Tag: Marketing

Starting A Business Too Much Of A Gamble?

Entrepreneurship
Grand Victoria Elgin, William Hopkins via Flickr

Grand Victoria Elgin, William Hopkins via Flickr

Many people think that investing in the stock market or starting a business is too much of a gamble.  Actually gambling is too much of a gamble, but with proper strategies, investing or starting a business doesn’t have to be a significant gamble.  Of course, most new businesses fail… So this post is going to give you some suggestions for making your new business less of a gamble.

1. Play the right game

While casino games are losing propositions for everyone in the long run, some games give you more of a fighting chance.  In the casino, the closest game to even odds is blackjack, and you can turn the odds in your favor by counting cards.  While not illegal, being a good counter will get you banned.

Most poker games pit you against other gamblers, so the smartest player, as well as the luckiest, will often walk away with extra money.  It should be noted, though, that the house takes a bit from each pot.  No matter what, in each game played, the house is the biggest winner.

In business, you play the right game by finding growing, profitable markets with customers willing to spend money.  From there, you study your customer and learn what makes them tick.  Rather than trying to fool them into parting with their money, we find out what they truly need and provide it for them.  Without good up-front marketing, you are really taking your chances.  However, you can opt for the following strategy instead:

2. Know how much you can lose and walk away after it is gone

When I go to the casino, which is almost never as they mainly take my money, I have a stop loss of about $100.  So nine times out of ten, I will walk away $100 poorer.  The one time out of ten I might walk away with a $500 win.  I figure the casino is entertainment, so winning is a very good night.  Note that a $100 loss is not that big of a deal when I might go to the casino twice per year.

In business, we might do the same thing.  We take $5000 and sink it into a new business and once it’s gone, we move on to the next business.  It is possible to see some promise along the way and choose to invest more, or find others to invest in your idea; but you must really see an opportunity before you do that.  Consider the investment an education in what not to do.

3. Use a methodology

When I play blackjack, I play the same way given the same circumstances.  I might increase or decrease my bet, but my plays are always the same.  I might win a hand, might lose a hand, but I always play the same way.

In business or investing, you create a methodology based on many factors.  A methodology in business might be to create business processes that do the same thing in the same circumstances for all customers.  For instance, you might create an unconditional money-back guarantee and provide exceptional customer service hoping to get word-of-mouth advertising from your customer base.  Maybe each customer will not spread the word, but some will.

When selecting a product or a stock to invest in, you might use methodologies that give you a “yes” or “no” about whether or not to go a certain direction.  Your formulas would be based on sound judgement, but you might not always pick the right product or investment.

4. You will eventually win

When I play blackjack, I might not win tonight.  However, if I play often enough, I will eventually have a winning night.  Even though this is true, my overall net will be a loss.  This applies to all kinds of gambling including the lottery, blackjack, slots, roulette, etc.  Overall, you always lose.  You could have a positive net with poker if you are good enough… and perhaps that is what we should consider a business win… when you are good enough to mostly win.

In business, one win is typically all you really need.  You can have 2000 failed business, yes, but if you keep trying and keep learning, you will eventually have a success.  Again, one is all you really need.

It is tough to try and fail over and over, but in order to succeed we must also fail.  Not trying to be in business because you could fail is a horrible reason not to try, because one success is all you typically need.

So what do you think, is it worth the gamble?

Originally published 6/13/2011 on businessfizz.com

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Small Changes With Big Results

Entrepreneurship, Marketing Research and Strategy

Sometimes being a business person is similar to being a painter of paintings.  It’s the smallest details that make the biggest differences.  And you have to pay attention to all of those details, at least at first when you are just getting started.  The customer’s perception of your company and your product are at stake… so what kinds of things should you worry about?

The internet is a tale of two cities.  One dark and desolate, and one bright and populated.  What is the difference between the two places?  The most minor of minor things.  And it may not be anything you’re thinking about.  Is it design?  Is it speed?  Is it wonder?  Is it usefulness?  The answers: Maybe, maybe, maybe, and maybe.  It seriously depends on what your target visitor wants and what your target visitor expects.  And then, you have to give them even more than they expect.

