Word of Mouth Has Gone Global-Part 2

On Monday, I introduced the topic of social media marketing as a low-cost, effective marketing tool for your business. Social media platforms currently include about 20 widely recognized platforms including Facebook, Foursquare, LinkedIn, MySpace, Twitter and YouTube.

Whatever platforms are chosen, they provide incoming or backlinks to your website and blog. This improves search engine results since the number of backlinks is an indication of the popularity and importance of a website.

Businesses use social media marketing to increase brand awareness and promote products and services. Businesses also receive feedback from customers and potential markets. Perhaps the best analogy I have heard was a comparison to a large, porous funnel. The various platforms cast a wide net to gather many followers into the funnel. As you continue to provide valuable and interesting content and develop relationships, some of those followers will eventually progress through the narrowing funnel to become customers and sources of referrals. Others will fall away.

Because these social media websites are available free to everyone with Internet access, they present inexpensive and powerful platforms for small businesses to get market feedback and conduct targeted marketing campaigns on a local, regional, national or even global basis.

How popular is social media marketing? I got a sense of the interest it generates when I searched Amazon for the phrase “Facebook marketing” and got 452 results. I got 1,618 hits when I searched “social media marketing.” Products included a cornucopia of books and videos ranging up to $1,200 and included 137 hits of “For Dummies” books alone.

Perhaps the real surprise is why there were not more results. According to Goldman Sachs, Facebook has over 600 million active users (defined as those who log on at least three times a week). Perhaps buoyed by the 2010 movie The Social Network, that is a 20% increase in six months. Those users include President Obama and Queen Elizabeth. According to LinkedIn’s Press Center, they have 100 million users speaking one of six languages in more than 200 countries. They add a new user every second. In September 2010, Twitter co-founder Evan Williams said Twitter is averaging 90 million tweets per day. They are gaining 370,000 new accounts daily, with 16% of them starting the service on mobile devices. I could go on, but you get the idea.

Social media marketing is simply too large to ignore, especially if your target market is under the age of 40, affluent and highly educated. It demands attention because of its size, growth trends and cost efficiency when compared to alternative marketing channels.

Today’s suggestion should be obvious by now. Evaluate social media marketing as a platform to build brand awareness and share content with your customers and target market. Use it as a vehicle to provide your customers with a voice. Encourage feedback. Social media marketing is all about consistent communication in channels selected by your markets. Avoid the trap of thinking it is about technology. Moreover, remember that ultimately you are connecting with individuals, not faceless companies and organizations.

On Friday, I will offer some specific tips to help you successfully implement that suggestion.

Word of Mouth Has Gone Global

Through your efforts to become a recognized expert in your field, you will accumulate an ever-growing body of material (articles, papers, program notes, PowerPoint presentations, research material, etc.) that can serve as content for the next group of ideas.

Social media marketing is all the rage. Embattled TV star Charlie Sheen set a Guinness world record on March 2, 2011. He reached 1 million Twitter followers in just 25 hours and 17 minutes. It took Mr. Sheen four days to reach 2 million followers. It remains to be seen whether he will catch Lady Gaga, who leads the pack with approximately 10 million Twitter followers.

Social media has influenced national elections and at least one guest host selection for Saturday Night Live. Viewers of Super Bowl XLV learned the Chevrolet Cruze can now read Facebook newsfeed content in real-time, affording drivers “the ability to send status updates and stay connected to social platforms.” Exactly what those other platforms are is unclear as of this writing. However, speculation is that it will likely include Twitter.

Moreover, as events of recent years have proved, totalitarian governments in many parts of the world think it is easier to control civil unrest online than in their streets. The first casualties of politically embarrassing protests are often these same social networking sites. Egyptian activist and Google executive Wael Ghonim was a leader of the early 2011 uprising that toppled President Hosni Mubarak. He told CNN, “I want to meet Mark Zuckerberg one day and thank him. I’m talking on behalf of Egypt. This revolution started online. This revolution started on Facebook.” I was fascinated to learn that the U.S. State Department starting tweeting in Arabic during the crisis.

The socio-economic and political impact of social media is a source of inspiration for some and fear for others. The statistics are impressive for all.

Let me provide a working definition of the term. Social media marketing relies on Internet platforms to provide content that attracts attention and encourages readers to share your message with their social network. Some of the more popular platforms are:

  1. Facebook
  2. Foursquare
  3. LinkedIn
  4. MySpace
  5. Twitter
  6. YouTube

Each has a somewhat distinctive set of demographics such as average age, gender, education level, membership size, U.S. and global traffic volume, length of average visit and so on. Visit www.alexa.com to find the best matches for your target market.

