Entries from April 2010 ↓

I’ve been reading and talking about education a lot lately. The Next Great Generation, a site which I’m an editor for, is having a whole week about the topic, so for some in depth thoughts on it from some bright young minds, I think you should take a look. I also have a long-winded piece coming up on that site about the topic, but I wanted to give a quick look into how western education systems affect creativity.

I went through a very normal public school education. I feel like I have a good picture of what a decent public school education looks like, and all I can say is that as far as fostering creativity goes, it sucks. How do I know this? Because I was great at school. Seriously, I was really, really good at school. I was the kid you hate because he doesn’t even try and still gets A’s. Where’d it get me? Into an academic advisor’s office that kept pushing me to do pre-med even though I hated all physical sciences. Once I finally decided to ignore that advice, where did my good grades get me? Law school. Fat lot of good that did me.

Do you see the problem here? Our best students are getting pushed towards careers that are completely empirical, and leave no room for creativity. We don’t need more lawyers and accountants. Yes, we need more doctors, but maybe if there were people coming up with creative solutions to the underlying causes of illness, we wouldn’t.

I’m not suggesting that our society will improve dramatically if we have more dance instructors or sculptors. I’m suggesting that every single function in society could be well-served with an injection of creativity. Let’s stop teaching people how to do things, and let’s encourage them to figure out their own way of doing things.

And one last thing, a $40,000+ piece of paper doesn’t prove anything other than that you can memorize information and regurgitate it onto a page. So, I beg you, if you’re one of those people who tries to impress others with his degrees, stop. Just stop. Please.

More and more, SMB’s are blogging, getting involved in social media, creating videos, and otherwise becoming publishers of content. The e-book is a popular format of publishing content on the web, but is it a format that SMB’s should embrace?

This is not a blog dedicated to home-based businesses, or get rich quick schemes.  Nor is it geared towards affiliate marketers, or people who sell exclusively information products. That being said, this is a blog geared towards small and medium sized businesses, and all of the above businesses fit that description, and in many cases, many SMB’s could learn a thing or two from them.

Chances are, if you’ve been looking for marketing advice online, someone has tried to sell, or give, you an e-book that will teach you how to market online.  An incredible percentage of these e-books serve the purpose of teaching you how to create the exact same kind of e-book to sell to make money online.  Others will actually go a little more in depth into broader online marketing techniques.

If you’ve downloaded or bought one or more of these e-books you know their quality varies dramatically.  I will admit to not being a huge purchaser of e-books. especially not those that promise to teach you how to make money online, but I will admit that several years ago, my first foray into online marketing was as a university student looking to make a few extra bucks, and so I bought an e-book for $50 that was supposed to teach me how to make a living as an affiliate marketer.

Most of the stuff in that e-book was not actionable, it was poorly written, and I’m pretty sure some of it may have been borderline black hat, but nonetheless, that was my first exposure to pay-per-click advertising, and the beginning of a path that would eventually lead to a career in marketing.  So, in some ways, that $50 e-book was worth more to me than my law degree (which was considerably more expensive).

The problem with e-books is that no one trusts them, because there are so many bad ones floating around the internet.  E-books can be written on any topic, and while “how to make money online” is often a popular topic, e-books exist on every topic from immigration to pet grooming.  And there is an equal number of really terrible ones on each of these topics, and those probably account for 99% of the e-books on the web.

I’m a big believer in the web as a publishing platform, but despite all the flaws of the traditional publishing model, it has one huge advantage: it acts as a filter. Publishers will only publish something they think is good enough to make them a profit.  Online, anyone can publish anything with nothing more than a prayer that it’ll be read, and if it doesn’t, oh well, no associated costs, so no real risk.  The result is a deluge of terrible works being self-published, and users/readers having to wade through all this garbage to find a few gems.

This is why users/readers are weary of the e-book. They’ve been burned too many times by really bad content, and don’t want to be bothered sifting through anymore.

The age where selling e-books was a profitable online business model is rapidly coming to a close, because there is not enough value in them in general.  While some e-books are worth their sticker price, users will not pay it because of poor previous experiences.

