This month it has been a pleasure to deliver some very pleasant surprises to a rather sizable cluster of clients new to Permission. Each of them ran their business in a very similar way. This I found out as they answered the questions included in our online marketing opportunity review survey.
There’s a few questions in there that are quite tricky. Questions such as the actual numbers that make up their sales process. Details like “What percentage of prospects do you convert into customers during the sales process?” Or “What is a client of average quality worth to you over their productive lifetime?”
Most clients reply with some very approximate answer. “Around 50% or between $1500 and $9000.”” But in the case of this fortunate group I received a list of exact figures – for instance 82% and $1750. This level of detail continued with their responses to all the questions that asked for some figures. These people clearly knew their numbers.
This made me grin from ear to ear when I noticed that their website was either bereft of any website analytics software or that what was there was woefully configured. I could just see that these “numbers” people were going to love the stat detail that their fresh new Google Analytics application would provide. It was going to completely change how they managed their website marketing strategy. Things would never be the same.
Over the years I’ve seen a number of ways that this could all play out. Here are just a few of the common scenarios that occur when “numbers” people are given the gift of a numbers website.
My first experience of this scenario occurred over 6 years ago with a city-based, large recruitment agency. Before we were engaged, their website was seen as a necessary part of doing business but nothing too special. They pinned their sales growth upon inspiring their recruitment consultants to open the right doors and meet the decision makers
responsible for making the next hiring decision.
So it was with some reluctance that they let me set up a Google Analytics account and convince their web developer that it was worth the effort to place the tracking code on all their web pages. I waited for three weeks of data to be gathered before I sent the first website visitor report to the CEO.
Now, this gentleman was a very hard person to track down. We rarely spoke face to face – usually the link in our communication was his very capable PA. So I emailed the report to her so she could print it out and ensure he looked at it. What a surprise when he called me 20 minutes after I sent the email – asking me to check the figures as they were
obviously wrong. The stats were way, way too high.
But they were right – the web developer had done a good job and Google rarely makes a data collection error. Yes, their website was really receiving over 10,000 visitors each month. A count that would take his army of recruitment consultants about 10 years to see. Needless to say within a few hours of me confirming the veracity of his figures, an appointment had been set for us to meet up and website marketing strategy was underway to make the very most of this traffic.
My other situation starts along very similar lines to the previous one. A rather large corporate, owning an appropriately sized website, producing a steady stream of leads. This all made their web developer look very good – even though there was no tracking installed, so “good” was very subjective.
Needless to say, I pushed for some analytics just to confirm how good the good news really was. Again, I had to convince both the web developer as well as the client. In the developer’s eyes the Google Analytics tracking code was going to cause their shopping cart to crash. Our team listened and then went on to show them other sites using a very similar code base as theirs without any problems. So they acquiesced and the code was installed.
However, this time the Google Analytics story was the opposite of scenario 1 – bad news indeed. Yes, there was a steady stream of leads but the stats showed these came with a sub 1% site conversion rate. In their industry the range was between 5% and 8%. Unfortunately, they were squandering traffic because one type of browser (which a sizable percentage of their visitors used) was failing in their shopping process.
Once we picked up the problem we immediately called their developers with some charts to prove our point. Thankfully, in a week the fix was in and with it came a sizable bump in conversion results.
This has to be my favourite of the three. Nothing too extreme. Just the general feeling of control settling over what was previously seen as something unmanageable. It’s the scenario that I predict will come to the people we started working with in April.
These were all very smart business people running very successful companies. However, when “numbers” people are tasked with managing anything that can’t easily be distilled down to a series of digits then things are usually left alone. In nearly all cases this is the wrong step to take. But if you show them how to collect and interpret the right data then their methodical and rational skills are able to capitalise on the opportunity their website represents.
Some of my greatest lessons are usually prefaced with a spectacular piece of personal failure. For instance, there was the time I installed some untested software in a mission critical application (yes, it failed beyond my wildest nightmares).
And the time when I told my mountain bike mechanic not to complete the extra repair he strongly suggested, which ensured that two weeks later said bike fell apart midway through an 80km event.
Nevertheless, not wanting to endure the same pain twice, I am now super-cautious when it comes to any new software installation, and whatever the bike mechanic suggests gets done quick smart.
A few of my clients have shared their own personal painful business experiences, which like mine led to some interesting ‘learning experiences’. And, like me, they didn’t want to go through the same discomfort twice so they implemented the necessary change and moved on.
Making the decision to change is not always easy. For instance, last year I read a case by Andy Grove (the then CEO of Intel) that spoke about the resistance of the Mini Mainframe computer manufacturers to capitalize on the opportunity presented to them by PC technology. Their choice was to either change or remain the same. Change meant supporting a new machine that sold for less than their current offering, with its commensurate reduction in margin. It also came with such ease of use that there was little hope of bundling with each sale lucrative service contracts to support them. Needless to say they didn’t change. The net effect was that the PC server market grew quickly in sophistication, so much so that it eventually replaced the whole Mini Mainframe market they operated within, forcing them all to shut down their operations.
Thankfully, the changes that most of us are presented with are nowhere near as severe as this. And in most cases, we are able to flex our change muscles and move on. Nevertheless, last year I witnessed a selection of businesses, for whatever reason, sit back and decide not to alter their course. And guess what, in each case the pain has not gone away.
In fact, the change they now need to make is greater than the one first presented to them. In each case, the change they had to make was quite generic and as such could present itself to all of us. And so, based upon the lines of forewarned is the same as forearmed, here are some details of just three of these instances.
