As the recession continues, restaurant owners need to find new revenue streams. One of the best ways of doing this is to expand your customer base. Here are some simple ideas that you can implement to increase your customer base and as a result your profits.
Make your menu affordable to everyone. Don’t leave anybody out
Lunch time is usually a time for customers to get in and out. You’ll always want specials on the board that are quick and easy; and cheap. You need to produce efficiently to get the customers in and out as quickly as possible. Dinner time is a more relaxed experience for customers. They will take their time when choosing menu options and they will look at a wider range of choices. It is always a great idea to offer options that range anywhere from $7.99 for a Spaghetti &Meatballs to a Heavy NY Strip for $18.99. You are, therefore, opening the menu to different customers and wallet sizes.
Advertisement on a Local Radio Station
If you can find a local radio station, usually it ends up being an AM station to advertise for you, it will significantly boost your sales. I did this with an AM station every Monday morning. The disc jockey would ask me questions about specials, my background, location, menu items, do we serve alcohol, etc. I was allotted a time slot for every week. I would often mention specials for the listeners and as soon as I hung up the phone, my phone lines would blow up before I was even open for business. The cost to me was around $170.00 a month. That’s a fraction of funds compared to advertisements in local newspapers or magazines. I had drones of people coming in to meet me that heard me on the radio.
Lucky Rock Bags
Take a box of sandwich bags, put a river rock in the bag to weigh it down, and include your menu, a coupon, upcoming specials, and locations. You throw these out on people driveways. The typical reaction when people call is that they received a bag in their driveway and this was the first time they were trying the restaurant or heard of you. Unfortunately, you will have a choice few that will be upset that the bag that actually landed in their driveway was purposively thrown in a bush or on their perfectly manicured lawn. I usually shrug these people off since they have never worked a day in their life in a restaurant. After all, we have free speech and this is a way for you to get your name out. That’s all I tell them.
Participate in Food Competitions to increase customer base
I have participated in these for a couple of years now and the feedback you get is incredible. There are hundreds of people that are walking around trying local fare. You can meet and greet the locals, tell them about yourself, and hand out menus. It’s also a great way for potential customers to sample your items before they visit your location.
Write a blog to gain customers
There are so many resources available on the web for you to write about your restaurant. Most of the time these websites are free and they will get the word out about specials you’re running, location, menu items, and other pertinent information about your particular restaurant. Some of the best websites for blogging on restaurants is chowhound, cooks, and pizza.com.
Have a Newspaper write an Article
An article about your restaurant is a great source of free advertising for your restaurant and can have a real impact on your business. A restaurateur that I know had one of the most popular newspapers from his area do an article about his restaurant in January 2007. They interviewed some of his best customers and asked them to put their two cents in. They took a picture of him cooking in his chef jacket. The article described his life as a chef, his background, and his favorite items to cook. He still busy 6 months after the article came out. This was due to the fact that the article had attracted new customers to his restaurant that ended up becoming regular customers of his. People were even traveling from 2 hours away to visit his restaurant.
Make a club and Email List
For example, you could form a pizza of the month club. Then twice a month you would provide the customers with an XLarge specialty pizza, 6 garlic rolls, 2 desserts, 2 salads, and one appetizer for $39.95. It’s your club, so you can do what you want to. Be creative. You can create an email list within this club to let your customer base know what the specialty pizza of the month is going to be or upcoming events.
Wine Tastings
Depending on your clientele, this is an extremely lucrative way to have other streams of income coming in. This is, of course, is dependent on if you have a Beer and Wine License. You can combine your food with the type of wine the wine guy has brought for tasting.
Cooking Classes
Provide classes to your customers each week about a particular aspect of cooking, a technique, a type of cuisine, etc. This can be worked around your restaurant hours. This is a great way to develop relationships with your customers.
Catering
This is a lot work and often times you need a lot of employees to help. You need a form of transportation that will safely transport the food without diminishing the quality. This requires planning and knowledge. For example, you need to know the portions sizes for a certain amount of people and have to remember to take every item you need for service with you. Catering can be a great source of new revenue, whether it be peparing food for private parties (weddings) or delivering lunch for local businesses.
Some of the ideas in this post come from an article by Lauren Axelrod, published in Business on August 2, 2008. To read the original article, click here.
Monday, April 20, 2009
Tuesday, April 14, 2009
Promotional Tools to Promote Your Restaurant
As the economy takes a hit, you may feel the effect as you crunch numbers and make your marketing dollars stretch. However, you don't have to break the bank when it comes to cost-effective promotions. You need the most bang for your buck right now. These simple promotional tools will give you that extra publicity boost you need to take your business to the next successful level.
Advertising Versus Public Relations
Before you delve into promoting your busines, you need to ask yourself the following question: Do you know the difference between advertising and public relations? That sounds like an elementary question, but many business owners use the words "advertising" and "public relations" synonymously.
Advertising: A paid public promotion of a product or service
(i.e. newspaper ad or online ad banner)
Public Relations: An unpaid promotion intended to create goodwill for a person,
product or company (i.e. press conference or press release).
Now that you know the difference between advertising and publicity, it's time to implement the following cost-effective promotions into your marketing plan. Are you taking these steps already? If not, you may want to think about implementing at least one of the following publicity tools in the near future:
Advertising Versus Public Relations
Before you delve into promoting your busines, you need to ask yourself the following question: Do you know the difference between advertising and public relations? That sounds like an elementary question, but many business owners use the words "advertising" and "public relations" synonymously.
Advertising: A paid public promotion of a product or service
(i.e. newspaper ad or online ad banner)
Public Relations: An unpaid promotion intended to create goodwill for a person,
product or company (i.e. press conference or press release).
Now that you know the difference between advertising and publicity, it's time to implement the following cost-effective promotions into your marketing plan. Are you taking these steps already? If not, you may want to think about implementing at least one of the following publicity tools in the near future:
- News worthy press releases: Not all press releases are considered news worthy. If you are launching a new product or website, this might be considered news worthy to local media. Before you send out a press release, think about if this topic interests local media. Do not blindly send out press releases to media. Find out the correct editor or department to send your press releases to, in most cases this will be the Food or Lifestyle editor but sometimes it may need to go to the business section or local news or events. Press releases can be sent via email or fax. Check your press release for errors and mistakes before you send out to an editor. You never know - you could be called for an interview as a result of your press release. TaDa members receive professionally written press releases every month that they just need to customize with their resturant's information before sending out. TaDa can also help you create a custom press release that will publicize events at your restaurant, promotions you're running, menu changes, and your participation/involvement in the community.
