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Salesmanship Without the Human Touch

Compensating For the Five Senses

thmb_office_computers_workstation_bzMost consumers want retailers to compete for their business. They’re looking for information, options and complimentary products – along with assurances that their business is wanted.

This is true with online and traditional shopping. Just because your Web site uses new technology, don’t think that consumer psychology has changed too. Customers generally buy the way they always have. The difference: On the Internet, you don’t have the nose-to-nose opportunity to persuade them that your product is the one they want.

Nevertheless, a five-step sales process is still valid online. Each step feeds the others, so two or more steps may operate at the same time on the same page by e-customers:

Step 1: Prospect – Customers usually come to your Web site because they were lured with good marketing, they are familiar with your product, or they searched the Internet and your name came up.

Whatever the reason, the customer is there. If you have a promotion, make sure it’s on the first page. And be sure the landing page offers immediate guidance to the cyber department customers are seeking. If you don’t deliver quickly, you run a big risk of losing them.

A word about promotions. They are an effective means of cross-selling related products. But keep in mind that what you think is logical may appear nonsensical to the customer, who could wind up not buying either the main product or the related promotion.

Step 2: Rapport – With traditional shopping, customers’ five senses work overtime. They are presented with product arrangements, eye-catching designs and opportunities to smell, feel and try merchandise. In addition, a motivated and skilled staff is ready to answer questions and add a sense of comfort when shopping in person.

Online, there is usually little of this. Rapport is built through navigation and links, which both involve sensitivity to customers’ shopping habits. If you make navigation too simple, you can lose cross-selling opportunities. Make it too complicated and you could lose customers due to confusion.

In terms of linking, every sentence is a potential link to a buying opportunity. Links replace human sales staff, provide more information, meet shopping preferences and offer new ideas (for example, “customers who bought this product also bought…”) But then again, too many links lead to frustration and too few lead to disinterest.

Step 3: Qualifying – This is a big online challenge. In person, you can start a dialogue to determine, or qualify, what the customer needs. Online, you must set up categories, sub-categories and cross-references. Classify by department, brand, function, gender, age, best-sellers and price, among other categories. Make changes after watching your Web logs for navigation path activity.

Your web architecture should clearly and easily lead prospects to the right aisle and take into account the three basic shopper types:

Determined shoppers know just what they want because they have a need or have responded to an ad.
Curious shoppers have a general idea of what they want but need guidance.
Browsers are window shopping and need a nudge to purchase.

Step 4: Presenting – By now, the customer has a better idea of what’s available and you present options: Colours, sizes, materials, price, men’s, women’s, children’s, consumer, industrial, commercial.

Step 5: Closing – Clinch the deal by outlining service plans; payment, ordering, shipping and discount options; warranties and guarantees; toll-free customer service lines, secure payment system and privacy policy. Consider giving the customer the opportunity to offer feedback on the online shopping experience. Don’t give up if they don’t buy. Online shopping often involves several visits.

Be persuasive: Address the user’s needs at every step of the process. Captivate shoppers with colours, shapes, sizes and prices. Appeal to the emotional aspects of making the purchase.

Smart Surveys Get Smart Results

Well-Crafted Questions, Yield Productive Answers


To keep your customers or win new ones, you need to ask questions and listen. One of the most effective tools for listening is a customer survey.

The problem is, many surveys are too long, cumbersome and designed with the company in mind — rather than the consumer. Here are three smart moves to craft a questionnaire that will get the results you really need:

Feedback from a well-designed survey can help you innovate products, improve services, anticipate trends and discover money-making opportunities.

1. Place the survey strategically.Questionnaires are more apt to be completed when customers have time, so make them available while people are waiting in line. Provide pencils or pens. Don’t put the surveys near your staff members or the door. Some customers feel self-conscious about taking a survey in front of employees, and if they pick one up at the door, they’re more likely to toss it in the car and forget it.

2. Isolate your survey as much as possible. If you don’t have customers coming into your place of business, you can include a survey with packing orders or invoices. But don’t attach it to other information about the company. That could influence the responses and skew the results. The questionnaire should be separate so the customer can fill it out and send it back anonymously. Include a postage-paid envelope.

3. Keep it short and smart. Surveys should stick the point, so you need to zero in on what you want to know. Leave plenty of space at the bottom for comments and suggestions.

A smart survey helps keep customers loyal. By implementing what you learn from the results, your company can unlock hidden profit opportunities and deliver “world class” service. Here’s a sample questionnaire:

We Want to Know . . .How satisfied are you with our company?___ Totally
___ Partially
___ Dissatisfied


Are you pleased with the responsiveness of our employees?
Is it easy to do business with our company?
How committed are you to staying with our company?
Are you comfortable referring friends, relatives and associates to our company?

