Tourism: Washington vs. Montana

You must have noticed Montana tourism advertising in Washington state, at least around downtown Seattle. (The photo above is at a vacant storefront on University Way.) They are taking siege, knowing full well that Washington doesn’t have a whole lot to combat their big gorgeous illustrations of wildlife and clever marketing aimed at wooing Washington residents to the “Big Sky Country.”

And who’s to stop them? As voiced in the New York Times, Washington officially became the only state in the union without a tourism office this year. Due to budget cuts, there is no more state money to promote tourism within or outside of the state. Archived property has been transferred to members of the Washington Tourism Alliance, formed this year with the goal of taking over statewide marketing coordination. This nonprofit group includes big agencies like Seattle’s Convention and Visitors Bureau and smaller operations like Indian-owned casinos and ski resorts. With tourism as the fourth largest industry in Washington and a year-over-year upswing on visitor spending and international visitors from 2009 to 2010, Montana clearly sees market share to capture.

If the grand billboards weren’t enough to make you realize Montana’s success, the tipping point for me was a recent radio commercial promoting Montana by Washington’s own Warren Miller. (He lives on Orcas Island.) It’s in this 60-second radio spot that Mr. Miller attributes Montana as the perfect destination for winter adventure, and likens settling in Montana to that of the early pioneers who ceased their travels upon landing in Montana – because it was just that perfect then too. Heck, surrounding this year’s Warren Miller film alone, look at Montana’s tourism efforts to raise awareness:

• 2011-2012 Winter Brand Awareness Study: General study including Warren Miller as a spokesperson, with a $6.4M media budget for the year.
• Glacier County Regional Tourism Commission: Marketing to bring recognition to the region.

Montana-focused tourism is also a political issue requiring advocacy within the state. Montana currently has a dedicated funding source for tourism promotion, a 4% Lodging Facility Use Tax commonly referred to as the “Bed Tax.” This tax was enacted by the 1987 Montana legislature and is collected from guests of hotels, motels, bed and breakfasts, guest ranches, resorts and campgrounds. And just like Washington’s new Tourism Alliance, Montana has a coordinated group of regional organizations dedicated to educating the public about the power of tourism, and value of the tax.

While Washington doesn’t have a state-initiated tax to promote tourism, there are some already enacted city-mandated bed taxes to fuel support for city specific tourism. (See the City of Olympia for example.) Downtown Seattle hotel owners have proposed a $2-per-night room tax to fund advertising that would promote travel to the city, particularly in slower months. If passed, that fee will add to the 15.6 percent tax Seattle hotel guests already pay in sales and room taxes, which go in part toward paying off debt on the Washington State Convention Center and promoting Seattle as a business and convention destination.

The good news for Washington is that despite dismal efforts to market the state, tourists do seem to keep coming and spending money. We also have a great state tourism website at www.experiencewa.com too. So there’s already a foundation for the Washington Tourism Alliance to grow and succeed, not to mention a grounding of support from hotel owners looking to advocate for new funding resources to expand the tourism industry. The tough part, particularly in this economy, is advocating to the public why this issue so important – over countless others – and how the numbers work out to our advantage. Enter the challenge of consensus building.

Until then, enjoy drop dead gorgeous images of Montana. They’re a nice diversion from the reminder of vacant storefronts regardless.

P.S. I’ve also been fascinated with Oregon’s tourism campaign too.

Photo courtesy of Montana’s Office of Tourism.

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Business Lunch: The McRib

Scarcity. It’s a great marketing tactic to create demand, and McDonald’s does it well with the McRib. You can’t get this sandwich whenever you want, it’s only offered once a year and at specific locations at limited times. And unlike the In-N-Out secret menu, which you can order from at any time of the year, the McRib is truly a marketing engine playing off of the basic economic principle of supply and demand – and, well, quirkiness since the McRib actually contains no ribs.

Per this TIME article, the McRib was introduced in 1982, disappeared in 1985, and then periodically introduced again and again in McDonald’s here in the states and abroad. The McRib hadn’t been sold nationally since 1994 until it was formally reintroduced last year in November. It’s a chemistry lab creation of 70 harmonious ingredients, including 980 mg of sodium, 26 g of fat, 10 g of saturated fat, and 500 calories. And this saucy number is all the rage.

Here’s an interesting tidbit, the the guy who won McDonald’s $1 million Monopoly grand prize last year was ordering — you guessed it — a McRib.

Interestingly enough, it’s up to McDonald’s franchises to determine when and if they want to sell the McRib, except in Germany where it is always available. Have no fear, there is a McRib Locator that tracks its availability nationwide.

So what product or service in your business can you promote with a little scarcity? Scarcity can give you an opportunity to deepen customer loyalty and offer you the chance to highlight and reward your VIP customers. Regardless, the perception of value and differentiation is of utmost important and it’s imperative that you follow-through on the offer. Beyond that, using scarcity as a marketing tactic is simply that, at tactic. And some work better than others.

…And sometimes, playing ‘hard to get’ is just plain fun.

Photo courtesy of geekosystem.

Debit card merchant and usage fees

FYI. As of this month, merchants will now be paying higher merchant fees for debit card transactions. The cost of transactions has jumped as of October 1, 2011 as merchants must now pay the maximum allowable fees under federal law for purchases under $15; 21 cents to 24 cents, instead of  6 cents to 7 cents per transaction. What does this mean? These fees may end up coming out of your wallet.