- Web sites, blogs and social networking sites: These are free publicity tools (web sites can also be developed at low costs) that are readily available at your fingertips. If you haven't developed a web site or blog, then you are missing huge promotional opportunities. Social networking sites such as Twitter, LinkedIn, Facebook, and Biznik are effective communications tools to connect with potential leads and customers. Social media networking sites are free (you just need an email to sign up for these sites). TaDa also offers our members free technical advice and step-by-step guides on establishing a presence online, blogging, using social networking to promote your business, building a customer database and developing a relationship with customers thru email marketing.
- Free or low-cost special events: It's important to thank your customers and clients - make them feel appreciated. Even if it's only an inexpensive morning coffee event, it's important to put your "face" in front of your clients and customers. In this technologically-advanced age of the email, text messages and voicemail, business owners sometimes forget the personal touch. Free or low-cost special events put you right in front of your clients again.
- Become a good steward within your community: Even if you can't afford to make a monetary donation, your volunteer time is just as important. It also allows you to give back to your community and gives you a great networking opportunity. You can also give in-kind donations for auctions (both products and services), which is another great way to promote your business (and a tax write-off). Pick a charitable organization that has personal meaning for you, and become a good steward within your community. TaDa's Student Restaurant Ambassador program is a good example of this idea at work. It allows you to help motivate local high school students to graduate while promoting your business at the same time.
Thursday, April 9, 2009
Menu & Photos a "must have" for a Restaurant's Website
Here are the results from a recent survey of 2,437 diners conducted by The Coyle Hospitality Group.
Consumers Judge the Quality of a Restaurant Based its Website
Sixty-seven percent of those polled indicated that the quality of a restaurant's personal website is indeed an indicator of the level of service they can expect to receive when dining there.
TaDa Tip 1: Make sure your website looks professional. If you don't make a good impression online, you may not get the chance to actually make thir acquaintance.
Menu and Photos are a "must have" for a Restaurant's Website
Two-thirds of those surveyed categorized having a menu on a restaurant's website as a "must have" and "very important." A restaurant having its own web site was also deemed crucial with 86% putting it at or above 'Very Important'. Photos of the dining room were also cited by the majority as at least 'Very Important'.
The data suggests potential diners are seeking to do what actual diners do: They begin by reviewing the menu and looking around the dining room.
Diners, when researching a restaurant online, are seeking hard facts about your menus and pricing. It appears that presenting even a basic website with menus and some photos is a big help. For many diners this is the easiest way to get directions, check hours, and yes, even dial your phone number.
TaDa Tip 2: Your logo shouldn't be the only graphic on your website. Make sure that your website includes at least one photo of the exterior and the interior of your restaurant. Give people a preview of what its like to walk thru your door.
Let Your Customers Speak For You
When those surveyed were asked what influenced them most to dine at a particular restaurant, word of mouth still reigned supreme. It was followed by user reviews, then professional reviews, and finally newspapers. This tells us that diners begin researching based on other diners’ experiences. Whether they are friends, acquaintances or simply others who have dined at the restaurant in question, people are looking for real-life experience to base their dining decisions on - either in person or on the web.
TaDa Tip 3: Include reviews by your customers on the "About Us" page of your website. Potential customers would rather know what other real people have to say about your restaurant then read the chef's bio.
Consumers Judge the Quality of a Restaurant Based its Website
Sixty-seven percent of those polled indicated that the quality of a restaurant's personal website is indeed an indicator of the level of service they can expect to receive when dining there.
TaDa Tip 1: Make sure your website looks professional. If you don't make a good impression online, you may not get the chance to actually make thir acquaintance.
Menu and Photos are a "must have" for a Restaurant's Website
Two-thirds of those surveyed categorized having a menu on a restaurant's website as a "must have" and "very important." A restaurant having its own web site was also deemed crucial with 86% putting it at or above 'Very Important'. Photos of the dining room were also cited by the majority as at least 'Very Important'.
The data suggests potential diners are seeking to do what actual diners do: They begin by reviewing the menu and looking around the dining room.
Diners, when researching a restaurant online, are seeking hard facts about your menus and pricing. It appears that presenting even a basic website with menus and some photos is a big help. For many diners this is the easiest way to get directions, check hours, and yes, even dial your phone number.
TaDa Tip 2: Your logo shouldn't be the only graphic on your website. Make sure that your website includes at least one photo of the exterior and the interior of your restaurant. Give people a preview of what its like to walk thru your door.
Let Your Customers Speak For You
When those surveyed were asked what influenced them most to dine at a particular restaurant, word of mouth still reigned supreme. It was followed by user reviews, then professional reviews, and finally newspapers. This tells us that diners begin researching based on other diners’ experiences. Whether they are friends, acquaintances or simply others who have dined at the restaurant in question, people are looking for real-life experience to base their dining decisions on - either in person or on the web.
TaDa Tip 3: Include reviews by your customers on the "About Us" page of your website. Potential customers would rather know what other real people have to say about your restaurant then read the chef's bio.
Wednesday, April 8, 2009
Industry Trends: Letting Diners Pay What They Want
Some brave restaurant owners are trying out the idea of allowing customers to pay what they believe a meal is worth.
Take for example a restaurant that was featured in a recent http://www.reuters.com/ article "that is combating the recession with a menu ranging from Wagyu beef pie to fresh lobster that lets diners decide the price. Like scores of restaurants in Sydney, Sobo on Bondi Beach has been hit hard by the economic downturn, which has driven many Australians to trim spending and cut back on eating out. To bring the clients back again, restaurateur Adam Gerondis is offering, for a limited time, a menu that contains empty boxes where the price of each dish usually is.
Diners fill in the price they want, and the bill is calculated accordingly.
"My main goal is to have a full restaurant every night and for people to enjoy it so much during the promotion that they will come back afterwards," Gerondis told Reuters.
The promotion that starts on Tuesday and runs until April 9.
"People have been watching what they spend and like all restaurants ours has been quiet, so we just want to give them the opportunity to pay what they think it's worth," he added.
Starters on the menu include blue cheese tart with caramelized onions, mains range from beef to salmon and there are also desserts such as creme brulee, as well as daily specials. Drinks, however, must be paid for.
Sobo main dishes are usually priced between A$24-A$36 ($16-$25), but Gerondis said he would be happy with whatever diners decide to pay for their meal.
"We have no preconceived ideas of what we will get," Gerondis said. "Whatever people pay, is whatever they pay."
As the credit crisis bites all over the globe, several establishments are asking people to pay what they want to keep their business going. "
Ultimately, we're still waiting to see whether the risks outweigh the benefits with this type of promotion. But it shows that restaurant owners are willing to try new things to keep people coming thru the doors.
Click here, to read an article from the Wall Street Journal which further explores this idea.
