157: How Auctioneers Can Be Like Presidential Candidates

This presidential election season has been the most annoying and befuddling of the six for which I’ve been eligible to vote. This is the third one with Facebook, Twitter, and YouTube; so, it’s more than social media stoking the fire.

The candidates have changed their opinions and platforms over their careers enough that Stephen Colbert could even use one candidate’s footage to debate himself. Others have assembled similar video presentations for other candidates, as well.

For two hundred years, American politicians have told one audience what they wanted to hear and another audience something else. Because all of us voters vote for our interests or our perspective of the interest of others, it makes sense that politicians play the chameleon game.

The problem now is how easily that deceptive pandering is captured and how easy it is to search for those captured moments. You’d think it’d behoove a candidate to be authentic and consistently honest, but politicians know that all Americans think most politicians lie for political expediency. They also know that if they uphold enough of their party’s platform, the zealots will look past their foibles.

Similarly, many auctioneers often play two crowds with different messages. Amazingly, they rarely get caught. At the same time, the industry as a whole scratches their head as to why the profession comes with a bit of a stigma in the marketplace.

On one hand, we market auctions to buyers as a place to get good deals (especially at absolute auctions). One auction industry blogger recently candidly admitted that he’d wait for an auction instead of buying an asset for a fixed price, if he had the time to chase the potential discount.

On the other hand, we tell sellers that only auctions will achieve the highest market value. I’ve had to copy and paste that into more proposals than I care to count—including proposals for absolute auctions.

“Well, a talented auctioneer working the frenzy of competitive bidding can get a crowd of people, who registered to bid thinking they’re going to get a deal, to pay more than retail for something.”

That’s true. I’ve witnessed that in person, especially with guns, sporting goods, cars, and collectibles.

What happens when there aren’t enough bidders or the right bidders to get that frenzy started, though? I’ve seen that happen, too: assets selling for pennies on the dollar.

Don’t get me wrong. A number of auctioneers consistently do better than the market with their sales. I’d hire them, if I had to unload the type of assets they sell.

That said, you and I both know that a lot of auctions are contracted not for superlative financial gain as much as an expedited end to a headache, a triage for the bleeding, or quick cash to allocate to another opportunity.

We can sell “high risk, high reward” with integrity. We can sell the time value of money with honor. We can sell superlative results with statistical evidence of our prowess.

But let’s stop selling one thing to our sellers and another thing to our buyers.

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Stock image purchased from iStockPhoto.com.

137: 5 Ways to Generate More End User Bidding

There are essentially only two ways to grow your business: get more transactions or get bigger transactions.

For auctioneers, there are two ways to accomplish bigger transactions: book auctions for assets with a higher intrinsic value or create more demand for the assets we already sell.

This is usually the part where a bid caller will interject that an auction inherently creates a higher demand because of the competitive nature of price realization at an auction. I’ve been to enough auctions to know that to be true. At the same time, you and I both know that even this very real dynamic sometimes isn’t enough to achieve reasonable reserves (or decent absolute auction prices). I know this, because—when auction prices don’t match their reasonable estimates—auctioneers turn around and ask me what more we could’ve done to acquire bidders.

Sometimes, the timing is off. By that I mean market conditions don’t match with the seller’s situation or the seller’s schedule. Candidly, there are times when we could have done something more or something better with the advertising budget. Other times, the terms of the auction limit who can bid—attracting the investor class’ cash buyers but not retail consumers.

Consumers outnumber investors. So, if we want more bidders at our auctions to create more demand, it makes sense to pursue end users. Here are several ideas to attract consumers that I’ve seen in the auction industry. Some require significant shifts for the auctioneer, but I’ve heard good results from those who have adopted them.

Implement a “Buy It Now” option.

Online retailers now mix retail and auction options.

eBay has been doing this for years and honing how it works. Why? Because consumers often don’t have time to wait for an auction to end. Traditional auctioneers push back against this feature because it bypasses the auction process. Could the item sell higher during the auction process? Sure. Could that purchaser also not participate in the live bidding (and push your other bidders) because their need was satiated by a more prompt option? Yes. Real estate auctioneers advertise “pre-auction offers welcomed” regularly. So, this isn’t a stretch for real estate; and eBay has proven it’s a good fit for personal property. This wouldn’t need to be an option for all items, either. Also, this would make far more sense for online-only auctions where there’s less of a halo effect than at live, on-site auctions. Obviously, special language would need to be crafted in absolute auction contracts unless this is used only in minimum bid/reserve auctions.

Allow item returns.

