Archives for October 2013

Some time ago now, we were contacted by someone on our mailing list. Wanting to put out a newsletter through their local paper.

Ben ended up talking to the fellow, ‘Roger’ had decided that it might be a good way to drum up some business for himself.

This for us is easy money. Write, design and print = Cash in the bank. After talking with Roger, Ben was sure that Roger’s idea was not going to do what he thought.

There are several reasons for this. Firstly, Roger was looking for leads. And if you are willing to spend the money to insert an A3 double sided print job in the newspaper then we can put together a far better lead generating piece with that much real estate than you could ever hope to achieve with a newsletter.

Secondly newsletters are primarily relationship building devices. They are not for making first time sales directly. If you are in any way ‘financially responsible’ you’ll only invest money building a relationship with one group of people with a ‘maybe asterisk’ against two others.

The First Group – current customers who are already satisfied with your products and services for whom you have a strategic level plan on who you are going to make money from them. This can be as simple as getting a referral from them over the next 7 years.

The Second Group – potential buyers who have expressed interest in buying from you for the first time (the viability of marketing to this group with a newsletter should be determined by CLV – customer lifetime value and ROI – return on investment)

The Third Group – is past buyers who haven’t made a repeat purchase within a logical time frame (the viability of marketing to this group with a newsletter should be determined by CLV and ROI, however if you can afford to send a newsletter to potential buyers this list deserves a newsletter too)

So we could have taken Roger’s money. $20,000 plus from memory when you include the printing, however sending a newsletter once, doesn’t a relationship build. Trying to get somebody to express interest in purchasing doesn’t work very well when you haven’t got a specific measurable call to action…

I know that eventually he got it done. Hasn’t done it again to my knowledge. Odd that the newspaper was so keep to take Roger’s money. No its not. They are in the media selling business not in the make Roger money business.

We know we when working with a client you need to make sure that they have every chance to make money. There is always a risk but do you want to be shooting a 5 cent piece from 2km away with a pistol or would you rather be shooting a barrel shaped fish in a barrel at point blank range with a submachine gun? (Being watching a ‘Sons of Guns’ marathon while I had a cold on the weekend…)

If we help you do the first one and you fail we know we get blamed. We help you do the second one we probably have a customer for life. The newspaper won this one and pocketed the easy money. We understand we are a quality not quantity operation. Staying clear of Roger helps us work more effectively with our smarter clients.

Is how so many sales platform presentations go (I know, I craft them). There is a lot of merit to these programs, however a lot gets glossed over too.

Like the fact you actually have to do some work. A painful admission that they never want to make come ‘closing time’ because quite frankly who does want to do work? This is a great copywriting lesson here too – most people prefer to take the magic pill than do the work. So embrace that desire if you want to maximise close rates but know you’ll be left with disappointed customers down the line.

The best students appreciate this and know that more is going to need to be done. Many in the guru business know that their business would be decidedly smaller if they relied only on good students.

What we really need!

Thankfully it’s quite simple. You need to implement.

Copywriting legend The Late, Great, Gary Halbert had a sign that hung in his office that reads:

The Top 10 Reasons Copywriters Don’t Get Paid.

1. Client won’t implement
2. Client won’t implement
3. Client won’t implement
4. Client doesn’t implement
5. Client doesn’t implement
6. Client doesn’t implement
7. Client can’t implement
8. Client can’t implement
9. Client can’t implement
10. Client can’t implement

Notice that the common words ‘Client’ and ‘Implement.’ When there is no word between them (as in ‘Client Implements’) the client gets paid and so does the copywriter.

For any guru offering an ‘education’ rather than ‘done for you’ services your results lay more in your own hands than theirs. The sad truth is doing something no matter how poorly is better than doing nothing at all. (However getting a professional in to do something should mean, its easier, faster and cheaper than doing it yourself. If it is cheaper for you to do it then you are probably underpaying yourself and may have self-esteem issues.)

However getting us in to do your newsletter (amongst other things) means that you are able to turn money into assets from which you will reap a reward. Not pie in the sky good ideas that never get acted on.

Take heed and invest in good results not good ideas.

Until somebody cracks physics to the point that time stops being linear, or we achieve immortality, (apparently both are possible according to some futurists) we are all hamstrung by 24 hours a day. About 7 of which we need to be asleep for if want optimal health – about 17 hours a day where we are awake. You can survive on less but it catches up with you in the end.

I’m gonna stick with the retiring at 65 deal too, it won’t be the retirement age when I’m 65 but hey you are probably older than I am. That means we probably start working full time in our early 20’s. Well I did.

So call it 43 years of work (Full time work at 22 – the year after I graduated).

There are about 220 working days a year. That means that 9,460 working days in your life.

