!” all day long. Things are looking very good. About now you, the reader, are waiting for me to give you a “But” but it doesn’t happen. I get worried when traffic into the trailer stops for about 2 hours but I finally figure out that everyone is watching the racing and they will return later, to buy, and they do. We are asked repeatedly if we will be at the Super-Nationals. Super-Nationals? This is our first day and people want us at their top event? I’m tempted but we are already booked for that weekend. The only question I have right now is will these folks buy and if they do, what will they buy?

Our first day with this group netted a $2,200 gross and we sold a lot of prints. Oddly enough, the only size print they buy is 12x18 and I think that is because the 12x18 prints were the only size we displayed. Not bad for a first day. Not bad at all! But what will happen tomorrow? The track manager tells me that on Sunday it will be a totally different group of people and these people are much less likely to buy as the Saturday group did.

I won’t drag this out. Sunday was a super clone of Saturday. Not only did these racers buy but sales were 25% higher to this group than the Saturday group. Our gross for Sunday was $2,900 plus. Our grand total for an audition weekend was $5,120!

So what have I learned from this?

While I will be the first to tell you that one event does not a trend make, it is obvious that there were people out there more than willing to pay the extra price to get products that they wanted when they wanted them. If they weren’t, I would have gone home with a very light billfold. I have found that when people are starved for a product they will buy with a ferocity that can scare you. I grabbed that opportunity and it worked! The question is if this level of buying frenzy with this group can last and from past experience I have to say no. Because this is only one group at only one track with no real changes it is easy to saturate this market and have sales drop drastically as everyone gets their photos. There are a limited number of corners and angles to shoot and once you’ve covered them, you’re repeating yourself. As a result, we will only do 3 or 4 of their scheduled 7 events next year.

Something I heard all day, on both days, was that the people coming into my trailer did not like the idea of having to wait to see and order their photos online. There was a lot of “Been there, done that. I’m not impressed any longer.” It was almost as if they viewed the online buying stuff as a fad. They wanted instant gratification and no one had been providing it to them. That does not mean that all of the racers felt that way but we had only two requests to view the images online so draw your own conclusions. It also doesn’t mean that they wanted the product delivered at the event but we didn’t get a single request to send their purchases to them. What WAS clear was that they wanted to SEE their stuff in near real time and BUY their stuff while they were excited about what they were doing. Am I a fad? I’m working hard to NOT be a fad but only time will tell.

This highlights an issue for the lone wolf. You are not able to get effective feedback from your potential customers. You may not realize it, but it’s true. While you are out there taking pictures your potential customers are talking about you and your work and you aren’t able to hear this vital information. You have to operate under the assumption that what you are providing is what your customers want and your assumption may just be totally wrong or it has changed over time. Being able to just listen to the people talk amongst them selves while they are looking at their photos has been one of the keys to our success.

Were my customers the same ones as the other guys? Did I penetrate into his lower priced customer base? I don’t know. I might have just gotten the people that were unhappy with the other guy but many of the people I listened to had clearly seen the other guys work and weren’t pleased.

So, did I bust the myths? For the first myth, yes if the conditions are right. People will spend much higher dollars if they are getting what they want. The second myth will be busted when I cover a kart group with a high percentage of kids racing and make sales like this. I suspect that the Karter Moms, like Soccer Moms, won't be as willing to open the purse strings. However, I definitely feel as if I've gotten answers to my own questions.

Again, my posts are done to give options to you, my fellow business person, and to provoke thought and discussion. You cannot make intelligent decisions if you operate in a vacuum and there are a lot of people out there that are quite willing to let you make mistakes. I know, I've made an awful lot of them.

[ChrisPerry]

Very interesting read.
What are you using as a printer? are the prints just loose prints, or mounted or fmatted or ramed or what?
i've not got one for on-location printing but am thinking about it for next year. We'll see how my Pets and Santa gig goes next month.

From all I've heard sales are usually higher for a buy it now or else don't sales model compared to here are your proofs and get back to me model (be it printed or web).
and we all know to sell big you show big.

Have you sold via the on-line order model at the same prices and quality you shoot now? If so, how do sales compare?

I know a few sports shooters that do the on-line model and it does not appeal to me. The model you're using appeals to me,but you need to have an assistant or two as you've shown the benefits to that.

having said all that, I don't think your corrollary is true - yes, you're both selling photos of the event but that is where the similarity ends. You're both selling different services - cash and carry (convenience) with customer service and a sales person vs essentially a catalog order arrangement.

walmart may sell more candy bars than 7-11, but 7-11 gets twice the price and neither company is encroaching on the other's customer base. Both models work.