So then it all comes back to marketing right?  Well… yes, and no.  It is very important to know what your customer’s (or visitor’s) requirements are.  Then you must really get into their mind.  Deliver innovation where innovation is not possible.  Smooth out the jagged lines or fill in the gaps of the customer’s requirements with what they really want, before they know they want it.  This is really where the art in business comes in, knowing the unknowable, doing the unthinkable, being the best in a catagory of no equals.

It all comes down to creating something that draws in visitors and customers like a magnet.  They can’t help themselves, they are drawn to your business.  They may not even be sure why.  It’s all of those little details that mean so much.

Make sure to check out other business leaders and their obsession with detail.  People like Howard Hughes, Sam Walton, and Bill Gates.  They built their obsessions into empires.

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It’s All About The Product

Entrepreneurship, Marketing Research and Strategy, Sales And Recruiting

When you go into business, it’s all about the product.  Because no matter which marketing method you use, ultimately the customer will either buy the product or not.  That’s why, if you are considering multi-level marketing, you must seriously consider the desirability of the product.  Would you buy the company’s product at retail?  If not, it may be too hard to sell your customer or sell yourself, and somebody has to buy the product in order for you to make money.

When you look at opportunities, you really need to do the math.  You are looking for a 20%+ rate of return for your time, materials, and cash investment.  For instance, if you spend $100 a month and at the end of the year have a $20 per month commission check, you are right on a 20% return.  So how do you do the math?  Try the following on for size:

cr / ci = ri

cr is what you expect for commission or profit for an individual customer in a year

ci is what you spend in dollars to get a customer.  You should include time, materials, advertising, and other expenses.

ri is your return on investment.  .20 would be a 20% return.

For your customer, you may sell to end consumers or other distributors.  You might want to figure out your return in both ways to see which gives you the most immediate return.  Traditionally this is going to be your customers.  Distributors get a break on the product so you get less of a profit on the volume.

The thing we are not figuring on is when your direct distributor gets another distributor.  You do get a cut on the sales to your second-level distributor, but it’s not usually as much as your first-level distributor.  What I would do about the multi-level aspect of your business is to ignore, for financial purposes, that you will ever get beyond your first level.  You might want to allow for a smaller initial return on investment to compensate for the multi-level effect, that’s up to you.

Again, product sales is the most important thing so you should always be selling the product, even when you’re recruiting.  In fact, sponsoring sales people, people who will sell the product to consumers, is usually the best way to go.  Some of you may say that selling the dream works best.  However, the dream gets people sponsored into the business, not selling product.  It also produces unrealistic expectations and unhappy distributors.  You may also get a look from the FTC.  So we sponsor sales people to get product volume, and we can generally bank on the fact that we’re only going to get first level distributors unless we train our great sales people to be good recruiters.

The downside to multi-level marketing is what the MLM company can do to you.  You are pretty much at their whim.  You advertise their way, you sell their way, and at a moment’s notice they could decide not to use distributors any more.  So be careful out there.

We are starting to be really active with a multi-level marketing company again.  We joined the company in 1992 and they have been very consistent. I believe they produce a very good return on investment for recruiting and have an exceptional product line that customers love.  Check them out.

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Marketing Blah, Blah, Blah

Marketing Research and Strategy

I have been working on a marketing project lately and what is the deliverable for marketing ultimately?  A nice little report that details the problem the company is facing, case studies of other companies, options to pursue, and the option selected with an implementation plan.  Unlike a technology project though, there really isn’t a hard and visible product of the marketing project.  It is research and strategy, both of which don’t sound like a whole lot.  They are software for the business though, and sometimes software is more important than hardware.

New companies often avoid marketing.  Or they see sales as marketing, or advertising as marketing.  I hear many people talk about internet marketing, which is actually advertising.  They are getting their message out to a mass audience hoping to get a few leads that they can sell to.  Internet marketing often encompasses marketing and sales directly to the customer, without much effort from the company beyond creating the web presence.  Individuals and companies often sell on the internet without really doing any marketing at all.  I call this brute force selling, not really having a marketing strategy (or having one that came from the top of your head) and just getting a message out there that may sell your product to people.  You might get some feedback from friends about your selling method and make changes based on that feedback.  The feedback is a shallow kind of research but can be very helpful to improving you message.

