THE PITFALL OF WHOLESALE NETWORKING TO RETAIL PROSPECTS

Business DiscussionThe verb “network” means to meet or interact with people for the purpose of making contacts and exchanging ideas. Contrary to popular belief, its primary goal is not to generate sales! It is, quite simply, to get to know people, and to have them get to know you. Sales are just one of the benefits that might result from increased exposure.

I am a strong advocate of networking. I was introduced to several significant vendors and business associates at networking meetings. That includes my insurance agent, social media consultants and two business partners. However, while I have provided leads that resulted in other people closing sales, I can think of only one small client engagement I gained through networking.

Why is that?

It is because my ideal client prospect is unlikely to participate in what I refer to as “retail networking” groups. My best prospects have been established in business for years; are generating annual revenue of several million dollars, have fifty or more employees, are adequately funded and have highly specialized strategic needs beyond their ability to address internally.

Furthermore, they have progressed beyond the usual concerns of new ventures, the greatest of which is simply generating sales. They recognize and value the need for more sophisticated services, and are able to pay to meet those needs.

That profile is not a match to the typical retail networking group. A business targeting start-up operations, solopreneurs, small average sales and/or “main street” business and consumer needs is far more likely to generate sales through networking groups. However, a reality of mining for customers in this environment is high turnover and high marketing costs. Statistics show more than 35% of a typical group’s participants will not be in business in a year, and perhaps as high as 90% within five years.

So if wholesale (or large scale) networking to retail groups is not an alternative for marketing your B2B product or service, what is?

There are probably as many correct answers to that question as there are small businesses. I will share several things that have produced business for me in a future blog.

Eight Secrets from a Serial Blogger

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Have you been thinking about blogging, but are concerned whether your writing skills will translate into effective online communications?

Increase your chances of success in getting your message to the right audience by avoiding the mistakes of others. This article offers eight simple suggestions its authors learned in the preverbal “school of hard knocks”.

Here they are:

1. Stick to a schedule. The correct blogging frequency is whatever connects with your audience. For some blogs that might be daily. For others, once a month is sufficient. The optimal blogging frequency is not critical. What is critical is to decide on a schedule, communicate it to your readers and stick to it! Avoid the temptation to over-commit. While most bloggers enjoy writing, it can be grueling.

2. Expand and enhance. Supplement your usual content by periodically sharing relevant quotes, articles and tips from others. You can also try using guest writers, treating your readers to different areas of expertise and points of view. A generous introduction to your guest author may result in them reciprocating on their blog, further expanding your following.

3. Keep posts short. Readers are looking for tidbits of actionable information, not detailed research. Keep posts short, preferably under 600 words. The average American reads less than 300 words per minute. Studies suggest 65% of visitors spend less than 2 minutes on a website. Therefore, an entry longer than 600 words will not be read in its entirety, if at all.

  • A better alternative to lengthy articles is to split them into multiple parts, posting them in consecutive entries. Begin each post with a review of what was discussed in the previous entry, and end with what to expect in your next post and when it will be shared.

4. Promote your blog. Add your blog’s web address to business cards, print media ads, letterheads, email signatures and so on. Adding a Quick Response Code to business cards and other medium is gaining popularity. A QR code allows Smartphone users to find your blog easily.

5. Use social media. Post summaries of blog posts on Facebook, Twitter, LinkedIn, etc. Exercise care to comply with each platform’s unique character limitations.

  • Since you will always end with a hyperlink to your blog, use a free URL shortener like https://bitly.com/ if pressed for space.
  • Post blog entries on SlideShare or other article marketing sites by uploading a pdf file. The last paragraph should be a brief “About the author” with a hyperlink to your blog.
  • Blog posts can be featured in your monthly newsletter to customers and friends.

6. Support online sharing. Add plug-ins or widgets on your blog to promote article sharing through Facebook, Twitter and other social media vehicles you believe are likely to help capture your target market. Allow readers to bookmark your URL to their list of favorite sites with the click of a button.