That gives us 160,820 working hours in our life, if you are a complete psychopath and work 17 hours a day. More if you decide to work weekends or not sleep. 8 hours a day 75,680 hours.

Besides compromising your quality of life or working into retirement, working weekends or any other generally psychotic behaviour – missing little Timmy’s birthday party to work counts as psychotic/ bad parenting to me.

Anyway we all only got so many hours. And the more we can achieve through leverage the more we gain. I’ve recently spoken to a couple of business owners who ‘can’t afford’ to do a newsletter. Both are looking to build their wealth so they can retire. Both are stuck and probably not going to be able to get any bigger.

One is stuck with terrible customer loyalty and his own delusions about the bulk of his business. Unwilling to invest in order to make it more profitable.

The other can’t afford it  – doesn’t have the money. Knows it will work… But…

To me this means he is over-paid.

Both are frittering away their most precious resource, by being stuck. Now if you are the owner of your business and controller of your own destiny and you are making excuses like “I can’t afford it” then you are over-paid. I can get any minimum wage employee to make that excuse. I don’t need a guy who bills himself out at $160 per hour  plus to make that excuse.

FIND a way to afford it. You are wasting your life away being stuck, or find a new solution.

I was speaking to a potential client, they asked ‘why we don’t target retail operations?’ I said because “Most don’t get it.” They are happy to make excuses about why they are going broke and losing their customers to ‘the internet’ and ultimately go broke. This potential client got it. They were unsure if they could afford it but they knew 3 ways to get the money so they could afford it if needs be.

These people are the ones who understand their time is finite and that delay costs them at the end of their 75,680 working hours. Speed wins, you arrive sooner or go further in a given period of time – applies in business and it applies in Ultra-marathoning. Ya gotta be ‘too fast, to come last.’

Recently Ben met with a potential client. Not that newsworthy I know but nor is this client particularly special, their objection rather mundane but very critical to successfully implementing a newsletter.

This client had good client flow. They are running about 66% capacity. So they could grow another 50% with their given infrastructure – all additional profits effectively and the only additional cost would be marketing to get those clients.

When Ben spoke to the client they had no spare cashflow to invest in growing the business! All the money made was coming out.

So while it made every sense in the world for this client to do a newsletter however they had a real problem creating the upfront cash in order to succeed with a newsletter. You know, they couldn’t really invest ‘anything more.’

It got me thinking after we had a chat. I realised that this is:

The Death Knell For Every Business!

It made me realise just how dangerous steady state is in a business. As soon as you get stuck like this, in the big picture you are sunk.

Especially when you aren’t really a marketing person. I know Ben and I can do an awful lot with very little – with just $4,000 cash a tiny client list and another $3,000 in trade credits we built this business. Ben’s potential client’s business is a professional practice. He’s not really a marketer in the sense that you or I are.

It’s frightening to think that this business is balanced on the knife-edge. What happens if there is a dip in client flow? What do they cut then? What about if the business loses a source of new clients?

What about if the business is reduced to operating at about 50% capacity? The costs stay but the business is now in a solid state of losing money…

What costs do they trim away then?

I think this so clearly explains the small business paradox – why so many are started and so few survive. There isn’t the commitment to marketing, many business owners rob Peter to pay Paul. Take money that they have no right to be taking – money that should be going into marketing is instead being taken as income.

When growing a business the first steps are:

1. 1.       Set aside money for marketing. THEN
2. Cover all essential operation costs (don’t go splurging on expensive office space and furniture…). THEN
3. Pay yourself. THEN at all times you have to
4. Always leave a profit (not necessarily in the accounting sense) or otherwise have money you can redirect back into marketing to further grow the business.

“The man who stops advertising to save money is like the man who stops the clock to save time.”
-Thomas Jefferson (This quote may be falsely attributed to Jefferson, it could have been Henry Ford, but it is better to acknowledge someone than to claim it as original thought)

One of the geniuses of internet marketing is a fellow named Glen Livingston. Not a super celebrity of internet marketing but none the less very good at what he does. Glen was responsible for coming up with Nextel’s name amongst other things.

When he first burst onto the scene it was because of his ability to understand the conversation behind the keyword. Glen can tell you in painstaking detail the difference between a person who types in guinea pig vs guinea pigs into Google. (singlular – usually wants to know what one is. Plural wants to know how to take care of them cos they were about to buy some.)

What he was able to do with this research was tailor his ads to boost click throughs. He was also able to construct long and elaborate relationship building marketing sequences through the use of auto responders.

Now the thing that always amazed him was that two years after someone opted-in he would often get a phone call from them and this person would be talking to him as if he knew them.

Now I can tell you that you can shorten that cycle.