Now the smart ones among you will see two sets of benefits in here when reading through these notes. First, there is the obvious one of having the opportunity to plan ahead and decide how you could react if these challenges came your way. And then there’s the counter-situation for the more aggressive marketers amongst us. For this group, the list offers a few ideas worth pondering when considering how to inflict similar discomforts on your own competitors.
As per usual, commercial sensitivity means that for each example I have had to change bits to protect those concerned but I’ve done this in such a way as to still make the tale useful.
So let’s kick off with pain and change situation No 1.
I’ll start with the most difficult of changes to face. Difficult because it requires the most change and as such leaves the majority dumbfounded and unsure where to start. All this occurs when the fundamental economics of marketing your service to your customers is turned upside down by a dastardly competitor who approaches the market in a very different way than the rest.
The company on the receiving end of this change operated within the health and beauty sector. They were locally owned and operate solely online. The range they sold was extensive, offered to the mid to low end of the market and, due to some very smart product sourcing arrangements, offered at the lower end price point. Their pain arrived with the entry of an overseas competitor offering like for like products. The competitor’s pricing strategy was similar or only slightly below their own. So, at the start is seemed that the market would be won in the online marketing area with similar budgets going head to head. Whoever implemented the right messages in the correct way would win.
But then the new arrival changed the game. As if overnight they seemed to dramatically overspend on new customer acquisition. Our client was willing to spend up to $25 to acquire a new customer. The competitor was marketing way above that – with estimated costs of up to $100 per sale. All for an initial gross order value that was, at a rough guess, at best 50% of this cost. $100 to receive gross sales of $50, with at best a 45% margin on this value! It just didn’t make sense.
Nevertheless, they continued spending marketing budget like this for a few months. Somehow they had configured their business to ensure it worked profitably while also spending four times more per customer than our client was.
Fortunately, I was lucky and found a few friends who were customers of this new operation and were willing to share with me the marketing they received during and after the sales process. It was quite impressive. To start, their website offered numerous up-sell options during the sales process to help squeeze as much profit as possible from each transaction. And then, once that first sale had occurred, customers received a steady stream of email and print-based marketing offering them a range of options to entice them to make their second and subsequent purchases. It was a profit-producing machine that let them push margins skywards. The net effect was that they were able to overspend others in the market by a factor of four and still make money.
To counter this strategy, I suggested to my customer a long list of changes. This started with their website, and then moved onto order processing and, finally, client follow-up. Now, of course, all this meant work and quite a bit of it too. It also required some cash, which was slowly diminishing as the full effects of this new competitor were starting to bite.
I shared with them all of the insights I had from seeing their competitors marketing first-hand but all to no avail. They thought their competitor would run out of money – they didn’t. And I could see the writing on the wall so we parted company. And so, six months later I see their competitor high up on the sponsored listings in Google while my ex-client is nowhere to be seen. Their market size has shrunk so much that even their AdWords campaign seems to have disappeared. All because they refused to accept that the pain wasn’t going to go away and that it was time to act and act fast.
The Internet is a cruel space for those that offer ‘me to’ services or products. Prospects can react in split-second timeframes – all it takes is a quick click of the browser’s back button and BAM they are back to the search results screen.
The ‘pain’ experienced here comes from sending high-priced traffic to a website producing below-average conversion rates. In this example, we started with a client early last year who should have expected a one in ten conversion rate but was struggling with the reality of a one in twenty result.
When I printed out their sales page and compared it with their competitors – other than the colours and images – they told a very similar story. Each one stood for good service, great value and flawless execution. There was nothing obvious to help you compare one against the other. This leaves Mr. and Mrs. Consumer one option to guide their choice – price – a core reason why most in this market make below-par returns.
Anyway, I took my printouts and set them down on the customer’s desk, pointing out the landscape of sameness in front of us. And, unlike my previous tale of woe where the client refused to alter track, this time there was a willingness to change the website marketing strategy. My client looked at each page in detail and admitted there was a problem that needed fixing fast. The wider business team was involved as together they brainstormed how to alter their service to make it stand out from the competition.
It wasn’t a quick fix, but once done they had something that made them stand out from the crowd. So much so that once the site was updated with this new content, then conversation rates started to climb.
My last example highlights how the size of a company can affect (negatively) its ability to react to pain and change. Bad news if you are this size or rapidly growing towards it BUT good news if you are a minnow trying to market against giants.
The story starts with a single web page whose sole purpose was to produce a steady stream of sales leads for a particular service the company offered. It did this with a credible result of being five times more effective when compared with what the company had previously done. So everyone was happy with their online marketing strategy.
Then the market changed in two main areas. (Fortunately, there was a gold mine of survey information collected within the landing page data that quickly revealed this happening.) Firstly, the types of problems that prospects needed to solve had shifted. Over time, the market these prospects operated within had seen a sizable drop in overall demand. This meant that price was more of an issue than before.
The symptom of all this was similar to the previous example – falling conversion rates and a need to re-write the landing page copy. But no one seemed to care. The business was very successful in other areas and as a whole was growing like a weed. Roles were shifting almost on a quarterly basis and new staff were coming and going. It was hard enough to find someone who was now responsible for this part of the site, let alone convince them there was a problem to be fixed.
And as the days ticked by, their selling message became further off-market, pushing downwards the weekly lead counts. All this was occurring while their competitors (who, by the way, were smaller operations) were changing their content almost on a weekly basis. It was frustrating to watch such success slowly fall away but in the end I let it slide. There really wasn’t much else I could do. Their smaller competitors were slowly but surely ‘eating their lunch’ as they actively tuned their prospect sales funnels
to better suit the changed market.