Take for example a restaurant that was featured in a recent http://www.reuters.com/ article "that is combating the recession with a menu ranging from Wagyu beef pie to fresh lobster that lets diners decide the price. Like scores of restaurants in Sydney, Sobo on Bondi Beach has been hit hard by the economic downturn, which has driven many Australians to trim spending and cut back on eating out. To bring the clients back again, restaurateur Adam Gerondis is offering, for a limited time, a menu that contains empty boxes where the price of each dish usually is.
Diners fill in the price they want, and the bill is calculated accordingly.
"My main goal is to have a full restaurant every night and for people to enjoy it so much during the promotion that they will come back afterwards," Gerondis told Reuters.
The promotion that starts on Tuesday and runs until April 9.
"People have been watching what they spend and like all restaurants ours has been quiet, so we just want to give them the opportunity to pay what they think it's worth," he added.
Starters on the menu include blue cheese tart with caramelized onions, mains range from beef to salmon and there are also desserts such as creme brulee, as well as daily specials. Drinks, however, must be paid for.
Sobo main dishes are usually priced between A$24-A$36 ($16-$25), but Gerondis said he would be happy with whatever diners decide to pay for their meal.
"We have no preconceived ideas of what we will get," Gerondis said. "Whatever people pay, is whatever they pay."
As the credit crisis bites all over the globe, several establishments are asking people to pay what they want to keep their business going. "
Ultimately, we're still waiting to see whether the risks outweigh the benefits with this type of promotion. But it shows that restaurant owners are willing to try new things to keep people coming thru the doors.
Click here, to read an article from the Wall Street Journal which further explores this idea.
Wednesday, April 1, 2009
One-Night-Only Eateries and Reach Out to Community Groups
One-Night-Only Eateries
Restaurateurs are getting creative with their new ventures. As a way of experimenting with new businesses despite the economic downturn, share-space-restaurants that are only open one or two nights a week are becoming the newest craze. These new restaurants are sharing the kitchens of already established restaurants during their off hours and off days.
Even Rachael Ray is getting in on the trend with her new Cafe Una Notte, which uses the kitchen of New York's Barbuto.
We have been seeing some retail stores recently buying store front space in short time segments (everything from one day to three months), but now it seems the restaurant industry is catching on to the idea.
This is a part of the greater "Carpe Diem" trend we are seeing today. People are sick of waiting for thing to turn around economically and thus are finding ingenious ways of starting their new ventures today.
This may not be something you want to try, but let it inspire you to think outside the box.
Reach Out to Community Groups
Consider inviting a book group to have their meeting at your restaurant or hosting a networking event for a community organization, like the chamber of commerce. Many organizations have monthly events for their members, so why not contact them and see if they need a location for any of their upcoming meetings or might want to have the event catered by your restaurant.
Don't be afraid to initiate contact with these groups and organizations. It's worth it to offer them a small discount on catering an event for them, or on any orders placed by members when they meet at your restaurant. You might just gain some new customers and a whole lot of positive word of mouth advertising.
Restaurateurs are getting creative with their new ventures. As a way of experimenting with new businesses despite the economic downturn, share-space-restaurants that are only open one or two nights a week are becoming the newest craze. These new restaurants are sharing the kitchens of already established restaurants during their off hours and off days.
Even Rachael Ray is getting in on the trend with her new Cafe Una Notte, which uses the kitchen of New York's Barbuto.
We have been seeing some retail stores recently buying store front space in short time segments (everything from one day to three months), but now it seems the restaurant industry is catching on to the idea.
This is a part of the greater "Carpe Diem" trend we are seeing today. People are sick of waiting for thing to turn around economically and thus are finding ingenious ways of starting their new ventures today.
This may not be something you want to try, but let it inspire you to think outside the box.
Reach Out to Community Groups
Consider inviting a book group to have their meeting at your restaurant or hosting a networking event for a community organization, like the chamber of commerce. Many organizations have monthly events for their members, so why not contact them and see if they need a location for any of their upcoming meetings or might want to have the event catered by your restaurant.
Don't be afraid to initiate contact with these groups and organizations. It's worth it to offer them a small discount on catering an event for them, or on any orders placed by members when they meet at your restaurant. You might just gain some new customers and a whole lot of positive word of mouth advertising.
Sunday, March 29, 2009
How Positive Psychology Can Boost Your Business
Here's a recent article from BusinessWeek.com that I hope you enjoy.
How Positive Psychology Can Boost Your Business
In tough times, entrepreneurs try the so-called science of happiness to build thriving companies
By Jill Hamburg Coplan
To understand how positive psychology—the so-called science of happiness—is being used by entrepreneurs, it helps to look at a company under siege. After all, it's one thing to talk about the connections between a positive mental state and a healthy company when a business is running well, turning a profit, and grabbing new customers. But tougher times really test entrepreneurs, separating those who hunker down and hope the worst will pass from those who use their strengths to find opportunity amid rubble.
Robert Aliota is determined to be, when necessary, one of the latter. In 2004, Aliota, the owner of Carolina Seal, an 11-employee Charlotte (N.C.) company that makes custom-engineered parts for DuPont (DD) and John Deere (DE), among others, learned that a competitor had pounced on one of his key segments. Worse, the rival had hooked ExxonMobil (XOM), a customer that had eluded Aliota.
Rather than hole up in anger or fume, Aliota followed a central tenet of positive psychology: capitalize on your fundamental character strengths, especially when things get bleak. Aliota's strengths include extroversion, optimism, and generosity. He had in the past referred business to the rival and toured its plant. Now he concentrated on cementing the relationship. Not long after, he got a call from his competitor: ExxonMobil needed a special part. Could Aliota supply it? Four years later, he and the onetime rival "are as closely allied as you can get without a legal alliance," says Aliota.
Coaches specializing in positive psychology are selling entrepreneurs a twofold promise. One is that optimism and cheerfulness have a measurable effect on the bottom line. The other is that happiness is a muscle you can strengthen. Aliota is buying all of it. "We're capable of thinking in a more positive way, but you need help to learn how," he says. That Carolina Seal has posted three years of double-digit growth, Aliota says, "is a lot due to the awareness we've gained." He hires for strengths rather than résumés, and when necessary, he redeploys staff to create a better fit.
His employees get more extensive training, and therefore, far more autonomy (Aliota took his first-ever two-week vacation this summer). Aliota begins and ends meetings with praise rather than criticism. And he has changed how he frames his mission. "We're a personal- and career-development company," he says. "It turns out the by-product is engineered rubber, metal, plastic, and foam."
POSITIVE PAYOFF
These ideas will no doubt ring a bell with anyone familiar with the work of humanistic psychologist Abraham Maslow or any of the truckloads of pseudo-scientific career-coaching books. What makes positive psychology different, its proponents say, is a decade of clinical trials, making sometimes-controversial use of brain-scanning technology, that have measured and refined what happiness can do. They've looked at how much an upbeat mood, for example, reduces the time it takes a team of doctors to make a tricky diagnosis. They've found that a social worker will make twice as many visits to clients if he or she feels appreciated.
