Excellence in your Business Planning

By Leave a Comment

What is “Excellence?”

I recently asked several professionals to answer the question:  What is Excellence?

Respondents included teachers of developmentally challenged kids, heads of hospital emergency departments, and fast food restaurant executives.

Their answers were simple:

  • Developing excellence in the business planning process should be the major focus and direction
  • Focusing on results is biased by outlying variables
  • One needs to accept small gains and details and understand the differences in individuals and structures when defining success.

These responses were typical of those I received in my survey, as exemplified by the teacher who beamed about her young challenged student learning to say a color or being able to walk up the stairs.  For the emergency department manager, the example had to do with reducing average patient waiting time a few seconds.  She noted that those few seconds could prevent more severe complications from heart attacks and save lives.  The fast food manager emphasized the importance of coordinating production of food with its prompt delivery, either “for here” or “to go”.

The purpose of this article is to make the point that these responses don’t really get to the heart of the question “What is Excellence?”  Instead, they focus on specific actions and outcomes rather than on the culture and execution of excellence throughout the organization.

The following illustration will help clarify my point:

Excellence Embodied in Business Planning

 

Examples of companies that, by using good business management, embody excellence throughout their organizations.

Examples of companies that, by using good business management, embody excellence throughout their organizations.

 

Many companies say they are committed to excellent customer service.  However, some companies have come to embody true excellence and not just give lip service to the term.  Examples of such organizations include Lands’ End, Ritz Carlton Hotels, Nordstrom’s, and L.L.Bean.  These companies have truly embraced business planning excellence at the heart of their identity, vision and mission.  Excellence permeates every aspect of these organizations.

There are several common factors in these diverse companies that illustrate the components of excellence.  It is sometimes overlooked in business planning that it is the culture and the commitment required throughout the companies in developing excellent practices.

Examples include:

  • In order to offer unlimited returns you need to provide excellent quality
  • Service companies like Nordstrom’s and Ritz Carlton both recruit and train staff to be excellent from the very first day
  • Companies focused on excellence exhibit trust in their customers.  The reality is that most consumers are honest. If companies are preoccupied with the few cheaters they will often ignore many legitimate complaints and not improve as a result
  • Empowering employees both encourages satisfied customers and motivates employees to experience success.

Another component of excellence is identifying, nurturing, and realizing the potential of excellent people. While it is easy to extol the virtues of excellence, we frequently ignore the conditions and risk of not pursuing it.

  • Excellence requires integration with organizational cultures, structure, and collaboration
  • Excellent people often tend to be independent by nature and require a culture that encourages their energy, determination, and focus
  • Evaluating the potential of excellent people becomes complex. They are frequently introducing new concepts, processes, and technologies. Evaluating both the risks and costs of success is frequently done in unchartered waters.

A major negative consequence of “results-focused” excellence is that we can make more errors in constraining excellent people than we do by encouraging them.  The reason for this is quite simple.  Everyone is aware of the costs and failures of special programs that do not succeed.  What we are not aware of are the losses we never realized in not pursuing new and exciting strategies.

These issues also relate to us as individuals.  We all want to be effective at whatever we are doing.  No one starts their days saying “I am going to do a lousy job today,” or “I am going to make my day miserable.”  However, many times our aspirations, goals, and efforts become frustrated.  There are numerous dimensions to this dilemma that can all contribute to our ineffectiveness.  Avoiding failure and stifling excellence has now become epidemic to many organizations.  The organization builds layers to take every idea and ensure it is analyzed and reviewed to meet various legal, cultural, and strategic criteria.  This almost always results in delays, watering down, and eventual rejection of the exceptional and different.

A friend of mine once put it this way when talking about many students coming out of ivy league business schools:  “They are not trained how to succeed, but how NOT to fail.”

Some suggestions for creating an environment and approach that foster Excellence include:

  1. Recognize strengths and weaknesses—then pursue the strengths.  For example, in interviewing applicants I will focus on the strengths rather than the weaknesses to learn about the successes to understand the energy and dedication of an applicant
  2. Find opportunities where one can succeed.  People are frequently terrified to quit many dead end jobs or admit they are wasting their careers.  This is particularly true in declining companies and industries
  3. Provide the confidence to pursue what one should be doing.  Many times both individuals and organizations minimize risk even if the payoffs more than justify the risk
  4. Stop spending so much time trying to correct weaknesses.  Start exploiting advantages that can result in significant opportunities.  Organizations continue to feed lost causes and ignore realities like changing demographics, technology, and competitive position
  5. Organizations need to commit to professional decision making as opposed to position.  Companies need to start accepting expertise through giving more responsibility to their key employees and having flatter organizations.  These organizations are also frequently more nimble and have lower costs
  6. Within organizations, different cultures need to accepted and appreciated.  For example, the accounting and product development teams have different roles and require different structures and rules to be optimally efficient
  7. If an organization is not making mistakes, they aren’t trying hard enough.  This is the best phrase I have heard in terms of learning to accept risk.  The key issue is not to encourage failure.  The successes will justify the total effort.

It is clear that both individuals and organizations have over-emphasized the risk of failure versus the rewards of success.  One need only look at the old line industries, such as retail and furniture, to realize that many of them have simply not adapted to their changing environments and taken the necessary risks to survive.  Similarly, individuals underestimate the risk of staying in poor situations and the rewards of trying to maximize their capabilities.  Both individuals and organizations need to realistically assess the risks of failures and the rewards of success.

As Gandhi said:

Many people, especially ignorant people, want to punish you for speaking the truth, for being correct, for being you.

Never apologize for being correct, or for being years ahead of your time.

If you’re right and know it, speak your mind.  Speak your mind.

Even if you are a minority of one, the truth is still the truth.

New Structural Paradigms for Business Management

By Leave a Comment

How Can They Become Part of the Business Management Process?

Today, businesses (large, mid-sized, small and startups) and the business management experts that advise them are all focused on openness, transparency, brainstorming, support and innovation.  We, too, have acknowledged their potential positive impact on decisions, motivation and profitability.  Unfortunately, the reality is quite different, they are rarely happening nor are they truly supported.  This article highlights the constraints and barriers facing business management to executing needed business changess.  We have found that just as what’s so often similar to today’s conflicted political environment; what’s missing in business management is a realistic view of many issues and the changing environment we live in.

Society and business management fail to recognize old paradigms and structures are failing

New Structural Paradigms for Business Management

New Structural Paradigms for Business Management

Many of our largest and seemingly most powerful corporations have experienced zero growth or failed over the last ten years.

  • Large corporate structures ( the post office, newspapers, magazines, and brick and mortar retailers), are all gradual losers or worse.
  • Companies and society continue to do what they have done in the past, often with poor results.  Despite massive investments, varying economic and political efforts, social problems like education, unemployment, and income inequality, are not being properly resolved.
  • Ignoring and failing to adapt to societal/business trends is done at our peril.

Many political, religious, educational and other institutions are facing crises because they fail to adapt.  For example, it is generally accepted that pre-kindergarten programs dramatically impact education and long-term societal goals.  Yet, few school systems nationwide have adapted them.

  • Closer to home we tend to ignore trends and deal realistically with issues. For example, U.S. manufacturing jobs aren’t coming back when countries such as China and India pay 10-20% of our rates.
  • Demographics make matters even more complex:
    • Women are soon to represent over 50% of the labor force;
    • Workers over 45 have increased from 31% to 41 % of the population;
    • Over 50% of births in the country are non-white;
    • Large numbers of college educated students between 20 – 26 face extremely difficult odds in finding well-paid jobs and careers;
    • The list goes on.

With little real attention to these changing trends and other factors, poor performance of many organizations is virtually a given.  What is even more distressing is that it is the business management structure of these organizations that produces much of the results rather than the typical financial discussions.  For instance, the long held proposition that bigness which includes:

  • economies of scale
  • Spreading expertise
  • marketing synergies

Other presumed advantages have simply shown little evidence of success in the last few years.