So you can create a company and do brute force advertising and sales, and you might get lucky.  Or you can learn a lot about the kind of product you sell, the types of people who may be interested, and the messages they will be looking for.  There is a ton of free secondary information on the internet that can really help, but it will take time to wade through it all.  Better than google searching for information is using an article database that specializes in business information.  I typically use the one that I have access to via the University of Phoenix, but I believe you can also pay for access to these article engines.  A couple that I use are EBSCOhost and ProQuest.

Secondary information is articles and research papers, which often refers to primary information.  Primary information is when somebody does direct research with consumers to get a good idea of their preferences.  Primary information often tries to prove or disprove a theory, leading to a confirmation (or not) of a belief.  Primary information can be acquired but is costly, but secondary information is plentiful on the internet.  And the more different articles you get that say the same thing, the more you can feel comfortable that the information is accurate.

All of this information and research can give us good ideas about our marketing strategy, but we have to test this information against our company mission and values and make sure it makes sense.  Assuming it does, we can make sure our advertising and sales processes agree with our marketing strategy.  We may also want to change other things about our company based on what we find out.  For instance, if the kind of customer we sell to expect exceptional customer service by telephone, we need to make sure we are prepared to help our customers in this way.  All of our company processes should be customer-centric, and our marketing research and strategy can be the test to make sure they are.

Now marketing may be blah, blah, blah to you… but it really can help create a focus for a company to make sure the customer comes first, last, and always.  Then sales just start rolling in, and it all seems easy.  Rather that the constant beating your head against a brick wall to make the sale.  Marketing makes a huge difference.

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Isn’t Marketing And Sales The Same Thing?

Marketing Research and Strategy

Well no… marketing and sales are not really the same thing.  They provide two different functions.  With sales, a salesperson with technical skills attempts to sell something to somebody.  Well managed companies will have a well-defined sales process so that the few variables that remain are handled by the sales person’s skill at selling.  For instance, a company may advertise to get leads that the sales person will attempt to convert into sales, using a standard process.

The standard process is usually defined by marketing.  Marketing’s job is to gather information and create a strategy.  Marketing can have an impact on everything, from the company’s mission statement down to the way orders are fulfilled.  Marketing’s job is to understand the customer: what they are most interested in, how they are likely to buy, what features are most appealing, what they look for in a vendor, and what kinds of services they expect with a purchase.  Marketing studies the customer from every angle and makes suggestions to management on how to change to get more customers and keep existing ones.  Marketing doesn’t reach out and touch the customer, except when gathering data, so marketing doesn’t directly create sales.

I usually say that marketing is a soft discipline where sales is a hard discipline, meaning that marketing is a management type of skill that is sometimes hard to quantify.  Sales shows direct results of effort… however, sales can be more or less effective based on how good the marketing is.

Ethics plays a role in both marketing and sales.  For instance, you don’t want to cheat your customers by promising one thing and delivering another.  Marketing can play a role in deception by delivering the product in a way that causes more to be consumed, such as making the measuring cap of detergent a color that blends with the detergent, causing the consumer to use more of the product than needed.  I am sure you have heard many stories of evil marketing people or horrible sales people, but in both cases the function of sales and marketing is to meet the needs of the customer in a way the benefits both the company and the customer.  Cheating the customer is not part of this equation.

If you sell stuff to a customer, you are not a marketer, you are a sales person.  If you study your customer for clues to how you can serve them better, you are marketer.  What do you think?

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What Can You Do With Marketing?

Marketing Research and Strategy

Marketing is a soft discipline so many small business owners don’t understand what it is and how it can benefit them. Other areas of business are more understandable: Sales and customer service, for instance, have tasks that you can easily identify and implement. Marketing isn’t quite so strait forward and it is not always so easy to come up with the answers you want. For instance: How can we make the sales process more effective? I could sit here and give you a few answers but it really depends on the customer. You have to truly understand your customer and their needs and desires in order to provide them a solution that makes sense.

Research and strategy is what marketing is really all about. We research to find out if our market is growing or shrinking, if there are niches that make sense to pursue, if our customer fits into a certain income bracket, how the customer is best reached, and so forth. We can also do marketing research to make our accounts receivable and customer service functions more effective, as certain kinds of customers are more responsive to certain actions. So marketing really can define the activities of the whole company, and mostly should, because the customer should be the focus of every department.