[Norm_Cabana]

Chris,

I use two Canon i9900s. One is dedicated to 11x17 paper and the other is dedicated to 13x19 paper. However, if needed, either printer can be pressed into service to print most anything else. I passed on dye-subs because I couldn't justify spending 2 or more times as much as the Canon for a printer that is locked into one print size and is only marginally faster than the Canon. I used Epson 1280s for a while but they kept clogging and were much slower than the Canons. I also use Canon i960s as general printers and I have nothing but the highest praise for these products. Considering what we put them through, they are absolutely bulletproof.

We originally shot using film and scanned the film to put the images on the web to show and get sales. Nothing was sold on site. In 2001 we went digital and started a mixed operation where we sold on site but we also displayed and sold on the web. Virtually from the instant we did this, 90+ percent of our sales came from our on-site work. In 2003 we stopped displaying photos on the web. About the same time we started taking credit cards on-site. Doing this allowed our prices to go above the $40-60 dollar range because customers weren't limited to the cash they had on hand. We were still getting requests to view the photos after the events but we soon found out that these requests were simply the customers asking our permission to leave our trailer without buying anything. Weird but true. In 2005 we stopped showing any photos after the event and insisted that if people wanted to see their photos they'd have to catch us at the next event. Earlier this year we finally worked up the courage to simply tell our customers that the photos had to be ordered at the event since once we left the event, the photos would never be available again.

To answer your question, in 2001 we did our first onsite sales event and grossed $700. In Oct 8, 2006 we grossed $7,100 at one event. By the time this weekend is finished we will have exceeded $20,000 in sales for this month alone. In all the time we sold online I don't think we had more than a $500 month in online sales. The more we've restricted access and focused our sales, the more we've made. Does this explain my attitude about selling online?

Don't view assistants as a cost center. View them instead as an income producer and business enabler. If you bring on an assistant they have to cause more sales to be made or they aren't worth having. When you are doing the shooting, adding an assistant means that you can now have someone do the things that you cannot now do. Your assistant can now organize your photos to show to your customers while you are not there. Your assistant is a visual representation of your company. Don't discount the importance of this. With an assistant you can now take advantage of displays that are tailored to your event. Finally your assistant can take orders, make products and collect money all while you are out making raw materials. Adding a second assistant now means that one can do one set of duties and the other can be a runner to help you to focus on your work while improving your work flow. Having a runner means that your photos can now be presented to your customer in minutes instead of hours. The second assistant can now create marketing materials (contact sheets) to give to people to entice them to come to your location. The more people who see your work means that there will be more people buying your work.

Since I do not shoot any longer, I would be doing what your first assistant would do. When I brought on my first assistant, he did the sorting and we shared the order/production duties. I was now free to spend time working on getting more business and managing the overall company. Before I brought on the assistant (a total crew of 2 people) I did $900 days or $1,800 weekends. After I brought the assistant on we saw a sharp rise in the total sales made per weekend. One assistant (three person crew) means that we can routinely make between $3,000-4,500 a weekend. With two assistants (four person crew) we are now routinely in the $6-7,000 a weekend range.

I thought long and hard before I took on the first person but now I wonder why I waited so long.

[ChrisPerry]

In theory, every person you hire should make you more money (lawyers and accountants are the exceptions although they can save you money)

I found epsons to be very clog-gy too. Good to hear the Canon's are hardy machines. I was leaning toward a dye sub or similar but the cost of some of the machines is high, and a fuji that the fuji rep ran at the last TPA mmet i went too sucked - perhaps it needed some work, but he's the Fuji rep trying to sell his printers...bad show.

As to the limited availability - it motivates buyers. The 'new modern' way to sell portraits is an LCD/DLP projecter at a view and choose session - bring in the HS senior or family and project the images on teh screen/wall BIG and they get 30 minutes to order and then that's that, too bad so sad. From those that switched to if they find sales are up 50% and they're selling bigger prints. A sense of urgency always helps.

May I ask why you're selling such large sizes? I thought 8x10 was the standard print size for most things, and even 5x7 for many events. So you have folks asking for smaller (for size reasons or cost reasons?)

[Norm_Cabana]

"I thought 8x10 was the standard print size for most things, and even 5x7 for many events."

That is precisely the reason why we don't sell them. They are standard and ordinary and you can get those anywhere. My customers are special and they deserve more. One of my "selling points" is that a customer is coming to us to impress someone. What's impressive about a 5x7 or 8x10? When I have a racer wanting to send something to his sponsor to say thanks, I tell the guy that "If you wish to impress, do something impressive! Don't send a dinky 8x10. Send a framed 12x18 instead that has been signed by you and your crew with the word THANKS in big letters."