Why is this phenomenon so apparent and why have so many organizations shown so little progress and success?

  1. First, many seemingly successful companies have tunnel vision, organizational constraints etc. and ignore emerging technologies and opportunities.
  2. Second, they lack the flexibility to respond to the needs of the market and use outdated solutions to new problems.
  3. Third, they fail to allow the vision, entrepreneurship and risk necessary to succeed.

The challenge facing today’s business management, organizations, and individuals

The business management challenge for organizations and individuals today is to create an environment where the structure and culture of the organizations encourages adaptation and change. I strenuously argue that if we do not learn to accept and accommodate deviant behavior within and outside organizations, we cannot achieve excellence or change.

While business schools, particularly top MBA programs, and organizations both preach openness, creative dialogue, and problem solving; they are seldom really practiced. In reality, support, listening, teamwork are frequently emphasized over fact finding, analysis, and arguing over alternatives.

This assessment was evident to me in my own consulting efforts over a number of years.  Many of my colleagues focus on being supportive of virtually everything a client proposes and avoid asking for difficult but necessary facts such as financial and sales records.  After years of my criticism, two of my colleagues have modified this strategy and adapted a simple good-guy bad-guy approach along with my collaboration.  They start meetings telling me in front of the client to be nice and if I am not, they will just tell the client to ignore me.  The strategy almost always works because we are surprised at our ability to get information and discuss what would be hidden or avoided in a normal session.

Improved communication, the internet and digital integration have profound effects on organizations we fail to fully comprehend.

Companies such as Nordstrom’s, Amazon, Zappos, Ebay, etc. thrive on opportunities from the internet and digital communication.  In contrast, companies such as HP, Sears, and Blockbuster continue to adhere to tradition bound business approaches and tend to change executives every few years or less.

Open systems and collaboration are like winning the trifecta at the horse track.

What is emerging today as a potential solution is the acceptance and reliance upon open systems and collaboration.  Open systems have been around for a long time but are becoming the norm for success.  They reject bureaucracy, authority, hierarchy, and closed decision making processes.  They encourage participation, diversity, new rules, and to some extent, chaos.

Google, the Internet, Facebook, LinkedIn, smartphones, tablets, etc. are examples of enablers through open systems.  Facebook and iPads may seem like play toys to some, but their inherent potential is just in its infancy.  The ability to quickly find information, engage participants, communicate, and see spontaneous actions and decisions are all results of these new phenomena.

What must we do to adapt to the changing requirements of business?

What is frustrating is that there are realistic new models of success.  We simply need to follow them which is not something typically done.

1.  The simplest approach is more cooperation.  Bartering, measuring and communication are suggestions for improving cooperation:

  • A highly skilled client of mine who had a costly technology needed to raise capital.  He had several investors who were willing to participate, if he could raise seed money from other investors.  He managed to get small investments from some clients and in return gave them dramatically reduced services as an offset.  He then got investment funds to jump start his business.  His clients got services they normally couldn’t afford, an investment opportunity and great value for the services.  The client also got initial success stories to help market to other customers.
  • Organizations need to be open to measurement and feedback.  Looking, understanding and sharing financials, operations reports and sales reports are the first step.  Simple research studies, social media and other devices are additional tools.  Simple management involvement through tools which might include just walking around or “how am I doing“ also work.
  • You need a commitment to open communication.  One of the investors on the “Shark Tank” TV program had simple advice for an entrepreneur who wouldn’t stop talking:  Stop talking and listen!

2.  The most difficult opportunities can be to pursue proven winners.

  • Have you hugged your best customers today?  We frequently take our best customers for granted and don’t thank them enough, help them adapt to changes in their needs, or simply listen to their concerns.
  • Similarly, where are we experiencing success and failure?  I can’t tell you how many clients don’t track sales by product or account, measure internet results or even monitor traffic and success.  In addition, when these efforts are executed they usually focus on the problems.  I would argue there is frequently more opportunity in expanding the successes than trying to fix the inevitable.

3.  The success of smaller, more innovative companies shows that many organizations should get smaller or act smaller in order to effectively deal with today’s environment.

  • Reducing layers and creating professional cultures are a start.  Boards and management need to split up organizations, spin off or create more independent groups.  That may be what’s really necessary to maximize the potential of both individuals and organizations.
  • Large organizations say they want excellence, entrepreneurship, innovation, risk takers, etc. but, really, they tend to encourage mediocrity.  For example, short term goals and reviews for both organizations and individuals actually inhibit the development of more positive cultural characteristics rather than spur them on.
  • Testing and failure which are critical parts of innovation are punished more than rewarded.  Even sound risk taking is reduced because of the fear of repercussions within the organization.  In short, organizations frequently ignore the advice “you can’t score if you don’t take a shot.”

4.  Finally, organizations are surprised rather than managing their environment.

  • On a number of different levels factors like global warming, aging of the population, product life cycles, technology changes, and the Internet are highly predictable.  What is frequently missing is recognizing and dealing with them.
  • Aspects like culture, personalities, and social standards can have dramatic impacts.  In 2005 over 1000 patents each were issued to businesses and people in places like Santa Clara, California, Austin, Texas, San Jose, California, and Boise, Idaho.  In contrast, New York City, with all the population and wealth, had only slightly over 600, and Los Angeles and Chicago were not even in the top 20. (Wall Street Journal, July 22, 2006)

5.  The greatest need for change is a commitment to open systems and collaborative models.

  • One of the most important outcomes from open systems is the collaborative decision making model.  As decisions become more complex, the need for diversity, internationalism, innovation, and expertise expand.
  • For example, when discussing issues the nature and presumed cause of problems are typically explained and focused on.  There is, however, little talk of solutions.  As one sales consultant argues: “We all know the adage….features tell, benefits sell.”  If that is true, how come so many of us still speak in terms of features and not benefits?  The prospect doesn’t care what your product or service does, they only care about what it does for them.

New paradigms for business management success

These new paradigms:  cooperation, betting on success, smaller can be better, and open collaborative systems, offer great hope for organizations.  While they involve new approaches to problems, the solutions are readily available.  What’s needed is to allow our organizations to be effective.  To do so, involves providing opportunity and education.  As the great manufacturing consultant Edward Deming once said regarding leadership, “It is the ability to drive fear out of the organization so that employees will feel comfortable to make decisions on their own.”

In simple terms, the first step is to recognize:

  • People want to do a good job and succeed
  • Organizations inhibit many of these efforts
  • The complexity of organizations and the environment add further complications to success
  • Organizations and individuals need to find the opportunities to overcome these barriers.

Internet Marketing

internet marketingInternet Marketing

Introduction

Even if you are not currently selling directly on the internet, you need to be aware of competition and trends, and you need to develop an internet marketing strategy.

U.S. retail e-commerce sales have been growing about 15% per year and are expected to have a compounded annual growth over the next few years at 14%.  Brick and mortar sales have been relatively flat and actually on the decline.

In 2012, 92% of retail sales still took place in brick-and-mortar stores.  However, by 2020, online sales are forecast to be $500 billion or 20 percent of nonfood retail sales.

For many types of retailers, the percent-to-total sales could be even higher, as e-commerce growth continues to significantly outpace overall retail sales growth.  Much of this will be fueled by the accelerating use of mobile platforms for shopping online.  Companies that sell products online should consider internet marketing as part of their distribution strategy.  In contrast, service companies tend to use the internet for lead generation and post-lead the sales process goes offline to a sales team.

Leveraging Your Internet Marketing — Pros and Cons

In addition to using your website for direct online sales, there are several marketing and distribution strategies you can use to sell products and expand their reach.