Positive psychology, in its current form, was born at the University of Pennsylvania in 1998, when Martin E.P. Seligman, then a Penn professor and president of the American Psychological Assn., made the study of positive emotion the theme of his tenure and developed a master's program for its study. Positive psychology caught fire, with Penn remaining the locus. In 2002, the University of Michigan's business school began offering PhDs in Positive Organizational Scholarship. In 2004, Case Western Reserve University began granting MBAs in Positive Organizational Development. Since then, hundreds of happiness-and-business researchers have taken on assignments at companies as various as Toyota Motor (TM), Ann Taylor Stores (ANN), BP's (BP) Castrol Marine, and Standard Chartered Bank, as well as the Scottish city of Glasgow and the U.S. Navy. Most graduates of Penn's master's program have fanned out to academia or big corporations. But a few, mostly from business-owning families, are taking the discipline to entrepreneurs.
Their argument is simple. A decade of research suggests that happiness at work—defined as pleasure, engagement, and a sense of meaning—can improve revenue, profitability, staff retention, customer loyalty, and workplace safety. Many of the studies are preliminary. They aren't cross-cultural or long-term. But they strongly suggest that postive emotion increases creativity and problem-solving ability and aids in fighting stress.
Cheery thoughts aren't for everyone all the time. Plenty of jobs require anxiety, pessimism, and even fear, researchers say. Airline pilots facing ice shouldn't be optimistic. Nor should accountants spotting fishy numbers, or regulators probing corruption. No research, however, suggests that a dour outlook helps entrepreneurs succeed. Aliota's coach, David J. Pollay, grew up working in his family's business and now heads The Momentum Project, a consulting firm in Ocean Ridge, Fla. For most entrepreneurs, Pollay says, "negativity is just not necessary."
True enough, some say, but that doesn't necessarily mean a focus on happiness is the answer, either. Such noted psychologists as Harvard University's Jerome Kagan, who has studied temperament for 50 years, caution that the psychology and biology of happiness are little understood and vary dramatically across time, cultures, and individuals. "A suicide bomber who's really committed to the cause feels very happy the moment before he blows himself up," Kagan says.
Causality is also a problem: Does being cooperative, engaged, and generous make an entrepreneur happy, or are naturally happy people just more cooperative, engaged, and generous? Another criticism, buttressed by studies of identical twins, is that people's general baseline temperament, or set point, is between 50% and 80% inherited, making it very difficult to change.
But this much seems certain: People can take control of certain actions that will make them happier for a time, such as setting appropriate goals. They can add gratitude, hope, and a dose of self-control to each working day. And it's clear that happy bosses perform measurably better, building productive teams and inspiring loyalty.
WHAT ARE YOU GOOD AT?
Positive psychologists start by asking their clients to take a test that evaluates a person's strengths, on the premise that doing what we're best at naturally brings joy. Thirty years of Gallup surveys have found that the most successful companies are ones whose employees believe they get to do what they do best every day. (Only one-third of working people do.)
Penn's test, which measures 24 attributes, is free online at viastrengths.org. Such an analysis can help entrepreneurs figure out the most productive uses of their time, but it can also be useful in hiring. Having a spectrum of strengths on staff is crucial for small and startup businesses, says Tom Rath, the head of Gallup's workplace research and consulting arm.
Once an entrepreneur knows his or her strengths, it's time to put them to use. That's what Melanie Morlan, owner of FirstBreathe.com, a wellness and athletic training company in Spokane, Wash., needed to do. She spent a decade working with the U.S. Olympic Committee and professional cyclists, including Lance Armstrong, before taking time out to raise her son. She wanted to reenter the workforce by building a larger consulting practice than she'd once had, offering nutrition counseling, coaching in weight loss and stress reduction, and building a Web site and blog. But she couldn't get started. "I'd get scared and set up roadblocks," she says, telling herself she'd never succeed and ignoring her to-do list. She eventually called on Senia Maymin, a coach and, like Pollay, a graduate of Seligman's program. Maymin also holds an MBA from Stanford University, and she knows family business and entrepreneurship firsthand, having worked alongside her father and brother at their hedge fund and co-founding three tech startups. Maymin helped Morlan exploit her strengths, of which creativity is first. So if Morlan lost a valuable client or made a bad decision, instead of spending the afternoon moping, she would turn to designing and building her Web site. "Creativity stimulates me," she says.
OFFER PRAISE
Even if emotional qualities do not show up among your top strengths, positive psychology coaches recommend trying to build stronger bonds with and among your staff. Barbara L. Fredrickson, a psychology professor at University of North Carolina at Chapel Hill, is studying the flip side of the adrenaline-fueled fight-or-flight response. She says an equal and opposite phenomenon occurred when our ancestors were content: Their brains flooded with with a stay-and-create chemical, possibly dopamine. Her theory is that while the anger-and-fear response kept us from being eaten alive, civilization's creations came about thanks to "happy" chemicals and what she calls the "broaden-and-build" state of mind they trigger. At work, that same reaction should make staffers more resilient in crises and more likely to be receptive to new ideas, while deepening collegial relationships and mutual respect. Despite the heavy theory involved, building stronger ties with those you work with can be as simple as offering abundant praise and recognition when appropriate; giving staff tailor-made rewards for performance; and letting them be themselves—maybe in the way they mark special occassions, maybe in the way they decorate their workspace.
Next in the consultants' toolkit is fostering appreciation. Studies suggest businesses succeed when their cultures are imbued with a sense of purpose—for owner and staff. Much work in that area has come from David L. Cooperrider, who heads the Center for Business as an Agent of World Benefit at Case Western Reserve University's Weatherhead School of Management. His workshop method, called Appreciative Inquiry, asks participants to reflect on, write about, and share aloud why their job and company matter. "There's a huge fusion of strengths, and every voice becomes part of designing the future of the company's business," says Cooperrider.
TRACKING RESULTS
If all this sounds too fuzzy for you, well, just speak with Juan Humberto Young, the founder of seven-person consulting firm Positive Decision Analysis, in Zürich. A positive psychology consultant and another Penn graduate, Young hears one criticism most: Positive psychology is too soft for numbers-obsessed business owners.
With a background running an asset restructuring unit at UBS, Young recognizes the importance of statistics. So every one of his clients measures his or her progress against customized metrics. An eight-store retail chain tracked its revenues—up 10% after three months. A bank watched its deposits rise 20%. And a hospital, long plagued by interpersonal conflicts, slow response times, and a backlog in the emergency room, saw the number of operations completed rise 8%. Young ties some of his firm's compensation to these results.