OK, so where does this leave us?
Well, during the next 6 months of 2011 your business will be presented with a few market changes that may or may not fit within the realms of the ones mentioned here. Some of them will be preceded with some market ‘pain’ that may be more obvious than others. However, in each case there will be two options presented to you to fix this pain – either change or remain the same. Please be very careful when deciding which ‘pain’ deserves no reaction on your part.
And for those wanting to drive the market rather than have it drive you, then please take your pick from the three presented here or add your own. Just ensure your own pace of change is faster than your competitors and you will be the cause of some angst in 2011.
Sometimes there is a short way to achieve a great result. For instance, you may not need a website packed with pages of content and landing pages hanging off every navigation bar.
Success could be achieved with just one or two well written pages, a mean way of attracting prospect-laden traffic, and you are done. Situations that suit this minimalist approach are usually those in which you are trying to attract prospects who are making quick-fire decisions about who to choose. In this case, it’s all about ensuring you are easy to find and meet the minimum level of standards they have. Achieve these criteria, and things can come together quite quickly and quite nicely, thank you very much.
In this month’s client reviews I came across a range of success stories from people achieving great results in situations just like these. Each is “kicking butt” against their competitors in such a comprehensive way that they are struggling to keep up.
Anyway, when I looked deeper at how they got to where they are now I could see four smart moves they all made that had a big effect on their success. But before I share these four nuggets of success, here are a few short notes on each business.
The first is a home equipment distributor who operates in both NZ and Australia. They represent a high-end European manufacturer whose competitors are 30% cheaper but, fortunately,
come with a similar reduction in product quality.
They started with a limited budget, so decided on marketing just one product from the many on offer from the factory. For this product they settled on a customer niche for whom this was an ideal solution. And when I say niche, don’t think 10 or 50 possible installations – there are thousands of people in Australia who qualify as valid customers.
So, rather than try to spread their limited online marketing money across every product on offer, they focused on just the one and the particular juicy benefits it could offer for those hunting it out. Carrying on with this theme of “focus”, they contracted us to create a website just for this product. One page was all we started with – later we added a blog
to bolster up the site’s content. But responsibility for all the “selling” fell to a single page of HTML.
Now, most would load up this page with a barrage of alternative product pictures, add in some pricing and a means of contact and be done with it. But not in this case. First, we sat down and worked through the particular problems that ideal prospects would be facing and kicked off the page with a headline that spoke to this position.
Fortunately, these marketers were also very smart when it came to gathering customer testimonials. So, a few lines below the headline and introduction copy we added a section on customer stories.
Their market segment to product match was spot on. Those who bought the product were raving about how much safer it was compared with what they had used before. Customers made videos showing them using the product, complete with happy, smiling faces. It was a pleasure to see. Every time a new testimonial came in we added it to the page and conversion rates nudged up a bit further.
And the upshot of all this? Well, the last two containers of product shipped in from Europe are now all pre-sold and the task has moved from generating leads to having to negotiate with the manufacturers to get more in the next shipment. Quite a nice problem to have.
Our second story is closer to home and in a completely different market – professional services. This client came to us wanting more leads from their website – no surprises there. But in this case it wasn’t that they had no business leads coming through their site, it was just that the nature of the work this led to was wrong.
Yes, it paid the bills but it also came with a great deal of administration headache, which made it barely profitable to retain. But, as it was the only type of business that their existing lead generation could provide, they took it. However, it wasn’t the right mix of work to build the business in the direction they wanted, so they needed things to change.
Like most customers that come our way, they already had a website that required some renovation rather than replacement. We tweaked some pages, altered the structure of its navigation, and put more emphasis on places we thought prospects would find more interesting than others.
As was the case with the previous example, this client had gone through some market segmentation work themselves and knew exactly what type of customer they were looking for. We optimised the site for a range of search terms that Google’s keyword research told us suited this profile and we were away.
A few weeks later, and leads began to flow in from people looking for the type of work this client wanted. Things were looking good, so we decided to grab even more traffic for this market with a highly segmented Google AdWords campaign and the lead count bumped up even higher. All this started mid last year and in late January we all sat down to review progress. Good website marketing strategy paid off and it was all good news.
The low-margin work that used to fill up their workload now represented a minority of their work and was steadily shrinking even more. Replacing it were the high-margin engagements they had been wanting. The business had grown to a size they were happy with and now they had the luxury of becoming even more fussy about the type of engagements they accepted.
The last story is one of my favourites as it shows the global marketing opportunity available to some of us when things go well. This company operates in the home services market and originally came to us wanting help to grow the lead volume for just the Auckland business. Like the last two examples, they had settled on a particular market niche they were going after. In this case they didn’t have a website or any copy so, like the first example, we helped them here. It all started with just a few pages and a form. Nothing too extravagant.
The first few iterations of selling words were OK but not that amazing. So some market research was conducted and, within a month or two of the research feedback, we better understood the needs and desires of the market. With this new-found knowledge we altered the words on the site and the conversion rates started to rise.
The business grew and the client was able to collect a good selection of customer testimonials. These were sprinkled around the sales copy and conversion rates nudged even higher. Within a few months the lead flow from the site had reached a promising level – enough to support the needs of the Auckland operation.
Now that we were confident of our lead conversion capability we turned Google AdWords on – still just for this one region – and a tide of new traffic and new conversions started to come in. Now the wider growth plan started to roll out. Other New Zealand regions were established, each with their own new business, new website and new Google AdWords campaign. Other than a few regional tweaks, these were extensively copies of the original content. The success found with Auckland’s website marketing strategy seemed to transfer nicely into these new regions and leads flowed and the regions grew.