  • Major online distributors such as eBay, Wayfair and Amazon (with over $100B in sales) have become critical distribution outlets and competition selling on them is fierce.  Yes, you have a wider potential reach to your target audience. But, shoppers on Amazon and eBay go for the cheapest price and if you’re not the cheapest for a product or comparable product you’re probably out of luck.
  • Lesser known marketplaces, communities and curators such as Etsy, Fancy, Svpply, ahalife are another option and tend to attract people who seek more unique types of product.
  • Flash sale sites (also referred to as daily deal sites) such as Rue La La, Groupon, and Gilt are doing over $1B combined sales providing an alternate business model and potential means of expanding your outreach enabling you to distribute products to your target markets quickly and efficiently.
Growth of e-Commerce is out-stripping brick-and-mortar sales with no sign of letting up.

Growth of e-Commerce is out-stripping brick-and-mortar sales with no sign of letting up.

Be aware that affiliating yourself with such distribution partners, may involve adhering to a variety of stringent rules and criteria, including:

  • As a vendor you may need to hold inventory and deal with special service requirements (penalties may be involved if you cannot meet certain criteria).
  • Volume can be highly variable by day, month or season.
  • There may be certain pricing restrictions and competition can be really fierce – even if you have a unique quality product you may still be beaten by someone who carries a similar style or category that is of lesser quality but is less expensive (i.e. “cheap” in many cases tends to win over quality)
  • Operationally, you may have to upgrade your inventory systems, as well as your overall data technology and communications systems to meet these platform’s requirements
  • And yes, there may be loads of administrative work and forms to fill out.

Online Media and Internet Marketing Channels: The Basics

We are all familiar with traditional offline marketing, which has its own different channels and means of promotion such a print advertising, direct mail, cooperative advertising, radio and television advertising, etc.  In the world of online and web-based internet marketing, however, there are many other avenues and forms to consider – some which may be better suited for your business than traditional approaches alone.

Source: Pew Internet and American Life Project

Source: Pew Internet and American Life Project

Be prepared to invest in your online marketing strategy

Though internet marketing and advertising may appear to be “free,” generally they are not — at least not in practical terms for business.  Of course, you can set up a Facebook page and YouTube channel for free.  However, if your goal is to have a significant impact on your sales you will also require meaningful and current content, management of your online sites, adequate technology (hardware, software, etc.), professional design, robust web hosting etc., links, etc.  Doing online marketing “right” isn’t a “no-brainer” — it requires time, development and investment in order to be effective.  If one is naïve and does not understand the fundamentals of online marketing the experience can become a nightmare and a financial failure.  However, if you understand the basics of doing business on the internet, obtain the right help when you need it, and can ascertain which means best serve you and your customers, internet marketing will be and indispensable asset to you and your business.

Forms of Internet Marketing

Contrary to some popular beliefs, online internet marketing isn’t simple or easy—at least if you want it to succeed.

Contrary to some popular beliefs, online marketing isn’t simple or easy—at least if you want it to succeed.

The most common forms of internet marketing include:

  • Search Engine Marketing (SEM)
    • Search Engine Optimization (SEO)
    • Pay-per-click Marketing (PPC)
  • Affiliate Marketing
  • Email Marketing
  • Banner Advertising
  • Blogs
  • Social Media Marketing

SEM – Search Engine Marketing

SEM is designed to increase your website’s visibility on Google, Bing and other search engines. SEM can include:

  • SEO – search engine optimization
  • SERM (Search Engine Reputation Management – equivalent to online Public Relations
  • PPC Advertising (Pay-Per-Click Advertising – including ads on Google AdWords, Yahoo, Bing and social media sites)

SEM—A Word of Caution

Some people guess that common sense and intuition are all that’s needed in order to maximize your website’s search engine placement, but SEM is not as easy as it seems. To make matters more complex, SEM consultants and web developers are often notorious for charging high fees for huge-sounding projects, when just a bit of effort on the right aspects of your web program can create 90% of the profitable impact.  An experienced SEM consultant will ask about and want to learn about your specific business and can often spot the best items to work on in order to make changes that pay off.  Often, these are not the most costly items.  Listen to what potential vendors ask about your firm or to ascertain whether they are just trying to tout a generic solution.  If they don’t ask questions and are not trying to understand your business, your business goals, and your target customer – don’t walk, run.  Ask for references and specific comparative outcomes and ROI.  This can be the first test of their reliability because many firms will not answer those questions.

SEO internet marketing

The world of SEO as marketed by SEM consultants is often filled with promises and high price tags.

SEO (Search engine optimization) is the methodology of strategies, techniques and tactics used to increase the amount of visitors to a website by obtaining a high-ranking placement in the search results page of a search engine, including Google, Bing and other search engines.  SEO is the process of improving the visibility of a website or webpage in the search engines when someone types in a specific keyword or phrase via the search engine’s algorithms.  (Note: “algorithmic search” is also referred to as “natural” or “organic” search by which you’re not paying for the keywords to show up in the results. Your search ranking is automatically reflected in the frequency and selection of key search terms in your web content, blog, newsletters, etc.)

Whether you use SEM consultants or natural key word strategies, SEO will help to ensure that your site is accessible and well-placed on a given search engine, improving the chances that potential customers will easily locate you and “click through.”  Where a site ranks in a search is essential for directing more traffic toward the site.  The higher a website naturally ranks in organic results of a search (i.e. the higher on the search engine results page the site), the greater the chance that that site will be visited by a user.

SEO is not only essential for search page ranking, but it makes a website ‘search engine friendly’ – with the goal of a good position in the search results when people search for words that relate to your website, product or service.  Remember that “SEO” relates ONLY to unpaid, ‘organic’ or ‘natural’ search results mainly based on key word placement and frequency.  It has nothing to do with paid advertising.

The vast majority of searches occur in the first 4-5 sites on a given search engine page.

The vast majority of searches occur in the first 4-5 sites on a given search engine page.

The best position in organic search results is — of course — #1 on the 1st-page.  Many businesses have to settle for any 1st-page position, at least as an early goal.  You can’t pay the search engines to get a better organic search position – you have to work at it.  This is where selection of your target market and linking of your key words to what your market is searching for comes in.  Many people miss this point, and end up spending a great deal of time and money with unfavorable search page placement.

Organic SEO position is important because every time someone visits your site after clicking an organic search result, you have received a visitor who’s probably interested in your website.  Better yet, the probability that such a visitor will click through and eventually make a purchase is increased dramatically by their initial identification of you in an initial search.

SEO is typically a set of best practices that webmasters and Web content producers follow to help them achieve a better ranking in search engine results and tend to fall under two types of categories — onsite SEO and offsite SEO.

• Onsite SEO involves making sure your website pages, titles, tags (part of the site code) and overall structure are optimized for target keywords.  Increasingly relevant content that users want is becoming a critical component in your ranking.

• Offsite SEO is pretty much what it implies.  You need to make sure that you have a significant amount of inbound links from highly respected external websites that are directed to your site.  It is a significant factor in how search engines rank your web pages.

You need both onsite and offsite SEO to be successful, and the right mix has everything to do with analytics and tracking.  Keep in mind that you MUST be using the right keywords or run the risk of spending time and money driving the wrong people to your website.

Many businesses optimize their sites based on the keywords they think people are using, not the keywords people are actually searching for.  That is a big mistake.  Doing a little upfront research with free tools such as Google’s keyword search (or even more robust marketing software paid solutions like Hubspot or Marketo) will go a long way in helping you in developing effective SEO for your business.

PPC (pay per click) is a method for placing online ads on search engine pages, web pages or social media pages by paying for each click-through, rather than by number of impressions or a flat rate.  PPC is used on websites where advertisers pay their host only when their ad is clicked.  With search engines, advertisers typically bid on keyword phrases relevant to their target market.  Content sites commonly charge a fixed price per click rather than use a bidding system.  There are also numerous variations in CPC terms such as CPA or CPL which your vendors need to explain if applicable

Well-placed ads on major search engines can make effective use of search terms and advertising dollars.