Once we know enough about our customer, we can create strategies and define business processes to mold to our customers’ needs. For instance, we may find that selling kitchen mixers is a declining marketing, but selling high-end mixers is a growing market with a higher profit margin. Our company may be seen by the market as selling cheaper products so we can create a new division to sell premium housewares to the high end market. Everything about the new division should appeal to this segment. We can create business processes within the new division to cater to the particular customer: where we advertise, how we sell the product, what kind of warranty is provided, and how customer service is handled.

Marketing really is the software that defines the hardware that is our business. Marketing is not sales, operations, or customer service but marketing can help all areas of the business be more effective for the particular customer group. If you have specific questions please feel free to reply and I will do my best to answer.

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What Do You Know?

News

My son went off to help in the hot dessert of Iraq
He packed up his bags and never looked back
I was so proud of him at the end of the show
I wish he’d never gone but what do you know?

My other son’s been going to college out west
Wants to be an actor, he’s trying his best
All it takes is a break to spin things out of control
He’s got a good head but what do you know?

My daughter is a Senior in high school next year
She got through it all, I really had no fear
Next year she’s going to Belmont, out on music row
She’s a country music writer, hey what do you know?

I’ve worked now for a distribution company going on three years
The layoffs started earlier, created a lot of fear
Now I’m a short timer with a week left to go
They’re closing down the place, well what do you know?

I started marketing my business a couple years back
Didn’t get much business but I made some good contacts
Now things are turning round, I’m reaping what I sowed
It’s going to support me, now what do you know?

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Marketing 101 For Small Businesses

Marketing Research and Strategy

Marketing is not simply the act of selling the product to a customer but is the definition and backbone of the total effort of the company.  Marketing defines the attributes of the customer and how the customer will be reached so that time and money are not wasted.  Marketing looks for the value added of the company that can be sold to the customer.  Marketing outlines the business flow of customers through various areas of the business.  Marketing can help determine the vision and direction of the company.

Good marketing is the difference between being miserable and disheartened, and being energized with a lot of activity.  You are selling to the right people who want to hear your message.  People are making their way through the marketing process, hearing the sales presentation, buying product or signing up as distributors.  Poor marketing practice is like cold-calling the phone book.  It’s beating your head against a brick wall and never getting anywhere.  If you are a new multi-level marketer, you have probably felt this way many times.

So how do you market well?  You need to find the right types of people for your product or opportunity.  Are you selling widgets?  Who uses widgets?  Do men or women usually buy widgets?  Are widgets purchased by everyone or just certain income levels?  Are people more likely to buy widgets in a certain part of the country or world?  Are office workers more likely to buy widgets than blue collar workers?  These are the kinds of questions you need to ask about your product in order to build a profile of your customer.

For a business opportunity that sells widgets, you probably want your customer for widgets plus a few other elements.  For instance, are store owners likely to want to sell widgets?  Are widgets best sold by personal sales people?  Does being a distributor for widgets offer a discount for purchases?  These questions can define which of your customers you may want to offer the opportunity to, or the kind of people you want to find for your opportunity.

The attributes of your potential customer or distributor is their demographic profile.  Demographics are subsets of the general population.  A given person usually fits within a group or several groups.  Perhaps your demographic profile describes only 10% of the population so 90% of the population typically would not be interested in what you are offering.  If you make your offer to the correct 10% of the population, not all will buy but they are considerably more likely to be interested.  This makes business fun, to be presenting to people who want to be presented to.

Marketing also defines your advertising methods, sales messages, and what values your business offers to your customers.  Marketing as a whole may be a process of trial and error, but once you find what works for you, you just do it over and over and bigger and bigger.  Larger companies try to get more precise with their marketing activities by doing a ton of research before ever delivering a product to market, but since we don’t have a major amount of resources or time, doing things small in a trial and error fashion works fine.

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How To Create More Demand

Marketing Research and Strategy

You have a winning product and you have a great sales presentation, why are orders only trickling in? It could be many different factors, and you will have to consider each one and possibly experiment a bit before you come up with the right answer:

1. Your expectations are out of whack

Perhaps you have good sales and you are just looking to get rich overnight. Let’s say you spend $100 on advertising and get $20 in orders. That’s not bad. Hopefully the orders you’ve received are from customers who will buy from you again.

2. People like the product but they like another vendor

Maybe your sales presentation needs a little bit more about why people should buy from you. Why should they buy from you and not somebody else? Just because you gave the sales presentation doesn’t mean you’ll get the sale.