Even so, says Young, who teaches at Switzerland's prestigious University of St. Gallen, many still balk. When he worked at UBS, he recalls, even the craziest trading idea would get a serious hearing. But the idea that "to create appreciation will make you more efficient and profitable—that's very difficult for [clients] to hear."
INTO THE ZONE
The last piece of the puzzle relates to exercising power over the self. The father of this field, called "self-regulation," is Stanford's Albert Bandura, a pioneer on overcoming phobias and in designing disease prevention campaigns. Few would argue with the notion that change is difficult, but research suggests that if you can master self-discipline in something as seemingly inconsequential as your posture, it will seep into your work life.
Coach Maymin delves into this with her clients, many of whom seek her out when they are between ventures. She says that to be able to get routinely into the mental state that Mihály Csíkszentmihályi (pronounced "cheeks sent me high"), another founder of positive psychology, calls "flow"—complete absorption in a task—entrepreneurs must craft a workload that's challenging but not too tough. Its demands should fully use an entrepreneur's abilities, the same way endurance athletes train just at their physical limit. "In the athletic domain, everyone can see it," she says. Psychologically, too, "self-regulation is a muscle you can train over time." She assigns her clients a small, daily exercise challenge each week, based on research that says if you accustom your body to pushing just past its comfort zone toward ever-retreating goals, "you can do the exact same thing in your company"—push past your comfort zone and achieve goals once thought to be out of reach.
Including, perhaps, smoothing out a messy merger. CargoWise EDI was, until 2006, a 50-person software company in Mount Prospect, Ill., serving the freight-forwarding industry. Founder and then-President Cris Arens called for a psychology coach after a combination with an Australian counterpart quadrupled its size, bruised egos, turned longtime policies and procedures upside down, and dashed morale. During Christmas 2006, Pollay ran a daylong seminar to get CargoWise's top U.S. employees to appreciate their individual strengths and find common purpose. They recalled when they were at their best. They thought about the company's wider purpose: creating jobs that support hundreds of families; cooperating while doing something they enjoy; producing useful products that facilitate commerce. None of it was groundbreaking, but employees didn't usually articulate these things. They talked about negative forces that were beyond their control and vowed not to be derailed by them.
"We're from the freight industry, so there was a lot of cynicism," says Arens, who calls himself "a blue-collar, down-to-earth person." But he also says the boost to morale was palpable. He brought Pollay back the next year to train the rest of the North American team. Now he's using the same techniques at HarneTech, his new green-building certification company.
Aliota at Carolina Seal says happiness science has led him to make lasting changes. For one, he regularly recalls and dissects his moments of entrepreneurial triumph, "times when I was truly in the zone, utilizing my natural strengths and having fun" as a sort of happiness fuel. One such moment came during a visit by respresentatives of a maker of giant water purification systems. Escorting the visitors on a tour of his newly renovated industrial facility, he introduced the whole staff by name. He shared the story of building the business up from two plastic shelves in his garage. He queried his prospects about their needs. During lunch, they connected over family and community matters. When Aliota and his prospects shook hands in the parking lot, the guests said they were ready to sign a deal—during a break, they'd canceled visits to two of Aliota's competitors.
To read the original article, click here.
How Positive Psychology Can Boost Your Business
In tough times, entrepreneurs try the so-called science of happiness to build thriving companies
By Jill Hamburg Coplan
To understand how positive psychology—the so-called science of happiness—is being used by entrepreneurs, it helps to look at a company under siege. After all, it's one thing to talk about the connections between a positive mental state and a healthy company when a business is running well, turning a profit, and grabbing new customers. But tougher times really test entrepreneurs, separating those who hunker down and hope the worst will pass from those who use their strengths to find opportunity amid rubble.
Robert Aliota is determined to be, when necessary, one of the latter. In 2004, Aliota, the owner of Carolina Seal, an 11-employee Charlotte (N.C.) company that makes custom-engineered parts for DuPont (DD) and John Deere (DE), among others, learned that a competitor had pounced on one of his key segments. Worse, the rival had hooked ExxonMobil (XOM), a customer that had eluded Aliota.
Rather than hole up in anger or fume, Aliota followed a central tenet of positive psychology: capitalize on your fundamental character strengths, especially when things get bleak. Aliota's strengths include extroversion, optimism, and generosity. He had in the past referred business to the rival and toured its plant. Now he concentrated on cementing the relationship. Not long after, he got a call from his competitor: ExxonMobil needed a special part. Could Aliota supply it? Four years later, he and the onetime rival "are as closely allied as you can get without a legal alliance," says Aliota.
Coaches specializing in positive psychology are selling entrepreneurs a twofold promise. One is that optimism and cheerfulness have a measurable effect on the bottom line. The other is that happiness is a muscle you can strengthen. Aliota is buying all of it. "We're capable of thinking in a more positive way, but you need help to learn how," he says. That Carolina Seal has posted three years of double-digit growth, Aliota says, "is a lot due to the awareness we've gained." He hires for strengths rather than résumés, and when necessary, he redeploys staff to create a better fit.
His employees get more extensive training, and therefore, far more autonomy (Aliota took his first-ever two-week vacation this summer). Aliota begins and ends meetings with praise rather than criticism. And he has changed how he frames his mission. "We're a personal- and career-development company," he says. "It turns out the by-product is engineered rubber, metal, plastic, and foam."
POSITIVE PAYOFF
These ideas will no doubt ring a bell with anyone familiar with the work of humanistic psychologist Abraham Maslow or any of the truckloads of pseudo-scientific career-coaching books. What makes positive psychology different, its proponents say, is a decade of clinical trials, making sometimes-controversial use of brain-scanning technology, that have measured and refined what happiness can do. They've looked at how much an upbeat mood, for example, reduces the time it takes a team of doctors to make a tricky diagnosis. They've found that a social worker will make twice as many visits to clients if he or she feels appreciated.
Positive psychology, in its current form, was born at the University of Pennsylvania in 1998, when Martin E.P. Seligman, then a Penn professor and president of the American Psychological Assn., made the study of positive emotion the theme of his tenure and developed a master's program for its study. Positive psychology caught fire, with Penn remaining the locus. In 2002, the University of Michigan's business school began offering PhDs in Positive Organizational Scholarship. In 2004, Case Western Reserve University began granting MBAs in Positive Organizational Development. Since then, hundreds of happiness-and-business researchers have taken on assignments at companies as various as Toyota Motor (TM), Ann Taylor Stores (ANN), BP's (BP) Castrol Marine, and Standard Chartered Bank, as well as the Scottish city of Glasgow and the U.S. Navy. Most graduates of Penn's master's program have fanned out to academia or big corporations. But a few, mostly from business-owning families, are taking the discipline to entrepreneurs.
