This according to Bruce Bartlett, who held a senior position in both the Reagan and George H. W. Bush administrations, balances out the potential positives of such a cut with the long-term consequences.

Proponents of the payroll tax cut argue it’ll increase spending and stimulate the economy by providing more in-pocket pay for every taxpaying employee in the U.S. On top of which, it decreases the taxes an employer has to pay on each individual employee, which – in turn – could lower the overall unemployment rate.

All of which begs the question: “If the idea has so many potential benefits, what’s the problem?”

Well, the potential problems, according to Bartlett, break down as follows:

• The tax cuts only help those who are employed. They don’t do much at all for independent contractors or those who remain unemployed.
• A lot of workers may simply pocket the additional savings, which means the cuts could wind up costing Washington without generating fiscal growth on the back end.
• Historically, employees don’t add to their spending at all if they’re only seeing an incremental increase in take-home pay. In other words, if their gross salary isn’t increasing, neither is their spending.
• A recent survey by the National Federation of Independent Business reveals 23% of businesses claim weak sales are their biggest problem, while only 4% claim it’s the cost of labor.

While a lot of what Bartlett is throwing out there is speculative at best, and almost every point has a counterargument that speaks to the greater good of the payroll tax cut, these are points that need to be considered. In the end, the key is to develop solutions that help the economy more than they hurt it. While a payroll tax cut sounds great on the surface, we need to consider whether it really serves the purpose for which it was proposed.

Source: “The Case Against a Payroll Tax Cut,” by Bruce Bartlett, New York Times, 8/30/11.

Congress is once again pushing national data breach laws that will assign a bigger burden on companies to respond after customer data is compromised. Here’s what they have in store this time around.

After several large data breaches involving companies like Epsilon, Citigroup and Sony, Representative Mary Bono Mack (R-Cal.) drafted a bill to protect both consumers and companies from e-commerce data breaches, The Hill reports.

The bill would require companies to alert the Federal Trade Commission (FTC) and their customers within 48 hours if any personal information is pilfered. Fail to report a breach and the FTC will levy fines.

How can you prevent these fines? The law grants exception to companies if they’ve got financial fraud preventions in place.

One big issue: Companies may fear handing over detailed information to consumers about their security failures. Full disclosure can deal a body blow to a company’s reputation.

Also, critics claim that the bill doesn’t guarantee there won’t be anymore security breaches.

But it’ll likely win lawmakers votes from consumers.

Just saying.

The survey, which was conducted by StrategyOne, polled more than a thousand American consumers. Among the 65% who believed a double-dip recession (which could only be brought on by two more consecutive quarters of negative economic growth) was imminent:

• 44% believe the second wave of recession will be worse than the first
• 21% believe it could be “much more severe,” and
• 23% doubt the U.S. economy will ever fully recover.

Still, when pressed, 52% of those polled said they felt America’s best days were still ahead – a sign that while recent headlines and warning signs may have consumers thinking gloom and doom, there’s still a strong sense of optimism for the future.

The bottom line: American consumers are keeping their purse strings tight for the time being. In addition to the 41% of consumers who say they plan to cut back spending over the next 3-4 months:

• 35% say they plan to spend less online (only 12% plan to increase their online spending)
• nearly 80% say they plan to spend less during the holiday season
• 87% say they plan to roll back or avoid big-ticket purchases, and
• 26% don’t expect their personal finances to fully recover until after 2011 (just as many doubt their finances will ever make a full recovery).

Perhaps the best thing salespeople and marketers can do to weather the storm is remind skeptical prospects:

• The U.S. economy has made slow, steady gains over the past several quarters, indicating progress, and, more importantly, ensuring that a double-dip recession isn’t even possible over the next several months.
• Layoffs are down, the majority of companies have lifted their hiring freezes and most corporate sectors are on the mend.
• It’s never been more crucial to buy (or invest) in American companies than it is right now. The more consumers invest, the better chance the U.S. economy has of growing (a true win-win).

Source: “Two-Thirds of Americans Expect Double-Dip Recession,” a PR Newswire press release.