3. People don’t understand your product

Perhaps either people don’t understand why they should buy the product or why they should buy this product when other comparable products sell for less. A little salesmanship could overcome this problem by going into more detail about the product’s features and benefits, and why the customer will be happier with this product.

4. The price really is too high

Generally as the price of your product goes down, demand should go up. You should not be selling for a loss but maybe a minor adjustment could change things. A little research is in order to figure out what people are willing to pay.

5. You aren’t selling your services

Many services add much value to a product. For instance, if you offer a long guarantee or you engrave the item. Perhaps you deliver the product to the person’s door the same day ordered. Make sure to offer free services that cost you little, or save you money.

6. You haven’t considered customer retention

Often initial orders are great but follow up orders are poor. How is the customer being treated? Are you meeting their expectations? Is the product falling short? Make sure to follow up with customers who order and ask them if there is anything you could do better.

I mentioned services that save you money. We found that many of our efforts to improve our customers’ experiences were worth spending a little more money for and saved us money compared to other distributors who did not do these things. For instance, we offered a six month money-back guarantee where other distributors offered 30 days. We found that more of our customers were successful with the product and we had significantly fewer returns.

We also had a policy of going above and beyond for our customers, and doing our best to eliminate the hassles of doing business with us. We found that people appreciated the effort so much that they would only buy from us, we had very few complaints, and almost nobody took advantage of our good nature. In fact, we only ever had 2 credit card charge backs because we would usually be able to work things out with our customers. I had mentioned that we used to bill customers who would send payment. We had so few customers not pay us that we saved money versus customers who used credit cards. I would also call customers who didn’t pay just to ask them if everything was ok. I ended up writing off 2 of the accounts but we generated a lot of word-of-mouth advertising.

Chris and I used to have meetings to discuss “the right thing to do” when we had an issue with a customer. This led to better customer service policies and more happy customers.

Hopefully you can come up with other ideas to improve customer retention and pump up your sales.

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Linking To Your New Website

Sales And Recruiting, Technology and Internet

Your website is your sales presentation and much more, but you must advertise to get visitors, warm leads, and or prospects to your website (i.e sales presentation). The way you do this for a website is to have advertisements that link into your website. Advertisements can be long winded or a little blurb that quickly describes what your website is. Sometimes your advertisement is actually built from your website. This is the case when a search engine indexes your web pages.

Nobody will know about your website until you start getting links to your website from other sites. Typically the way this is done is by telling the other website about your site, or submitting your site. You can submit your site to directories and search engines. And there are a ton of them! I would start with Google and Bing, then do a search for search engines and directories from Google for more places to submit your site for free.

Another possibility is to exchange links with other similar websites. You would typically contact the other site by email and ask if they would like to exchange links with you. Then you put a link to them on your site and they put a link to you on theirs. Many web owners will gladly exchange links but others may not reply, but keep trying.

If you have a blog, there are a ton of RSS search engines and other ways to promote your blog. Do a search for “How do I promote my blog” for more ideas. Many websites provide this kind of information to you. Additionally, you may want to post thoughtful comments on other blogs in response to their articles. Most comment forms include your name and website name so people can see what your site looks like. You might also try this with non-blog websites, I’m sure you would get a few visitors.

There are places on the internet where you can submit classified advertisements that include a link to your website. Many are free. I am not sure how effective advertising this way is, but you might get a visitor or two. One last way to advertise your website for free is social networking sites. I have talked about these before but they do often allow you to link directly to your site. Up and coming social networking sites such as twitter.com are often very effective.

There are tons of other ways to advertise links to your site, just do a search for “How do I promote my website”. Many will submit your site for cost, but you really want to try to promote your website for free. Stick to free. I say this because some of the best ways to advertise your website on the internet are free. If you can, I would measure the most effective ways to advertise for free, which website statistics often provide.

Ultimately we are more concerned with sales than visitors, so the more targeted your visitors are the better. In other words, when your advertisement is presented to your demographic and they visit, they are most likely to buy.

The way that I promote my website is to spend a little time each day on promotion activities. Set aside an hour or two, research, and post requests for links. It is not hard work and it will produce results in the long run. I often switch from method to method, for instance today I will post responses to blogs and tomorrow I will submit my site to directories.

For those of us doing multi-level marketing, you can assume that the same concepts are generally true of recruiting.

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