7. Encourage feedback. Always thank readers who post comments. Be respectful of opinions and suggestions, even if you disagree with them. While it is perfectly appropriate to delete spam (an inevitable byproduct of successful blogging) or comments with inappropriate language, deleting reader comments simply because you disagree discourages feedback. Periodically end posts by asking readers for comments, suggestions and ideas for future articles.

8. Don’t give up too quickly. Some experts believe it takes about 100 posts before you begin to build a following. Most bloggers become discouraged and give up before reaching that milestone.

© 2013 by Dale R. Schmeltzle

You Can Count on a Guy in a White Hat

whitehatAs an entire generation who grew up watching Gun Smoke, The Lone Ranger and a long list of other television westerns knows, good guys always wore white hats!

One of the greatest Hollywood clichés of all times, it is deeply ingrained within each of us that you could count on a stranger in a white hat! They were sure to be honest, kind, generous, courageous, moral and chivalrous.

That leaves the other guys, the ones in the black hats. Just as good defines evil, they were the anti-hero of every storyline, the exact opposite of guys in white hats. A man in a black hat was surely dishonest, cruel, self-centered, cowardly, immoral and boorish. Good guys and bad guys were always on opposite sides of an issue. Fortunately, good always triumphed in the end.

So it is not surprising that when it came time to pick names for two broad categories of search engine optimization (SEO) practices, a baby boomer somewhere choose white hat and black hat to describe the opposite ends of a long spectrum of internet marketing techniques and philosophies.

The stakes are high in this modern day gunfight. Fair or not, a potential customer who has never heard of your company has no choice but to equate your search engine results and the quality of your content with the prominence of your company among your peers and the value of your products or services!

A study of December 2010 Google searches for B2B and B2C businesses found the top 3 search engine rankings got 60% of all click throughs, with the first position enjoying a click through rate (CTR) of 36.4%. Page one listings got 8 times more clicks than page 2. CTR differences by ranking were even more dramatic for key words with more than 1,000 searches per month.

What then are the distinguishing characteristics of these opposing marketing camps? They hinge on the answer to a single question. Does the marketer play by the largely unwritten and frequently changing rules of the major search engines (Google, Yahoo and Bing control over 95% of the market) or not?

Just like the old Code of the West, white hats follow the rules. They focus on engaging and informing readers rather than manipulating search engine algorisms. Their procedures include writing key word rich text (without meaningless repetition), link building and paid advertising using pay per click ad words.

Black hats still refuse to play by any rules. Their techniques include email spam, keyword stuffing, article spinning (posting substantially similar content in multiple locations) and using hidden text to trick search engines.

What are the rewards for playing by the rules of this 21st century Code of the Internet? White hat marketing can be expected to produce slower but longer lasting organic search rankings. Black hat techniques will likely eventually be penalized by search engines, reducing rankings or eliminating the listing from their database.

What color is your hat?

© 2013 by Dale R. Schmeltzle

“LIKE” IF YOU REMEMBER MYSPACE

MySpaceIs it just me, or has there been an explosion of people posting nostalgic photos on Facebook and asking you to click “Like” if you can remember a black and white picture of some fifties TV icon or a once popular consumer product from your youth? Time has a way of reducing our past to warm, fuzzy memories. Heck, show me a photo of a macho guy enjoying a cigarette on the back of a horse and I might even forget that three of the Marlboro Man actors died of lung cancer!

Digital media has done more than merely provide a medium to share the recollections of our youth. It has greatly diminished the time span during which products and services move from broad acceptance and popularity to distant memories. Allow me to offer two well-known examples.

Gutenberg’s 1440 invention of the printing press revolutionized communication. It made possible the sharing of ideas and information through the mass production of books. It took another 555 years, until 1995, for an upstart company named Amazon to start selling those same books using something that had been introduced just three years earlier. That something was the Internet.

It took another 12 years to popularize eReaders like their famous Kindle. Within four years, Amazon was selling three times as many eBooks as hard covers. Their success obviously does not include a plethora of competitors including the hugely successful Apple iPad. It seems almost certain the paper book will soon be a candidate for Facebook friends to ask you to “Like” if you can remember owning one.