So much for “as is where is.” This would rock the industry more than a Buy It Now button. That said, I’ve seen it done by an auction company for whom I’ve worked. The returned items get recycled into a subsequent auction, and the consumer gains confidence in their bidding. Obviously, this isn’t for every asset category or even every item within an asset category. For those auction companies who could handle the auction terms and logistics, though, this could gain a higher price ceiling for all items on the aggregate—because consumers wouldn’t be hedging their bets.

Order & publish home inspection reports.

Real estate auction firms around the country are already doing this, but they are in the minority. Even if the terms remain “as is where is,” you can raise the price ceiling by letting the consumer know in advance what issues will need to be addressed. Consumers will compensate for the cost of remedying those issues in their bid, but that compensation will probably be smaller than the hedge on a mystery. Also, this disclosure is a good brand strategy to developing trust in the marketplace. I doubt home inspections are cheap. The question—after your own property evaluation—is whether or not it would pay for itself.

Advertise where consumers congregate.

Auctioneers tend to congregate their advertising where other auctioneers advertise. I understand the defense: “We have to be in that paper, because we don’t want people to think we’re doing less business than our competition.” But what if this contest is being held where end users don’t gather? In past auction polling, one auction company for whom I’ve worked found that the paper with the largest circulation in their market brought the fewest bidders and that an inexpensive regional paper brought a lot of bidders—with a much lower budget hit. Let the other companies waste their advertising budgets, competing in empty arenas. Use Google Analytics, Facebook Insights, auction polling, and other analytical tools to find where consumers hear about you; and spend your money there.

Write advertising copy from a consumer perspective.

The vast majority of auctioneers suck at Facebook marketing and design their print media backwards, too. Their marketing message is out of order, emphasizing what’s important to the auctioneer instead of what’s important to the buyer. Consumers are interested in assets they want, not events you’re hosting. So, don’t headline with auction information. Some of the most effective auction advertising doesn’t even use the word auction—or uses it only at the bottom of the advertisement. Why? If a consumer doesn’t want an item, they don’t care that there’s an auction event, let alone what date it is. If they do want that item, where they get it is less important for them that the attributes of the item they want.

The difference between wholesale and retail prices should be enough incentive to investigate changes to our workflow, terms, and marketing. Your path to consumer-driven prices might be on very different paths than these five options. That’s okay. What’s important is that we’re interacting with the marketplace, evaluating our processes based on the feedback we gather, and then making changes to our practices to adapt.

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Feature image purchased from iStockPhoto.com. Others linked to sources.

135: The Magic Formula for More Efficient Advertising

For years, I’ve been saying that there’s no silver bullet in auction advertising. I’ve taught in my seminars that there’s no Ronco “Set it, and forget it” strategy, because the one constant in marketing is that there are few constants.

It’s time, though, that I come clean.

There is a foundational formula that applies to all auction advertising, including yours. Using it can transform your sales pitches & seller proposals, your media spends & overall budgets. The number in its answer trumps all the numbers in your Google Analytics, Facebook Insights, and Mail Chimp reports.

Very, very few auction companies that I’ve consulted are using this formula, but the ones who are have a competitive advantage over the ones who aren’t.

I’m talking about Cost Per Bidder Per Medium.

Knowing your generic cost per bidder would be interesting—discovering how much it costs you on average to get a consumer to register to bid; but it wouldn’t be much in the way of actionable data. Knowing how much it costs you per bidder per medium, though, goes beyond interesting. That knowledge is incredible marketing power.

Here’s the basic formula:

Now, repeat that for every medium or every media category you use in your advertising: signs, direct mail, newsprint, paid search, social media, public relations, etc. Save that information, and repeat this process every auction. After a few months, you should start to see patterns on the aggregate. You’ll discover that some media are less efficient than other ones.

If you sell more than one type of asset or the same asset in more than one geographic area, you may want (1) a larger set of samples or (2) separate spreadsheets for each market.

Once you get enough of a sample size collected, you can use it to start adjusting your budgets to favor the most efficient source of customers. For example, if Facebook costs you $5 to acquire a bidder, and newsprint costs you $50 in bidder acquisition, then you can start shrinking the size or frequency of ads to send money over to social media.

You can have hundreds of people click to your website from your email blast or thousands from social media. If the only people who show up at your auction are the ones who saw the sign, though, that traffic is empty. If your YouTube video went viral or your phones have been ringing off the hook from a press release that’s hit all of the local news, but most of your bidders all brought your direct mail piece to the auction, then the buzz didn’t bring you buyers.

Buyers trump traffic.