Australia was the next target. And guess what, the same process that made Auckland, Wellington and Christchurch a success was rolled out across cities like Sydney and Perth. Would the copy that talked to the needs and problems of New Zealanders transfer successfully across the Tasman?
Yes, was the resounding answer that the first month of conversion data revealed. The only difference was the volume – there was a ton more than we had originally envisaged.
So, what are the common themes of success that these stories demonstrate?
Define your niche. The speed at which prospects browse the Internet makes it a ruthless place to market within. Present a “me too” product and/or service and you can expect prospects to click that “back” button in a nano-second. You can avoid falling into this trap by picking a niche and creating a website with the sole task of attracting and
converting people within this space.
So naturally, when you attract this market segment to your site, they will experience a message tailored just for them – a striking difference to competitor sites that are struggling to appeal to everyone and by doing so appealing to no one. (Following this strategy also makes the process of optimising your site for a smattering of keywords so much easier when you know the specific types of prospects you are after and their possible search terms.)
Market to the needs of the audience. It’s not what your product is that matters – its what it does. And what it “does” is usually purchased because it solves a particular problem your prospect has. In most cases they are looking to solve a problem – which they have been forced into translating in their own mind as requiring a product they are now looking for.
By talking to the problems your product/service helps to solve, you in effect remove this “translation” step and, by doing so, leave them the relatively easy task of noting if the problems you mention are the same as the ones they have. Which, if you have done your keyword research well enough, should be very likely and therefore should lead to a mutually satisfying ending.
Serve your sales copy with dollops of social proof. A website containing just your copy that says how you solve a certain type of problem is a good step. But supplement this with some customer stories that support this position – now that’s even better. And best of all? A regular stream of recent customer stories that are added into your pages – making your site carry more content from your customers than from yourself. Then things really start to soar.
Make yourself easy to be found. None of these success stories would be on this list if no one had found them in Google. And, yes, Google is still the big Gorilla here and in Australia and in fact across any market you want to promote online. So you need to be found. And not for the name of your business but for the search terms your prospects will use when looking for solutions to their problems. If they are more akin to visiting a website hosted in Australia with an Australian domain name rather than a New Zealand version, then that’s what you need to get ranked well for.
So IF you have a prospect audience that makes quick-fast decisions like these, then why not take these points as a simple summary of things you need to focus on in your online marketing strategy for 2011. If not, then there are other ways to build success – just call and I’ll take you through your road map to achievement.
Online Marketing
Martin, the very tanned ski instructor, told us before we went up that when we got off the top of the T-Bar and looked down, we would be wondering why he had brought us up this far. He was not wrong. It seemed impossibly steep for us intermediate/beginner-level skiers. My wife, Claire, just couldn't bring herself to look down, glancing across to the edges of the run instead. Madeleine, my eldest at 13, who I had bribed to even get onto the T-Bar, was very quiet. Which left Annabel, at 10, who was looking up at me with a very angry scowl on her face. I was going to pay for what happened next in so many ways from so many people.
Just getting to this stage had been a test of our endurance. While the first two days of skiing on the beginner slopes had gone without a hitch, this last day was lining up to be a doozey. It started with waking up and finding out that the frost was so hard that the water pipes had frozen in the bach we were staying in. So, no tea or shower. Looking outside I could see our car resembled an ice cube with wheels.
Minus six degree temperatures were the norm as we drove over the mountain pass to the start of the ski field where we met a nice friendly mountain man who told us with a smile that chains were required. Great! Both Claire and I were 'wheel chain virgins' so off I went with the rental car instructions, which told us to tie the red chain to the yellow hook. My hands were numb and so I thought was my brain as I struggled – until I realized that THERE WERE NO RED CHAINS ON THE DAMN THING. And before I get a barrage of comments that, as a colour-blind individual, any normal person could have figured it out, I can confirm that Claire – who is not afflicted as I am – can vouch for me. But we endured and fixed the Mensa puzzle that was the car chains to get our front tyres wrapped in steel and were able to rattle our way up the mountain. So far so good.
As it was the third day on the mountain, we were experienced in where to go to vacuum our wallet for ski-lift tickets and, likewise, how to leverage our feet into the rental boots without destroying a tendon or two. So, hot, tired and rather frazzled, we made it onto the snow only to find Annabel's ski bindings were not working. Claire and Madeleine were fine, so they disappeared in a daze of snow ploughs leaving me with a very upset girl and skis that didn't fit.
Three times I went back and forth from the snow to the rental shop to get these bindings to work. By the end, I must admit to being a tad short with my comments to Clarke from Canada who was working on the bindings – sorry Clarke.
Anyway, we eventually had a good morning on the easy beginner slopes and then decided to head up – with help from instructor Martin – to the upper climes of the mountain and the first T-Bar station. Once up there the view was amazing. You looked through the range of snow-covered mountains across the Canterbury plains to a rather smoggy Christchurch in the far distance. But, unfortunately, this brief moment of tranquillity was quickly destroyed as a gaggle of groovy snow boarders flew across the tips of our skis. It was time to get serious and make it down the mountain.
Martin told us we would take it really slowly and just do one turn across the side of the slope and then wait at the other end. He went first and made it look effortless. Claire was next and promptly nosedived into the edge of the mountain. Now, before I present my reaction, I must add that in the two days prior she was the only person who hadn't fallen over, at all, even on the really slippery icy parts – and she had a slight smugness about the fact, too. So I admit I may have yelled out some 'encouragement' that could have been taken the wrong way.
