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Sales
Up, Profits Down – Say It Isn’t So!
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
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Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
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415-898-7879 |
Toll
Free |
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866-CFO-PLUS
or 866-236-7587 |
Fax |
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415-456-9382 |
Email |
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thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
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www.cfoplus.net
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When
faced with declining profits, most businesses
respond with increased sales. Their thinking is
that there is a direct correlation between the
two. Increased sales means increased profits,
right? Wrong.
When
Furniture Brands International Inc., the largest
furniture maker in the world, posted fourth quarter
sales for 2003, at a glance, sales increased four
percent from the same quarter last year. Most
business people may assume that profits increased,
too. However, the furniture giant’s profits actually
fell 23 percent compared to the prior year.
Is
this fuzzy math? Not really. There were other
operational lags on the company, which impacted
posted profits. For example, the company absorbed
millions in charges from closing numerous factories
throughout the U.S.
In
a similar relationship, some companies actually
increase sales dramatically and earn lower profits.
How? By paying for growth. A simple example is
a carpet company that hired three additional sales
people to increase sales. While the salespeople
increased sales, their salaries, the increased
labor for installing the carpet and an increase
in two top-selling lines of carpet all impacted
profits. Increased sales do not automatically
equal increased profits.
We
use a powerful software program that allows us
to pinpoint key performance indicators that allow
us to identify trends in profit potential. Aside
from using a software program, you can examine
these areas that can impact profits. Examine the
following questions and you will most likely determine
many areas that could be negatively impacting
profits.
Customers
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Who
are your most profitable customers? What do
they buy? Why do they do business with you?
What additional products may they buy from
you? |
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Are
service fees optimized? |
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Are
any of your customers costing your company
money?
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Product
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What
is your most profitable product? Why? |
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What
is your least profitable product? Why? |
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What
can you do to increase profits on your least
profitable product? |
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How does your product compare in price and
quality to other companies? |
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How
can you sell more of the profitable products
and cut the least or no profit products? |
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Do
you currently link products with customer
targeting programs? Why not?
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Price and Profit
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What
is the cost of your best product? What is
the gross profit margin (sales less cost of
sales)? |
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Can you improve gross profit by increasing
selling price or reducing cost of sales? |
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Do you compensate sales teams based on profitability? |
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Does
it make sense to change the sales channel
based on customer profitability?
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Operations
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What
are your weekly/monthly operating costs? |
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What
are your largest overhead costs? |
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Is
there a way to reduce overhead costs?
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Warehouse
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Is
your inventory in line with customer buying
patterns? |
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Could
your picking cost be improved with a better
warehouse layout? |
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Can
you increase truckloads, and reduce rush order
handling? |
The
questions above are only a starting point to pinpoint
where you may be able to increase profits and
more efficiently manage your business.
Many
companies hold onto products that have little
or no profitability. Rather than emphasizing the
company’s best selling or most profitable product,
they spend company resources to develop, market,
sell and house low profit, high cost products.
One
such company noticed an increase in sales and
a decrease in profitability. After using a profit
analysis software product, they came to the conclusion
that one of its customer segments was not as profitable
from a net operating margin perspective as it
was from a gross profit perspective due to excessive
indirect cost incurred in serving the item. This
knowledge allowed them to implement a profit improvement
initiative to change their pricing infrastructure
and service policies in order to make their business
more profitable.
Whether
you use the questions above or call us to perform
a profit analysis product, you can be on your
way to improved profits today!
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The
Rewards of Recognizing Employees Beyond Their
Pay
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
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Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
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thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
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www.cfoplus.net
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It’s
Psychology 101 – praise employee behavior
you want to reinforce. Parents do it naturally,
but for some reason we forget the concept
as we walk into work. Employees work better
with the anticipation of extra recognition
either through pay, awards, rewards, or positive
feedback.
Personal
recognition expressed through appreciation
for employee efforts teaches employees to
be proud of their work, the people and place
they work in. This added recognition contributes
to their likelihood of continuing the desired
behavior or goal. Increased loyalty, better
attendance and boosted morale are often by-products
of happy, content and secure employees.
When
an employee is proud, excited or goal-driven,
increased productivity follows. By using motivating
techniques such as the following developed
by Dr. Gerald H. Graham, you’ll notice a huge
return in productivity for a fraction of your
investment.
1. |
Personal
congratulations for positive behavior
or achievement of goals. |
2. |
Personal
note regarding desired behavior or meeting
a set goal. |
3. |
Public
recognition in front of peers. |
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Celebrate
successes as a group. |
Rewarding
employees beyond their pay boosts morale and
derives desired results from employees. Perhaps
the most valuable characteristic of alternative
reward systems is predictable behaviors, which
in turn, equate to predictable outcomes.