Well-placed ads on major search engines can make effective use of search terms and advertising dollars.

In PPC programs, the online advertisers will pay Internet Publishers the agreed upon PPC rate when an ad is clicked on, regardless if a sale is made or not.  The basic measures of PPC accounts are:

  • CPC (Cost Per Click – the amount you pay each time someone clicks an ad and is directed to your site).  CPC can range from a few cents for specialized, uncompetitive business niches – up to $50 or more for highly competitive industries like financial services.
  • Cost Per Conversion (the amount you spend before you get one sale, signup or other goal).  If you ‘convert’ one out of ten visitors, and you pay $2.00 for each visitor from Google (i.e.: CPC = $1.00), then your Cost per Conversion will be $20.00.

Usually PPC ads cost nothing to display – when a viewer clicks on the ad, only then is an advertiser is charged for the ad – hence ‘pay-per-click.’

The most popular PPC ads are text ads like you see on Google’s search page.  Video and display ads (display ads have a photo or graphic or logo) are also common and can appear on almost any website (although they are generally ‘served’ from an advertising provider like Google).

PPC is a very quick and easy way to promote your website, products and services when getting a 1st-page organic position is a longer-term, more difficult goal.  PPC is generally profitable when your business targets a specific segment of the market with a relatively unique product or service or offer – and when there are not a lot of competitors bidding against your ads and driving up the cost of your PPC efforts.

Affiliate Internet Marketing

Affiliate Internet Marketing is the term used to describe a revenue-sharing plan where an online automated marketing program lets webmasters place an advertiser’s banner ads or buttons on their own website.  Webmasters will receive a referral fee or commission when a customer has clicked the affiliate link and performs the desired action, such as make a purchase or opt-in for downloads or newsletters on the advertiser’s site.  Advertisers invest in affiliate programs for lead generation, and, of course, sales.

Email Internet Marketing

Email Internet Marketing is a type of direct digital marketing that uses email as the marketing communication delivery method.  Email internet marketing comes in a variety of forms including:

  • Direct email to a selected list of recipients
  • Affiliate emails
  • Email newsletters and other “opt-in” forms of communication

Email internet marketing is used in a number of ways by organizations and marketers for brand and customer loyalty building, acquiring or converting customers, company advertisements, or for communicating promotional offers and more.

E-mail internet marketing requires you spend time building your list.  Sign-ups, contests customer feedback and social media are all ways to build your list.  Organizations like Constant Contact are inexpensive resources to mail and clean your list.  Also, ensure you are not “spamming” your recipients and that they have a ready mechanism to opt out from your emails if they so desire.

Banner Advertising

If you have spent any time surfing the web, chances are you’ve seen more than your fair share of banner ads and related forms of advertising (pop-ups, etc.)  A banner ad is typically rectangular advertisement placed on a Web site above, below, or on the sides of the Web site’s main content and is linked to the advertiser’s own Web site.  In the early days of the Internet, banners were ads with text and graphic images.  Today, with technologies such as Flash, banners have become much more complex and can be ads with text, animated graphics and sound.  Most commerce-related Web sites use banner ads.  Think of banner ads as a magazine or newspaper ad but in an interactive, digital format.

blog internet marketingBlogs

A blog is a website in which items are posted on a regular basis and displayed in reverse chronological order.  The term blog is a shortened form of weblog or web log.  Authoring a blog, maintaining a blog, or adding an article to an existing blog is called “blogging”.  The term “vlog” refers to a video blog.  Why have a blog?  Many have a blog to bring a more personal touch as an expression of their brand and to create a dialog with their audience.  Some do it for sheer vanity.  However, blogging if done well can also be a boon for a site’s SEO.  Blogging has become easy and inexpensive, but as with all internet marketing outreach it requires constant tending to keep it fresh and relevant.

Social Media Internet Marketing

Social Media Internet Marketing is a term used to describe a variety of Web-based platforms, applications and technologies that enable people to socially interact with one another online.  Some examples of social media sites and applications include Linked In, Facebook, YouTube, Del.icio.us, Twitter, Digg, blogs, and other sites that have content based on user participation and user-generated content (UGC).

The number of social media sites is exploding—be selective in which ones you choose and manage them well.

If you think about it, social media is like an online version of word-of-mouth advertising.  One user on a social media site may favorite, follow, or Digg something about your company, and suddenly your brand and name is being shown to all of their friends.  If the friends repost the mention they open up your brand to all of their friends and so on down the line.

When creating profiles on these sites, remember to link them up.  For example, on your Twitter profile you can include a link to your blog or Web site.  On Facebook you can install a Digg application so others can see what you favorite, and a Facebook Twitter application lets your Tweets become your Face book status update.  Twitter feeds can be added to your blog, and so on.  By linking up your profiles, with one update you can blast your message to multiple social sites.

Success in Social Media Marketing requires that you Be Open, Honest, and a Little Social, too.  To successfully market in social media spaces, a business needs to create honest and open profiles that will appeal to consumers and create enough “buzz” to encourage sharing with friends and networks — don’t pretend you are “just another user” on the site.  Be honest in letting users know that you represent a business, versus being a single person who always tweets and posts information that links to one business.  People will see right through this.  Being genuine, impactful, and at times even humorous can be great ways to make Social Media Marketing work for you and your business.

Remember that when you use these social media sites, you are opening your business up to direct dialog and comments from users.  One of the biggest mistakes a business can make in such cases is not responding.  When comments are left on your blog, a message is posted to your Facebook Fanpage wall or when someone tweets a reply to your status on Twitter, make sure this person gets a message back from you.  Show that you have an interest in what they are saying.  If you never respond, the user does not have a reason to come back to your profile. Make sure you have staff members who will continue to update these pages with fresh posts and comments to users.  Daily updates are best.

One thing to remember is that as a business engaged in social media, you might receive comments and posts that are not positive — comments that you might feel hurt your business reputation.  A business has to always be courteous and address the concerns appropriately, no matter how rough the comment you are dealing with is. Social media links can travel fast and wide, causing sometimes unforeseen consequences unless dealt with.  This is where Social Media Reputation Management might play an important part in your overall strategy.

Social media also provides a way for you to promote new launches and products. For example, you can twitter company news and announcements (via links), you can add unique and fun demos of our products on video to your YouTube channel, or upload hot product shots to Flickr or your Facebook Fanpage.  When an online publication covers your business or products those news stories can also be added to your various online social media profiles.

Concluding Thoughts on Internet Marketing

internet marketing trafficI hope that what I have shared with you makes a convincing case that the importance of successful online marketing of your product or service cannot be underestimated.  None of the elements of internet marketing work in a vacuum, and you should consider your goals, your budget and what overall strategy and plan-of-action would be best, especially given the stage of development of your business.  At the end of the day, online marketing boils down to testing and measuring what you’re doing, tracking the results of campaigns and tweaking the programs.  That’s why analytics is so important – with good analytics you can gauge what is going on with your online marketing and adapt accordingly, insuring that you are not wasting time and money, but rather that you are achieving tangible results while knowing why.

Also remember the actual quality, pricing, and differentiation of your product or service itself will determine your ultimate success.  While internet traffic can obviously be delivered and retained on the website by effective marketing methods, your product or service, its features and benefits, will still be the crucial factor for making a sale.

Companies need to develop integrated plans with these efforts and continually monitor changes, opportunities, challenge successes and failures.  Google Analytics can be a key tool in measuring these factors and the changes.  In the end impressions, clicks, conversions and ultimately profitability are the real measures of success.

Glossary – A Few Web Internet Marketing Terms

It helps to know the jargon when you venture into new territory, like internet marketing.  To make the most of your online marketing strategies, familiarizing yourself with the terms in this list will help in your conversations and further research:

Above the fold:  Content and/or ads that appear on a page before a viewer needs to scroll.

