Apr 21, 2015 | Communication, Marketing, Small business, Social Media
I hate you
Small businesses are all aware of the power of Social Media, usually want to play, and mostly get it wrong. Following are the 11 Mistakes I have most often seen over the last few years. This is despite facebook being around since 2004, Twitter since 2006, and the others mostly 5 or 6 years, so you can’t really say this stuff is new anymore.
The application of Digital technology to marketing is the greatest innovation since Guttenberg put ink to paper. It offers small businesses the opportunity to be something other than bound by geographic boundaries and the economics of scale.
- You have no plan.
The last thing you want to do is overlook the first thing you should do every time you allocate some of your scarcest resources. Identify your target audience, do your research, determine your objectives, develop your content, and make your choices of the tools best suited. Then act accordingly, monitor results and improve, rinse and repeat.
- You are working solo.
Solo can be done but is really hard work. I picked up a typo in a mates newsletter a week or so ago, pointed out the page in an email, and he still could not see it. Working solo, you often miss what is right in front of you, and there are only so many things you can do yourself, so pick the ones you can do well, and are necessary, and ignore or outsource the rest.
- You think you are a writer
We are all taught to write at school, that does not make us writers. Of course, you’re not trying to be Hemingway, but quality writing makes a huge difference to the results, even in 140 characters.
- You fail to interest your audience.
Pretty obvious. We have so much blasting at us that we get little chance to impress, a fleeting second at best. Breaking through the mass of communication is critical. Best exercise I usually recommend is to haunt the shelves of your local newsagent for a while, read the headlines of the magazines. Those people know how to attract and interest an audience.
- You’re Not Being Yourself.
It is easier to outsource the blog posts and social media updates, but I recommend that you at the very least read and edit every post that goes out under your name. Authenticity is now almost a cliché, but that is why it is right. Unless you are Barak Obama, people will get annoyed that you are not writing the posts that are under your name. Social media is as much about opinions as they are facts, tell people what you think, recognising not all will agree, and perhaps even better some will dislike you and not come back, leaving a tighter group of advocates. Being a fake, bland, and opinion-less is a quick way to lose credibility and audience.
- You not consistent.
Be regular and predictable in the frequency and length of post, and keep the same style. To some extent this is inconsistent with the “be interesting” advice above, but it is a useful to be maintain the same persona. You would have trouble with a friend if they behaved inconsistently, sometimes late, sometimes early, often unpredictable and erratic. Once or twice can be fun, all the time is tiresome. Same in social media.
- You are careless.
Written communication is far more informal than it was in the past, but that is no excuse for typos, grammatical mistakes, and confusing messages. Some colloquialism and slang is OK, but a little goes a long way.
- You are not visual.
Human beings are visual animals, and visual is becoming easier by the day, so use it. There are many alternatives, stock images, your own shots, video, Instagram, vine, YouTube, and all the rest. Use it to make a point, stand out, and engage.
- You are not tracking the numbers.
This is the last, and most stupid of all, as well as being disturbingly common. The huge benefit of digital marketing is that suddenly, your efforts can be tracked, a genuine calculation of return can be made, suddenly we get to find out which half of our communication budget was being wasted before we had the numbers. if that is not enough, the free analytics are pretty comprehensive, more than most small businesses can easily use.
Apr 14, 2015 | Customers, Marketing, Small business
It is all about what goes in
Unlike a funnel for petrol into your tank, sugar into your cake, or production ingredient into your ribbon mixer, in a sales funnel there is no bloody gravity!
You have to create the gravity!
You have to create the customer energy, commitment, interest, whatever it takes to move from one point to another more committed point, and eventually to a transaction.
Not easy.
Most marketers inherently hope if not believe their prospective customer is just hanging out for their product, that even if they do not yet know it, their product will be the saviour. That is not because they are misguided or simple, that is how they are trained, and those that stick with it are usually the more optimistic, and sometimes thick-skinned amongst us.