For the rest of this week, I will be offering suggestions to use social media marketing as a low-cost, effective marketing aid for your business.

More “Free Stuff” on the Internet

Participating in message board discussions is another free way to raise your profile within your community of current and potential customers and in your area of expertise. A message board is nothing more than an online discussion forum where people with common interests and knowledge exchange information by posting questions and answers, along with other relevant comments. Messages usually require approval from a moderator before being visible. They can be archived indefinitely.

Answering questions on message boards gets you recognized as an expert. Asking questions gathers valuable information. Both help grow followers for your social media sites as discussed in the following chapter.

  • Message boards are available for virtually every industry, profession and product. For example, Intuit hosts an “Accountants Community for QuickBooks Practitioners and Accounting Professionals” where experienced users of their hugely popular QuickBooks software ask and answer questions. In essence, Intuit supplements their customer support function with participants’ expertise. Search the Internet or ask your network contacts for message boards relevant to your business and expertise. Then contribute your knowledge frequently.
  • LinkedIn Answers and Yahoo Answers message boards, like many others, rate responders by how many participants “Like” their answers and how often their response is selected as the best answer. This is a highly desirable feature and a real feather in your professional cap.
  • Include a link to your website in your message board signature.

Reprints of press releases, blog posts, articles written by or about you and even your “best answers” are excellent testimonials to your expertise and prominence in your industry. Toot your own horn by periodically distributing copies to customers and prospects. Include them in customer mailings, mail orders, newsletters, marketing packets and similar material. Always keep a supply in your lobby.

  • Including a professional photograph with published material puts a human face on your business.
  • While distributing marketing materials as email attachments is easy and cost efficient, it also increases the risk that recipients will not open the email due to security concerns over computer viruses often transmitted in attachments. For that reason, including critical points in the actual body of your email may be preferable.

More marketing tips from Avoiding Market Obscurity on Monday. Have a great weekend!

Publish or Perish – Part 2

On Monday, I began a discussion of how publishing paradigms have been redefined by the Internet, making it much easier and cheaper to publish original works. I began Part 2 of that discussion by posing a question you may never have thought of. What would it do for your professional credibility and for promotional efforts if you could hold up your own book every time you spoke in public? Even if you never sold a single copy, but just displayed the books and handed them out as door prizes, I suspect it would provide a tremendous marketing advantage over your less prolific and linguistically talented competitors.

Let me be clear. I am not talking about creating the great American novel or something that knocks John Grisham and Dan Brown off the New York Times Best Seller List. I should also caution that if your intention is to generate enough royalties to quit your day job, following this idea is not likely to accomplish that goal.

I am talking about authoring a paperback book that demonstrates and shares your considerable body of knowledge and skills, and that is written and packaged in such a way that you can be proud to hold it up in front of any audience. Its primary purpose is that of a marketing tool to promote the sale of your products and services by establishing you as a recognized expert in your field. Think of it as a marketing cost rather than a potential profit center.

There are numerous print-on-demand companies available online to authors. Most offer publishing packages ranging from free (and therefore very basic) Do-It-Yourself to a variety of optional services such as cover design, professional editing, eReader formats and distribution assistance. Each option adds a layer of fees, and can very quickly disqualify this idea from my “free or low cost” criteria. I suggest you avoid companies that charge significant fixed setup fees, impose minimum orders or do not provide online marketing assistance. Other variables include pricing strategies for paperbacks and eReaders, and royalty options.

CreateSpace is one of the best-known print-on-demand companies. Its website was designed to walk novice authors through a self-publishing process. It allows you to easily design and publish professional looking paperback or hard cover books with no minimum orders and at single copy prices that can literally be less than a Venti cappuccino. It also offers several free online marketing portals, allowing different pricing strategies in each.

Here is how Amazon explains their subsidiary. “CreateSpace provides one of the easiest, fastest, and most economical ways to distribute your content to millions of potential customers on Amazon.com and other channels. Media formats supported through CreateSpace include books, DVDs, CDs, video downloads, and Amazon MP3s. With the CreateSpace manufacturing-on-demand model, your products will be produced as customers order, so you don’t have to make an up-front investment in inventory. Plus, CreateSpace takes care of the customer service and order fulfillment on your online retail orders, so you can focus on promoting your titles.”

Here is a final thought on this idea. Unless you are fortunate enough to find a solution for world hunger, there is probably nothing you will do in your career that deserves to be promoted more than publishing your first book. Use every tool at your disposal to promote it!