The poll, released on July 22nd, asked Americans to rank how much confidence they had in 16 different areas. Here are the rankings in descending order (the % meaning the number of Americans who have strong confidence in each area/institution):

1. Military 76%
2. Small business 66%
3. The police 59%
4. The church or organized religion 48%
5. The medical system 40%
6. The U.S. Supreme Court 36%
7. The presidency 36%
8. Public schools 34%
9. The criminal justice system 27%
10. Newspapers 25%
11. Banks 23%
12. Television news 22%
13. Organized labor 20%
14. Big business 19%
15. HMOs 16%
16. Congress 11%

No surprise that the military ranks first. Since 1998, the U.S. military has never dropped past the third position in confidence surveys.

But the fact that U.S. Congress has dropped to 11% is a reflection of the ever-widening political divide in this country. The rift began in the 70s, but has never reached the point where it is right now. People seem to be drawn to either side of the political divide, and there’s almost no middle ground in between.

Meanwhile, almost every major issue comes down to a split based strictly upon party lines and allegiances, a situation which falls in direct contradiction to the way most Americans expect Congress to operate.

What do you think? Have you lost your faith in Congress? What needs to change in order for Congress to operate successfully again?

Feel free to share your thoughts in the comments section below.

To read the entire breakdown and analysis of this Gallup Poll, click here.

1. Less reliance on finance/credit: The credit crisis had two long-term effects on business — tighter restrictions on borrowing and increased fear of revolving debt. As a result, fewer buyers are willing to accept (or secure) credit for purchases they cannot afford outright. So top sales organizations have shifted to offering payment plans that allow customers to “buy now, pay later” without the fear of sky-high interest rates.
2. Increased focus on price: The Internet gives buyers instant access to dozens of “low-ball” offers and major discounts. While some companies have responded by offering to “match any price,” top salespeople stand pat on the value of their offer. Offering to match a competitor’s price may send a message to existing buyers that the price of your goods is naturally inflated and you’ve been ripping them off all along. The best strategy is to win buyers is to show them the long-term ROI you can provide, rather than short-term savings.
3. More online buying: As more people warm up to the idea of buying goods and services online, companies need to adjust their strategies accordingly. There’s still no substitute for the human touch when it comes to winning big-name accounts or smoothing over a service issue, but buyers have come to prefer the convenience of making quick-hit purchases (or renewals) online. If your process requires too much effort, they may start buying from a competitor’s site.
4. Lack of brand loyalty: What’s been the result of buyers having instant access to a thousand awesome offers at once? A lack of brand loyalty, that’s what. Customers are bouncing from one product or service to another, pledging temporary allegiance to the company that can cater to their needs and/or provide the right price. Many companies have resorted to tossing out one-time premiums to woo buyers away from the competition. The solution: Focus on building stronger one-on-one relationships with buyers. That way when a competitive offer does come along, your customers will tell you about it, making you the first to know.
5. Changes to the buying process: Spending is tight, which is exactly why so many companies are enforcing new rules, like getting approval from a board of decision makers. Salespeople can respond by partnering with prospects early on to determine how their buying process works and what they can do to expedite (or simplify) the transaction.
6. Stiffer negotiating: Buyers are looking for the best deal possible, more so now than ever before. They’re learning to haggle or do competitive research if it means getting a better deal. A lot of salespeople have reacted by creating their own competitive analysis and offering it to prospects at the beginning of the selling process. This way they eliminate the need for prospects to research other offers, while presenting the information in a way that highlights all the areas where their products and services offer more value than competitors’.
7. More willing to rent or lease: Not only is it more difficult for most prospects to justify big-ticket purchases in this economy, but companies are also topping one another at a much faster pace these days — which increases the need for buyers to constantly upgrade their products. Smart buyers respond by leasing or renting products rather than making a major investment in something that may soon become obsolete.
8. Less want/more need: Vanity purchases are so 2007. Today’s buyers are dealing with much tighter budgets, which is why it’s critical for salespeople to focus on what buyers need, rather than what they want.