The reality is that most customers are distracted by life. Their kid is sick, their car just terminally broke down, their daughter is going out with the “wrong” bloke, or they are planning a holiday. They really do not give a flying fig about your brand new, shiny, world beating gizmo anyway, and it is just easier to be nice and not tell you to piss off, and be busy when you ring, than to be a bad guy. You just misunderstand and wonder why the order has not come in yet
This rant was motivated by another of those annoying self proclaimed experts that extol the unmatched virtues of their particular cure-all, in this case a digital funnel template. Must have scraped my email from the website, twitter, or some turd sold it to him. Now my inbox is being flooded with spam, with the writer becoming increasingly concerned at my health because I have not yet bought.
“Just do X, so easy anyone can do it, and for an investment of just $279 for my exclusive, all singing all dancing funnel and 15 minutes a day the cash will roll in”.
Bullshit.
Selling is hard work, best done by professionals who understand their market, products and customers well, and have the emotional intelligence to work with the prospect to deliver value via a transaction. It never happens just because somebody bought a template.
Sales Funnels can only be as good as the input allows, and the process facilitates. When you need someone who can do this stuff properly, call me.
Apr 13, 2015 | Collaboration, Small business
Collaboration
Small businesses have 10 strategies I have previously summarised, that they can deploy in various ways to build success with the retail gorillas. Collaboration is the 7th, and often the most challenging, as the other parties to the collaboration are not by definition, under your control.
Successful collaboration relies, when all the jargon is scraped away, on both parties recognising at all levels where the collaboration ‘touches’ each other, that their individual best interests are best served by serving the best interests of the collaboration.
Having just claimed to have scraped away the jargon, that is a mouthful. However, the idea of the ‘commons‘ must be central to any collaborative exercise.
A key component of supermarkets business model is the reduction of transaction costs. They only want to deal with large suppliers, as it reduces their supply chain costs per transaction, delivering substantial efficiencies. It therefore follows that suppliers collaborating to generate the economies of scale to enable them to play by the supermarket rules, makes sense.
The flip side of course is that supermarkets use their power to get the best deal for themselves, subjecting suppliers to an ongoing game best described by the prisoners dilemma. In effect, if you do not give them what they are currently demanding, they will find a supplier who will.
Small suppliers to supermarkets have to find ways to apply some leverage to their opportunities. Collaborating to reduce various forms of transaction and supply chain costs , and marketing, as well as pooling data and data capabilities are logical if challenging tasks.
Many produce suppliers have found ways to collaborate, but their produce is unbranded, and commoditised by retailers, so they lack the consumer leverage that is enabled by a brand.
Branded packaged goods may have some consumer leverage, but collaborating with their competitors for shelf space if not for the consumers dollar is enormously challenging, but nevertheless possible.
Digital tools now make the communication component of a collaboration, which is profoundly important, relatively easy if the will is there.
Opportunities fall in three main areas:
- Supply chain. Collaboration to buy common inputs like boxes, freight, and commodity ingredient purchases like sugar, are increasingly common, particularly in regional areas where you have a number of small suppliers close by, all subjected to distance loadings of some sort. Contract packing a complete product is increasingly being used as it removes the need for investment by the marketer, and utilises unused capacity for the packer.
- Data acquisition, management and analysis. Lots of variations here, but everyone needs data to participate, even in the most basic of category and performance reviews. Scan data acquisition is challenging as there are revenues and margins attached to both the retailers and their data wholesalers that will be protected. However, when that hurdle is run, managing data is an activity that responds well to scale as the costs are in the overheads, the marginal costs of data management are very small, and can all be outsourced. Data analysis is more challenging, but interpretations of data can be very specific. Turning data into useable market intelligence is the end game, and is not necessarily compromised by collaboration on the basic components, acquisition of raw scan data, storage and distribution of the data, and even generic information like market sizes, share movements, category drivers, and the like.
- Marketing. Collaboration in marketing efforts need to explicitly exclude any hint of price collaboration, collusion, which of course is illegal. However, there are numerous ways small businesses can collaborate in their marketing programs to compete, not only reducing their costs but also increasing their opportunity to appeal to customers. Complementary products, joint promotions of various types and locations, collaborative and complementary media placement, the list of possibilities is limited only by imagination. There are complications of packaging, product numbers, and the rest, but they can be relatively easily overcome.
The real challenge is to visualise the future, see industries and their structures in new and different ways, and to recognise the opportunities that are there, and find collaborative ways to leverage them.