That does not mean, however, that the e-book as a tool is not useful to businesses looking to market online.  While the e-book should not be looked at as a direct source of revenue, an e-book can be used as a lead generation tool.  The idea is to create an e-book that has so much value, and offers so much to the reader, that the publisher actually breaks through the perception of bad content, and builds trust with the reader as an expert in a given industry.  This trust is then leveraged in such a way that the reader can potentially become a customer.

The e-book needs to have great value for a potential customer, while recognizing that it will likely not return significant revenues in and of itself.  However, its value to the business that publishes it as a reputation and awareness builder can be worth far more than a few hundred dollars of revenue from the sticker price.

If this sounds familiar to readers of this blog, it’s because the process is the same as it is for many other forms of marketing.  Instead of writing an e-book, to build that trust, a business can build a kick-ass blog; it can guest post on other people’s blogs like crazy; it can help users in forums; it can participate in social media discussions.

At the end of the day, whether the format is an e-book, a white paper or a blog, the end goal is the same: Provide exceptional value to a potential customer in order to build trust, and to hopefully generate a lead that will be likely to generate a sale.

Have you ever stumbled upon a niche website, and thought to yourself, “How do these guys stay in business? There can’t be more than a handful of people in the world who want their products!”  It’s a fantastic question, because niche markets are some of the most lucrative around, despite the fact that they are, by definition, very small.

When a niche business needs to increase revenues, it is not going to go looking for new customers, because frankly, there aren’t that many out there.  Instead, it will rely on selling more to its existing customers.  There are a couple of ways to do this.  One is by offering exceptional customer service.  Another is through cross-selling.

Cross-selling is defined as selling an additional product to an existing customer, and it is the ideal way for any small business, not just niche businesses, to make more money without increasing their marketing costs.

There are a number of reasons to cross-sell, and the foremost is that it’s cheap and easy.  Because cross-selling is happening to customers that you already have, you can do it on your own properties without paying for advertising.  You can do this on your website by promoting products other than the one the customer’s currently looking at.  You can do it on the receipt of the product that the customer has already purchased.  If you report on a service, you can cross-sell in a report (“With product A, you are currently getting X.  If you purchase product B, you will also get Y.”).  If you have a mailing list, you can cross-sell on your mailing list.  The ways are virtually unlimited, and their costs are all negligible.  The process is easy because you’re not going out looking for new customers.  You’re targeting the ones right in front of you.

Cross-selling is further facilitated by the fact that your existing customers already like you.  You know this because they have purchased your product.  If they did not like you (or your product as the case may be), they wouldn’t have bought it in the first place.  It is far easier to sell to a customer who is already familiar with you and likes your products enough to have purchased them in the first place than it is to market to someone cold.

Cross-selling also allows you to open your customer’s eyes to additional opportunities that they may have never considered before.  When cross-selling, the only rule should be that the products you are trying to push on your customers should be at least marginally related to what they originally purchased.  If the product is in no way related to the original purpose, you’re no better than a spammer.  If, however, the product is identical to what you’ve already offered the customer, he either won’t be interested because he already has one, or you’ll cannibalize an existing sale because he’ll simply switch from one product to another.  As such, when cross-selling, the key is to promote a product that is related without being identical.  Sold a car?  Promote maintenance packages.  Signed a landscaping contract?  Promote your snow removal services.  Design websites?  Promote your marketing offerings.  An easy way to accomplish this is if you have sold a product, promote a service, and vice versa.

Some businesses are hesitant to cross-sell to their customers because they fear it might come across as too pushy. Your customer’s already given you cash, should you really continue to bother him?  Maybe you’ll annoy him and he’ll never come back.  While that concern isn’t entirely unfounded (I ordered a shirt from Armani Exchange for a friend, the ensuing deluge of promotional offers I received in my inbox made me vow never to purchase anything from them ever again), in most instances, cross-selling is actually seen as a service by the customer, especially if done well.

Consider for example, Amazon’s “Frequently Bought Together” and “Customers Who Bought This Also Bought” sections.  These sections which are presented as friendly suggestions are fantastic cross-selling tools.  I have found many great books from these sections, and while I recognize that it’s Amazon trying to get more of my business, I genuinely appreciate the quality suggestions that are given in these areas.  Below are some of their suggestions given on the page for one of my favourite novels, On the Road by Jack Kerouac (affiliate link). If you’re a Kerouac fan, you’ll probably want to read those books.



