Why Marketing Is So Hard

This was a post that appeared in the Inbound Hub area of Hubspot, and it had some useful metrics to appraise your marketing program:

But, the article didn’t do anything to suggest what you could do about these distressing stats, so here are our ideas:

For every 1,000 Qualified Prospects you touch:

*40% will not buy anything;

*300 will buy from some vendor in six months;

*200 will buy will buy from some vendor in 6-12 months;

*100 will buy from some vendor in more than 12 months.

Which means that 60% of your marketing dollars are wasted….the total percentage of those who won’t buy in six months. What  can you do to up the percentage?

1. Take a look at your competitive posture. Are you in a perceived unique niche? If not, your advertising might be helping your market leader succeed.

2. What’s your acquisition cost per customer? One of our clients knows that it costs him $129 to acquire a customer that might yield about $5,000 over the customer’s life span. The cost should also include reminder advertising, but if you want to look at lifetime costs vs. lifetime revenues, that’s the better way.

3. Another way to look at acquisition cost is to say that it shouldn’t normally (startups are the exception)  be more than 15% of your selling price. This cost includes all forms of promotion for marketing, which includes selling expenses, such as salaries, commissions, print and web advertising, etc. Web promotion expenses are also included. So, if you’re spending $150/month on SEO, you better be averaging $1,000 per month in web-originated sales.

4. Is your staff annoying customers during the acquisition period? Does your web site, or do your CSRs do follow-up calls on the customers to find WHY they didn’t buy from you?

5. If you get your market position right, the sales costs will be less, and your customer acquisition costs will go down. This isn’t news: we had a marketing prof at the Wharton school tell us the same thing a few years ago.

6. You’ve got to put social media marketing in these same metrics. What social media would influence more customers to buy from you now?

So, marketing need not be hard, or expensive, but getting to where it isn’t might be both.

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Don’t Ban “Bossy”

This nutty controversy has gone into overdrive! Even the New Yorker magazine feels compelled to weigh in.

The female and male owners that we know have all been accused of being ‘bossy’ at some time in leading their companies, even though it’s not fashionable to be labeled as such whether you’re male or female. Being a softer, ‘coach’ is more palatable in today’s culture, and I would reiterate that good leaders adapt their leadership style to the situation.

One of my clients (who happens to be female) commented that it could be called ‘executive leadership’! I’m sure Sheryl Sandberg, and now Condolezza Rice find the whole controversy amusing.

I’m also sure that the controversy won’t detract either of them from effectively leading their organizations.

That’s my .02, and I’ve been labeled ‘bossy’ in my career too.

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The Profit

I did a post on this show, which airs on CNBC at 8 pm Arizona time, midway through the last season, but I find the show fascinating. Basically, companies invite in Marcus Lemonis, a turnaround specialist and wealthy multi-time entrepreneur (best known for Camping World) to help them turn around their failing companies. Marcus usually takes control by investing in a controlling share of the company. How he gets his money back is a little mysterious.

As long as I’ve done management consulting, I always learn from the show:

1. Entrepreneur/owners can be amazingly pig headed. Marcus tries to be conciliatory, but sometimes, they just don’t listen, and he goes into authoritarian mode. These owners invite him in! Most of them need to take listening 101. Don’t be like these guys.

2. His mantra is people, process and products, and usually changes most of them to achieve the turnaround. He usually changes senior leadership; the owners are already out of control when they hire him.

3. Once he’s reached a deal, he always announces to the entire employee cadre who he is and why he’s there. With the former, now minority owners there. Good practice, I think. Good employee buyin.

4. Turnaround decisions are made rapidly….get rid of stale inventory, remodel showrooms and buildings, etc. It appears some of the turnarounds can take some time: he bought a controlling interest in a New York car brokerage company last season, and is licensing it all over the country this season.

5. It appears the show will feature updates on how past investments are doing. We have Solutions Forum licensees in a couple of the areas where companies are, and they’ve appreciated continuous feedback on The Profit’s recommendations.

So, check it out!