Apr 10, 2015 | Management, Small business
It is interesting to consider the notion of ‘knowledge’ and how experts are given that label.
Often it just means that someone who is seen as an ‘expert’ may have just a little bit more knowledge that those who are listening.
Consider the primary school teacher, teaching maths to 10 year olds. To them, the teacher is an expert, knows it all, but could that same teacher teach maths at high school, graduate, or post graduate level? Probably not.
In primary school they are a relative expert, but the depth of knowledge required to teach maths at a post graduate level is far higher than primary school. On the other hand, could the teacher of post graduate maths teach 10 year olds?
Often not, as they do not relate to the level of knowledge that exists, and the way these kids will think and learn. The Uni professor may have all the maths skills, but often no skill at relating to their 10 year old audience, often simply because of the assumed level of expertise .
“How could they not know that?”
This post evolved out of a series I am doing, teaching basic software skills to small businesses by relating them to the things they need to do in their business every day, cash flow, P&L, and the other basic stuff that are absolutely essential to a business, but ignored by many small businesses simply because they do not understand what is being said.
There are legions of free “how to” videos, manuals, and the rest, readily available, but still I see small businesses every day who do not understand the importance of actively managing cash flow, or if they do, how to go about it.
Accountants know this, but they have generally failed dismally to communicate it to their small business client base. Generally it is not because they do not want to, but rather because they fail to communicate at the really basic level many small businesses require. On the other hand, owners of small businesses are often loathe to engage their accountants in this sort of conversation at $200/hour when they know they will not understand a thing.
Clearly the assumed level of knowledge is too high they get confused, and do not relate, but that is not their problem, it is that those setting out to teach the stuff have failed to understand their audience.
Mar 19, 2015 | Customers, Governance, Lean, Management, Small business
Image courtesy of ddpavumba at FreeDigitalPhotos.net
Remove transaction costs. Easy to say, hard to do.
The concept of transactions costs is generally attributed to British Nobel prize winning economist Ronald Coase, and the publication of his 1937 paper “The nature of the firm”
Transaction costs will always be present, they are the enablers of an organisation. The challenge is squeezing the maximum productivity out of the transaction costs you will inevitably incur.
Like all costs, transaction costs fall into three categories:
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- Those that are necessary for the sale, and that add value to the customer, so they would be willing, if you asked them (and this is the big test) to pay for it. Things like delivery of physical products fall here, and we all know there is no such thing as “cost free delivery”. ,
- Those that are necessary, but do not add value to the customer. Costs associated with compliance, your training and innovation programs, taxes and charges all fall here .
- Those costs incurred that do not add value in any way, just consume time and money, such as rework, picking up wrong deliveries, or correcting wrong invoices. You generally do not need an activity costing initiative to know that this third category is usually uncomfortably large, and should be eliminated.
The bloating of transaction costs has three basic causes:
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- Not getting “it right first time” requiring rework to correct the mistake. For small businesses, the costs of mistakes are relatively much harder to absorb than they are for a large enterprise.
- The penalty of small scale, expressed in the variable operational costs incurred, and the productivity per dollar of overhead spent. The flip side is that small operations can be far more agile than large ones, as the distance between a decision being made and actually getting something done, is much shorter.
- Less than optimum processes, or the ways that businesses manage the things that need to be done to support and document a transaction.
If you chose to take a deeper look at these three causes, they are all rooted in the way people go about doing their jobs on a daily basis, and for small businesses, with less people, and far easier personal communication, this is where the leverage can be applied by continuous improvement.
It costs the same to raise and process an invoice of $1,000 as it does for an invoice of $100,000. Therefore the transaction cost % of the invoice value is far greater for the smaller invoice. This relationship is reflected throughout the supply and distribution chain, and even minor improvements can deliver substantial savings. Technology offers the opportunity to reduce the absolute cost of processing to almost nothing, making the transaction cost irrelevant either way, but once people are added to manage the exceptions that cannot be handled automatically, the costs soar.
The source of Woolworths superior performance over the last decade compared to Coles has been the impact of their reductions in transaction costs that have dropped straight to the profit line. Wal-Mart became the biggest retailer in the world by focusing on the reduction of transaction costs of all types, and passing the savings on to consumers as lower prices to attract the volume creating a virtuous circle. Less obviously, they passed many costs back to suppliers, then continued to insist on and successfully extract cost reductions from those same suppliers in spite of increasing their costs, simply because of the scale of their sales potential for suppliers.