Divide and Conquer

The Canadian tax system taxes individual, rather than family, incomes. That means that if you’re married, or living in common law, you might want to consider a transfer of income to a lower-earning spouse or children.

Known as income splitting, this tactic can significantly trim your tax burden because the income transferred is taxed at the marginal rate of the lower-income family member.

However, from the government’s perspective, income splitting means less revenue. So tax authorities put up some obstacles called attribution rules. Under these provisions of the Income Tax Act, certain income earned by related parties is attributed back to the person who made the transfer.

Nevertheless, there are legal ways to split income. Here are five methods that might help you save on federal taxes:

lores_canada_money_coins_currency_cash_dollars_close-up_mbGifts to a spouse. If you provide any gifts or interest-free loans to your lower-income spouse, dividends, capital gains or interest earned will be attributed back to you. However, if your spouse reinvests the investment income, the money earned on those investments is taxed at your spouse’s lower rate.Transfers to children. All income derived from gifts to an adult child are taxed at the child’s rate rather than yours. With an interest-free loan, and under attribution rules, income earned on the funds will be taxed in your hands, just as it would have been if you had not made the loan. However, the income then becomes their property and can be reinvested without further attribution.

Trusts. Starting Jan. 1, 2016, graduated tax rates will apply to testamentary trusts for the first 36 months. After that it is taxed at the highest marginal rate except where there is a disable beneficiary. The rules are complex. Consult with your accountant.

Retirement plan transfers. Income derived from a contribution to a spouse’s Registered Retirement Savings Plan (RRSP) is not attributable to you if the money stays in the plan for at least two years. The point of making contributions to a spousal plan is to provide tax relief at retirement. Spouses with equal RRSP funds when they retire will likely pay less in total tax.

Pension Splitting. Anyone who is eligible for the Pension Income Tax Credit can transfer as much as 50 per cent of the qualifying income to the tax return of a lower-income spouse or common-law partner. This is generally allows a greater portion of family income to be taxed at a lower rate and generates a higher level of after-tax income.

Registered Education Savings Plan. You receive no tax deduction at the time of your contribution to the plan and all income earned within the plan is reinvested tax-free. When the plan starts paying out for the education of children or grandchildren, the money withdrawn is taxable to the student, who is likely to be in a low marginal bracket.

Caution: Provincial rules vary in terms of tax rates and the ability of minors to enter into contract agreements. Attribution rules are complicated, so consult with your accountant before you start splitting your income.

Be Aware: U.S. and Canada Share Border Crossing Information

Canadian business travelers who spend a lot of time south of the border should be aware of Canada Revenue Agency’s (CRA) efforts to crack down on tax evaders.


Critical Residency Issues

U.S. tax residency is based not just on U.S. Citizenship and green card status but also physical presence in the U.S.

Physical presence generally includes time you physically spend in the country, including days spent on business trips or attending conferences.

Under U.S. tax law one of the determinants of residency is the substantial presence test. Many mistakenly believe that they are safe as long as they spend fewer than 183 days away in one year.

In reality the test is much more complicated: You are considered a resident of the U.S. for tax purposes if you are physically present on at least 31 days during the current year, and 183 days during the three-year period that includes the current year and the two preceding years, counting:

  • All the days you were present in the current year;
  • 1/3 of the days you were present in the first year before the current year, and
  • 1/6 of the days you were present in the second year before the current year.

Days spent in the U.S. because you are ill and unable to leave do not count.

If you are caught in this calculation you will be required to file a U.S. tax return reporting your world income, as well as a Canadian tax return. An exemption is available if you can establish a closer connection to Canada than to the U.S.

To claim closer connection exemption you must file Closer Connection Exemption Statement (IRS form 8840) each year on or before June 15 of the following year. If you don’t file this form you may lose the exemption.

Canada and the U.S share immigration entry and exit dates under the Entry/Exit Initiative of the Perimeter Security and Economic Competitiveness Action Plan. This information will help the IRS determine the number of days a Canadian spends in the U.S. This could result in Canadian business travelers having to pay U.S. taxes.

U.S. tax residency generally is based on physical presence in the country for any reason ranging from shopping excursions and holidays to business trips. Many Canadians are not aware that entering the U.S. for business on behalf of a Canadian employer or to attend conferences will count toward U.S. tax residency status. (See right-hand box.)

The increased risk of being liable for U.S. taxes significantly boosts the chances that Canadians may face an IRS audit. As well, travelers may have to file U.S. foreign compliance disclosures and report all their Canadian holdings ranging from bank accounts to ownership holdings in Canadian corporations or partnerships.

In addition to this increased scrutiny, the CRA plans to boost efforts to track down tax evaders who use aggressive tax strategies to hide money in tax havens or make questionable claims related to business travel.