  • Issue a press release
  • Publicize it on your blog, social media network and website.
  • Promote the book within your network groups and to your customers by throwing a launch party. If you have contacts with newspapers or other local media outlets, invite them as well. Consider donating a portion of the event’s book sale proceeds to a local charity. The charity will in turn promote the launch party to their network of volunteers and supporters.
  • Finally, distribute your book as holiday presents to your key clients and prospects.

I look forward to speaking with you again on Friday.

Publish or Perish – Part 1

The pressure to publish original works in order to compete for tenured positions in academia gave rise to the phrase “publish or perish.” In the past, authoring books and papers to establish expertise may have been the easy part. It first required finding publishers. In the case of books, it also forced authors to incur significant upfront expenses. For example, publishers might charge setup fees and have a minimum first printing of 1,000 books. Since the average book only sells about 700 copies, many undoubtedly collected dust in the author’s attic until given away as presents or discarded.

The old publishing paradigms have been completely redefined in the information age ushered in by the Internet. Today and Wednesday, I will discuss two ideas available to everyone at minimal or no cost.

Publish your seminar content, articles, papers, press releases and anything else you have written on free Internet article marketing services. You can find my LinkedIn article, the material presented in Appendix I, and several other articles I have written on these websites.

Internet article marketing services include:

  1. Buzzle
  2. Digg
  3. EzineArticles
  4. GoArticles
  5. Reddit
  6. Scribd
  7. StumbleUpon
  8. Uber Articles

Every business has certain words and phrases that potential customers are likely to use in search engines when looking for your products or services. These words or phrases are called keywords. For example, assume I operate a catering service. Relevant keywords might include catering, caterers, event planning, cater, caterer, caterer for weddings, menu catering, and so on. Actually, my example includes eight out of the top ten most searched words and phrases related to catering in my local area during the previous month. I found them using Google’s Keyword Tool, which is available free online. If my business was located in suburban Dallas, I might also add the words Plano, Dallas area or Texas to each phrase.

Making all online material (articles, press releases, website text, etc.) keyword rich therefore optimizes or increases the chances that potential customers will find you in their search. For that reason, this process is often referred to as search engine optimization, or simply SEO. Some experts tell us including keywords in the title and the first 90 characters is especially important for best results.

Include a brief “About the Author” section at the end of each manuscript. Your biography should establish your subject matter expertise. Including a link to your website also improves search engine results as discussed in the previous bullet.

On Wednesday, I will talk about another alternative to avoid the “publish or perish” issue in promoting your business.

Just Keep the IRS off my Back (or Knowledge is Power Part 4)

I ended Wednesday’s post with a reference to “Small Business: Causes of Bankruptcy” by Don B. Bradley III and Chris Cowdery of the University of Central Arkansas. They reported that of businesses in their study that filed for bankruptcy, 58% admitted to doing “little to no record keeping.”

Far too many small businesses fail to maintain adequate accounting and record keeping systems. Do not fall into the trap of thinking your accounting system is nothing more than an unavoidable burden to placate the Internal Revenue Service. Fully utilized, it is arguably your most important management tool. Software products as basic, inexpensive and widely supported as QuickBooks or Sage Peachtree can address the needs of most small businesses.

Without an adequate accounting system, a business cannot fully understand its revenue cycle. Nor can it know the actual cost of products and services, or measure results. For these unfortunate businesses, making informed marketing decisions is simply not possible. They are forced to react blindly from a position of weakness rather than to be able to act confidently from a position of knowledge.

Two final examples illustrate the importance of knowing your numbers.

Although there are valid business reasons to occasionally offer products or provide services at a loss, you cannot continually sell something for $75 that cost you $100 and expect to make up the difference on volume! Your gross profit margin sets a limit of how low you can routinely price a product or service in order to cover operating expenses and still make a profit. If your full price gross margin is 32%, a 25% promotional discount affords a small gross profit; a 50% discount does not.

Knowing your numbers can be far more challenging for manufacturers and service providers than for retailers, but is no less crucial.

Now assume your average sale is $127 at an average gross profit margin of 23%. Further, assume the average customer makes 3.8 purchases per year. Your customer is expected to generate $483 in sales and $111 in gross profit annually. If customer retention averages 4 years, they are worth a gross profit or undiscounted value of $444.

Both examples demonstrate limits that exist on all marketing efforts. High margin products and high repeat sales support high marketing budgets and discounts; low margins and low repeat sales do not.