Adapted from “17 ways consumers are changing,” by Rick Newman, U.S. News and World Report, 1/15/10

Here are five strategies top sales organizations are using to turn that negative trend into a major boost in business:

1. Set up in-house financing for loyal buyers: Given the fallout from the recession, most buyers are incredibly leery of borrowing from major financial institutions at this point. One of the biggest reasons — all the stipulations and fine print banks attach to their finance contracts. Alleviate buyers’ concerns by offering simple finance options that encourage existing customers to increase the level and frequency of their purchases. Bonus: Once a company sets up in-house financing, it gets to reap the benefits of the interest attached to buyers’ purchases.
2. Use guarantees as a selling point: A lot of today’s prospects are in a position where they need to justify every new purchase to other decision makers before moving forward. The more secure prospects feel, the easier it is for them to convey why the investment is a safe one. Most companies offer guarantees and warranties, but very few sales organizations actually focus on them as major selling points. Reinforce the value of guarantees, and consider whether there are additional assurances you can offer that will ease the commitment of borrowing or buying on credit.
3. Provide rewards for paying off purchases quickly: Buyer rewards boost sales and loyalty. In a down economy, they can also be used to encourage prospects to pay off their investment ASAP. Some companies boost their pay-up rates by offering buyers a discount on future purchases or membership into a rewards club in exchange for paying off their debts quickly. It not only ensures the company collects, it also helps lock buyers in as long-time customers by encouraging them to buy again.
4. Offer volume discounts and package deals: Bundling products and services is a proven way to boost average income per sale. Salespeople who can demonstrate why, how and how much volume discounts or package deals will save prospects are in a much better position to boost their average income per order. Recast these purchases as a way prospects can save money and increase profits long term. Then demonstrate how the prospects’ return on investment justifies any necessary financing.
5. Promote your brand as the buyer-friendly alternative to borrowing: In a marketplace where customers are so reluctant to finance purchases, companies that don’t offer financing may actually be able to tout that as a great selling point. Recast the lack of financing as your company’s willingness to provide buyers with affordable payment options (e.g., layaway, installments, buy now, pay later, etc.) that won’t sink them into revolving debt. Become an advocate for your buyers, and they will repay you with repeat business.

Can you think of any other strategies we’ve missed here? What’s working at your company? Let us know in the Comments Box below.

For decades, companies have used sales and marketing data to boost revenues. But new waves of online data are allowing companies to see buying patterns they weren’t able to before.

Result: Online buyer data has emerged as one of the most valuable marketing resources a company can have.

Consider these strategies companies are implementing to transform buyer data into a major boost in profits:

• Using past buying history to cross-sell and upsell ancillary products and services to existing customers (70% of Amazon’s revenue last year was the result of “product suggestions” compiled from customers’ past buying history).
• Utilizing demographic info buyers provide when they register on the Web site (e.g., job title, industry, region, age, etc.) to identify common buying patterns — and opportunities for new products or services.
• Leverage geographic data to determine where the biggest clusters of buyers are located, so salespeople can canvas that area — or the company can target that area for a branch office or local store.
• Tracking point-of-purchase receipts to determine what time of year customers are most likely to buy (and why). Then capitalizing by scheduling major promotions during those weeks or months.
• Tracking the pages online shoppers visit on a company’s Web site. Companies use this info as a selling tool. Example: Once a registered buyer visits a specific product page, that info can be forwarded to a sales rep who will follow up with the buyer personally to see if the buyer has any questions about the product or service.
• Creating social networks on the company’s Web site so that buyers can communicate with one another, share feedback on products and suggest other products. Building an online community also gives the company consistent access to unfiltered buyer feedback.
• Generating instant results from online price testing, as opposed to having to set up a test and a control, and monitor weeks or even months of results before making a decision.

What are some online strategies that work for your company? Share them in the Comments Box below.