It seems to me there are two parameters to transaction costs:
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- The absolute amount of the costs in a whole process
- The productivity of the costs in the process.
Most systems just look at the quantum, and set out to cut corners, work the current system harder, but by looking at the detail of the things that generate the costs, you can eliminate those that do not add value. However, moving a transaction cost on to another link in the supply chain does little to eliminate the cost, it just moves it. Retailers generally have been expert at this moving of transaction costs, while often creating them as a source of revenue. Practices such as making minor claims on a supplier, and holding up payment of a complete invoice until the claim is dealt with, then making the dealing with the claim a minefield for small suppliers abound. A source of the success of Aldi in Australia has been their focus on the reduction of transaction costs, but in return they get their “pounds worth” at the invoiced price point.
In dealing with supermarket retailers over many years, a number of transaction cost types have become evident:
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- Cost of searching, storing, processing & managing information. Category management is a prime suspect here. Suppliers engage in a costly, data intensive exercise in the expectation (hope in most cases) that there will be returns from the collaboration that is hoped to occur, and from the opportunities good category management can unearth. While the costs of the data transactions themselves may have dropped precipitously over the last 20 years, the costs of the overheads to manage them have not.
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- Cost of negotiation. In almost any negotiation where one party has the power, and is happy to use it, the outcome is virtually pre-ordained, it is just the quantum of the cost that is in question. Knowing, and sticking to your “Walk away” point is an absolute must.
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- Cost of time. A vastly under measured cost in most businesses. We tend to have people on staff because there is a job to be done, and we pay them competitive rates to ensure we get the best people we can for the job, but we tend not to measure the value delivered by the doing of the job, its cost is just a part of the fixed overhead. Every minute spent costs a business, but apart from VC operators who use “burn rate” as a key measure, we tend to ignore it.
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- Cost of certification. The range of certifications that are supposedly “needed” from HACCP to OH&S, to quality verification of components in a product to various religious and quality standards are legion. Each costs time, money, effort, and carry heavy opportunity costs. A bit of effort to isolate those that are really needed, and to manage those that are with automated or at least consistent processes can save a significant amount of time and money
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- Cost of influence. People deal with people, not corporations, no matter how automated and impersonal our communications systems become. Getting to know people , building relationships and trust takes time and effort. It is time and effort well spent, to a point, and finding the point at which the costs outweigh the benefits is a management challenge most fail.
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- Costs of cock-ups and rework. This is probably the biggest, most pervasive source of transaction costs. From the wrong invoice to a truckload pf product turning up to be rejected, and turned around dumped or put into rework. It is not just the cost of the product, but the added time, lost sales, loss of reputation, and needless consumption of capacity that really hurts. “Lean” processes target waste, and this one is the biggest waste that occurs, and is often made up of a lot of low hanging fruit if you go looking for it, and know where and how to look.
Small businesses are in a great position to reduce their transaction costs, simply by being good at everything they do, and being “close to the action” can make the wrinkles that can be ironed out that more obvious.
The original post that started the series is here, followed by the more detailed posts, 1, 2, 3, 4, 5.
Mar 17, 2015 | Customers, Marketing, Sales, Small business
marketing funnel
Creating a marketing funnel is the basis of all digital marketing initiatives. If you put the term into google, you get back 3 million plus responses, many of them having nice illustrations attached that in one way or another, look like a funnel, with stages and various names attached.
However, there are very few places with useful advice on how you create and manage a funnel, perhaps it is easier than I have found it.
Every situation is different, and every prospect needs to be addressed personally in some way, nevertheless, there are a number of generalised stages I have seen, which drive the manner in which you deploy the digital tools.
Step 1. Create a “Hook”. A “Hook” is something that arrests the attention of someone in the target market. This implies, accurately, that you have defined your target market in considerable detail. I am working with someone who is an expert at setting up self managed superannuation funds. His target market is the owners of small businesses that rely on the owners presence, often they are tradesmen, who are over 55, and have not put enough money away enough for retirement. The “Hook” we have evolved is “If you are over 55, and behind in savings for your retirement, you have the opportunity to use a tax effective self managed super fund which delivers a doubling of your net worth in 7 years”.