B2B (business to business):  Companies and sites that market to other businesses.

B2C (business to consumer):  Companies and sites that market to individual customers.

Banner ad:  A graphic ad that links to the advertiser’s site.

Call to action:  A marketing technique that asks prospects to take a specific action.

Cookie:  Identifying code downloaded to recognize repeat visitors or track online activity.

Conversion rate:  The percent of site visitors who take a particular action or make a purchase, often called converting browsers to buyers.

CPC (cost per click):  Amount actually paid for a click-through to a site from an ad.

CPM (cost per thousand):  The advertising cost to reach 1,000 viewers or listeners; allows comparison among various advertising methods.

CTR (click-through rate):  The percent of people viewing an ad who click on it.

PPC (pay per click):  Payment method for online ads in which advertisers pay for each click-through, rather than by number of impressions or flat rate (see CPM).

ROI (return on investment):  The amount of money earned (or lost) as a percent of the amount invested.

SEO (search engine optimization):  The process of making a website search-engine-friendly to improve ranking in search results.

SEM (search engine marketing):  The combination of SEO with paid search marketing through PPC, paid inclusion, or paid appearance.

SERP (search engine results page):  Short for search engine results page, the Web page that a search engine returns with the results of its search

Social media:  Two-way communication channels online for networking, sharing news and views, contributing content, and soliciting comments from customers and prospects.

URL (uniform resource locator):  Address designating the location of information on the web; includes a registered domain name.

Widget:  Small application tool placed on a website to add value.

Guidelines for Website Design

website designGuidelines for Website Design

Your Website Design — Things to Ponder

You’re thinking about website design. Congratulations! This could be a great move to propel your company to growth and success.

But before you start, did you know:

  • Currently, over 8,000 websites go live per hour, and
  • Of the estimated 600+ million websites worldwide, approximately ¾ of them are inactive.

So, before you run off and hire a high-priced designer and developer, there are a few critical questions you need to ask yourself and issues you should consider to ensure your that your website design helps you in your business goals, and ends up being more than a waste of money.

First-and-foremost, your website design will be a reflection of your business and brand, one that can be an essential and critical part of your business and its ability to succeed in a complex and highly-competitive world.  I recommend you approach building a website as you would in forming your business — first, think strategically and then, think about the nuts and bolts that bring the light of day to that strategy.  This article is designed to help you do just that, and to provide perspective regarding what you need to know or at the very least what you should consider before you create a website design.

A friend of mine once said, “When you have 10 seconds to live, spend nine of them thinking!”  This advice applies to many areas of life and business including the successful construction of your website.

Your Homework—Have a Plan

A well-designed website is the product of a solid business plan at the foundation.

If you have a business plan already in place, you most likely did your basic homework:

You researched your target market, you evaluated your competition, and you defined your unique value proposition to determine the viability of your business.

Your website design should be a reflection of that business plan and in building your website you need to keep the answers to key questions in the forefront.

At the end of the day — website or not — it boils down to the simple questions:

  • Why should someone do business with you vs. someone else?
  • What value do you provide that others don’t?  and
  • How do you offer value in a way that is different from your competition?

Your Website as a Tool to Reach Your Audience

The more information you have, the more you know about your target audience – who they are, how they behave, their hopes, their fears, their goals, and even what technologies they use. The more you know about your audience, and the more you know about your own business goals the smoother, less expensive, less time-consuming and less troublesome the process of building your website will be. As with any complex project, there will always be delays and changes, but the more you think about and know the answers to the larger strategic questions in advance, the more effective, efficient and successful you will be.

The Four “C’s”

There are four critical questions to address before you’re off and running to build your website design:

  • Your Company
  • Your Customer
  • Your Competition, and
  • Your Competitive advantage

None of these should be looked at in a vacuum.  Remember, they all interact, and the whole is greater than the sum of its parts.  Let’s look at each of these in more detail.

Your Company

Before you start designing your website (much less actually building it), and before you begin talking to web designers and developers, consider the goals of your site, including the following possibilities:

  • To sell your product or services
  • To develop a community
  • To provide a contact for future communication or selling
  • To build your brand
  • To provide information
  • To build long-term relationships,
  • All-or-some of the above

Even if you answered the very last response above, there are priorities and great differences regarding how your website design will help you achieve one or more of these goals.  Even among the top 5 etailers (Amazon, Staples, Apple, Wal-Mart, and Dell — who represent over $60 billion in E-commerce sales), there are profound differences in goals, relationships with customers, repeat business strategies, sales, etc.

In the final analysis, the main reason you are building your website is to have a positive impact your business, including its ability to generate revenues, profits, growth and competitive advantage.  Every decision you make regarding the design and construction of your website should be focused on improving these goals.  Examples of the types of questions you will need to answer with your website design and construction include:

  • What is the brand image I want to convey across all channels?
  • What is the tone of voice and positioning I want to convey and how will it resonate with my audience?
  • How can I rapidly and clearly communicate my value proposition to my audience?
  • How can I create a desire in my audience to buy and refer?

It goes without saying that the answers to these questions will be critical in your website design.  For example, if you are launching an accessories line that focuses on handcrafted, upscale Italian styled jewelry you probably want a clean, sleek design with very elegant perhaps more muted tones.  Having a design with bold colors and call outs that look like a discount brand will certainly not be beneficial for you and in fact will bring forth less than desirable results and probably bring more harm than good.

Your Customer

Ask yourself the following two questions about visitors to your site:

  • Who do I want to visit my site?
  • Who is most likely to visit my site?

These questions lie at the heart of your target market.  Ideally, the people most likely to visit your site are the same people as those you would most like to visit your site.

So, what can you do to maximize the probability that your site will be visited by a high frequency of target customers?  The answer to this question lies in the answers to the following questions:

  • Who are my target customers and what do they want to know?
  • What do I ultimately want visitors to my site to do?
    • Fill out a form?
    • Purchase an item?
    • Sign up for a newsletter?
    • Call for a quote?
    • Visit your brick and mortar location?
  • What vehicles or technologies are my visitors using?
    • Are they coming to me through a computer, tablet, or smart phone?

Answering these questions will help when it comes to designing your site, mapping out your site’s information architecture and designing the overall user experience in terms of content and features.  Careful planning in these areas will insure that people will want to visit your site and do business with you.

Rule #1 about Your Customer–Make it easy and remember to keep it simple.  If people can’t find what they’re looking for or aren’t engaged in your content, they’ll leave. Try to have people get to where they need to go in four clicks (preferably three) or less.

Also, it is critical today that you determine what and how you want your site to appear on various browsers ( chrome, explorer) and technologies (iPad-, Smartphone, desktop ).  These issues should be addressed In the design of the site but carefully tested in the execution.  There will be some compromises but at least underrated what they are.

Your Competition

You may feel you know your competition, but have you taken a serious and objective look at their websites? Ask yourself:

  • What is common among my competitor’s websites?
  • Which of my competitors’ sites do I or don’t I like?
  • Why?
  • Are there major differences between my more successful competitors’ sites and others?

If you are selling products at retail, be sure to research Amazon and eBay.  They are probably your competitors and might also be considered as customers.  Research how they have designed their sites for maximum efficiency for their customers.

Keep these things in mind about your competition as you plan and develop your website.  Certain industries have common elements and themes in their sites, as well as certain required features which you should also include on your site.

Your Competitive Advantage

The competitive advantage of your website may be speed, ease-of-navigation, appearance, other factors or “all of the above.” Consider all possibilities when you design and build your site.

Before you invest too much time in creating a copy of your competitors’ sites, also keep in mind what makes you different and how you can stand out from the crowd. This is also an important component in your web-based competitive positioning.