Speaking of buyers, you can take this formula one step further to separate the tire kickers from the paying customers. In the formula, you can replace “bidder” with “buyer.” If you want to know how much you spent per buyer, the formula looks like this:

The formula is simple, but the data collection tends to be the hard part for auctioneers. The spend side of the equation should be easy to capture, since you already have invoices and probably a formula-driven Excel budget. You can add a couple columns to that budget to do this math for you and then link to those result fields in a master spreadsheet.

Then, all you have left is asking bidders where they saw or heard about the auction. (It’s okay if they choose more than one.) You can poll them at on-site auctions, and you can create a toggle-list question for those who register to bid online. Using some tools currently taught in the Auction Technology Specialist designation curriculum, you can even track online bidders passively from their first interaction with your online AND offline media all the way to the bidding page.

If this seems like a lot of work, think about how much more work this information could help you book. Imagine if you and another auction company were vying for the same auction, but you alone could show the seller exactly where they can spend their money the most efficiently. Do you think you’d look a step ahead of your competition with a summary from the past year’s advertising effectiveness in their asset and geography markets?

That’s a rhetorical question.

It will probably take you six to 12 months to build reliable statistics. So, you’ll want to start as soon as possible. Don’t wait. I can name auction companies with more than a year’s head start on you.

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Stock image purchased from iStockPhoto.com

122: The Right Mailing List for the Job

Direct mail typically accounts for almost 60% of my company’s billable work, and a bunch of mailing lists pass through my inbox every week. (My preferred mail house currently averages about 30,000 pieces of mail per business day.) Because of this experience, I regularly get asked where to find lists of buyers and sellers.

Usually I get a request like, “Where do I find people who want to buy [insert asset here]?” There is no such list of people with intentions. There are, however, multiple resources for lists of people who categorically are more likely to be interested in specific assets or services. I’ve narrowed them down to seven categories. Below, you’ll find a brief description of each category and then a flow chart to help you determine which is right for your situation.

Chamber of Commerce

Chambers of Commerce are typically looking for new infusions of income and are open to new members, even those from outside the community.

Pros: gets you in front of local movers & shakers, business people, and referral agents

Cons: usually only give addresses on labels (which can’t be automated and don’t receive USPS discounts); usually takes longer to obtain than electronic lists

Business SIC Codes

Big brother knows what companies do according to tax records and other public information. If you’re selling items with commercial value, it’s fairly easy to find similar businesses to the assets’ current user.

Pros: connects you with targeted prospects; lists arrive electronically and usually can be reused for little or no list cost; geographic targeting ranges from hyper-local to national

Cons: no guarantee that the piece will get past gate keeper to decision maker; mailing typically to a company, not a person; dependent on company accurately reporting their industry specialty

Trade Publication Subscribers

This can be industry-specific publications on the state, regional, or national level or generic business publications in a small geographic area. Regularly, because of publication dates and deadlines, advertising in these print publications isn’t feasible. However, many publications offer rental of their subscriber list.

Pros: gets you in front of niche buyers or local investors & referral agents; often come with surveyed demographics

Cons: can be very expensive, if available at all; often come as labels, which cost you postage and automated addressing

Every Door Direct Mail

The United States Postal Service (USPS) allows you to saturate neighborhoods like no other media with reduced postage costs.

Pros: concentrated geographic coverage, lower postage

Cons: can be slower than first class if not circumvented with secondary services; printing and mailing quantities can be higher to cover geographic area and USPS size minimums

Interest-Based Publication Subscribers

Collectors and people with similar interests often read niche publications. Regularly, because of publication dates and deadlines, advertising in these print publications isn’t feasible. However, many publications offer rental of their subscriber list.

Pros: gets you in front of niche buyers and highly-qualified prospects; often come with surveyed demographics

Cons: can be very expensive, if available at all; often come as labels, which cost you postage and automated addressing

Demographic Consumers

Thanks to public records, you can find people from a wide variety of demographic selectors, including some lists related to hobbies or interests.

Pros: connects you with targeted prospects; lists arrive electronically and usually can be reused for little or no list cost; geographic targeting ranges from hyper-local to national

Cons: prices can vary greatly, according to specificity of selectors

In-House Contacts

Auction, contact management, and database software allow you to capture past clients. Some of that software allows you to query specific indicators such as geography, spend level, etc.

Pros: typically free to use; offers pre-qualified prospects based on past interest; electronic nature allows for electronic use and USPS presorted discounts

Cons: requires maintenance (content input) and constant updating; not as exhaustive as purchased lists in that the selection is only from past interactions, not the community at large.

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Stock image of mail boxes purchased from iStockPhoto.com.