Anyway, the girls were next and they coped, and I brought up the rear and managed not to bowl them all over. We then snaked our way very gradually down the slope with many a small mishap along the way. The extra speed from the steeper slope made everything seem to come at you in one big white rush.
There was so much to remember – lean forward, put your weight on the downhill ski, look ahead of you, keep relaxed (yeah right!), bend your knees, hands out in front. Halfway down, Martin stopped and let us get our breath back. With the wind chill, the temperature must have been a small minus figure but we were all hot from the work.
Then as we gathered our thoughts he did something really smart – he went round each of us and told us to focus on just one specific thing (unique for each of us) for the next few turns. Forget the list of eight or so we needed to do – it was just one from Martin's list.
I was told to remember to keep my hands out in front of me. That's all. Try it yourself as you are sitting down. Move both your hands so they are in front of you and parallel with your shoulders and see what happens. You should naturally lean forward. Once I did this my weight moved onto the front of my skis and gave me slightly more control over my turns. Now, it was still very messy I admit, but it felt like progress was being made.
Madeleine had to weight her downhill ski more, Annabel to look further ahead and Claire to bend her knees more. We all made it to the very end and the start of the T-Bar queue. And then it was back up to do it all again – with no change of instruction – just focus on that one thing Martin had told us. And, by George, we started to make some progress. Slowly, I must admit, and not without some snow carnage along the way but by the end of the last run we were better than when we had started.
This all got me thinking on the drive back to the bach. I remembered how this strategy was similar to something I had read in a book on the flight down (REWORK by the founders of 37 Signals, it gets a quick review later in this month's newsletter). It mentioned the power of doing a few things very well rather than trying to spread your attention across many and achieving little success in any of them.
Gordon Ramsey, the celebrity chef, is a proponent of this strategy too. When sent in to fix an ailing restaurant his first task is frequently to cull the menu down. It allows for less waste and lets the chef focus on improving the quality of what's left. Most online marketers could do with their own Gordon Ramsey experience, too.
We often come across people who are trying to spread their efforts across too wide a 'menu' of online marketing tactics. Search, social, email marketing and even affiliate marketing are all on their weekly list of things to do, none being completed with much level of proficiency.
This month's customer coaching call talked to this point, with my rant early on in the discussion about the difference between being effective and being efficient. I laboured the point a bit to get the message home but nevertheless knowing 'what' to do is obviously more valuable – and is a sign of being effective – instead of just being efficient at getting 'things done'.
Being a father of a teenage daughter, I see this whole effective vs efficient theory playing out with the amount of time Madeleine spends on Facebook, MSN chat and text, all to ensure she remains connected with her group of friends. Each of these is a highly efficient communication tool, but are they effective? Do they bring her any closer to her friends?
I used to meet up with my mates for an hour or so each week to walk around the village and chat (grunt) like teenage boys did back then and we still managed to create quite close friendships. I'm not that convinced that all this barrage of banal e-gossip actually does bring people closer together.
Now, I know that all this discussion of 'focusing on the few' will make those with a perfectionist personality feel very, very uncomfortable. Because no doubt as I barrelled through the white stuff with my hands duly out in front, I was probably committing a mass of ski posture sins along the way. But it didn't matter – I was making progress. That's the fallacy of a perfection culture. By following its path you never give yourself the right to really focus on the few and perfect these whilst letting the others remain very rough around the edges.
And so, while you may cringe when you see the layout of your email marketing campaign – it may not matter a dot. Because for your industry, knowing how to attract your type of prospects, the focus should be on organic search and growing your exposure through Google, something that you do very well indeed. And likewise, I have seen many a business 'hidden' to Google searches that was successfully built on very solid ground with good old-fashioned direct-mail promotional flyers being mailed out once a month, supplemented every other week with an email message.
I'll try not to start this article off with a rant, but it will be hard. Anyway, once I'm over this part I can ensure you this is followed with some solid, practical and rational discussion.
Anyway, from where I'm sitting there seems to be two types of business owners, each with their own predominant mind set – both staring down the same barrel of an economy under stress. On the one hand you have those who are sucked into every depressing news article the media publishes. This they absorb and take to heart and by doing so allow it to remove any enthusiasm they have left. These people see all this 'economy' stuff as being 'done' to them and so, once it all stops, all will be back to normal. That is as long as they can survive along the way. So for them, all they can do is sit back and hope they can ride out the storm of an economy in turmoil. Based on the theme of the two recent articles Paul Holmes has written for the weekend papers I would put him in squarely within this category.
In one he cited the increased difficulty in selling his premium olive oil at the Auckland Food Show when compared with the same experience a year prior. For him, this issue supported the commonly understood but rarely discussed fact that the economy was going down the toilet. I have heard of the Big Mac index being a predictor of purchasing power parity between alternative currencies but now we have the sales (or limited ones in this case) of olive oil being correlated to dire economic issues.
The week after his first article, the NZ Herald did a follow-up note, including some of the letters that were sent in by readers. As usual, there were a bundle that supported the view that all is bad and we need to hide in a hovel until it all goes away. However, within this mire was one from the show's organizers stating that he was sorry Mr. Holmes had not achieved the same success that other exhibitors had this year. In fact, other premium suppliers of olive oil had actually sold out their product during the same days he was struggling to shift a drop. Just brilliant – it brought a chuckle across the table that Sunday afternoon.
Now, don't get me wrong – I am not one to gloat at anyone's misfortune – and I readily admit that when it comes to consumer spending, if the For Lease signs along Auckland's Newmarket are anything to go by, then things are tight.