Ask yourself right now, “Do I really know where my business fits in that continuum?” If you regularly exceed your limits, marketing actions that seem perfectly reasonable could eventually lead you down an irreversible path to failure.

For a decision maker in your position, Sir Francis Bacon’s statement should be restated, “knowledge is survival.”

I hope to see you here again on Monday. Thanks for your continuing support. Please share the information on CFO America’s blog with your friends.

How Does It Feel to Fail 10,000 Times?

I ended Monday’s post with a series of questions. The last two were:

  • What is your average shopper traffic (or sales transactions) by day and within meaningful time frames (morning versus afternoon, etc.)?
  • What is your closing ratio or the percentage of prospects that actually make a purchase?

You have several alternatives to measuring traffic and closing rates. The simplest (and most expensive) is to install electronic sensors on doors. This works well for most high-volume retail businesses, especially if customers enter and exit through one door, and employees use another. If everyone uses one entrance, sensors can be programmed to start counting only when the store opens, or with the first recorded sale of the day. For lower volume establishments, you might consider keeping manual counts or simply track the number of bid requests or proposals. Finally, you can simply monitor the number of sales transactions and study changes over time.

None of these methods is perfect. For example, electronic sensors count everyone twice (entering and leaving). They also include accompanying children and others who cannot realistically be considered prospects. However, as long as the counting methodology is used consistently, it will begin to disclose meaning trends and allow you to monitor changes in traffic because of your marketing efforts.

Knowing things like who responded to your promotion (repeat vs. new customers), what they did (bought only sale items or made additional purchases) and when they did it (for example, traditionally slow mid-week traffic increased 14%) are important in your accountability analysis and evaluation.

If the costs of your promotion exceed the ultimate benefits, take a page out of Thomas Edison’s playbook. When challenged about experimenting with over 10,000 different substances before picking a carbon filament for his light bulb, he replied, “I have not failed. I’ve just found 10,000 ways that won’t work.” Learning that something won’t work is valuable information. If a new marketing idea fails to generate the intended results after you have given it sufficient time to succeed, simply cross it off your list and move on to the next idea.

If all that sounds fairly basic, you may be in the minority. A study titled Small Business: Causes of Bankruptcy by Don B. Bradley III and Chris Cowdery of the University of Central Arkansas reported that of businesses in their study that filed for bankruptcy, 58% admitted to doing “little to no record keeping.” I assume the actual number of failed businesses doing little to no record keeping probably exceeded the number willing to admit it.

I will end this series on Friday with two final examples of why knowing your numbers when operating a small business is essential to your success.

Knowledge is Power – Part II

I ended Friday’s post by stressing the paramount importance of accountability in marketing plans. In simple terms, that means comparing the ultimate benefits of your marketing idea to its total costs.

That is not an easy comparison, even for people with financial training. Here is a sample of the types of accountability questions you should be able to answer, both before and after a promotion. Inherent in each question is the assumption that you have an accounting system capable of capturing and reporting the supporting data. Additionally, the last two questions may require a count of people entering your store or contacting your office.

You can undoubtedly add to the list. I encourage you to tailor it to your specific business and circumstances. If available, compare your numbers to industry norms and analyze significant variances.

  • What is your gross profit (sales price less the cost of goods sold) on every item in your inventory?
  • What are your turnover rates by major inventory category? Inventory turnover is defined as the cost of sales divided by average inventory value. For example, if your annual cost of sales is $1.2 million and your average inventory (at cost) is $218 thousand, your turnover rate is 5.5. Generally, the higher the ratio, the more efficiently you are utilizing your capital. However, at some point a high turnover may indicate the potential loss of sales if items are out of stock too frequently.
  • What are your average sales by day of the week and month?
  • What is your average dollar sale per transaction?
  • What percentage of sales is from new customers versus repeat customers?
  • Who are your most profitable and least profitable customers; what characteristics distinguish one category from the other?
  • What percentage of sales (by meaningful categories) is returned?
  • What is your average customer retention? Customer retention means how long your customers continue to do business with you.
  • What is your average shopper traffic (or sales transactions) by day and within meaningful time frames (morning versus afternoon, etc.)?
  • What is your closing ratio or the percentage of prospects that actually make a purchase?

You have several alternatives to measuring traffic and closing rates. The simplest (and most expensive) is to install electronic sensors on doors. This works well for most high-volume retail businesses, especially if customers enter and exit through one door, and employees use another. If everyone uses one entrance, sensors can be programmed to start counting only when the store opens, or with the first recorded sale of the day. For lower volume establishments, you might consider keeping manual counts or simply track the number of bid requests or proposals. Finally, you can simply monitor the number of sales transactions and study changes over time.

