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Here's the thinking that leads just about every all-you-can-eat buffet to trend to mediocrity:
"Oh, don't worry about how fresh the mashed potatoes are, after all, they're free."
Indeed, as far as the kitchen is concerned, each individual item on the buffet is 'free' in the sense that the customer didn't spend anything extra to get that item.
The problem is obvious, of course. Once you start thinking that way, then every single item on the buffet gets pretty lousy, and the next thing you know, the customers you seek don't come.
So, the hotel that says, "With this sort of volume... we do tend to encounter a slower pace with our free wireless internet," has completely misunderstood how to think about the free internet they offer. It's not free. In fact, it might be the one and only reason someone picked your $400 hotel room over that hotel down the street. Sure the hot water and the towels and the quiet room are all free in the sense that they're included in the price, but no, they're not free in the mind of the purchaser.
Successful organizations often beat the competition by turning the buffet problem upside down. "Let's make these the best mashed potatoes in town--who knows, next time, that guy out front will bring his friends."
The mashed potatoes aren't free, the mashed potatoes, the wifi and everything else you do are an opportunity. The cheapest and most effective marketing you'll do all year.
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When Will the Fed Hike Part II - Discussion of Debt Duration - Communication the Only Tool Left Posted: 14 Jan 2014 11:25 AM PST In response to When Will Interest on US National Debt Exceed $1 Trillion some readers objected stating "things are different now". I had to laugh at that. Others stated that I ignored duration. I did, but I did post results at various interest rates, one of them optimistically assuming rates would stay at current levels. For ease in discussion, here is the chart again, with my original "fed is in a box" claim. An analysis of "debt duration follows". Projected Interest at Various Rates ![]() Hidden AgendaDuration Weighted Average Reader "Paul" pointed me to the OMB Fiscal Year 2012 Q1 Report. There are lots of interesting charts in the report, but especially note the chart on page 15, shown below (annotations in red are mine). ![]() Duration is expected to rise from from about 67 months (5.58 years) to about 78 months (6.5 years). Current Trends According to Bloomberg, yields are rising sharply on the long end. ![]() click on chart for sharper image Yield on the 5-Year note is currently 1.59%. A year ago it was 0.78%. Yield on the 10-Year note is 2.83%. A year ago it was 1.87%. Think the Fed can afford to let interest rates rise further? I didn't and still don't. Even though the average duration is now 5.5 years, The Fed Owns 40% Of All Treasuries Over 5 Years In Maturity. According to Forbes (see above link), during 4 years of QE, QE1, QE2, and QE3, the Fed accumulated 36% of all Treasury securities between 5 years and 10 years in maturity plus 40% of those government bonds over 10 years in maturity, as well as 25% of all the mortgage backed securities not owned by Fannie Mae and Freddie Mac. What's the Fed going to do now? Accumulate all the notes and bonds? While buying less of them? The math doesn't quite work does it? Communication the Only "Tool" Left The Fed hopes to stabilize rates via communication, hoping to convince everyone of three things
Three Problems
Exit Strategy So what is the Fed's exit strategy? The Fed really doesn't have one, and that is the reason for all this meaningless communication from various Fed governors (frequently in contradiction with each other). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Obama Promises the Pen of Executive Orders if Congress Does Not Act; Should Republicans Complain? Posted: 14 Jan 2014 09:48 AM PST Similar to a speech made last week in which French President Francois Hollande vowed to pass his agenda by executive order instead of parliamentary law, Obama warns Congress he will act alone. President Barack Obama said Tuesday he was pleased Congress had passed a sweeping $1 trillion spending bill, but warned he would wield power alone if lawmakers blocked his policy plans.If Obama's threat sounds familiar it's because it is. Please consider, Hollande Wants to "Get Things Done" by Decree, Not by Passing Laws. When Hollande made his statements I asked two questions.
Should Republicans Complain? Obama seriously sounds like a spoiled brat. "If you won't give me cake, I will have cake anyway". No doubt, Republicans will complain strongly about the president's message. I have a better idea: As long as this is the way the system works, then let's see some real hardball from Republicans the next time they are in office. Turnaround is Fair Play By decree, let's get rid of the National Labor Relations board. More importantly, since President Kennedy instituted collective bargaining of public unions by decree, let's undo collective bargaining by decree as well. There is a massive amount of fertile ground for the kinds of decrees the country really needs, especially in regards to less government. If we can get less government via decree rather than Congressional bickering, I'm 100% in favor. So rather than complain now, let's hope the next president, Rand Paul, carries the "executive order torch" to the fullest extent possible. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
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