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When Saying ‘No’ To a Customer Makes Sense

Well, Ryan Estis, writing on his own blogsite at ryanestis.com, needs to broaden his horizons a bit.

Yes, it occasionally makes sense to say no to a customer, but:

1. Not just in the service or consulting space, which seems to be the area Ryan is addressing;

2. In a retail setting, where you might not have the stock, or have the exact model that the customer is looking for. Referrals, even to your competitors, are a good idea. Maybe you can serve the customer another day.

3. Sometimes, you can’t customize your product or service enough to get into the excellence range that the customer wants. Better to be upfront with them. Again, refer to a competitor you trust, or take the idea back to product/service development.

4. None of this has anything to do with core competencies or strategy….there are lots of times that entirely new directions for products or services were found as a result of customization. Is that customer telling you something that you SHOULD be doing?

Anyway, someone send this blog to Ryan, or maybe he’ll weigh in on the ‘comments’ section.

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Eulogy for Larry

One of my favorite and longest tenured clients died last week, fairly unexpectedly. He’d been in the hospital about two months, and home for one.

I got a Spidey-sense that he wasn’t feeling well in December, although to outward appearances at that time, he was fine. But, we talked over succession planning, because he and his wife wanted to take an extended vacation this year, starting in October. We decided that things were well in hand: his son showed the ability to lead the company, and he had a veteran employee that he’d promoted recently, who showed signs of being able to lead until the son was ready.

He actually bought his family business for about $50k 20 years ago, and when he died, sales were about to close at $3.5 million. Not a bad rate of travel. We could see $10 million.

One of the many things that was interesting about him was his journey through leadership of his company. He came from a tech orientation, which he’d occasionally return to when annoyed at the rest of the company (common entrepreneurial trait).

He used to REALLY get annoyed at his sales department because, when large clients asked, he was on the next plane. To anywhere in the world. But, he developed a crack sales team. He never started out to sell, or to close sales, he was just damn good at it. And, he kept his fingers on the pulse of what clients were thinking. Priceless.

Another priceless series of traits were his sense of humor, his ability to step back from what was going on (although he needed a little prompting at times), his family orientation (really) and his curiosity.

An ideal entrepreneur? Nope, there is no such thing.  But damn close. Needless to say, I’ll miss him.

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Stick Around After The Sale

Many owners are thinking of selling their businesses, usually because 1)they’re tired of running it; 2)they get a good offer, and 1) is true and 3) their kids aren’t interested or capable of running it.

The Wall Street Journal had a great article this week about sticking around after you sell your business, which we’d like to highlight for you:

1. Most sales involve seller financing these days, which is a nice retirement income, and wise from a tax standpoint,  but it’s a good idea to stick around and make sure the business is running correctly. Not the way you might have done it, but on sound business principles.

2. Have the buyer provide a business plan that you agree to, and in particular a marketing and sales plan. He/she will have to expand the business anyway to pay you off, so you’ll have to be involved anyway. You should be tolerant of new ways of doing things.

3. If it’s a family owner business that’s being sold (and we recommend that, rather than being gifted), it’s also a good idea to stick around. Speaking personally, when I purchased our family business, my Dad stuck around, and generally offered wise counsel. Occasionally I had to remind him who owned the business, but not too often.

4. Does it seem like you can trust the buyer? Vet his professional and personal background nine ways from Sunday. If your gut says no, don’t go.

5. It’s not a bad idea to decide on sales and profit targets with the buyer, to make sure he/she succeeds. Sometimes, as happened to me, we were a little too successful and stretched our financial resources, needing a little extra time on the payment. A call to the seller helps if you’re doing owner financing.

6. Decide on what you want to do. Odds are you’ve worked all your life, and you might not have any hobbies. Personally, I’m toying with doing car restoration and courses for our School.  I’ve fixed manufacturer mistakes all my life on cars. My wife is just against me doing it in our garage. So, I might go to work for a friend in his garage. He likes the idea.

So, ponder these things over the weekend.

 

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You Have a Great Idea, Now What Do You Do?