None of these methods is perfect. For example, electronic sensors count everyone twice (entering and leaving). They also include accompanying children and others who cannot realistically be considered prospects. However, as long as the counting methodology is used consistently, it will begin to disclose meaningful trends and allow you to monitor changes in traffic because of your marketing efforts.

Knowledge is Power, More Knowledge is More Power

Sixteenth century English philosopher Sir Francis Bacon is credited with first saying, “Knowledge is power.” Actually, the closest phrase historians can find in his writings is, “Human knowledge and human power meet in one; for where the cause is not known the effect cannot be produced.”

Regardless of who said it, the statement is never truer than when making business decisions in a dynamic and highly competitive environment. “Knowing your numbers” requires that every businessperson possess a clear understanding of two things in order to establish a marketing budget and implement successful marketing campaigns.

The two prerequisites are the specific goals to be accomplished and the financial consequences of changes in customer behavior on sales, gross profit and net income.

It has been said that the goal of marketing is to persuade consumers of three things:

  1. They need to buy your product or service;
  2. They need to buy your product or service from you; and
  3. They need to buy your product or service from you right now.

In other words, the purpose of marketing is to influence consumer behavior in ways that accomplish your business goals. What exactly do you want to accomplish? Do you want to stimulate sales during a post-holiday slump; clear out seasonal, overstocked or discontinued merchandise; introduce a new product line; sell specific high margin products; or just get more people through your front door? Each of those objectives requires its own set of tactics.

Begin by making a list of your marketing and business goals. They should be consistent with your value proposition and business philosophy. Include financial and non-monetary objectives, along with realistic timeframes for each goal.

Try to be as specific as possible. A goal of simply increasing sales is neither constructive nor measurable. A goal of increasing sales 5% per month for the next six months through a combination of a 4% increase in customer count and a $17 increase in average dollars per sale is. If your timeframe extends over a long period, say a year or more, you will also need to establish interim benchmarks to measure short-term progress toward your long-term goals. That will allow you to take timely corrective action or readjust your goals as needed.

After you have defined your goals, structure promotions to measure accountability of their ultimate accomplishment. Be able to measure incremental sales and to segregate the results of simultaneous promotions. Compare results against expectations and the cost of the promotion. Accountability is a paramount management concept that underlies every business endeavor.

On Monday, I will discuss a sample of the types of accountability questions you should be able to answer, both before and after a promotion. Inherent in each question is the assumption that you have an accounting system capable of capturing and reporting the supporting data.

Mastering the Art of French Cooking

I decided to start today’s post by recounting an experience of Julie Powell as portrayed by actor Amy Adams in the 2009 movie Julie and Julia. The movie tells the true story of Powell’s 2004 experience writing a daily blog of recipes from Julia Child’s book Mastering the Art of French Cooking. Ms. Powell’s personal commitment is to prepare and discuss 524 recipes in 365 days, all in her tiny apartment kitchen. It was as she described it a “deranged assignment” that was often overwhelming. Early on, the only comments Powell received about her blog were critical posts from her own mother. However, after a few months the blog slowly caught on and eventually became a great American success story. Her blog posts were later compiled into her first book, Julie & Julia: 365 Days, 524 Recipes, 1 Tiny Apartment Kitchen.

A blog is simply a website where businesses and individuals share information about marketing, branding and other matters of common interest. Blogs can include videos and pictures. Most are interactive, allowing visitors to leave comments and share posted information with others. Blogging is a powerful and flexible educational tool. Use it to demonstrate your subject matter expertise and communicate your products and services to a wide audience.

The idea of starting a blog for your business is especially appealing since several well-known vendors (for example, WordPress and Blogger.com) are available to you free of charge. These services are user friendly, flexible and can be optimized to enhance search engine results. Remember the following points in your blogging.

  • Develop a consistent writing style, generally limiting each post to 400 to 600 words.
  • Be consistent in your reporting schedule. For example, my blog is updated with fresh content every Monday, Wednesday and Friday morning. If you know in advance that you will be unavailable at your normal reporting time, you can upload your post and schedule it for automatic release.
  • Be engaging and invite readers to post comments to your blog. However, monitor those comments for inappropriate content. WordPress, for example, will not show reader comments until you approve them.
  • Finally, recognize that blogging can initially be somewhat frustrating. You will probably question whether anyone is actually reading your content. Remember Julie Powell’s experience and ultimate success.

Bon appétit!

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