Their argument is simple. A decade of research suggests that happiness at work—defined as pleasure, engagement, and a sense of meaning—can improve revenue, profitability, staff retention, customer loyalty, and workplace safety. Many of the studies are preliminary. They aren't cross-cultural or long-term. But they strongly suggest that postive emotion increases creativity and problem-solving ability and aids in fighting stress.
Cheery thoughts aren't for everyone all the time. Plenty of jobs require anxiety, pessimism, and even fear, researchers say. Airline pilots facing ice shouldn't be optimistic. Nor should accountants spotting fishy numbers, or regulators probing corruption. No research, however, suggests that a dour outlook helps entrepreneurs succeed. Aliota's coach, David J. Pollay, grew up working in his family's business and now heads The Momentum Project, a consulting firm in Ocean Ridge, Fla. For most entrepreneurs, Pollay says, "negativity is just not necessary."
True enough, some say, but that doesn't necessarily mean a focus on happiness is the answer, either. Such noted psychologists as Harvard University's Jerome Kagan, who has studied temperament for 50 years, caution that the psychology and biology of happiness are little understood and vary dramatically across time, cultures, and individuals. "A suicide bomber who's really committed to the cause feels very happy the moment before he blows himself up," Kagan says.
Causality is also a problem: Does being cooperative, engaged, and generous make an entrepreneur happy, or are naturally happy people just more cooperative, engaged, and generous? Another criticism, buttressed by studies of identical twins, is that people's general baseline temperament, or set point, is between 50% and 80% inherited, making it very difficult to change.
But this much seems certain: People can take control of certain actions that will make them happier for a time, such as setting appropriate goals. They can add gratitude, hope, and a dose of self-control to each working day. And it's clear that happy bosses perform measurably better, building productive teams and inspiring loyalty.
WHAT ARE YOU GOOD AT?
Positive psychologists start by asking their clients to take a test that evaluates a person's strengths, on the premise that doing what we're best at naturally brings joy. Thirty years of Gallup surveys have found that the most successful companies are ones whose employees believe they get to do what they do best every day. (Only one-third of working people do.)
Penn's test, which measures 24 attributes, is free online at viastrengths.org. Such an analysis can help entrepreneurs figure out the most productive uses of their time, but it can also be useful in hiring. Having a spectrum of strengths on staff is crucial for small and startup businesses, says Tom Rath, the head of Gallup's workplace research and consulting arm.
Once an entrepreneur knows his or her strengths, it's time to put them to use. That's what Melanie Morlan, owner of FirstBreathe.com, a wellness and athletic training company in Spokane, Wash., needed to do. She spent a decade working with the U.S. Olympic Committee and professional cyclists, including Lance Armstrong, before taking time out to raise her son. She wanted to reenter the workforce by building a larger consulting practice than she'd once had, offering nutrition counseling, coaching in weight loss and stress reduction, and building a Web site and blog. But she couldn't get started. "I'd get scared and set up roadblocks," she says, telling herself she'd never succeed and ignoring her to-do list. She eventually called on Senia Maymin, a coach and, like Pollay, a graduate of Seligman's program. Maymin also holds an MBA from Stanford University, and she knows family business and entrepreneurship firsthand, having worked alongside her father and brother at their hedge fund and co-founding three tech startups. Maymin helped Morlan exploit her strengths, of which creativity is first. So if Morlan lost a valuable client or made a bad decision, instead of spending the afternoon moping, she would turn to designing and building her Web site. "Creativity stimulates me," she says.
OFFER PRAISE
Even if emotional qualities do not show up among your top strengths, positive psychology coaches recommend trying to build stronger bonds with and among your staff. Barbara L. Fredrickson, a psychology professor at University of North Carolina at Chapel Hill, is studying the flip side of the adrenaline-fueled fight-or-flight response. She says an equal and opposite phenomenon occurred when our ancestors were content: Their brains flooded with with a stay-and-create chemical, possibly dopamine. Her theory is that while the anger-and-fear response kept us from being eaten alive, civilization's creations came about thanks to "happy" chemicals and what she calls the "broaden-and-build" state of mind they trigger. At work, that same reaction should make staffers more resilient in crises and more likely to be receptive to new ideas, while deepening collegial relationships and mutual respect. Despite the heavy theory involved, building stronger ties with those you work with can be as simple as offering abundant praise and recognition when appropriate; giving staff tailor-made rewards for performance; and letting them be themselves—maybe in the way they mark special occassions, maybe in the way they decorate their workspace.
Next in the consultants' toolkit is fostering appreciation. Studies suggest businesses succeed when their cultures are imbued with a sense of purpose—for owner and staff. Much work in that area has come from David L. Cooperrider, who heads the Center for Business as an Agent of World Benefit at Case Western Reserve University's Weatherhead School of Management. His workshop method, called Appreciative Inquiry, asks participants to reflect on, write about, and share aloud why their job and company matter. "There's a huge fusion of strengths, and every voice becomes part of designing the future of the company's business," says Cooperrider.
TRACKING RESULTS
If all this sounds too fuzzy for you, well, just speak with Juan Humberto Young, the founder of seven-person consulting firm Positive Decision Analysis, in Zürich. A positive psychology consultant and another Penn graduate, Young hears one criticism most: Positive psychology is too soft for numbers-obsessed business owners.
With a background running an asset restructuring unit at UBS, Young recognizes the importance of statistics. So every one of his clients measures his or her progress against customized metrics. An eight-store retail chain tracked its revenues—up 10% after three months. A bank watched its deposits rise 20%. And a hospital, long plagued by interpersonal conflicts, slow response times, and a backlog in the emergency room, saw the number of operations completed rise 8%. Young ties some of his firm's compensation to these results.
Even so, says Young, who teaches at Switzerland's prestigious University of St. Gallen, many still balk. When he worked at UBS, he recalls, even the craziest trading idea would get a serious hearing. But the idea that "to create appreciation will make you more efficient and profitable—that's very difficult for [clients] to hear."
INTO THE ZONE
The last piece of the puzzle relates to exercising power over the self. The father of this field, called "self-regulation," is Stanford's Albert Bandura, a pioneer on overcoming phobias and in designing disease prevention campaigns. Few would argue with the notion that change is difficult, but research suggests that if you can master self-discipline in something as seemingly inconsequential as your posture, it will seep into your work life.
Coach Maymin delves into this with her clients, many of whom seek her out when they are between ventures. She says that to be able to get routinely into the mental state that Mihály Csíkszentmihályi (pronounced "cheeks sent me high"), another founder of positive psychology, calls "flow"—complete absorption in a task—entrepreneurs must craft a workload that's challenging but not too tough. Its demands should fully use an entrepreneur's abilities, the same way endurance athletes train just at their physical limit. "In the athletic domain, everyone can see it," she says. Psychologically, too, "self-regulation is a muscle you can train over time." She assigns her clients a small, daily exercise challenge each week, based on research that says if you accustom your body to pushing just past its comfort zone toward ever-retreating goals, "you can do the exact same thing in your company"—push past your comfort zone and achieve goals once thought to be out of reach.