It’s been our experience at Newsletter Marketing Systems that it takes 6-9 months to build a relationship using printed newsletters. There are a bunch of reasons.

Firstly for all intents and purposes 99% of the mail is delivered. I think internet marketing guru Ryan Deiss says email has a 60% deliverability rate, A quick Google of the subject says 75%. Email has an open rate of between 9 and 11% . Send 100 emails, 75 of them arrive, if 11% are opened then you’ve gotten through to 7.5 people –call it 8.

According to Australia Post the open rate for commercial mail is 73% and they are talking about bills from banks and power companies as well as flyers from hardware stores. Send 100 letters, 99 arrive 72 are read. You need to send 9 times the emails in order to be as effective as with mail.

That’s the math behind the statement.

Secondly, there is the increased emotional processing that occurs when you receive something tangible. Check out Bangor University’s study using “Neuroscience to Understand the Role of Direct Mail.” Send the same message electronically and in the mail and in the mail it will be processed by the recipients’ brain in a completely different way. With direct mail being processed more deeply hence the better relationship building qualities.

Thirdly, people like getting mail. 82% of Australians check their mail daily. And 82% of people read their mail the day it is received.

Conversely, 65% of people receive too many emails in a day to read them all.

All of this adds up to the phenomena Ben and I see over and over again – people who have never met us think we are their friends and want to buy from us in under a year. Vs 2 years to achieve the same relationship with email.

Some might have said I was creative. Personally I detest the word – creative has negative connotations to me. Creative for creativity’s sake in a business sense is somewhere between stupid and suicidual.

Creativity without expectation of financial reward is cool. I have many friends who make the art they want to make and to hell with doing it profitably. I haven’t developed this skill, its on the shelf and I will revisit it again one day. When indulging myself is an option.

I might apply the innovator label to myself – trying to improve a business so that it is more profitable. But creative I am not.

You can always change the business you are in. Back when I first started my roof restorations company, the standard business model was, you sell a roof restoration, you move on to the next one. Sounds simple enough and if the business owner was ‘switched on’ there might be relationships with a re-guttering company, a leaf screen company and that was it.

You could then sell those too.

I tried my hand at this when I integrated the concept of water management. It went from “we sell roof restorations,” to “we help people catch, store and use the rain water that falls on their roof.”

I will tell you that in the early to mid 2000’s that wasn’t exactly a hot button. But it was an accurate reflection of what is going on. Water restrictions were in full force, the drought coming to its zenith here in Victoria.

The market wasn’t ready for it. Then the occupational health and safety laws changed and I went out of business.

All the same, the idea of innovating your business and in this case, how you present what you are selling is a valuable way to spend your time. I took the humble roof restoration, new guttering and water tanks and transformed it into a sustainable living concept.

With time I am sure I could have found a way to position what we did in a way the market found valuable.

From our side though, we had a way to massively increase the value of each customer. Simply by having more to sell to them. This is important because it meant we could spend more to acquire a lead if we had the same conversion rate as our competition. Just we didn’t know it at the time.

We also didn’t really have the systems in place to get those extra sales. Oh Well, you live and you learn.

New ideas are important but they do need to be implemented in a meaningful way.

I assume that many of the people reading this are old enough to remember beta max video cassettes. The vastly superior video format that lost to VHS?

Also is the war between Apple and Google – iPhone vs Andriod?

When I last checked Apple was the inferior quality product according to most geeks. I don’t take status seeking hipster’s opinions about technology that seriously. What little I read about this Google is making serious inroads into Apple’s market share. So it may be a case of the better product winning.

However this is not always the case. The world is still buying the inferior victor of a great many product wars (Pepsi wins more often than not in blind taste tests but it is second in market share). The best product winning is a myth. It allows people to delude themselves into thinking that.

Business isn’t about the best product to market.

Arguably the greatest living copywriter Gary Bencivenga once said

‘I would take a gifted product over a gifted pen’

What Gary means is it is always easier to sell a good product over a bad one and that a good sales job doesn’t mean the product is any good. I agree with him. Good copy and a bad product is actually a road to ruin.

You need good products – it makes your life that much easier and they should be easier to sell than bad products. However the reason so many gurus take the contrary stance ‘your products don’t matter’ is to be memorable.

What they don’t tell you:

Long after the sale is made the product remains. When you are actually selling there is gap between expectations and reality. When people buy a piece of exercise equipment, they do it because they imagine they will be thinner, sexier, healthier.

What they are left with is a 10 ton elliptical running machine that occupies space that they don’t want to use (Boring, sweaty and hurty). We all know that we need to use the frigging thing to be thinner, sexier and healthier and even that doesn’t guarantee we will achieve it. (Weight loss isn’t easy – I’ve put on 50kg in the last 10 years. Don’t worry I look thinner than I did 10 years ago.)