In short, if you’re not cross-selling to your advertisers, you’re missing out on an easy way to increase revenues with little effort, and little costs, which has the nice side effect of offering a valuable service to your customers.  Cross-selling is possibly the greatest sales technique ever created.

If you’ve ever used a call tracking service to measure a marketing campaign, you know that you get a ton of interesting information from those services that include how many calls a tracking number gets, the sources of all those calls, the duration of each call, and you can even get recordings of each call.  This level of call tracking is much more sophisticated than anything most small businesses have in place, and yet, I think getting something like this would help them out a great deal.  Not only because it’s a great way to measure their marketing campaigns, but also because it’s a great way to see how good their customer service is.

I’ve written before about how marketing is more than a funnel, it’s an hourglass, and marketing efforts don’t end at getting customers in the door, but rather continue on to post-sale support, because a return customer is infinitely more valuable than a one-and-done customer. And the way to get repeat customers is to deliver exceptional customer service.

In July 2009, Amazon.com, the world’s largest online retailer showed the world just how much exceptional customer service was worth by buying Zappos.com for about $900M.  For those that are unfamiliar with Zappos, they are an online retailer, much like Amazon, that started out selling shoes.  While many online advertisers compete on price, what made Zappos unique was that it built a reputation of providing exceptional service.  Service so exceptional that customers who bought from Zappos, would continue to buy from Zappos even if they could find their goods elsewhere for less money.

So, why did Amazon buy Zappos?  Let’s be clear, Amazon is a technology juggernaut.  When it comes to technology, there was nothing that Zappos had that Amazon did not, or could not have built for less than the $900M purchase price.  What Zappos had was a world class customer service reputation, and a philosophy that Amazon saw that it needed to emulate if it wanted to continue to succeed in the low margin world of online retail.

Zappos’ service is unique in a number of ways, but their difference starts with their corporate culture, and the kinds of people they recruit.  Zappos has a policy that after weeks of intense customer service training, they will pay employees to quit.  The goal of this seemingly bizarre practice is to weed out anyone who will not be compatible with Zappos’ values.  Zappos never says that the people that don’t work for them aren’t good enough, but they do say that those who do work for them all share the same values when it comes to customer service.

While I was not able to find anything more recent, there is a telling stat from 2005 that showed that in that year, 60% of Zappos’ business was from returning customers, the holy grail of any business.  That is telling of just how satisfied customers are with their service.

However, beyond any stats, to understand how truly exceptional the company is, you need only talk to a customer.  I’ve spoken with people who are as loyal to Zappos as Grateful Dead fans.  They love this company the way most companies can only dream of being loved.  You will hear stories of Zappos replying almost instantly to anything posted on the web about them, to customer service agents walking people through an order process on a competitor’s website, accept returns on items that clearly should not be returned, and even just talk to customers who need an ear.

I’m not suggesting that every business should go and become the next Zappos, but I am pointing to them as an example of two things.  First, customer service is an excellent marketing tool because it costs less than most other marketing, and returns more.  Second, delivering exceptional value in some form or another, is a fantastic way to build a business.

Don’t believe me?  Just ask Zappos, they have 900 million reasons why you should.

In working with small businesses, I’ve come to a conclusion: They like to burn their money.  Most SMBs are wasting their marketing budgets.  They invest in all the right kinds of marketing.  They invest in search marketing, and social media, and buy display advertising in all the right spots.  They target the right demographics. They hire good copywriters.  They’ve got all the elements for success.  The problem is, they don’t know if they’re actually succeeding, because most small business do not track their return on investment (ROI).

Simply put, if you want to measure the effectiveness of any marketing, the only thing you need to track is ROI.  If your ROI is positive, your marketing is working.  If it’s negative, you need to make a change.  Some might think that a negative ROI is the worst thing that could happen to a SMB.  I disagree.  The worst thing that could happen to a SMB is not tracking ROI at all, because if you don’t track ROI, how can you know what’s working and what’s not?  Then, whatever is not working, will continue to cost you money with no benefit and you won’t realize it until you’ve already spent too much money.