Ask yourself:

  • What makes my business unique and how can I best express this in my site?
  • What do I have to offer that my competitors don’t and how can this be rapidly communicated on my site?
  • How am I different than my competition?
  • What do I actually do better than them?

This approach to analyzing your competition and your own business helps you think about what makes you different and how to express such differences in your website design, whether it be through content, features, or functionality.  Careful attention to these matters will give you a slight edge while still being in line with standard industry practices that are there for a reason.

The Nuts-and-Bolts of Your Website Design

Once you’ve tackled the larger questions behind the website, it is time to get into the nuts and bolts about your site design, its functionality, how information is organized, and the actual content that will be on the website.

Domain Name

A domain name is the address where your website will be found on the Web.  The best domain name is one that uses the company’s name in the URL.  But sometimes that can be hard to get, if you haven’t already registered it.  If you can’t get your company name, then consider something catchy or memorable that your customers can associate with.  Most sites use .com at the end but public organizations generally use.org and .net is generally as a secondary source of names.  In choosing a web name provider, try and stick with your web site developer.  In any case, use a recognized dealer, like Yahoo, Google or Go Daddy.

You’re Website Designer

Website designs have become easier to develop, less expensive, and have more built-in features than years ago.  Resources such as WordPress, Intuit, Volusion and Network Solutions all offer very good sites with lots of options at very good prices.

In considering who will design and build your site, there are some major decisions you need to consider.  Frequently, technical designers will give you great functioning sites, but they may lack the aesthetic qualities you desire.  On the other hand, creative designers can design beautiful sites but they many not navigate efficiently or facilitate SEO and ecommerce efficiently.  It is critical that you consider and balance these features, especially if you have a limited budget.

Your web design also involves a number of functions that need to be considered in your evaluation. These can also be divided up or handled by one or more staff. The decision on using a purchased site versus designing your own should be primarily based on cost, the complexity of your needs and the uniqueness needs of your look.

Your Website Designer should manage the project including:

  • page layout
  • graphics
  • text location
  • theme and colors
  • navigation and
  • Cross-linking of pages.

If your website requires coding, the website programmer will take the plan from your Designer and create the code to make the site run correctly.  In many cases, code is already embedded in the elements of the site and simply need to be “plugged in.”  Your Designer and (if needed) programmer are also responsible for all the technical details that happens behind-the-scenes to make sure the site works properly for your visitors.  You may also want to hire an Internet Marketing Consultant to help you determine how your website fits into your overall marketing strategy, and how to generate more traffic.

When you select a web designer make sure in advance that you will receive what you expect.  Obtain and check references, and look at other sites the designer has created.  Be sure the designer understands your business, its goals and resources.  Make sure the site has proper capacity for growth.  Your site might also require revisions for some of the following now or in the future:

  • Provisions for integrating with other internet efforts especially social media sites.
  • Check out and credit card provisions with organizations such as Visa, MasterCard, American Express and Pay Pal
  • SEO links and key words
  • Tracking especially with Google Analytics
  • Connections to EBay , Amazon and affiliates

Also make sure you have a clear plan and understanding regarding:

  • Who owns the site and the code?
  • Who will maintain and provide the server for the site?
  • What is the backup and emergency plan for the site?
  • Who is in charge of promotion and price changing mechanisms?

Plan Your Website

Above all — don’t neglect the planning of your website.  Even if you’re going to hire a professional Web designer to build your site, you should have an idea of what you want on it and how it should appear to your audience.  And, don’t be afraid to build it on your own if it is a productive use of your time and resources.

Content, Content, Content

Now that you know your goals and understand your target visitor and what she or he is looking for, decide what content you will need on the site and how that content is to be structured.  Organize that content into “buckets” – this will essentially become the menu/navigational structure there to make it easy for people to “navigate through the site” and find what they’re looking for.  This navigation should be consistent throughout the site so that no matter where someone is on the site they may access the menus and navigate from one category or page to another.  In general, you want to think about your site as three or four levels deep – your home page, category pages, content pages, and action pages (e.g. place where someone fills out a form, buys a product, etc.)

Content considerations on your site include:

  • On the homepage when someone gets to your site what does that home page look like?
  • What are the most important things people should know or you want to convey?  You may want to guide them to other parts of the site and feature specific content or product.  Your home page is usually the first point of entry to your site
  • Your category page provides a summary of what may be in a particular category and provide links or guide the user to featured or deeper content ahead.
  • Your content is just that – perhaps the most granular of what you have on site.  It may be an article or product information – it tends to be that area where you ultimately influence and want your visitor to take action.
  • Remember, the pages can have different functions and don’t try to do everything at once on the same page.  In particular, pages may be designed for goals like creating attention, building the image, promotions, and/or SEO.  If you are focusing on selling the promotion, SEO goals and branding may be have some conflicts.

E-Commerce Considerations

If you are considering an e-commerce site below is an outline of the basics you may want to consider as you plan your site.

  • Informational architecture / navigation
    • Header
    • Utility Navigation
    • Primary Navigation (should be top level menus to product categories and other primary navigation, for example to key content areas such as a blog)
    • Secondary, Tertiary and Other Navigation
    • Footers (which may be delineated into further categorization including :)
      • Customer Service: Contact Us, FAQs, Returns and Shipping, etc.
      • Company Information : About, News, Legal (e.g. Privacy Policy)
      • Find Us On : Social Media pages
  • Home Page (product and other promotions)
  • Catalog Pages (category pages)
  • Product Pages
    • Product description
    • Features and specifications
  • Registration Sign In and Accounts
    • Create an account
    • Sign in
    • Account management
    • Sign out
    • Address book
    • Previous orders
    • Wish lists
  • Shopping Cart
    • Add to cart
    • Shopping cart widget
    • Shopping cart page
    • Checkout Process
  • Other Pages
    • Press pages
    • Blogs

Final Words

Designing and building your website is one of the most important tasks you will undertake in launching and growing your company.  In many respects, your website design will be what most of the world sees when it “meets” you.  Planning and executing with quality are the keys, and here are some final thoughts:

  • Think about how people look for information and how they categorize things
  • Put yourself in the visitor’s shoes
  • Map out a few pages at first, and then add to your site using the framework you developed.
  • Remember a website is a reflection of your business and your reputation relies on professionalism and a professional look.  Doing the upfront homework and knowing why you want to have a website and the goals you are aiming to accomplish (and how that takes place) will put you at an advantage when you are ready to begin building a website.  Information is potential power and knowing what you’re trying to accomplish is a great boon when and if you begin to speak to web designers.

Startup Business Internet Guide

startup business internet guideStartup Business Internet Guide

Why Should I Do Business and Market on the Internet?

Using the internet to grow your company is no longer an option—it is the standard, driven by the consumer.

Using the internet to grow your company is no longer an option—it is the standard, driven by the consumer.

By best estimates, 85 percent of American adults now use the internet, and a growing number of them are shopping online.  Ecommerce sales is currently on track to exceed the $1 trillion mark in 2013.

In today’s world, when someone is looking for a product or service the chances are they are doing some if-not-all of their shopping online.  Businesses that had a high use of the web increased business by 10% while those with little or no internet business decreased by 5% (source: Boston Consulting Group, The Internet Economy in the G-20, and March 2012).

The question is not “why?” you should do business and market on the internet, but “how?” to intend to do so and make the most of it.

What Role Should the Internet Play in Your Startup Business Plan?