Still, 600 years from invention to impending obsolescence is not a bad run! Now consider a more recent service life span.

MySpace was introduced in August 2003, six months before Facebook. Just two years later, it was the most visited social networking site on the planet. Rupert Murdock was so excited about its prospects that he paid $580 million for it in 2005. In 2006, it reached 100 million accounts, a level that required 1,600 employees to support.

Facebook over took it in April 2008.

In June 2011, Murdoch’s News Corporation sold MySpace for $35 million, a 94% loss on their six-year investment. With uncharacteristic understatement, Murdoch pronounced the purchase a “huge mistake”.

These examples illustrate three critically important points for all 21st century marketers.

  1. Communication trends change faster than businesses can anticipate. Most lack the resources to manage that change.
  2. Faced with a constantly expanding stream of free choices, your target audience no longer uses communications channels popular just a few years ago.
  3. Neither do your successful competitors.

The cost of failure is high. Even the most carefully designed marketing communiqué, be it a press release, an ad campaign, a newsletter, etc., will fail if it is not transmitted in the optimal channel.

The only way to avoid that mistake is to communicate a consistent message and single brand to over-lapping audiences across multiple channels. That is what successful digital media marketing is all about.

© 2013 by CFO America, LLC

Lessons from Cool Hand Luke: Failures in Business Communications (Part 2)

Last week, I discussed the potentially dire consequences of using the wrong channels when communicating with customers. Paul Newman’s famous line from Cool Hand Luke, “What we have here is a failure to communicate” served as my theme.

I outlined nine milestones in communications, from the printing press to the Internet. Today, I conclude with a follow-up on how each of those communications channels has fared over the years.

More recent developments in the nine communication mediums include the following:

1. The days of printed books and newspapers may be numbered. Consider the following:

  • Although Amazon keeps its sales figures close to its corporate vest, reports by Bloomberg and other sources suggest it likely sold over eight million Kindles in 2010. Amazon’s January 27, 2011 press release reported, “Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the Company has sold 115 Kindle books. Additionally, during this same time period the Company has sold three times as many Kindle books as hardcover books.” Those sales were achieved in spite of stiff competition from the Apple iPad and other eReaders.
  • In an industry financed by advertisers, newspapers now cost more to reach a similar audience than radio, magazines, or websites. The Newspaper Association of America expected ad revenue to drop 9.7% in 2009 after falling 16.5% in 2008.

2. In a press release issued November 12, 2010, the U.S. Postal Service reported a loss of $8.5 billion in fiscal year 2010. They delivered 6.1 billion fewer pieces of mail than the previous year. Labeled advertising mail, 273 million pieces of daily junk mail make up 47% of Postal Service volume, but only 25% of its revenue.

3. Struggling from its failure to win a federal contract to deliver mail, the Pony Express announced its closure on October 26, 1861, two days after the transcontinental telegraph connected Omaha to Sacramento. During an 18-month existence, it succeeded in reducing the cost of a 1/2 ounce letter by 80%.

4. Home phones are being replaced by cell phones and other mobile devices. Smartphone users can now perform virtually any function available on a computer. They can also scan product bar codes for instant price comparisons and download directions to local competitors. In October 2010, CTIA-The Wireless Association reported in their 50 Wireless Quick Facts that over 89% of handsets operating on wireless networks are capable of browsing the web.

5. With its market steadily evaporating since the 1975 invention of digital cameras, Kodak ended a 74-year run when it discontinued production of Kodachrome film in 2009. SEC filings reported a $210 million loss that year. Kodak filed for Chapter 11 bankruptcy in January 2012. They will no longer manufacture cameras, and will sell its film division. The digital camera was invented by a Kodak engineer.