Many companies use recognition or incentive
programs. Programs include sales awards programs,
employee recognition programs, business incentives,
individual incentive travel, incentive merchandise
catalog reward programs, and point-based programs.
Altana
Pharma uses these programs and is one of the
highest yielding pharmaceutical companies
in Europe with a 17 percent increase in corporate
revenue and 25 percent increase in operating
to 2.3 billion dollars in revenue. The company
offers employees a comprehensive benefits
package, including a pay-for-performance compensation
structure and a whole host of benefits designed
to support the overall health and welfare
of its employees.
Company
executives believe in true partnerships and
this includes partnerships with employees.
In addition to the comprehensive benefits
package, the company offers formalized recognition
and time-off programs, which reward employees
beyond their paychecks. By recognizing employees,
and using the methods above, Altana has reduced
costs, reduced cycle time, and improved quality
and efficiency of workers.
Throughout
the United States, small businesses and Fortune
50 alike use incentives and other forms of
positive reinforcement. Incentives are large
and others are smaller. Starbucks offers their
employees one pound of coffee per week, among
other incentives and has been named one of
the 100 best companies to work for in America
in 2004 by Fortune magazine.
Now,
you may be asking yourself, “What can I do
to get my employees positively motivated and
accomplish goals and set standards?” Here
are five simple steps!
Plan
– Set performance expectations and goals for
groups and individuals to channel their efforts
toward achieving organizational objectives.
Make sure to involve employees in the planning
process, they will better understand the standards,
objective, goals, rewards.
Monitor
– Measure employee performance and feedback
on their progress toward the goal. Work with
employees to change problematic measures.
Develop
– Increase the capacity to perform by using
more effective work processes, assignments
that introduce new skills or higher levels
of responsibility, and training that encourages
better performance.
Rate
– Evaluate results based on the preset
standards and appraisal requirements.
Reward
– Pay for performance, personal recognition
from managers, workplace recognition, time
off rewards and other monetary and non monetary
rewards can all be used to positively reinforce
the behavior or goals accomplished.
And
what’s the bottom line? When positive reinforcement
is implemented, employers have a great deal
to gain from what they actually contribute.
When employees are disgruntled, tired, feel
worthless or are unmotivated, productivity
is negatively impacted, and the bottom line
suffers. On the flip side, happy, content,
secure and positively charged employees offer
intense employer loyalty, better attendance,
increased morale and an overall better work
product. You can do a great deal to positively
impact your employees. Want to get started?
Give us a call today!
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Making
customers your marketing department |
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
: |
www.cfoplus.net
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By
Genie Fuller
Founder of Winning Referrals, Ltd.
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One
evening last August I got a phone call from
my friend, Sarah. During the course of the
conversation, Sarah exclaimed emphatically,
“Genie, you have got to go see Seabiscuit!!!
It’s a true story about this race horse and
has a great message—you will love it—just
go see it!”
Sarah
was a customer of the movie and I was a viable
prospect. For new movies, we all refer our
friends, thinking only of their enjoyment,
not the value to the movie producer, theater,
etc. However, when most business people ask
their customers for referrals, they somehow
forget the value to the prospect and believe
getting a referral is about helping themselves.
Then the referral falls flat without the enthusiasm
and confidence a true endorsement delivers.
The
traditional approach of asking for referrals
is generally ineffective. It is focused on
your objectives. Customers are not in-tune
with your goals; they see and hear the world
through their own filters. They do not instinctively
identify prospects for you, and yet their
contacts could become your biggest, revenue-producing
asset.
Customer
referrals are so important to all businesses
that a recent article in Harvard Business
Review states:
“The
only path to profitable growth may lie
in a company’s ability to get its loyal customers
to become, in effect, its marketing department.”* |
But
how do you proactively stimulate “loyal customers
to become, in effect, your marketing department?”
Many
business people who desperately want referrals
operate under several erroneous assumptions.
They fail to realize that customers are not
prepared to endorse the company. Some service
providers believe that long-standing customers,
who could be referring business, do not, simply
because they do not come across viable opportunities.
Yet the truth may be that satisfied customers
are now taking the service for granted and
are not motivated to “sing the company’s praises.”
There are other myths that prevent people
from interacting to incite referrals. A couple
of them are:
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Customers
understand what I do, so they recognize
my prospects. |
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Customers
have experienced my service; they know
how to endorse me. |
To
begin developing your customer marketing department,
analyze the current reality. What circumstances
prevent your customers from spontaneously
referring you business? From a customer’s
viewpoint, your referrals are not a priority—customers
just don’t think about your business.
