Running a business requires calculated risk. Pure and simple. When you succeed, you count those risks as entirely worthwhile. You may even pat yourself on the back for your bravado. But what happens when you fail?

Our culture is one that places high emphasis on risk that leads to success and a high price on risk that leads to failure. Two business owners can take the exact same risk, and, for reasons beyond both their control, one can succeed and the other can fail. The one who succeeds is seen as a hero, while the one who fails is remembered as a fool.

It’s too bad, really. Of those two men, which is really the wiser for his or her experience?

Your business must assume some risk…it’s the nature of the beast. Another part of this nature is that not all of the risk will pay off. Sometimes you’re going to lose. What do you do with those failures?

Someone once said that the “fastest way to succeed is to double your rate of failure.” It all boils down to learning to view failure as a strategy for innovation. Want to succeed? Double your rate of failure. Don’t confuse this with funneling dollar-tokens into a slot machine in a desperate attempt to break even. It’s not the same thing. That kind of stubbornness isn’t smart. Getting up , dusting yourself off, learning from your mistakes, and moving forward is.

We had a meeting with a client yesterday to discuss a performance-based advertising campaign. As I was explaining the difference between performance-based tactics and traditional tactics, I found myself wondering, “shouldn’t all advertising be performance-based?”

With performance-based advertising, you only pay for measurable results. How many prospects called? Walked through your door? Sent you an email? With this data, you can reduce your campaign to a cost-per-contact figure. This makes it very easy to determine whether or not it’s worthwhile and working. Historically, pay-per-click advertising online has dominated this category, but it is rapidly expanding into other media as well.

On the other hand, with traditional advertising, you pay regardless of the results. You’re going to write a check for that TV spot or print ad whether you gain new prospects or not. Traditional media has typically covered this gaping hole in logic by labeling traditional advertising “awareness advertising.” What John-Doe small business owner knows how to measure awareness? Sure, it’s logical - plaster billboards all over town, folks see it, and become aware. Sounds reasonable enough, in a very non-scientific sort of way. But what does the consumer do with that awareness? And, more important, how can you measure it and assign it a value so that you’ll know when you’re getting a good buy or getting ripped off?

Here’s the rub: why would you pay thousands of dollars per month for this nebulous idea of “awareness” when you can pay the same amount of money for actual, real-life customers who come to your place of business to buy stuff? Do you know what your cost-per-awareness is? Or, would you sleep better at night knowing your cost-per-customer? Hmm…

In my opinion, the performance-based model is the way of the future. ALL advertising should be performance-based. If it doesn’t perform well, STOP DOING IT.

Regular readers of this blog know I’ve regularly harped on the ongoing battle between Apple and Microsoft. The Mac/PC ads are fast approaching mythic status, ranking up there with the Coke/Pepsi rivalry of the 80’s.

There was (and is) a lot of buzz surrounding the long-awaited Microsoft response to these ads. As I’ve noted here, that response was somewhat lackluster. The beauty of the Mac ads is that they have an “I’m-rubber-you’re-glue” quality to them that forces any response at all from Microsoft to backfire.

Ever since Microsoft launched their multi-million dollar response to the Mac campaign, I’ve been waiting for Mac to respond. This week, they did, and I have to give them a standing ovation.

The moral of the story: honesty is always the best policy. Whether you’ve fallen short of expectations or whether you’re attacking a competitor, be honest. Consumers will reward you for it.

We had a conversation yesterday with a rather shortsighted sales manager from a local radio station. He was making the point that, when his station feels the pinch of a bad economy, “desperate times call for desperate measures” and that “what flew a few months ago doesn’t fly anymore.”

In turn, our point was “great…wouldn’t it be wonderful if you explained that to your customers and worked to find a win-win situation instead of stomping on growing and profitable relationships?”

I don’t think our point was taken. It’s no surprise, really. All he can feel is his current financial pain, and pressure from his bosses, no doubt. He is in desperation mode. And people get weird when they get desperate. As a result, he expects to increase his profitability by burning bridges and damaging trust. In his mind, it makes sense. I just really have to question that logic.

Don’t get me wrong…when budgets decrease, it’s sound business practice to tighten the belt and cut the fat. The trick is not to throw the baby out with the bathwater.

My stepdad hung a small plaque on his office wall throughout the many years he operated his business. After his death a few months, I brought the plaque home and it now hangs on my office wall. The plaque reads “those who believe the customer isn’t important should try living without them for 90 days.”

Good advice for shortsighted sales managers.

Maverick:  it’s a word that being tossed around a fair amount these days.  The mainstream media began calling John McCain a “maverick” several years ago, as a result of his tendency to buck party lines.  At the time, it was a compliment.  Now, however, as McCain seeks the White House, the media appears to be [...]

During times of economic boom, you can get away with touting fluff and flair as points of differentiation, because consumers have more discretionary income and they don’t mind spending it. Not so in a recession. Income is down. Spending is down. Confidence is down. As a result, consumers focus on value in an effort to get the most out of every dollar spent. And, therein lies the opportunity…

The knee-jerk reaction to a sales slump is most often a price cut or a discount or some sort of incentive. And it’s contagious- if your competitor slashes prices, then the temptation for you to do the same is significant. But don’t be fooled. No one wins a war of discounting, especially in times of economic turmoil. Prolonged discounting may give you a bump in market share, but in the intermediate and long term, it only cheapens your brand and erodes its equity.

Instead of discounting, get back to the basics…back to your roots…back to what really drives you. What kind of real value does your brand provide and how can you increase it? The brand that focuses on value rather than discounting will emerge from economic downturn with greater brand equity and market share.