Source: “A Data Explosion Remakes Retailing,” by Steve Lohr

Consumer spending rose for the sixth time in seven months, according to the Department of Commerce. The consistent increase is a positive step toward economic recovery, one that most analysts attribute to:

• consumers having more money to spend on personal shopping
• job loss decreasing during the month of November, and
• a slight rise in employee salaries — based mostly on employees working more hours for slightly higher wages.

While these are all positive signs, the increases are slight and experts still haven’t seen any watershed moment to suggest a major bull market is on the horizon.

Housing sales have dropped to their lowest point since April, according to the census bureau. Plus, the totals for November dropped more than 11% from October, clear proof that the housing market — a major indicator of economic prosperity — is still in dire straits.

So how can salespeople leverage these two contradictory trends to their advantage? It helps to focus on the fact that consumer spending and confidence levels continue to inch their way back up.

Leading economists estimate the U.S. economy grew at a rate of 4% in the final quarter of 2009. Combine that with a 2% jump in the third quarter, and salespeople can make a strong case for the fact that now’s the time for buyers to invest in solutions that can help them maintain an edge on the competition.

Source: “Consumer Spending Rises, but Home Sales Drop,” by Catherine Rampell, New York Times, 12/24/09

More than 50% of sales managers say the biggest obstacle to closing is buyers’ shrinking budgets, according to a recent PBP Media survey. These three companies aren’t only immune to that obstacle, they’re thriving on it:

1. Priceline (Revenues up 46%): The travel industry has suffered over the past few years due to corporate cost cuts and a lack of consumer spending. Meanwhile, Priceline has capitalized because it allows travelers to create their own itinerary and, more importantly, name their own price. As a result, Priceline is gobbling up a huge chunk of the market.
   The takeaway: Offer buyers as many options as possible. Empower new prospects by letting them dictate the terms of doing business. Then partner with them to create a win-win.
2. Amazon (Revenues up 38%): Profits are soaring at Amazon, despite the fact most retail book stores have taken a major hit. Sure, Amazon cashes in on the fact that a lot more business is moving online. But nearly 70% of the company’s sales last year were the result of “product suggestions.” For example, whenever someone purchases a product from Amazon, the site suggests a list of other products the customer might be interested in as well (i.e., “Buyers who purchased this item also purchased …”). Amazon also encourages users to interact and suggest products for one another.
   The takeaway: Audit past buying history to identify valuable cross-selling and upselling opportunities. Then market those ancillary products to high-probability buyers.
3. GameStop (Revenues up 26%): The video game market has continued to perform well throughout the recession. But GameStop has done exceptionally well, thanks to two interactive Web sites and a brand-name magazine that promote new offers and encourage brand loyalty. GameStop also resells used games at a discount, which helps the company draw more cost-conscious buyers.
   The takeaway: Work with IT to turn your site into an interactive resource that gives buyers a reason to return on a regular basis. Some companies use blogs, message boards, industry news and e-newsletters to attract more buyers to their business.

Four things these companies’ selling strategies have in common:

1. Several buying options give customers more control over the process
2. Affordable choices for cost-conscious buyers
3. A strong Web presence that allows buyers the convenience of doing business online, and
4. A business model that relies more on satisfying buyers’ needs than pushing big-ticket purchases.

Are there any companies and/or successful sales or marketing strategies we’ve overlooked here? Let us know what you think in the Comments Box below.

Source: “10 Retailers Gaining Strength from the Recession,” by Rick Newman, U.S. News and World Reports, 10/05/09

The Forrester Research survey, which polled 4,000 U.S. consumers, asked: “If the Web sites for the newspapers, magazines, and other online content you regularly read were no longer free, how would you prefer to pay for that content?” The results:

• 80% would no longer access those sites if they had to pay
• 8% would want an all-access subscription for everything on the site
• 8% would want a subscription that includes print, Web and access to info from mobile devices, and
• 3% would prefer to pay a flat rate for every article they read.

This is obviously a major knock for the 60% of C-level media execs who are considering charging for online content, according to a recent American Press Institute Survey.

But it may be good news for C-level execs whose employees are allowed an annual budget for business-related subscriptions. Determining whether the sites for some of these publications provide free access to articles could be an easy way to streamline your subscription budget without depriving employees of helpful resources.