The unprecedented global reach, speed, and efficiency of the Internet offers a critical resource for businesses to inform consumers and promote your brand, services, and products.  In addition, using the internet as a fundamental marketing and sales tool is an extremely cost-effective way to reach people either locally or worldwide.  Startup business owners adopt and use the internet to generate better and more relevant leads, to introduce customers to new products, or new features of existing products, and to direct customers to the most efficient way to purchase the product in question.  The process of internet marketing and sales is now well-established, as illustrated in the model below.  The internet provides a highly efficient and cost-effective means for businesses to reach new and existing customers, to create relationships, offer opportunities to experience and sample, and ultimately to purchase.

internet marketingHere are some of the major issues you need to think about as your online marketing and sales outreach meets your potential customers in the purchase process:

  1. Consider:  what brands/products do consumers have in mind as they contemplate a purchase?
  2. Evaluate:  how do consumers gather information to narrow their choices?
  3. Buy:  what are the key factors that drive consumers to a certain brand and buy it?
  4. Post-purchase:  what factors matter most to consumers as they reflect upon their buying experience and form expectations/considerations that will or will-not lead a subsequent purchase?
  5. Advocate:  what factors will drive consumers (your greatest marketing asset) to tell others about the product or service they purchased?

This framework can help you focus your time, energy and resources to best determine how to allocate your marketing and advertising dollars, know where true opportunities for sales are, and determine what you need to deliver in order to effectively compete.

Using the Internet as a Research Tool Before You Start

develop internet strategy

Use the Internet to develop your strategy, learn about your customers, and scope out your competition.

Before you start spending money on your internet platform, it is wise to conduct some initial market research, i.e., using online resources such as “Information Strategy and Research” and “Quick Market and Competitive Research.”

In terms of your major competition, you can ascertain information regarding their products, merchandising, distribution strategy, channel distribution, pricing and overall brand positioning.

Google your competitors, use keyword search tools (https://adwords.google.com/keywordtool — is a good free source).

Look at online trends (www.google.com/trends/ ‎ — another free resource), view competitors websites and statistics (Alexa, Compete and Quancast have some great free tools to learn about different websites online statistics).

If you’re a retail or e-commerce startup business, in addition to using major search engines such as Google or Bing, search on Amazon and eBay to help you determine how your competitors are using various distribution channels and how they price their products and services.

View potential market and customer demographic information including:

  • Population statistics
  • Demographics
  • Shopping affinities, etc.

There are tons of tools and free sites out there (beware, however—these sites often hook you in on the freebies, and then offer premium tools for a subscription price).

Quantcast is a good quick resource for viewing website statistics, visitor demographics, and interest affinities.  ComScore measures what people do as they navigate the digital world and it publishes many studies and a variety of whitepapers that may be relevant to your startup business.

Many data analytics companies, industry publications, and service providers publish papers and studies which are great tools to use.  I am amazed at how much industry data and market information is available on the web.  For example if you go to www.bpplans.com, you can frequently find preliminary free draft business plans for businesses such as yours.

What Should Your Website Look Like and What Should it Do?

Knowing in advance what you want to achieve with your website is critical to its success. Spend time designing your site, comparing it with others, and “building it out” before you start the actual process.

One of the most basic steps for starting an Internet marketing campaign is to create a website if you don’t already one or, if you have a poorly designed site, re-designing it to adequately serve your present and future needs.  A primary purpose of your website is to enable you to advertise and promote your startup business to customers and/or clients in the most efficient way possible.  Think of a website as a place where you provide information about your products/services in a well thought-through and organized fashion to interest and engage your audience so that they want to “click through” your site and ultimately do business with you.

Another key role of your website is to establish, build, and maintain your credibility as a quality business.  For some businesses, their website is more than a marketing tool, and some savvy startup business owners have integrated their websites into their business operations.  For example, if you are an online retailer, your website is the “life line” for your startup business, and it needs to function flawlessly from first customer contact to efficient transactions to follow-up service and contact after sale.  Monitoring direct sales, tracking promotion and marketing campaigns, and keeping real time inventory are also commonplace in well-run Ecommerce businesses today.

How Much Should I Spend on My Company’s Website?

Depending on your business goals and needs, designing and building a site can range from less than $100 to several thousands of dollars.  Some startup businesses have been very successful designing their own sites using free or inexpensive website builders/templates such as WordPress, Volusion, WIX, or Weebly.  Most likely, you want something that reflects your own vision and unique startup business.  Many designers will work with these template sites to custom size to your needs.  In any case you should compare resources and have an outsider review your site and plans.  There are now many sites where you can post your website project and receive quotes from experts from around the world.  Elance is one such example.

Tracking Your Site’s Performance

Google Analytics provides free real-time analysis and tracking of your site’s activities. This is very valuable in monitoring trends, promotional campaigns and demographics.

Google Analytics provides free real-time analysis and tracking of your site’s activities. This is very valuable in monitoring trends, promotional campaigns and demographics.

Once your site is designed and launched, you will need to track its performance to be sure it is working as you had intended, and that your customers are responding as you had hoped.

Monitoring and tracking your site includes the following types of data capture:

  • How many people visit the site, where do they come from, and how long do they stay?
  • Where do they spend their time on the site?  Do the “click through” or come-and-go?
  • What pages have the most site traffic, and how many of these translate to sales?

While there are quite a few paid services offering analytics (Coremetrics and Omniture for example), Google Analytics (www.google.com/analytics ) is a great free tool to track your website’s statistics and key performance indicators.  You simply need to install a short code onto each page of your website, and the reports are instantaneously generated.  Google Analytics is specifically designed to give you data by page, demographics, time on the site, visits and actual sales, etc.  Your problem will generally not be finding the time to look at it but rather getting addicted to the wealth of information it provides.

Final Words About Your Startup Business’ Website

With intelligent design, use, and tracking of your company’s website, you have an opportunity to reach a global audience at levels of efficiency never before dreamed possible.

If you have a vision to grow your company and thrive in today’s world, a website is an essential tool with virtually limitless capabilities.  Careful planning and design will help insure that you make the most of your website, and that it serves your startup business well.  As with any tool, your website must be maintained and used for its intended purpose, as a complement to your other marketing, advertising, promotion, and sales assets.

The most important aspect of the internet is that it is dynamic and interactive.  The average consumers receives 50-150 emails, texts, tweets, etc. per day. There are numerous technologies to view the internet including laptops, desktops, iPads, and phones that need to be considered in various parts of your business.  Sharing information and communication through tools like the cloud, Skype and Read Me are growing every day.

In summary, you need to evaluate and monitor how every aspect of your startup business is affected and can benefit from using the internet.

Rethinking Pricing

rethinking pricingRethinking Pricing

Introduction

Pricing products or services used to be a relatively straightforward process.

You would:

  • Calculate your costs
  • Determine how much profit you wanted to make, and
  • Add appropriate brand value.

You would then tweak your pricing model a little bit with promotions, clearance sales, supply and demand considerations, seasonality, and product life cycles.

You then tested your model a little and, Voila! — prices were set forever — well, at least until you had a cost increase or a price war broke out with your competitor.

pricing supply and demandSo much for the simple “Good Ol’ Days…”

Our traditional notion about how to price our products and services has undergone a complete transformation in recent years.

Consider the following:

  • Production and distribution techniques have changed dramatically and become much more efficient.  This has resulted in great value and pricing opportunities for huge retailers such as Wal-Mart, Costco, and Amazon to name a few
  • The Internet now allows price changes to occur immediately, with instantaneous visibility and accessibility to consumers.  An entire new “deal/discount” industry has been born from this shift, including companies such as Groupon, Gilt and others, and
  • There is much greater diversity in consumer pricing behavior these days.  The same consumer who will buy $ 1000 shoes in better department stores will go to places like T.J. Maxx and Amazon for unbranded commodities at 20-40% off.

Despite the increased complexity and ever-changing nature of today’s pricing environment, there are still some basic rules and simple tips you can follow to build your market share, make money in the process, and establish long term success.

Here are some considerations to review to maximize your pricing results.

Branding

The two most touted but diverse strategies to develop effective pricing are:

  1. “Build a brand and charge whatever the market will support” and
  2. “You can make it up with volume.”

$1000 designer purses and Amazon represent successful examples of these extremes.