SMBs generally have very small marketing budgets compared to big business.  As such, if they’re to compete, then they need to make sure that every dollar of that budget is being spent as effectively as possible.  The small business doesn’t have the luxury of buying media space and running 30 second spots in primetime on the prayer that it’ll make the phone ring.  The primary concern of every SMB should be, “How do I spent my budget most efficiently?” The only way to answer that question is to track ROI.

There is a misconception that tracking ROI is difficult.  It simply means tracking what kind of revenue each of your marketing efforts is returning to you.  ROI is calculated simply enough as ((value generated)-(investment))/(investment)*100.  This means that you need to track three things:

1. investment: The amount of money being put into a given marketing campaign.  This should be the easiest part.
2. Value generated: The amount of money that was generated that can be tied specifically to that marketing campaign.  In order to accurately track this number, you need the third element of tracking.
3. The conversion funnel: The process by which visitors arrive at your site, and the path they follow until the eventual conversion.  This can be done relatively easily using free tools such as Google Analytics.  I could devote an entire post to ways of doing this, but for now, I suggest playing around with Google Analytics.

Instead of focusing on step-by-steps of how to set up conversion tracking, I want to instead focus on some fundamentals that are often overlooked.

First, you can’t measure ROI, if you haven’t determined what a conversion on the web is for you.  It’s unrealistic to think that for every business on the web, a conversion is a sale.  If your website is meant to make your presence known, and create awareness, and purchases happen in store, measuring your ROI for a web marketing campaign by sales is going to be frustrating.  Instead, define your conversions as the end goal that occurs on the web. Some common examples include newsletter registrations and other sign-ups, requests for estimates, downloads of a brochure or an e-book, or even arrival on a specific page of a website.

Second, remember that at the end of the day, we’re tracking return on investment, and the only way to do this is by using monetary values.  Therefore, whatever you have chosen to define as a conversion, you must assign a monetary value to it. This is often where businesses break down in their conversion tracking process.  How can one assign a monetary value to a free newsletter?  The answer is to rely on estimates and experience.  As the business owner, you and only you, should have some idea of what kind of value certain actions have for you.  If you know that for every 100 newsletter sign-ups, you sell 1 widget for $375, then the revenue associated to each sign-up is 1/100th of the revenue generated by the widget: $3.75.

The more precise your estimates as to the value of each action in your conversion funnel, the more accurate your calculation of ROI will be.  Therefore, the longer you track ROI, the more accurate it will be, because you will be refining your estimates as you go.

To continue our earlier example, we had determined that a newsletter sign-up, our defined conversion was worth $3.75.  However, we have yet to determine exactly what the ROI on this marketing campaign was.  So, let’s assume that you spent $1,000 on this marketing campaign, and it generated 2,000 visits to your site, and that you converted those visits at a rate of 10% for 200 newsletter sign-ups.  I threw a lot of numbers in there, but in reality, we’re only concerned with the beginning and ending numbers: $1,000 spent, and 200 newsletter sign-ups as a result.  Recalling that ROI is ((value generated)-(investment))/(investment)*100, we can calculate our ROI.

Value generated in this instance is 200 newsletter sign-ups at a value of $3.75 each, so 200 x $3.75 = $750 of value generated.  We also know that the investment was $1,000.  Plugging all this into the above formula we get: ((750)-(1000))/(1000)*100=-25

So, the return on investment was -25%.  This marketing campaign resulted in a 25% loss of its initial investment.  While that may not be great news for the business owner, the fact that he knows that this marketing campaign is returning a negative ROI means that he can now take appropriate measures to correct this, either by modifying the marketing campaign, or ditching it for a new strategy.

At the end of the day, what’s important is to know exactly how your marketing budget is being spent, and to determine whether it’s being spent effectively.  Business owners need to think of their marketing as an investment if they want to be successful, and as with any investment, what matters is the results.

Do you track ROI on your marketing campaigns?  If so, what techniques do you use to do so?  If not, what’s stopping you?  Let’s chat about it in the comments.