Including, perhaps, smoothing out a messy merger. CargoWise EDI was, until 2006, a 50-person software company in Mount Prospect, Ill., serving the freight-forwarding industry. Founder and then-President Cris Arens called for a psychology coach after a combination with an Australian counterpart quadrupled its size, bruised egos, turned longtime policies and procedures upside down, and dashed morale. During Christmas 2006, Pollay ran a daylong seminar to get CargoWise's top U.S. employees to appreciate their individual strengths and find common purpose. They recalled when they were at their best. They thought about the company's wider purpose: creating jobs that support hundreds of families; cooperating while doing something they enjoy; producing useful products that facilitate commerce. None of it was groundbreaking, but employees didn't usually articulate these things. They talked about negative forces that were beyond their control and vowed not to be derailed by them.
"We're from the freight industry, so there was a lot of cynicism," says Arens, who calls himself "a blue-collar, down-to-earth person." But he also says the boost to morale was palpable. He brought Pollay back the next year to train the rest of the North American team. Now he's using the same techniques at HarneTech, his new green-building certification company.
Aliota at Carolina Seal says happiness science has led him to make lasting changes. For one, he regularly recalls and dissects his moments of entrepreneurial triumph, "times when I was truly in the zone, utilizing my natural strengths and having fun" as a sort of happiness fuel. One such moment came during a visit by respresentatives of a maker of giant water purification systems. Escorting the visitors on a tour of his newly renovated industrial facility, he introduced the whole staff by name. He shared the story of building the business up from two plastic shelves in his garage. He queried his prospects about their needs. During lunch, they connected over family and community matters. When Aliota and his prospects shook hands in the parking lot, the guests said they were ready to sign a deal—during a break, they'd canceled visits to two of Aliota's competitors.
To read the original article, click here.
Saturday, March 28, 2009
The Importance of Making A Personal Connection
Check out this recent article from the Wall Street Journal which explains the impact personal connections have on spenging decisions. As people are forced to cut back on expenses, they are far more likely to continue spending money at the businesses or with people with whom they feel connected to. Independent Restaurant Owners should make it a point to personally greet all of their customers. It puts a real human face on your business, making it more than just an other anonymous place where they go out to eat. You're what makes your restaurant special and different, don't be afraid to captalize on this.
The Guilted Age: Spending to Keep Others Afloat By Stephanie Simon
Melanie Ulle and her husband are scrimping these days, and she feels guilty about the exotic foods -- the hummus, the naan, the chai -- that she stocks in her already-full kitchen each week.
Truth is, though, she'd feel worse if she stopped buying them.
Ms. Ulle likes the couple who runs the small ethnic market by her Denver home; she likes their kids, who play by the register after school. She sees how empty their shop is now. She's heard they've both taken second jobs. So, despite her own pinched budget, Ms. Ulle feels compelled to help them out. Each week, she faithfully runs up a bill close to $50.
"It's the guilt economy," Ms. Ulle says.
And it's helping keep families afloat.
Ms. Ulle's spending is borne of the empathy that comes with knowing when you trim your budget, you're hurting others who may be much closer to the brink.
The burgeoning field of behavioral economics argues that people don't always weigh costs and benefits rationally, and don't always act in their financial self-interest. These hard times have revealed a new wrinkle to that illogic: Our budgets reflect more than our personal needs. Those families whose finances permit it sometimes spend with the needs of others in mind.
Donations to many charitable institutions are down, but that may not be the correct measure of the nation's philanthropic impulses. Writing a check to an institution is impersonal, abstract and easy to quit. Far more difficult is canceling the kids' weekly music lessons when you know the piano teacher's husband just lost his job. Or firing the house cleaner who greets you every week with a new photo of her baby.
There's more than a touch of self-interest mixed in with the altruism, of course. Those who can afford luxuries like private piano lessons and weekly house cleaning aren't keen on forfeiting such luxuries -- something families freely acknowledge. But they also say their decisions are shaped in part by the pain that cutbacks may cause others.
"What we buy or stop buying, when we buy, for whom, and how much we spend are never simply decisions to maximize our own interests," said Viviana Zelizer, a Princeton professor who studies the intersection of sociology and economics. "The monies we spend signal which relationships matter to us."
That may be why Jessica Gottlieb had no trouble canceling the monthly pool cleaning at her home in Studio City, Calif., after her online retail business tanked, costing the family thousands of dollars a year in income. "There were different guys coming out all the time. I didn't know them," she said.
But she's anguished about the gardener, who has been mowing her tiny patch of lawn for a decade. "He's watched my kids grow up from babies," Ms. Gottlieb explained. "He's a part of our world."
At $60 a month, she knows the gardener is a ridiculous frill; she could buy a push mower and take care of the lawn herself quite easily. But Ms. Gottlieb, a self-described softy, has decided that he stays. "I'm a big marshmallow," she said.
Financial coach Heather Tuininga, who is based in Seattle, counsels her clients to strip away such emotional entanglements when they're budgeting.
She recalls one client who bought breakfast in a local Starbucks three times a week because she liked the barista. Ms. Tuininga laid out the facts: The barista was friendly and no doubt welcomed the tips, but her client didn't owe the woman anything.
"Relationships based on financial transactions are not true friendships," she recalls saying.
Ms. Tuininga told the client she'd be better off using the $80 a month in Starbucks expenses to pay down her credit-card debt -- or to donate to a charity that could help more people in far greater need than one barista.
That's true, says J.D. Trout, a philosophy professor at Loyola University. But he sees empathy -- and the irrational acts of spending that spring from it -- as a trait to be cherished. People keep the gardener or tip the barista extra, even when they can't afford it, because they sense their common vulnerability in tough times, said Mr. Trout, author of the new book "The Empathy Gap."
"There may be better ways to spend that money," he said. "But we'd worry about someone who didn't have those feelings."
Workers in the service industry recognize the value of that one-on-one connection, and often work hard to build it. As the recession has deepened, for instance, Christopher McGraw has made a point of taking more time to greet customers at McKinners, the gourmet pizza restaurant he co-owns in Littleton, Colo. He nurtures a sense of relationship with his regulars by showing them a cellphone snapshot of his 19-month-old, Teddy, giggling in the tub. And he greets returning customers by name, asking them personal questions about their jobs or pets.
Mr. McGraw believes building those connections is a key factor in keeping his restaurant afloat. "I hear it all the time: 'We're back because we wanted to come see you.' "
James Jafari, a massage therapist in Indianapolis, makes a point of showing clients pictures of his nine-year-old daughter or talking about his latest family vacation -- anything that "will let them see me as a three-dimensional human being," he said. In this economy, he adds, "it's the personal relationships that are keeping me going."