If you can build a differentiated brand, it is generally the most effective strategy.  However, the “if” in this equation requires that you develop an integrated and frequently expensive marketing program to support your brand.  This often includes not only a great product, but a program to communicate its quality, its image, its service and many other attributes that require sound marketing, advertising, and promotion.  It is well to remember that many of the best brands have taken years to develop compared to the short time spans and limited resources that startups generally have.

What are you really selling and what is the customer buying?

Product definitions keep changing.  Airlines add new fees, restaurants keep bundling their meal offerings, and warrantees keep changing in both price and characteristics.  One of the most critical aspects of pricing which is frequently considered from more of a cost perspective is the product or service itself.

What are the components, quality, service, presentation, and add on characteristics?

What is your competition doing and what do your customers expect?  For example warehouse clubs thrive by selling multiple units at lower prices per unit while other industries like candy bars and coach airline seats raise prices by creating the ever-shrinking product. Ingredients and contents can also change.  When cotton prices soared for the apparel industry many suppliers switched to polyester at lower costs.  In the tech sector, chip prices keep declining and technology companies seem to add more memory rather than lowering prices on existing models.

Product pricing is also affected by bundling and unbundling or to coin a phrase, “Do you sell it your way or our way?”  Bundling — if done correctly — can both improve a product offering and satisfy the customer, such as selling complete meals or LEGO sets.  Bundling can also be a way to increase profits by adding elements such as high margin warranties to low margin items like electronics.  Bundling can also enhance sales and value such as offering extra services in places like fitness centers or nail salons.  While shipping used to be considered an element of Bundling, free shipping with minimum purchases has now become almost an essential part of the pricing and shopping experience, both on the internet and with brick-and-mortar stores.

Pricing strategy

In the final analysis, it is individual consumers who will determine the effectiveness of your pricing strategy.

In contrast, unbundling can provide both value and customized products, so that customers don’t buy products they don’t want or need.  Computer companies let you build your own model to your own needs.  Many automobile companies feature the same “custom design option” — now often over the internet.  As an aside, every time I try to “unbundle” and buy a customized product, I end up with more than I need at a higher price.  Unbundling has become so popular, however, I have to assume there are many people who know how to do it right.  Spirit Airlines offers no frills fares and charges for every service to maintain perceived low prices.  Generic brands represent another form of unbundling by charging lower prices in exchange for brand marketing and reputation.

Pricing psychology can also dramatically affect your success.  After you have worked long and hard to develop a rational pricing strategy, remember consumers can react strongly to psychological presentations that we all understand conceptually but frequently ignore in the moment.  These can include practices such as pricing at “$9.95”(instead of $10.00), eliminating the actual dollar sign, unmonitored purchase limits, offering some items for free, selling two for $9.95, changing colors, and font sizes, etc.  The list of factors that can influence consumer pricing psychology is long and complex, and it is essential to factor it into you’re rethinking of pricing.

Maximizing opportunities by varying prices

One of the most successful efforts by sports teams and airlines is variable pricing.  The simplest thing is they have ranges in seat prices by location and quality.  First Class versus coach or company box versus general admission for the same ticket can vary from up to a thousand dollars and more.  The biggest change however is in varying prices by time, seasonality, holiday etc to develop revenue in off peak periods etc.

While these examples utilize sophisticated and expensive computer models, the most noted model is very simple.  Specifically the early bird special in Florida has been around as long as I can remember.  Similarly, vendors seem to suddenly appear in major urban markets when it starts to rain with overpriced umbrellas.

Understanding and communicating prices is another way to differentiate your products.  Few people actually understand the basis for pricing of products such as cars, credit cards, phones, airlines, happy meals, etc.

Freemium

The concept of “Freemium” is more than a business model.  It’s also a pricing strategy.  Offer a free product or service, then offer ‘pay-to-upgrade’ features, and you have a Freemium strategy.  Remember that companies like Google and Facebook were built on free offerings for entry, followed by a host of upgrades and “for pay” services.  Ancillary aspects of the Freemium strategy include samples, blogs, demonstrations, contributions to charities, etc. — these can all create awareness and build long term volume at little or no initial price.  An older variation is to basically “give away razors and printers” to sell the “blades and ink.”

Promotions

Contrary to some popular opinion, “Promotion” is not a dirty word and the use of promotions is not synonymous with diluting the value of your brand.  New outlets (like flash sites or Amazon), bundling, seasonal programs, etc., are several of many valid ways to offer promotions and discounts in order to increase volume without diluting your brand.  There are a near-limitless number of ways to offer promotions without downgrading your brand or its image. And, let’s face it — today’s consumer expects promotions.  Here are a couple of promotion concepts:

  • Essential to the process of effective pricing is to understand the entirety of your product mix.  Getting people into the store with loss leaders is a proven strategy.  For Seasonal retailers the use of such promotions as “back-to-school” or “holidays” drive traffic to the store (or website), where they thrive on specials and often buy other products NOT on special.
  • Product costs can be greatly affected by promotions, buying shelf space, markdowns, packaging, inventory requirements, returns, etc.

No document about rethinking pricing would be complete without a discussion of the effective use and understanding of the ever-changing environment of the internet.  Selling direct, selling through Amazon or eBay, linking with flash sites, affiliating with industry sites, etc., are all valid distribution vehicles that employ ecommerce and the internet.  Most importantly, customers are checking the internet with increasing frequency, so you must be extremely vigilant about your competition and how your product’s pricing compares.

Service and Quality

Many customers will opt to stay with a company in large part because of the quality their service after the sale.

Service and quality can be the big differentiators between you and your competition, especially for small businesses.  Buying from a reliable supplier, receiving good information and prompt, personal service after the sale are critical to success and profits.  Even hospitals will promote their emergency rooms’ time to service in order to attract new patients as well as to improve satisfaction and actual health outcomes.  In contrast, restaurants and retail stores can suffer major declines if customers have to wait too long.  Other factors that can affect price decisions are quality, availability, selection, return polices, and guarantees.

Efficiencies of Logistics, Sourcing and Distribution

Another aspect of pricing strategy that can provide major competitive advantages has to do with logistics, sourcing and distribution efficiencies.  These may be used to reduce costs for you and prices for your customers.  For example, Amazon is able to employ such efficiencies to operate on a 15-20 percent margin while traditional retailers have to work on 40-50 percent margins.  Similarly, shipping times, delivery methods, using direct shipping, etc., can affect inventory management costs, all of which translate into pricing at the point-of-sale.

While pricing has become more complex it also provides more opportunities for success.

Entrepreneurs who recognize that traditional pricing models no longer apply in today’s world of business, will be better able to price their goods and services appropriately in this “Brave New World.”

Profit and Pricing

pricing for profit

Don’t lose sight of the very real fact that at the end of the day your pricing strategy absolutely MUST generate sufficient profit for you to support and grow your business.

While pricing strategies can vary widely depending upon the factors we have discussed above, ultimately the survival and growth of your enterprise depends upon your ability to price your products or services at a profit that enables you to re-invest into your company, be it in research, expansion, employee retention or investor dividends.

In order to be sure that your pricing allows for such profit, a thorough and accurate model of your direct and indirect cost structure needs to be in place, and you need to know what the sustainable level of gross margin and pre-tax profit is for your industry sector.  If your margins are too high for your industry, you either need to be able to substantiate your added value or be prepared for competitors to emerge on the scene and start eroding your market share.

Final Words on Rethinking Pricing

Pricing of products and services for startups is much more complicated today than it was even ten years ago.  However, a good pricing strategy is really is an essential element of your overall plan to maximize your company’s marketing efforts.  A well-thought-through pricing strategy can accelerate segmentation, enhance the value of your branding, maximize opportunities to remain competitive and generate sustainable profits.  The important aspect when rethinking your pricing strategy is to aggressively manage and innovate your entire pricing package rather than simply reacting to short-term changes in the market or competitive pressures.