In reality, there is nothing illegal about lowering the amount of taxes you owe, provided the methods used are legal. But when tax planning reduces taxes in a way that is not consistent with legal rules and regulations, the methods are considered to be tax avoidance. The CRA interpretation of tax avoidance includes transactions that:

  • Contravene specific anti-avoidance provisions, and
  • Reduce or eliminate tax through means that comply with the letter of the law but violate its spirit and intent.

This differs from tax evasion, which typically involves deliberately ignoring a specific part of the law. For example, those participating in tax evasion may under-report taxable receipts or claim expenses that are non-deductible or overstated. They might also attempt to evade taxes by willfully refusing to comply with legislated reporting requirements.

Tax evasion, unlike tax avoidance, can involve criminal prosecution.

Of course not all tax shelters are used to evade taxes. Under theIncome Tax Act, tax shelters generally include either a gifting arrangement or the acquisition of property where the tax benefits and deductions will equal or exceed the net costs of entering into the arrangement. A gifting arrangement involving limited recourse debt related to the gift is also considered a tax shelter. Generally a limited recourse debt is one where the borrower is not at risk for the repayment.

Tax-shelter promoters must have an identification number and provide the CRA with a list of investors or participants, including their names, social insurance numbers, and other prescribed information. This identification number allows the CRA to track the arrangements and the participants. All tax shelters are reviewed and, if they are considered potentially abusive, they are audited.

Of particular concern to the CRA, and arrangements you should avoid, are mass marketed gifting tax shelter arrangements. These are made for the primary purpose of avoiding taxes. They include schemes where taxpayers receive a charitable donation receipt with a higher value than what they paid. This can typically be four or five times their out of pocket cost. The CRA audits every mass-marketed tax shelter arrangement and no arrangement has been found to comply with the Income Tax Act.

If you have questions, consult with your adviser.

Testamentary Trusts and Taxes

lores_testamentary_trust_kkTestamentary trusts, unlike inter vivos trusts, are formed by wills and executed when an individual dies.

A trust is a legal structure that allows you to separate the control and management of an asset from its ownership. Trusts involve relationships between three different parties:

  • The settler, who sets up the trust, contributes the first assets and sets the instructions on how to manage the trust and who will benefit from it;
  • The trustee, who controls and manages the assets; and
  • The beneficiaries, who benefit from the assets.

The transfer of the assets to the trust is known as the trust settlement.

Trusts can be either:

1. Discretionary, where the trustees decide who will receive the distribution from the trust, or
2. Non-discretionary, where the distribution is made according to the trust agreement.

Testamentary Trusts

A testamentary trust is a trust or estate that is generally created on the day a person dies. The terms of the trust are established either by the will of the deceased or by provincial or territorial court order.

Testamentary trusts do not include any trust created by anyone other than the deceased or a trust created after November 12, 1981, if any property was contributed to it other than by an individual as a consequence of the person’s death.

If the assets are not distributed to the beneficiaries according to the terms of the will, the testamentary trust may become an inter vivos trust.


Income splitting: Despite the kiddie tax rule, you can still split interest income received from arm’s-length parties and certain other forms of income with a minor.

Taxes: Currently the income of a testamentary trust is taxed at marginal rates so it has significant advantages if the beneficiaries are already taxed at high marginal tax rates. Income splitting between the trust and beneficiaries allows the beneficiaries to reduce taxes significantly.

Beginning in 2016, flat top taxation is scheduled for estates in taxation years that end more than 36 months after death and all grandfathered inter vivos trusts and testamentary trusts created by will. There is an exception aimed at ensuring graduated-rate taxation that continues to apply to trusts with disabled beneficiaries. In addition there are several other exemptions, including the:

  • Elimination of the exemption from the calendar year as a taxation year requirement: The new rules provide that existing testamentary trusts and estates that have existed for longer than 36 months, and that have off-calendar year-ends will have a deemed year-end as of December 31, 2015.
  • Elimination of the exemption from tax installment requirement.
  • Charitable donations treatment: For 2016 and subsequent years there will be more flexibility to the tax treatment of charitable donations made in the context of death after 2015. Donations made by will, and those made by Registered Retirement Savings Plans, Registered Retirement Income Fund, Tax Free Savings Accounts or life insurance policies will no longer be deemed to be made by the individual immediately before the individual’s death.

Instead, these donations will be deemed to have been made by the individual’s estate at the time the property actually transferred to the qualified donee within 36 months after death. The trustees can choose the year in which the donation was made so it can be the year of death, an earlier taxation year or the individual’s last two taxation years. The current annual limit will continue to apply.

Only one testamentary trust (even if there are several mentioned in the will) and usually the estate itself is the only trust eligible for graduated rate estate treatment for the 36 months.

Setting up trusts can be complicated so be sure discuss your needs with your accountant.

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