You can coach customers to become your marketing
department. Realize to be effective, customers
must first be convinced of your commendable
service. They also must be able to identify
profitable prospects and recognize referral
opportunities to spontaneously refer you.
To capitalize on your customers’ contacts,
you should establish a referral generating
routine when working with your customers.
Because
employees forget to “ask for referrals,” you
can implement rituals that, over time, become
marketing habits. Even though there are more
steps in the process, begin now by implementing
our top three “Referral Rituals” systematically
with your customers.
Referral
Rituals
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1.
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Remind
customers of what you have accomplished.
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Elevate
their perceived value |
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2. |
Recap two or three points that describe
your important services and the distinctions
that differentiate you from the competition...
Give
them verbiage that is easy to remember
and successful when endorsing you |
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3.
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Point
out prospects you believe they may know.
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Be
specific in describing a profitable
customer |
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By
employing these three rituals you coach customers
to look and listen for potential new business.
Take these three rituals and establish a routine
for appointments. Make it a practice to review
a customer’s experience as the normal preliminary
conversation on an appointment. In this way,
you accomplish the first two rituals—getting
the customer in touch with the real value
as well as specifying the key benefits so
customers are prepared to convey your message.
Then, at the end of the appointment, point
out one or two target prospects and simply
ask the customer who they know in these categories.
When
you perform these rituals consistently you
circumvent the myths and make customers proud
to endorse you. By establishing a routine
for customer appointments, referrals are not
left to chance. Your employees habitually
conduct appointments to garner referrals.
As
our Referral Rituals become a positive and
instinctive behavior your customers are conditioned
to spontaneously endorse you persuasively,
just like they refer a new movie.
Referral
Rituals will make “loyal customers, in effect,
your marketing department!”
*
(The One Number You Need to Grow by Frederick
F. Reichheld; Harvard Business Review,
Dec. 2003)
Genie
Fuller is the founder of Winning Referrals,
Ltd. and the CEO21 Referral Groups. She has
thoroughly researched business referrals for
the last 20 years and now trains business
owners and professionals to increase revenue
through referrals from customers as well as
other contacts. Learn more about Winning Referrals
at www.winreferrals.com
or contact her by phone at 713.572.2578.
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Use
Sales Letters to Market Your Services
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
: |
www.cfoplus.net
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You
may think that using sales letters has gone
the way of the dinosaur, but if that was true,
your mailbox would not be filled to overflowing
each day. The truth is that direct mail works.
The
very best copywriters command more than $1,000
per letter, and some make millions taking just
a contingency fee based on results of their
creative efforts. How can you take advantage
of this extremely effective marketing technique?
You don’t have to pay big bucks to achieve similar
results; you simply have to keep certain things
in mind to write effective letters.
When
you write your sales and marketing letters,
you have three missions: 1. ensure you address
the primary questions your prospective customers
are likely to ask, 2. keep the reader’s attention,
and 3. give them the need or desire for that
product or service.
Your
readers typically will ask themselves five simple
questions to determine whether they need your
product or service or whether they will work
with you at all. These questions are:
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What
do I get out of it? |
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How
will this make my life better? |
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What
if I don’t want it? |
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How
do I know I can trust you? |
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What
is my calculated risk? |
Do
you need to be a great writer? Not necessarily.
If you can speak persuasively, chances are that
you can write persuasively, too. Personalized
language sells better than a formal dialogue.
Use
these writing techniques to help your prospective
customer see why they need your product or service,
what the associated benefit is, and exactly
how to get it.
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Specify
the most important benefits and features
that apply to the reader’s need. |
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Use
the YOU point of view. How is it going to
impact them? |
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Use
active words – Protect yourself, Control
outcomes, Plan for the future. |
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Use
natural transitions to keep the flow of
your letter. |
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Follow
the rule of three. Three adjectives, adverbs
or ideas have more balance and rhythm than
two or four – The broom is quick, easy,
and long-lasting. |
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Include a call to action. Tell readers exactly
how to purchase or contact you – Complete
the form, Call toll-free 24/7…800-800-8000. |
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Conclude
your letter by restating the reader’s need
for your product or service. |
There
are a few trends you need to make sure you avoid
when writing your pitch.
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Forgo
generalities. Be specific. If your offer
sounds too amazing, be sure to state it
in a believable way. Readers may immediately
discredit you if it sounds too unreasonable. |
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Keep
your readers moving from point to point.