But the real question is, should media companies be able to charge for online content? And, if so, what’s the key to developing a business model where consumers would pay for that content?

Source: “New Forrester Report: Consumers Weigh In On Paying For Content,” by Sarah Rottman Epps, 11/16/09

The new technology, which Apple could potentially use to display ads on computers, phones, TVs, media players, and gaming consoles (among other things), would include a built-in feature that freezes the media device until the user acknowledges he/she has seen or heard the ad.

In the case of music devices (such as the iPod), users would be required to click a button, acknowledging they’re listening before the ad starts.

The technology’s inventors argue the new technology will actually offset costs, allowing consumers to pay less (or, in some cases, nothing) for some of their favorite electronic devices. If the ads became too much of a distraction, consumers could later pay a fee to disable the ads.

The problem: We’re living in the digital age, where most content is free and companies are scrambling to come up with ways to charge for (or profit from) the same content they used to offer at cost. That type of atmosphere doesn’t bode well for this type of marketing ploy – especially considering the tech-savvy demographic that accounts for such a huge chunk of Apple’s annual revenue.

Of course there’s no guarantee that Apple will use this technology, even
if the patent is approved. But it does raise serious questions about what lengths even the most innovative, profitable companies are willing to consider in order to keep revenues strong in a post-industrial world.

Source: “Apple Wouldn’t Risk Its Cool Over a Gimmick, Would It?” by Randall Stross, New York Times, 11/15/09.

What’s next on the list? $300 million worth of rebates on dishwashers, refrigerators and washing machines. That’s right, the Maytag Man is back in business.

The choice to include rebates for these specific household appliances is largely based on the fact that sales of the big three are down a collective 25% compared to figures from the last U.S. housing boom.

While the appliance program (part of the Obama administration’s American Recovery and Reinvestment Act) resembles cash for clunkers in the sense that it rewards consumers for spending money on major purchases, Consumer Reports claims there are several differences. Among them:

• Consumers may be entitled to as much as $200 in rebates, provided they purchase prequalified Energy Star models (Energy Star is run by the U.S. Department of Energy and the EPA, and company-made appliances that meet its standards use up to 25% less energy).
• You won’t have to turn in your old appliance to get a rebate.
• While rebates will be paid for by the federal government, the size of the rebate will be decided on a state-by-state basis.
• The overall amount each state receives in rebate money will be based largely on the population of that state.

While the program provides major perks for consumers, this may also be the perfect opportunity to upgrade the appliances in your corporate breakrooms and/or cafeterias. Not only will you save money on appliances, your appliances will be more energy efficient as well, which means lower costs.

What’s your opinion? Are these programs serving their purpose, or are they ultimately just another form of robbing Peter to pay Paul? Let us know in the comments below.

Source: “Cash for Clunkers moves to appliances: Money back for your old Kelvinator?” Consumer Reports, 8/21/09.

1. More than 70% of companies performed better than expected: This could be a mirage, as corporate cutbacks and widespread layoffs may have helped companies artificially boost their earnings.  But the positive takeaway is companies are making the moves necessary to right the ship. As profit margins increase, so does a company’s ability to wheel and deal again.
2. Credit defaults on the decline: Bad credit means bad business. The fact that consumers (and companies) are gettting back to accumulating debts they can actually repay ia a positive sign. With defaults on the decline, companies may want to return to offering available credit lines to buyers (or suggesting low percentage ways they can secure credit).
3. Bailout banks battling back: Whether you agree or disagree with corporate bailouts, the short-term reality is the bailout funds are having the positive impact some financial analysts hoped they might. Citigroup, Bank of America, Goldman Sachs and J.P. Morgan all posted multi-billion dollar profits during the second quarter, which may be a healthy sign that Wall Street is once again open for business.
4. Consumers show signs of resilience: Consumer confidence was on the rise during the second week in August, according to an ABC poll. The same poll revealed 47% of consumers feel their finances are in good standing, up from 44% in the week before. 25% of respondents also felt buying conditions were good, up from 24% a week earlier. Further proof of a boost in consumer spending – Apple sold 5.2 million iPhones during the second quarter alone - up an astounding 626% from a year ago.