6. A July 2008 report by Borrell Associates titled Say Goodbye to Yellow Pages estimated the industry would lose 39% of its revenue over the next five years as small businesses focus more on online advertising. It was forecast that 2008 print revenue of $12.7 billion would decrease to $7.8 billion by 2013. In an age of instant information, an increasing number of businesses are obviously questioning the wisdom of spending scarce marketing resources on a medium that will not be distributed until months after incurring the expense. Some estimates suggest that up to 20% of small businesses do not survive to see their Yellow Pages ad in print. Meanwhile, concerns over the environmental impact of discarded books are causing cities to explore advanced recovery fee ordinances that will add millions of dollars to industry costs.

7. The marketing impact of satellite radio remains to be seen. Sirius FM Radio reports almost 22 million subscribers in some highly desirable demographics. Yet, the public company has not traded above $3 a share in over four years.

8. A four-decade oligopoly by ABC, CBS and NBC began to crack by the 1980s. Having once controlled 99% of all broadcasts, their market share dropped to 32% by 2005 according to the Journal of Broadcasting & Electronic Media. The Fox Network now produces the highest rated show on TV (American Idol) and the longest running primetime show (The Simpsons). The increased popularity of cable TV, Internet access to programming and digital recording devices threaten to redefine television’s role as the “high end” communications media. Fortunately, the ability to embrace technological changes has allowed television to hold the average American’s attention for 4.7 hours a day (according to a 2008 Nielsen report) over 60 years after its introduction. Finally, NBC’s owner Comcast announced in January 2011 they were dropping the iconic peacock from their corporate logo. This announcement ended a 56-year television tradition that first trumpeted the arrival of color programming to an entire generation of mesmerized children. Curse you, Comcast!

9. Lastly, the traditional model of text dominated static communications on a free World Wide Web navigated via a handful of search engines is being challenged. New paradigms including pay per click advertising, video and yes, social media are quickly redefining it.

As I reflect on this timeline, it occurs to me that few people can anticipate, let alone shape communications in this accelerating stream of consumer driven changes. Names like Gates, Bezos, Zuckerberg and a handful of other young billionaires come to mind.

The rest of us do well just to keep up with it.

The goal of today’s successful small businesses should be to meet customers in whatever communication channels they choose at that moment and to educate and influence (never dictate) consumer behavior as best they can.

There is no “one-size-fits-all” magic formula for success, no one thing that will permanently solve marketing challenges or slow the pace of change. What worked yesterday may not work tomorrow because as Tony Robbins and others have said, “The past does not equal the future!” That much is clear from the timeline. There is simply no substitute for hard work, vision and continuous planning and experimentation.

However, there is also much cause for hope.

Don Bradley and Chris Cowdery’s exhaustive study Small Business: Causes of Bankruptcy had this conclusion: “Evidence suggests that failure rates of small businesses in the United States are related to the nature of a capitalistic market in relying on competition where only the strongest survive. The causes for small business failure and ultimately bankruptcy are many. A successful entrepreneur is, no doubt, the consummate businessperson who must be a jack-of-all-trades. It is evident that nearly all entrepreneurs have the opportunity to control their own destiny. Success is obviously not a guarantee, but nor is failure. A well-rounded businessperson who has carefully planned and prepared with a clear vision of who and what the company is will have an excellent opportunity for success.”

I also point out that many of the marketing ideas discussed in this blog would not have been possible just a few short years ago. Many more have been made easier and more cost efficient by recent technological developments and increased Internet-based competition.

I therefore challenge and encourage you to seize the opportunity to control your own destiny, to embrace change, to experiment with new ideas, and to learn from your triumphs and your disappointments in these exciting times. Your business will grow in the process.

I wish you great success in your efforts and I hope you have fun in your journey.

© 2012 by Dale R. Schmeltzle

Lessons from Cool Hand Luke: Failures in Business Communications (Part 1)

The 1967 movie Cool Hand Luke earned Paul Newman an Academy Award nomination for his portrayal of a nonconformist member of a southern chain gang. It also taught me two lessons. The first is that some people can eat 50 eggs (you had to see the movie). Admittedly, that has never proven to be especially useful information. Nonetheless, it seems good to know.

The second and more important lesson is that a failure to communicate can have potentially dire consequences to individuals, and by inference businesses.