That rings true to Mr. Jafari's client, Phillip Cox, who continues to pay for massages a couple times a month, even though he recently lost his job in investment management. Mr. Cox has cut back on other luxuries, like taking his family out to dinner. Logically, he knows that decision will ripple across the economy, hurting the busboys and waitresses at his family's favorite restaurants. But he doesn't know those people, so he finds it an easy cut to make.
By contrast, he can't bring himself to let go the woman who cleans his house twice a month, when he knows her car recently broke down. Nor can he cancel his massage therapy, when he knows Mr. Jafari's business already has dropped by 20%.
"I don't want my difficult situation to impact the people I support," Mr. Cox said.
He's quick to point out that he has a more selfish motive, as well: He wants to maintain his comfortable lifestyle as long as he can, in the hope that things will get better soon.
That expectation of recovery is part of what keeps Ms. Ulle shopping at the ethnic grocery, too. She loves trying out exotic foods, and she wants the store to be there for her down the road, when she no longer has to watch her budget.
In that way, her weekly guilt-economy grocery bill may be a sort of investment in the future. As she said, "it's not wholly philanthropic."
For the original article, click here.
The Guilted Age: Spending to Keep Others Afloat By Stephanie Simon
Melanie Ulle and her husband are scrimping these days, and she feels guilty about the exotic foods -- the hummus, the naan, the chai -- that she stocks in her already-full kitchen each week.
Truth is, though, she'd feel worse if she stopped buying them.
Ms. Ulle likes the couple who runs the small ethnic market by her Denver home; she likes their kids, who play by the register after school. She sees how empty their shop is now. She's heard they've both taken second jobs. So, despite her own pinched budget, Ms. Ulle feels compelled to help them out. Each week, she faithfully runs up a bill close to $50.
"It's the guilt economy," Ms. Ulle says.
And it's helping keep families afloat.
Ms. Ulle's spending is borne of the empathy that comes with knowing when you trim your budget, you're hurting others who may be much closer to the brink.
The burgeoning field of behavioral economics argues that people don't always weigh costs and benefits rationally, and don't always act in their financial self-interest. These hard times have revealed a new wrinkle to that illogic: Our budgets reflect more than our personal needs. Those families whose finances permit it sometimes spend with the needs of others in mind.
Donations to many charitable institutions are down, but that may not be the correct measure of the nation's philanthropic impulses. Writing a check to an institution is impersonal, abstract and easy to quit. Far more difficult is canceling the kids' weekly music lessons when you know the piano teacher's husband just lost his job. Or firing the house cleaner who greets you every week with a new photo of her baby.
There's more than a touch of self-interest mixed in with the altruism, of course. Those who can afford luxuries like private piano lessons and weekly house cleaning aren't keen on forfeiting such luxuries -- something families freely acknowledge. But they also say their decisions are shaped in part by the pain that cutbacks may cause others.
"What we buy or stop buying, when we buy, for whom, and how much we spend are never simply decisions to maximize our own interests," said Viviana Zelizer, a Princeton professor who studies the intersection of sociology and economics. "The monies we spend signal which relationships matter to us."
That may be why Jessica Gottlieb had no trouble canceling the monthly pool cleaning at her home in Studio City, Calif., after her online retail business tanked, costing the family thousands of dollars a year in income. "There were different guys coming out all the time. I didn't know them," she said.
But she's anguished about the gardener, who has been mowing her tiny patch of lawn for a decade. "He's watched my kids grow up from babies," Ms. Gottlieb explained. "He's a part of our world."
At $60 a month, she knows the gardener is a ridiculous frill; she could buy a push mower and take care of the lawn herself quite easily. But Ms. Gottlieb, a self-described softy, has decided that he stays. "I'm a big marshmallow," she said.
Financial coach Heather Tuininga, who is based in Seattle, counsels her clients to strip away such emotional entanglements when they're budgeting.
She recalls one client who bought breakfast in a local Starbucks three times a week because she liked the barista. Ms. Tuininga laid out the facts: The barista was friendly and no doubt welcomed the tips, but her client didn't owe the woman anything.
"Relationships based on financial transactions are not true friendships," she recalls saying.
Ms. Tuininga told the client she'd be better off using the $80 a month in Starbucks expenses to pay down her credit-card debt -- or to donate to a charity that could help more people in far greater need than one barista.
That's true, says J.D. Trout, a philosophy professor at Loyola University. But he sees empathy -- and the irrational acts of spending that spring from it -- as a trait to be cherished. People keep the gardener or tip the barista extra, even when they can't afford it, because they sense their common vulnerability in tough times, said Mr. Trout, author of the new book "The Empathy Gap."
"There may be better ways to spend that money," he said. "But we'd worry about someone who didn't have those feelings."
Workers in the service industry recognize the value of that one-on-one connection, and often work hard to build it. As the recession has deepened, for instance, Christopher McGraw has made a point of taking more time to greet customers at McKinners, the gourmet pizza restaurant he co-owns in Littleton, Colo. He nurtures a sense of relationship with his regulars by showing them a cellphone snapshot of his 19-month-old, Teddy, giggling in the tub. And he greets returning customers by name, asking them personal questions about their jobs or pets.
Mr. McGraw believes building those connections is a key factor in keeping his restaurant afloat. "I hear it all the time: 'We're back because we wanted to come see you.' "
James Jafari, a massage therapist in Indianapolis, makes a point of showing clients pictures of his nine-year-old daughter or talking about his latest family vacation -- anything that "will let them see me as a three-dimensional human being," he said. In this economy, he adds, "it's the personal relationships that are keeping me going."
That rings true to Mr. Jafari's client, Phillip Cox, who continues to pay for massages a couple times a month, even though he recently lost his job in investment management. Mr. Cox has cut back on other luxuries, like taking his family out to dinner. Logically, he knows that decision will ripple across the economy, hurting the busboys and waitresses at his family's favorite restaurants. But he doesn't know those people, so he finds it an easy cut to make.
By contrast, he can't bring himself to let go the woman who cleans his house twice a month, when he knows her car recently broke down. Nor can he cancel his massage therapy, when he knows Mr. Jafari's business already has dropped by 20%.
"I don't want my difficult situation to impact the people I support," Mr. Cox said.
He's quick to point out that he has a more selfish motive, as well: He wants to maintain his comfortable lifestyle as long as he can, in the hope that things will get better soon.
That expectation of recovery is part of what keeps Ms. Ulle shopping at the ethnic grocery, too. She loves trying out exotic foods, and she wants the store to be there for her down the road, when she no longer has to watch her budget.
In that way, her weekly guilt-economy grocery bill may be a sort of investment in the future. As she said, "it's not wholly philanthropic."
For the original article, click here.
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