Most analysts predict the economy won’t really start to pick up until the end of 2009 or beginning of 2010, but these factors provide several valuable business angles for companies looking for fresh new ways to market their products, draw in more prospects or motivate prospects to start spending again.

For more upsides revealed by second-quarter earnings, check out
SmartMoney‘s “Eight Bright Spots of the 2Q Earning Season.”

And that annoys the heck out of most cell phone users — which, increasingly, is all of us.

With the rise in demand for the smartphone, this frustration has become even more, well, frustrating.

That frustration has led to an extraordinary event. The U.S. Congress noticed. Not only did it notice, but elected representatives really went out on a limb in the face of a consumer uprising: They decided to look like they care.

How does Congress look like it cares? Why, they hold hearings of course.

What remains to be seen is if those hearings will lead to a change in the status quo.

The issue of carrier restrictions came to a head with the hyper popularity of Apple’s iPhone, introduced two years ago to overwhelming demand and approval. The one thing the iPhone’s owners routinely lamented, however, was the phone’s tie-in to AT&T.

The problem isn’t peculiar to the iPhone. The nation’s Big Four cellphone companies — the others are Verizon  Wireless, Sprint  Nextel Corp., and T-Mobile USA — all offer sophisticated smartphones available from no other carrier. And their policies limit what consumers can do with them.

Smaller carriers say these exclusive deals and service limits cut them out of the competition. They’re claiming these arrangements amount to an unfair trade practice that should be eliminated.

As you might imagine, the major carriers see it differently. They insist that the exclusivity deals have promoted phone innovation and are similar in nature to the deals signed by brands like Martha Stewart or Michael Kors to sell their designs only through selected retail outlets.

While Congress ponders the question and takes the temperature of consumers — who may turn up the heat for more choice — there’s also word that the Justice Department may enter the fray.

The Wall Street Journal reported the department has launched a review to determine whether The Big Four prevent smaller companies from offering advanced phones to their customers.

If they find that current practices violate federal trade laws, their decision could upend the hot mobile phone market for years to come.

The problems involved in making all phones available to all carriers would include overcoming the hurdle of making phone sets that operate on both the GSM and CDMA technology standards.

As things are now, AT&T and T-Mobile use GSM, which is used by all European carriers. Sprint/Nextel and Verizon Wireless use CDMA.

If the feds step in, either phone makers may have to produce two versions of their units, or all carriers may have to agree to operate on the same platform.

Then again, phone developers might decide to create a hybrid that operates on both systems.

What do you think would be best for these businesses and the consumers they serve? Is it possible to satisfy everyone involved?

The three surveys, each conducted during the past six months, reinforce the idea that consumers are more determined than they have been in years to buy American – and that may be a major opportunity for new marketing and/or advertising campaigns.

Among the studies’ most important findings:

• More than 80% of respondents in the Yankelovich poll said buying American products is important to them (and 37% admitted they’d even be willing to pay a little more for such goods)
• Almost 40% of auto consumers surveyed by Gallup claimed they’d “only” consider buying cars from an American company, and
• While nearly 60% of respondents in the BIG Research study said they always make a conscious effort to buy American, 65% felt it was harder than ever to find reliable American companies to do business with, due to all the bailouts, bankruptcy and other problems associated with the recession.

Perhaps that final bit of info is the most relevant - nearly two-thirds of consumers feel a personal responsibility to buy American, but the biggest challenge they face is finding stable companies to do business with.

That’s a tremendous edge for companies that can refocus their marketing collateral, advertising and sales presentations to play up the “Made in the U.S.A.” mantra. It’ll draw prospects to your business, and boost loyalty by reminding them that doing business with your company isn’t only a sound investment, it’s a small way they can contribute to getting the American economy back on its feet.

Source: “It’s Getting More Difficult to Buy American” by Mark Dolliver, Sales and Marketing Management Magazine, 7/8/09.