I am tempted to explain away the reason for the high rate of business failure with the fact that they ran out of money. While a true statement, it is overly simplistic. It is also more descriptive of a symptom than the reason for the problem.

I believe a root cause of many business failures is actually a failure to communicate.

Communication is what successful marketing is all about. It is about establishing and strengthening customer relationships by communicating your message and your value statement to the right people, at the right time and using all the right channels. It is about a continual education and training process.

A review of major milestones that have shaped business communications over the centuries will illustrate an essential point. It is that societies and consumers usually accept and embrace communications changes faster than the business community can adapt to them. Even the most carefully designed marketing communiqué, be it a press release, an ad campaign, a newsletter, etc., is likely to fail if it is not transmitted in the optimal channel. The pace of change is escalating, thereby increasing the chances that businesses will fail to communicate their message to customers and prospects.

As you review the timeline, think about how each change influenced the growth and success of businesses that were foresighted enough to embrace it. Consider also the wide variation in the useful lives of the various inventions, ranging from the printing press that has been around almost 600 years to the Pony Express that lasted less than two years. Lastly, imagine how businesses might have successfully adapted to further changes as each of the milestones were eventually displaced or relegated to a lesser importance by later means of communication.

Here are several examples of innovations that significantly influenced businesses:

  1. Gutenberg’s invention of the printing press in 1440 made the mass production of books possible. Mass production of newspapers followed in 1605. The first paid advertisements appeared in a French newspaper in 1836.
  2. The United States Postal Service began in Philadelphia in 1775. Free mail delivery in U.S. cities began in 1863, reaching rural America by 1896.
  3. On April 3, 1860, a rider left St. Joseph, Missouri and headed west. He carried a pouch containing 49 letters and five telegrams. A rider carrying another pouch left San Francisco the same day and headed east. The Pony Express was born. Both pouches reached their destination ten days later. It was the fastest means of east-west communication in the days immediately preceding the Civil War. A 1/2 ounce letter cost $5 at the start of the service, or approximately $135 based on changes in the consumer price index through 2010.
  4. Alexander Graham Bell was awarded a patent for the telephone in March 1876. The first “long distance” call between Cambridge and Boston, a distance of about three miles, occurred in October of that year. New York and Boston became the first cities linked by telephone in 1883.
  5. George Eastman developed film technology to replace photographic plates in 1884. He founded Eastman Kodak in 1892. With the slogan “You press the button, we do the rest” he introduced photography to the masses with cardboard box cameras that sold for $1, the equivalent of $25 in 2010.
  6. Chicago’s R. H. Donnelley created the first Yellow Pages directory in 1886. The name was coined three years earlier when a Wyoming directory printer ran out of white paper and used yellow instead.
  7. On November 2, 1920, Pittsburgh’s KDKA reported the results of the national election that saw Warren G. Harding elected president of the United States. This was the first broadcast of a commercial radio station. Paid advertising followed within two years. Large companies like Westinghouse, Philco, Wrigley and Maxwell House Coffee typically sponsored entire programs.
  8. Scottish inventor John Baird demonstrated the first television in London in 1925. The image had just enough resolution to discern a human face. Television was introduced to the public (including my father) at the 1939 New York World’s Fair. Commercial television developed following World War II. Milton Berle became its first “superstar” in 1948. As with radio, broadcasts were usually sponsored by a single national advertiser including Texaco and Procter & Gamble. The first national broadcast of a show in color was NBC’s Tournament of Roses Parade on New Year’s Day 1954. Westinghouse began offering a color television in the New York City area about two months later. It sold for $1,295, or approximately $10,500 in 2010 inflation-adjusted dollars.
  9. Two decades of research into communication networks, much of it related to government sponsored defense projects, culminated on August 6, 1991 when the European Organization for Nuclear Research introduced the World Wide Web. By 1994, there was a growing public interest. By June 2010, the estimated number of Internet users had reached two billion.

Next week I will review more recent developments in the same communication mediums, and discuss the lessons that can be gained from those changes.

© 2012 by Dale R. Schmeltzle

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