Nevertheless, my view is that when things start getting tough it is very easy – and is almost a natural reaction – to focus attention on what we see as causing the problem (usually it's some nebulous thing like the 'economy') and blame it for ALL of our problems, when there could be a dollop of our own making in what we are experiencing.
But this counter view just gets lost in the barrage of media sound and print – as it continues its obsession with espousing the view that we are helpless and just mere pawns in the process. I suppose you sell more papers and grab more TV viewers when you convince people that this is all 'beyond their control'. And what's more, with it changing daily if not weekly, it is our personal responsibility to keep updated on all the latest ills that are heading our way.
So with all this brainwashing, when the economic changes push buying decisions out a bit further, and more prospect convincing is required, few make the connection to what this means for their online marketing. And, for example, if you rock up to a food show expecting to present your wares in exactly the same way you did last year then things may be a struggle. The market has changed and, therefore, your marketing needs to.
Some have wised up to this fact. And, just like there was an olive oil business a few stands down from Mr. Holmes that was doing a roaring trade, we have seen stories of business success from those who have tweaked their marketing to best suit the current economic state.
Now, there's a multitude of different forms this act of tweaking can take, but here are three 'category wide tweaks' that could be applied to nearly all business types and produce some positive change.
Tweak #1: Fix all Leaky Buckets
Here you're looking for improved efficiencies in your current marketing and promotional activities. It applies to both your customer and prospect marketing. First, here's an easy one – a customer 'win back' campaign. This is for all those customers who used to buy from you but, for a whole wealth of reasons, don't now.
They have already had the initial marketing expense invested in them to get them to that first sale – now all you need to do is convince them to come back and purchase again, and again. Just like a regular customer newsletter, every business should have in its regular promotional arsenal a quarterly customer 'win back' campaign that rolls out during the year to entice those who have bought to buy again. The offer could be a 'value add' or a product/service discount – whatever it takes – and you will need to test which works best and to what degree. All this could be delivered by good old trusty direct mail or email. Whatever form this takes, this campaign could be honed into something that brings people back spending at a very efficient cost per sale.
Fixing prospect 'leaks' was the subject of this month's customer conference call. The fancy title I used here was 'Lead Nurturing' but the outcome is exactly the same – to slowly nurture your leads so that they have a greater chance of making a purchasing decision at a later stage. Order-hungry salespeople may need their customers to purchase when they want, but as decision cycles move out so does the likelihood of this occurring to the same degree it may have in the past. Only today I read in the NZ Herald how a Newmarket furniture shop owner used to have people walk in off the street and purchase a $5000 couch in one visit. Nowadays people will come back for multiple visits and involve their friends and family in the decision all to buy a $400 table. Heaven knows how long your prospect nurturing campaign will need to run to convince people to buy a couch. And I bet he doesn't have any prospect marketing in place to carry this message.
Tweak #2: Re-align the Economics of your Marketing
This point came up in discussion with a customer only a few weeks back. Most people would think it would be just crazy to spend so much on prospect marketing that they effectively lose money on each new customer gained. Sounds like a path to economic failure, doesn't it? Well, not in all circumstances – a few massive corporations have been built upon such a strategy.
For instance, Guthy Renker, who is an aggressive infomercial marketer with operations worldwide, has very successful businesses that operate exactly this way. It goes something like this. You sign up to purchase their face cream, which costs a once off $29.99 with the opportunity to renew each month for, say, another $19.99. Those first purchase customers come in at a loss, which is only turned into a profit when they make the second or third purchase. Guthy Renker's businesses have such large cash reserves that they can manage to carry this 'debt' for the first month BEFORE they purchase again and the tide starts to turn and boy does it turn in their favour. It's this 'economic power' they have to, say, take on 100,000 new customers at a first stage loss of just under $3 million, that makes them one of the big boys of infomercial fame.
The same theory applies to other businesses too. Going back to the discussion I had with this customer. The latest reports from their AdWords account showed that, with the Google Marketing costs and our management fees, they were just about breaking even on their new customer acquisition process, whereas previously they had sneaked through with an OK profit. Now this business offered a range of products that had a very strong likelihood of repeat purchase – I would pick a conservative estimate of around three times a year. However, times were now different, cash was short, and so people were clicking on their ads but not necessarily buying – when they wanted.
Their AdWords traffic delivered a sizable proportion of their new customer sales but still, for them, no profit = pain so they stopped their campaign. I showed them that they were effectively running breakeven on customer acquisition and how their email marketing efforts needed to be ramped up to turn this into a good profit but to no avail.
They stopped and in a very short time saw their sales fall by 40% and the likelihood of future revenue drop with it. They just didn't have the 'economic power' to make the online marketing work.
For them, in their market, the marketing economics had shifted – and they weren't able to shift with it. And, yes, there is an equivalent to Guthy Renker in their market that is 'vacuuming up' what's left of these prospects as new customer acquisition costs go to breakeven, and will probably remain there even when they move into negative numbers.
Tweak #3: Turn up the Value Volume
This month's newsletter includes a review of a book all about doing less. Now this may seem to be a very strange subject to cover when most are trying to increase their activity levels. But, as usual, it's the converse that's true. Taking the route to doing less enables you to increase your focus on each task. And, by applying this increased level of focus to the right areas of your business – like increasing your value proposition to prospects – then things really start to take off.
So, getting back to that Furniture store owner I mentioned earlier. If the value you provide is a warm and dry floor space for prospects to walk around your stock while they decide what they want, then things are looking quite grim. Every furniture shop I know of has this. Gee, you can just hop on TradeMe and scan hundreds of pictures of second-hand (and new) furniture from all over the country without even having to brave the wet of winter.