Back in September, the Wall Street Journal had an interesting article on exploiting an idea, and we should have commented earlier, but here we are:

1. Do some internet market research on your idea: it’s free, and it could be quite illustrative about whether it’s a GOOD idea. In today’s marketplace, ideas work worldwide. You could also use a survey site, such as Survey Monkey, but that risks disclosing your idea to others somewhere.

2. Assuming that the idea goes from good to practical, who’s the target market? How big is it? What prices can you charge (this is hard to figure out if no one else is doing it, but can be guessed at, and err on the high side, since it’s easier to lower prices than raise them).

3. If you decide to go to market with the idea, rather than licensing someone else to do it, for royalty fees (usually 5-15%, depending on strength of the idea), how much money will it take? Do you have enough? Can you find partners or outside venture financing from somewhere? Is it likely, even with the worst case that you make more than the licensing fees?

4. Do you have any experience in getting an idea off the ground?

As you would expect, we detail all these items in courses A02, A03, A11, and A12. We also have a package deal: all four courses for $99, which is about 20% off. If you take all four courses, you’ll increase your chance of succeeding by about 80%: we guarantee it.

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On Crowdfunding, Watch Out for State Regs

In talking to one of our clients this morning about crowdfunding, it occurred to me that when doing a listing for debt or, especially, equity, that you be sort of in compliance with state regulations.

This topic has also been a topic of discussion and regulation by the Securities and Exchange Commission. They are eyeing many crowdfunding sites and posts to see if they’re sort of in compliance with securities regs.

Here in ol’ backward Arizona, the state regulators have also been known to be confused by the difference between debt and equity. We won a case on this matter several years ago, but, since we don’t have loser pays, the State didn’t reimburse us $31,000 in legal fees. If Arizona is confused odds are other states are. And, if they have big enforcement arms, the governments will take you to court. Or a creditor could, as happened to us.

So, some words to be wise…..

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Rating the Crowdfunding Platforms

Entrepreneur in its print version had a useful article about a crowdfunding rating agency, if you will, called CrowdsUnite.

We took a look at their site, and while not exactly a ratings agency, they did list 12 crowdfunding sites on their website, with links.

About two or three of them appear useful to business, but it’s all in the crowdfunding listing and what happens.

One of our clients had an interesting experience with www.hyperfund.com, which was that they didn’t disclose a $5,000 commitment fee to do research on whether to approve his loan. We thought that should be waived altogether, and told one of the Hyperfund founders so, since as a member of Solutions Forum, we’ve already vetted his funding need and even recommended funding platforms.

We’ll do the same for you…..we only charge $100 as a review fee, and we’ll throw in access to our articles site at www.thesolutionsforum.com. For a complete run-through on financing sources, take our Alternative Funding course at www.theasoe.com

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Employee Engagement: One size can’t fit all

Julie Winkle Guilioni, writing in smartblogs.com/leadership had an interesting post that I downloaded recently.

Now, after the first of the year, it might be time for you to rethink this topic. Here are her central points about what employees might want:

1. Autonomy: the right do determine what they do and when and where they do it.

2. Career opportunities: Do you have any? Do the employees know about them?

3. Flexible working conditions: with this might come hourly pay, rather than salary

4. Goals: Have you or their direct supervisors set goals for the new year?

5. Learning, development and training: Is it available, do they know about it, and have they used it?

6. Management transparency: May not be an issue, and many employees don’t understand it.

7. Meaning: Do they think their job has meaning, to them?

8. Money: Do they think they’re fairly paid? Do you pay at or above the competition?

9. Benefits: May be important to those with families; are you competitive for your industry? Rise of Obamacare has raised profile of benefit packages.

10. Recognition and appreciation: This is surprisingly important, if done in a public way.

Each employee may want a different mix of the above, plus a few more that Julie’s got in her article. A 360 degree survey to find out what employees think is important will help you get the mix right.

Link to Julie’s article: http://smartblogs.com/leadership/2014/01/16/employee-engagement-one-size-cant-fit all/

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