This statement is in 4 parts:
It identifies the prospect very clearly,
It is very specific about the situation the prospect finds themselves in
It tells them of a solution to the situation
It makes a big promise.
Without the very specific definition of a target market, the Hook is less effective, as it does not speak to anything specific to which a reader will relate, it becomes too general.
Step 2. Generate traffic. This can be done by a variety of means, using both paid and organic means. Organic is slower, and is centred around personal networking, blog posts, articles, and other content that gets shared on social platforms. It is a passive approach. By contrast, paid traffic generation can be very effective with the great degree of target definition that can now be generated by all the social platforms. For my self managed superannuation (SMSF) client, we are targeting the small business owners with a very specific and targeted Google Adwords campaign, coupled with an extensive organic program.
Step 3. Customer capture. Having driven traffic to a website, you need to do something with them to progress them through the steps towards a transaction. Usually this involves the download of something of value for free in exchange for a name and email address. The lead is then followed up with a staged set of automated emails that are responsive to the actions of the potential customer, often offering further “freebies”. This tactic is now so widely used that it is losing its effect, so increasingly it is being supplemented with the further offer of something of greater value still for a minimal amount, $3-7. This does two things:
It qualifies the lead as a real lead, not just a freebie follower,
It gets leads used to using their cards to purchase from you.
Step 4. Transaction development. This process can take many forms, from the gentle prompting towards a transaction that can be a highly iterative and lengthy process, to the maximisation of a sale by adding value to the original offer. By way of example, it takes me ages to come to the conclusion that I need to buy a new suit, it is a substantial cost, and occasional purchase. However, once in a shop, the opportunity to also sell me a tie, belt, shirts, and perhaps another pair of shoes is real. The upsell stage, or as McDonalds have perfected, “would you like fries with that?”
Step 5. Remarketing. Once you have a customer who has bought and hopefully had a good experience, it is easier to sell them again, and again, and over time you can build a very good picture of what they like and what they do not by their interactions with your database. Again, by way of example, I still buy a lot of books, real books from one of the few remaining bookshop chains. I have a card that gives me a discount based on purchases, yet they insist on sending me emails with offers that bear no resemblance to the purchase habits exhibited on their database via the card. Utterly stupid, and exactly the reason they will go out of business eventually. Amazon will never make that mistake, their offers are very specific and targeted to behaviour, not just of the individual, but of the cohort of individuals with similar behaviours that can be ascribed to the individual. In addition, once someone subscribes to your database, you have their permission to market to them, so irrespective of where they may be in the funnel, there should be processes in place to periodically “re-tweak” their interest.
Funnel management Toolbox. There are a range of tools, digital and otherwise, for each step in the sequence, and their relative performance is the subject of much very effective review, so I will not repeat it. Suffice to say several specific tools are necessary for any effective automation.
- Registration page . To attract the registration and manage the delivery of the “freebie” and of the leads details to the auto responder software. There are many around, but Leadpages seems to have the game pretty well sewn up. Recently both Facebook and Twitter have added “one click opt-in” capabilities to their sites that leads people directly to your autoresponder.
- Autoresponder software. Absolutely necessary, and there are a host of suppliers, from those with simple tools to those fully integrated with CRM systems with more bells and whistles than even the most sophisticated and technically savvy medium sized business will struggle with, so my advice for the small businesses where I operate, is to keep it simple. Mailchimp and Aweber are the most popular around my patch, and both work well.
- Creativity and originality. Unfortunately, or perhaps fortunately for some of us this does not yet come in a box, or made available for download, it resides between the ears of real people.
- Customer centric copywriting skills. As with the above, not available via download. It is one thing to get all the digital tools right, but someone still has to be able to make them work to optimum levels, and the copy writing skills and experience needed are significant.
- Technology implementation . Again, somebody who knows what they are doing with this technology. It is one thing to know how it works, it is another entirely to actually make it work. Implementation simply is not as simple as all the vendors would have you believe, for most small businesses, implementation sucks.
PS. The illustration at the top of the post is confusing, hard to understand, and not at all like the last one you saw. Just like in life!!