Likewise, I read a recent article by a bicycle parts importer in which he complained that sales were a real struggle as cyclists were now choosing to buy from overseas websites and skipping over the locally stocked product. As one who has done this on occasion I can tell them why – the price difference – it's huge. The margin between locally sourced and overseas products is just way too high, so it is still worth the effort and the hassle of ordering it yourself. The internet has destroyed most of the value that was there for those who used to spend their time locating unique overseas products and then try to charge a steep margin for the privilege. Only last month Permission purchased some specialist software on Trade Me from a distributor with all the legitimate commercial license keys and, by doing so, saved over $1250 in the process when compared with using the local distributor.
Within all this value degradation sits my local restaurant Ragu as a shining example of people doing it right. They have recently leased a space at the top of Pt Chevalier shops that was bare for quite a while. Prior to them taking over, the space had hosted a few restaurants/bars that all seemed to splutter to a slow, and what must have been an expensive, halt. But these guys are thriving. I was in there on a Wednesday night a few weeks back for an evening meeting with a community group I am involved with and the restaurant was half full and the bar was comfortably buzzing. It just smelt successful.
This time we were eating. The waitress greeted us at the door, showed us into the bar while we waited for others to arrive, and helped us organize our drinks. All with a nice warm and welcoming smile. This high level of service carried on throughout the evening. The food was great, the price reasonable, and there wasn't even a grumble from the cashier when we asked if it was OK for us to pay individually for what we ate and drank. No problem at all.
Ragu gets some space here because it fits within an industry category that must be doing it especially hard at the moment. Hospitality – especially restaurants – must be right there on the firing line when it comes to cutting back the family budget. But there they are, fighting for all they are worth to make you feel very happy indeed when you spend your hospitality dollars with them. Yes, they have invested in great staff, while others could be pulling back in this area and, yes, they have launched a business in a category at a time that most would have thought it to be completely barmy – but from where I'm sitting things look very good indeed.
They are a great example of a business that has taken control over their fate in this economy while others are just sitting back and letting it happen to them. Doing nothing is not something that fits with my character and based on you reading this far I'm sure it doesn't fit with yours either. So I hope the three points that I have delved into here make it on to some part of your list for some 'focused' attention to get things started. Let me know if they do and keep me updated on the success they bring in the weeks ahead.
Some of the smartest people I have met freely admit to knowing the least. For example, a few years back I was fortunate enough to meet one of New Zealand's more wealthy souls – hundreds of millions in assets sort of wealthy. He had made all his money in the challenging local retail sector. Fortunately, he was a relation of a close friend who had done me a favour and weaseled me a few moments with him over a cup of coffee in the rather modest Auckland office. Permission was in its early stages of development and I was looking for as much guidance as I could get.
Anyway, during the short time we had together, he politely answered every question I posed. And, surprising to me, he shared freely on the many parts of his business that he had struggled to know all about. Product selection, in-store placement, store position – really big parts of his success, but still areas he admitted to not trusting his own judgment on. To fill this gap, he invested heavily in technology and conducted extensive research to find the best answers available. And even as his success grew – and with it his confidence – he still ensured that he remained true to his conviction and returned back to research and other types of statistically valid evidence to find the right decision. He knew exactly what he didn't know and found as much smart data as he could muster to seek a solution.
I think a passage of text from a book I read last month on investing goes a step further in supporting my thoughts here. In it the author mentioned how Warren Buffett, not surprisingly, neatly fitted into a similar method of decision-making as my retail mogul. Apparently, while others claim Mr. Buffett reached his mega wealth by knowing more than anyone else, he puts it down to knowing what he doesn't know.
"We have a ton of doubt on all kinds of things" says Buffett, "and we just forget about those". So he and his business partner Charlie Munger put all those things they don't know how to evaluate into the too hard' pile. Apparently this is where over 99% of the probable investing ideas that come their way end up.
I have a close friend who is starting a business and who I wish was more like these two in the way he approached his upcoming decisions. I care for his success, I really want him to achieve, but deep down I know that it's probably going to be a hard road ahead. I formed this opinion after meeting him for lunch the other week, a few days after he had left his job and kicked out alone. So just a few days in and his plans focused upon securing a nice premise to run his one-man operation from and ensuring he charged people what he was "willing to get out of bed for". So I sat there, stared at my tuna salad, and gradually got more and more confused.
It's a consulting business, so that means with today's technology all that's required is a laptop, a printer, a mobile phone and place to hog at Starbucks for too long, nursing a rather average coffee. (There wasn't a Starbucks nearby my home when Permission started so I was forced to move aside some boxes and turn the spare bedroom into an office.) Back then, I had a very long list of things I didn't know. They included big chunky things like: a) if there was a market for what I was offering; b) if people were willing to pay for the services; and c) how I could find prospects to present my wares to that very week before I had to return the laptop I had borrowed.
All this was very different to how my friend approached those first few weeks. As our lunchtime chat progressed I could see that there wasn't much he didn't seem to know about how to make it the success it was sure to be. So we ate and talked and I shared all the mistakes I have made – there have been quite a few. I left the restaurant hoping that some of it would prompt him to think that perhaps he don't know as much as he thought. But I was wrong – from what I hear nothing has changed and the lease is close to being signed.
Charles Darwin had a few words to say in his time. I think one or two fit neatly into this area, too. So, in defining how natural evolution works, Darwin proposed that it is not the strongest or the most intelligent of the species that survives but those that are the most adaptable. Now, surviving as a species is motivation enough to make most people adapt. Either change or die – now that would seriously get people used to making some alterations to their lives. However, when it comes to business and the changes that can affect you there – well, things tend to change as fast as the business owner is willing.