Another reason for the 2x3 based sizes is that we shoot very tight and we don't leave much room for cropping. An 8x12, 11x16.5 or 12x18 where the subject is filling the image is a VERY impressive print and is VERY hard to resist.

[Terry Zorich]

Great read, Norm.
A couple of very nice days! Certainly better than my best weekend so far this year.

I wish there was a good kart track aroud here; we have THIS as our best option: http://www.sandhookspeedway.com (turn down the volume first!)

I'd say that up to 20% of our gross sales for a given event comes from online sales; we're grossing about a thousand bucks a month online on average. For the tiny amount of work it requires (I simply edit and upload images when I get an order notification; Printroom does the rest), it still SEEMS to make sense for me.

On the other hand, I bet that if we stopped selling online altogether, I could pick up a good portion of that "lost" 20% as additional sales at the track. Then, I wouldn't have to spend any time during the week filling online orders; we'd get the money up front.

But...the fact remains that a lot of my customers simply can't/won't get to see us on the day of the event. Many of the venues are large and people tend to stay near their trailers. If I dropped online sales, I would get a bunch of loud complaints, and since I have sold online for the past four years, I think it would be difficult to explain why I've stopped. One customer recently suggested I was only doing event photography "to make money". I politely let her know that she was more or less correct, and explained why, but she was still quite pissed that photos from February(!) were no longer available online. (I'm not THAT worried about people like that, but they do make noise and spread nasties among their friends, who may happen to be customers...)

On the subject of dye-subs versus inkjets: I use both, and I recently upgraded from Kodak 1400 dye-subs to the Kodak 9810. One HUGE advantage to the 9810 (versus inkjets) is that it requires much less attention. You load one roll of paper, and a new ribbon, and the printer doesn't need to be touched for 250 prints. Meanwhile, the inkjet is complaining every five or ten minutes that this or that $12 ink cartridge needs to be replaced. With the dye-sub, you don't have to figure out how many cartridges you need to buy, and in which colors. You never have to clean the heads. You never have to fiddle with paper sizes...although you're limited to 8x12 or smaller.

I use an Epson R1800 for prints up to 13x19; presently we offer 11x14 and 12x18...but I'd already decided to stop buying A3 paper; I'm willing to pay more for 13x19 paper, just because I can't be stopping to switch paper sizes every time I make a large print. At this point, I may stop offering 11x14's altogether.

However, there IS value for customers in buying small prints. I have heard many requests for smaller prints (i.e. 5x7) from customers because they simply don't have any wall space left to put 8x10 prints; they say the 8x10's are too large. I'll continue to offer 8x10's as the "de facto" size, but I have considered eliminating the 5x7 and 11x14 sizes. If they want those sizes, they could always buy the images on CD, which is a better value for them anyway...or we COULD print them and simply not advertise the option.

Like anyone selling a product or service, I'd like to find ways to increase my average sale. We've started concentrating on some higher-priced products, but ultimately, I may have to go after some different customers. Norm, this thread has reminded me that just because another photographer "has it covered" doesn't mean there's no room for me to nose in there and take some of that business.

[Terry Zorich]

Originally Posted by Norm_Cabana

In all the time we sold online I don't think we had more than a $500 month in online sales. The more we've restricted access and focused our sales, the more we've made. Does this explain my attitude about selling online?

I would not say Norm's attitude is 'wrong' - it may be the best solution for his business. However, I thought I'd share a current story to illustrate the flip side. We had a fairly good day on Saturday, making ~50 sales. I posted the event to our Printroom site on Sunday afternoon, and in the first FIVE HOURS the event was available online, I received $572 in orders from the event. Using Printroom, all I need to do is edit the image files and upload them. I timed myself just for fun; it took 23 minutes to edit and upload all those orders - a nice payoff for less than a half hour's work.

Now, of course, IF I did not do online sales, and IF we could have let everyone know that the photos would NOT be available online, then I surely would have made some additional sales at the event. However, my contention is that we would not have generated the same amount in additional onsite sales as we will do in total online sales from this event. And there's one other thing that tells me selling both onsite AND online is the right thing to do: It's the fact that some people clearly PREFER to buy online, despite the delayed delivery (compared to getting it onsite) and despite slightly higher prices AND having to pay shipping charges. I must say I'm baffled at the customer "logic", but as long as the sales are coming in, I'll happily fill them.