Do not use long paragraphs, sentences or
words. Use words such as win, secure, or
now, which will entice the reader and give
them the positive reinforcement for your
service or product. |
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Lose
the humor. Humor works in many areas, but
not in sales. Don’t interrupt the psychology
of selling by using humor. |
Use
these tried and true guidelines to write winning
sales letters. By sticking to these dos and
don’ts, your customers will stay focused on
you and your product or service. An effective
sales letter can return more than five times
the average direct mail return, which is just
one-half of one percent. If you are unsure about
the true benefits you have to offer your clients,
give us a call today!
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Adware,
Spyware and the Rest
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![](images/2004-MarApr/grey_cfo.jpg)
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Our mission is to provide information and strategies
to business owners and managers for improvement
in the effectiveness of its business management
so that key objectives can be realized.
|
|
Ted Hofmann
- Principal/Senior Consultant
John Morre - Principal/Senior Consultant
Linda Panichelli - Principal/Senior Tax
Consultant
CFO Plus, LLC
1450 Grant Avenue, Suite 102
Novato, CA 94945-3142 |
Home Office |
: |
415-898-7879 |
Toll
Free |
: |
866-CFO-PLUS
or 866-236-7587 |
Fax |
: |
415-456-9382 |
Email |
: |
thofmann@cfoplus.net
jmorre@cfoplus.net
lpanichelli@cfoplus.net
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Website |
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www.cfoplus.net
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Free
stuff is great! I am always interested in
anything that is of value and costs me nothing.
But, as your mother probably told you many,
many times before, there is precious little
in life that doesn’t come with a price tag.
Most
internet users know at least something about
the dangers of computer viruses. But, there
exists an even greater menace lurking on the
net you may be unaware of. The menace takes
many forms and is collectively know as “adware,”
“spyware” and “malware.”
These
small programs “phone home” the information
they gather from your hard drive. The information
they send ranges from the Web sites you visit
to the credit card and banking information
stored in your financial software. Some programs
even record the passwords and usernames you
type.
The
first sign that you are under attack is when
you notice your computer is working more slowly
and it seems to be “churning” constantly.
Another sign is when Internet ad pop-ups appear
even when you do not have a Web browser open.
So,
how do these programs wind up on your computer?
It’s simple. They usually are installed on
your computer without your knowledge. Many
of these programs are attached to free “helper”
applications. Examples of these are pop-up
blockers, MS Internet Explorer toolbars, and
one of my favorites, Bonzi Buddy.
How
do you know if a program contains one of these
little creatures? You don’t. Actually, that
is not entirely true; many companies will
mention that additional software comes with
the application which helps them pay for their
costs. This information is usually tucked
away in the “Terms and Conditions” message
you must agree to before installing the software.
Personally, I don’t know many people (ok,
I know no one) who reads every word of those
agreements every time before they click the
“I Agree” button. We’re only human, right?
To
protect yourself, don’t download, much less
install, ANYTHING unless you have absolute
confidence and trust in the company that makes
and distributes it.
If
you aren’t familiar with the company, do some
research. Some good sources of information
are sites like ZDNet.com, Doxdesk.com, PCMag.com,
SpyWareInfo.com, and of course, this one!
Unless
your friends and family work in the computer
security business, they are not good sources
of information and should not be trusted.
Enough said.
By
now, you may be asking, “How do I get rid
of it?” Uninstalling the program rarely works.
Even if a uninstall feature actually exits,
it almost never uninstalls everything.
Yet there is hope! Programs exist that find
and remove adware, spyware, and malware. And
the better news? Most of them are free! (Yes,
I know what I wrote in the first paragraph,
but this is the good free.) Unfortunately,
some of the free ones actually remove files
installed by other applications only to install
some of their own.
The
product I recommend for most users is Ad-aware
by Lavasoft. It is very easy to use and you
can safely remove all of the files it finds.
Lavasoft offers a free version for non-commercial
use. Make sure to download the updates every
time you use the software. Run the program
at least once a month even if you are positive
that you don’t need it. Always run the program
when your computer starts acting quirky. You
may be very surprised at what it finds.
Other
trustworthy applications are Spybot Search
& Destroy, CWShredder and HijackThis.
They are geared for computer savvy users and
occasionally recommend removing things that
you really don’t want to remove. Read the
instructions and pay very close attention
to the alerts if you decide to use one of
them.
Keeping
your private information private is a challenge.
Cautious and vigilant computer users lessen
their exposure to the pirates in the world.
Kasey
Pirbhai, CTO of Allyson-Kas, Inc., can be
reached at kc@allyson-kas.com or 856-812-0623.
She is a frequent contributor on computing
topics. Visit www.allyson-kas.com for more
information.
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