And in these situations it is perhaps those who expect that changes are going to occur and who are willing to implement them that are the ones with the real advantage. Therefore, if you set yourself up knowing that there are areas of your business that you will never know the full story on your own, then accepting change and dealing with it is just a natural process of uncovering more about what previously lay hidden. Here at Permission, we tend to meet a lot of people who know what they don't know. It's a common characteristic of the people who end up working with us. And it would be fair to say that the vast majority of them either own very successful businesses or are employed by those that do.
It's a rare case to have a struggling business turn up on our doorstep looking for help. But then it's probably just a reflection of how a reverse of this mindset works. I've met a few average business owners in my travels and, as a very general statement, they all tend to have a personality type that makes it very clear that there is very little they don't know about their business. Therefore, with this kind of view of life, the last thing they want to do is engage some help from some "expensive consultants" to tell them something that they "probably already know about their business". Which of course is the exact opposite of what would happen but, nevertheless, it's a mindset that reflects the reason why they are in the situation they are.
Working in an environment where there are known areas of unknown work seems a natural thing to talk about when you relate it to the arts. The author JK Rowling has mentioned how the Harry Potter characters she wrote about seemed to take on their own life as they interacted with each other – all this while she scrambled to keep up with them in her writing. How this would play out through her chapters she had no idea. But still she planned diligently, wrapping a structure of sorts around each chapter, detailing what it should do and when it would be completed. All these bits she knows – she can control them, they are the known bits of her process. To see this in action, look at the image to follow of one of her plans on how one of her books would play out. It's all in longhand, just as she wrote her books.
So what does all this mean for online marketing? Well, quite a bit surprisingly enough. There are a few big chunky areas of this marketing space that at the start of any project are totally unknown to both us and our clients. Here are just three areas that come to mind:
The keywords your best prospects will type into Google when searching for what you offer. You may think you know what they are, Google may even tell you in its research tools the alternative ones that are used each month – but you will need to research which specific keywords actually have behind them people who will arrive on your website and buy your stuff.
The most aggravating problems your prospects want solved by buying what you offer. The old features and benefits sales message tells the tale that people don't buy a drill – they buy the hole the drill will create. But that's just part of the reason – they need a hole so they can hang that shelf, so their partner will finally see them as being the handy person they told them they were when they first started dating. That's the real reason they are browsing along the aisles of Bunnings. Now, that's one very deep problem that I don't expect your average Bunnings' sales person to find out, but hey, it could well be the real reason behind that purchase of the full set of drills they end up walking out of the store with.
Naturally, some problems people will tell you about; others are just too deep and without some serious psycho-analysis you will never uncover them. ( I have read that all our purchases apparently resolve back to the same problem we all want to solve – improving our own level of self-esteem – but that's too deep a rabbit hole to go down in this article.) Anyway, just for now, think about problems rather than colours, sizes and product range. And put the discovery of what they really are into the I don't know' bucket for you to find out all you can. Just to mix it up a bit while doing this work, also be aware that we are dealing with humans here, whose problems wax and wane with changes to their age, lifestyle and other outside forces.
Nevertheless, as clarity comes in this problem area' you will start to look at the words and pictures used on your website in a very different light. Is it all about you and not about them? Most websites fit into this group. Is there a place where you mention the problems your ideal customers could be facing? And do you show them how good you are at solving these problems with some social proof to back up your case (think customer testimonials)?
So, to finish this list of three unknown' areas of online marketing, I'm going to add in one big catch all' – the profile and needs of your ideal customer. Hopefully, we all know what we do and how we do it. That's what we live and breathe in business; we have process documents and strategic plans for this stuff. But what about having the same level of understanding and clarity of our ideal prospect audience? Rarely does this carry as much detail.
For example, last week I sat down with a prospect who sells a business-to-business service and asked him to tell me who his ideal customers were to help me better target them online and grow his operation. "They all are," he replied. "Every business in New Zealand should be our customer – what we offer is valuable to them all." Which, strictly speaking, is true but not that accurate.
So the Chris Price level of polite interrogation continued until we found out their current customer base was skewed towards a certain business category. They also had trouble selling to professional service businesses and struggled to collect debts from one particular industry segment. Then we looked into how the following could positively influence a prospect purchasing – age of business, gender of owner, stage of growth (high, flat or decline), mindset of buyer (stressed, relaxed, busy) and more – all to help define exactly who the best target prospects were.
This process frustrated the hell out of my customer. He wanted to sell to everyone, and not leave anyone out with our marketing message. All this talk about defining a group sounded to him like limiting the marketing success of the business. Things became a bit heated so we broke for coffee and came back once some of the emotion had left the issue. Then I took him through some examples of marketing messages and images that were written with their sell to all' strategy in mind. They were bland, boring and lacked any position or market focus. Very similar in fact to the advertising we received lately in Auckland from our prospective mayoral candidates. No one wanted to upset anyone in what they said or did – it was all very grey, bland and boring.
So the options as I see it are – go after all the market and get hardly anything with your bland advertising, or segment your market and produce messages that talk to their specific needs and achieve more – take your pick. Yes, the latter is the harder of the two, but then who said making a business work effectively was easy!
So to wrap up, knowing more about these three areas will put you in good stead when competing for your customers online. And, by working with Permission, we can help you bridge these points as quickly as possible. Part of our solution comes from some very smart ways to gather the necessary market intelligence to make the unknown more known but, still, when we start there is usually more grey than black. And this is a good thing.