Debit cards have been under hot debate lately. At issue is the fee that retailers pay to banks to process electronic debit card payments, otherwise known as interchange fees. Previously, interchange fees were set by the payment card networks, such as Visa and Mastercard, as part of the contracts that allowed merchants and their banks to use the networks to process electronic payments. The networks argued that interchange fees helped pay for the electronic processing, fraud prevention and convenience that go along with accepting a debit card payment. Merchants used to pay interchange fees of about 1 to 2 percent of each transaction, or about 44 cents on the average purchase. Now, the credit card networks have eliminated the interchange fee rate schedules and the merchant discounts on small-dollar purchases and set all rates at the maximum allowed by law.

And if you think you might fair better opening a merchant account with a small regional bank, you might ask further into their policies. Apparently, banks with less than $10 billion in assets are exempt from the debit card swipe fee limits, but that doesn’t mean that they’re not opposed to charging fees. Thus, these small banks can charge higher interchange fees for using their cards, particularly as they’re finding it harder to generate loan income otherwise.

What about all the press on the ‘customers’ of banks paying more for using debit cards? That’s true too. Banks are now charging ‘activity fees’ for accessing your own money, the New York Times recently ran through a few banks’ fees as well. Check out the new debit card swipe fee rates in effect.

• Chase: $3/month service fee on debit card use.
• Wells Fargo: $3/month “debit card activity fee” charged to GA, OR, WA, NM and NV customers a part of a test program.
• Bank of America: $5/month for debit card use, starting in 2012. Cancelled as of November 1, 2011!
• SunTrust: $5/month for debit card use, starting in 2012.
• Citibank: No fee, as it would be a source of irritation for its customers.

President Obama is blasting Bank of America for charging fees. Banks are trying to defend their position. Retailers are on the road to discriminating against debit cards. And small businesses may end up scrapping credit card transactions all together in favor of cash. Regardless, accessing money this days costs money. Finding the most efficient way to do so is the name of the game, but at what cost to your business?

Photo courtesy of BizMology.

Business Lunch: Pumpkins

October has set upon us, Halloween is just around the corner, it’s pumpkin season.

But pumpkin farmers are a bit wary this fall. Unfortunately, those on the east coast have experienced a season of drenching storms from Hurricane Irene causing farms to throw away waterlogged pumpkins molding faster than usual. Scorching hot temperatures this past summer also sliced the Texas pumpkin production in half. For most of the nation, the hot dry summer ripened crops early and the rains in the early fall drenched them. Simply put, pumpkins will cost more this year. And because of the wet fall, they’re not going to last very long either.

All the more reason to embrace the the spirit of supporting local. We’re lucky in Washington to have local farms selling pumpkins and businesses thinking seasonally.

• Snohomish Festival of the Pumpkins: Your guide to ‘agritainment’ activities surrounding the jack-o-lantern.
• Not close to Snohomish? There’s a site that aggregates Washington State pumpkin entertainment too.
• It’s hard to miss infamous Starbucks pumpkin latte. There’s even a Facebook page devoted to the drink with a contest pitching U.S. customers against those in Canada.
• We love our beer festivals in the NW. Check out the Elysian Pumpkin Beer Festival (Oct. 8-9). The Huffington Post also assembled their pumpkin beer favorites too.

Celebrate the season and support your local farmer! Particularly how weather dependent this season has been, local farms certainly appreciate your support. Make the time to visit a farm, get in the dirt and have fun ‘picking’ your pumpkin. It will make you smile every time you walk up to the front door.

Photo courtesy of The Telegraph, it’s a 1,647 pound pumpkin found in Shoreline, WA.

Business Lunch: Food Truck Consulting

Find an obstacle, create a way to lower the barriers to entry. That’s what Matt Cohen of Off the Grid did. Originally wanting to start a food truck business serving the ramen noodle dishes he learned to prepare in Japan, he encountered obstacles when trying to obtain permits to operate his business. Like many cities trying to engage in and regulate the food truck revolution, he ran into city bureaucracy that made it more difficult for him to move forward. Instead, he built a for-profit food truck business that supports a rapidly expanding network of about 100 mobile food vendors at weekly events around the Bay Area.

Reshaping the way food trucks operate, Off the Grid is a soup-to-nuts, vertically integrated operation, assisting mobile food vendors with everything from location scouting to social media tricks to truck aesthetics. His consulting arm has even won the hearts of the city as his clients receive expedited permits. Off the Grid also works with the local Parks Department to open spaces for food truck events, creating even more business for its clients.

In Seattle, operating a food truck business is just as tough. However, this year the Seattle City Council recently voted in favor of new rules, which allow food trucks to sell beyond private lots. For a breakdown of these new, more relaxed, regulations, see this Seattle Times article. Prior to this new regulation, I also wrote about food truck business models.

Time and time again, we’re confronted with obstacles that challenge our vision or progression forward with an idea. The real challenge is possibly refocusing and changing direction. Sometimes the obstacle itself may present an unmet need, as it did with Mr. Cohen. While it may be frustrating to shift gears, the process of thinking through alternatives might highlight a profitable avenue for both you and your customers. It may just become your win-win cash cow.

Photo courtesy of Off the Grid.