Long after the sale is made the product remains. This can also work wonders for you. I still look at my first car and think it’s a good car. It makes me biased towards buying the similar car again. It’s a Ford lasted me 10 years so far. Still going strong.

Yes, supplying products means you have a chance of a repeat purchase in the future. Supply them a product they hate and they won’t come back. That’s for certain. However you need to be marketing for repeat purchase to make the most of that good will generated by selling them the good product in the first place.

Its funny how often business owners lament the demise of customer loyalty. However it’s not on the demise. Customers are treating us the way they have been treated for years.

Here’s what I mean. Business owners have taken customer loyalty for granted for a very long time now. There has been a culture in business not to respect their customers. How long have customers lamented “where has customer service gone these days?”

So this is really something of our own making.

“I remember the good ole days”

When the guy serving me was the guy who ran the store, he knew that unless he bent over backwards I could go down to the competition. But he really understands what I am worth to their business.

They remember that, they pine to be treated like that again. How many purchasing experiences do they get in their life where they feel they are the most important person in your life. Not that many.

They are dealing with teenagers with funny coloured hair and no dress sense. Do you hear that popping noise? Oh!?! it’s the customer service representative popping their gum, because I happened to be in the store preventing their much needed gossip with their BFF? Doesn’t matter that without me and my kind (customers) they’ve got no job.

Most employees will never grasp the importance of that last sentence. They treat customers as a problem preventing them from working.

Seriously, if you treat me like that, fine. I will treat you as an inconvenience too. For example, yesterday I was in a Mitre 10 talking to the franchisees about doing a newsletter – they know they can’t compete with Bunnings and Masters on price they need to rely on service, relationship, solving problems etc in order to compete.

It got me thinking about how I shop for hardware. If I need a list of things cheap and I can ‘hunt’ them, I go to Bunnings in the next town. There is a Masters coming soon next door to the Bunnings – PRICE WARS.

Should be good when I need to hunt cheap stuff.

When I need it quickly or I need customer service I go to the Mitre 10 around the corner from me. And I will buy from them in reward for their help.

Customers are worth far more and deserve far better than what they get.

Most businesses never calculate the future value of a customer. They just expect that future value to materialise ‘one day.’ They never factor in the value of referrals.  They never earn any of it and are disappointed when they are denied the value they believe they deserve…

Just like any sale future value from a customer must be earned. It doesn’t happen automatically. Be prepared to go and earn that next sale while you are making the current one.

Eli Goldratt, Bill Walsh and Bill James. The three men who have shown me a lot about thinking outside of conventional wisdom. Napoleon Hill’s principle of ‘accurate thinking’ applied to all three men. They looked for more accurate ways to think about their chosen fields. Goldratt, business. Walsh, football. James, baseball.

Goldratt showed an underlying form of business so elegant and simple that it became easy for me to visualise what is happening in a business.

It made decision making in my own business easy. Would the decision increase throughput (goods sold and produced)? Would it cut bottom line costs? Would it decrease the size of the asset base without reducing throughput?

Everything that didn’t do that was just ‘fancy pants’ number-manipulation with no value to the business.

Bill James The father of the term ‘Moneyball.’ No AFL panel show can go an hour now without mentioning the term and baseball was forever changed because of James’ ideas. James’ ability to see through the stats and why they were inaccurate was important. James’s fascination with baseball statistics was because he saw they had taken on the power of language – they could paint an image for him. Bill James fostered my love of accurate and relevant stats – helping me do well at fantasy football/rugby and makes growing businesses easier.

James and Goldrratt’s ability to build and understand systems is vitally important to growing businesses. Systems are usually inserted retroactively into businesses. So being able to understand and measure the results they actually create relative to their initial goals is vital to every part of business.

Bill Walsh was the real story behind The Blind Side. Michael Oher was ‘only’ the star of the story (ironically he no longer plays left tackle in the NFL). Bill was the story because he made people like Michael Oher (and me if I grew up on the other side of the Pacific) essential to NFL. Walsh’s system demanded it – it couldn’t function as effectively without them. Bill Walsh’s complete rethink of NFL offensive systems was so effective that today all football offences are effectively run based on Walsh’s original philosophy.

‘Paint Me A Word Picture’

is an all too common phrase heard in my social life. Usually in some role-playing game, one of the participants wants a clearer picture of what they are confronted with. They are reliant on the ‘Game Master’ to give them their reality.

A business is actually conceptual. You can either rely on the stories of staff, yourself and advisors or you can look at the picture painted by your metrics. Any systems you build require measurement – measurement to create a word and number picture so you can see what is going on. The word picture derived from the numbers is far more important, than anecdotal or