How powerful are customer reviews? A lot more than you probably think…

Think about the last time you decided to go to a restaurant or purchase a product; did you look at the reviews?  If you are like most people, the reviews were probably the most important piece of your buying criteria. 

I read an interesting article in Business News Daily titled: Why Word of Mouth Trumps Traditional Advertising.  They looked at a new study by Nielsen Global Trust in Advertising survey that was based on the responses and behaviors of 28,000 people from 56 countries around the world.

I took the liberty of pulling out the highlights:

  • 92% of people trustrecommendations from friends and family above all other forms of advertising when making a purchase decision.
  • 70% percent of people profess trust in online customer reviews, up 15 percent in the past four years.
  • 60% of consumers responded to advertising on company websites,
  • 50% of consumers responded to company emails.
  • 40% of people were swayed when seeing product placements in television shows, radio ads and movie ads.
  • 40% of people trusted ads viewed in search engine results and on social networks.
  • 61% growth since 2007 in consumer trust in ads from mobile devices such as tablets and smart phones as well as text messages.
  • < 50% of all people still find paid traditional television, magazine and newspaper ads credible.

The way businesses advertise is fundamentally changing.  I think the verdict is still out as to what works best because we are not far enough along in the cycle of change to make any hard statements of success.  There are numerous examples of businesses that sell to consumers (restaurants, clothing boutiques, etc.) that are successfully using some form of social media advertising to draw more people into their businesses.  Unfortunately, a lot of these businesses are having to sell their product at a loss to get the new clients with no guarantee they will come back (see previous post).  I have yet to find a success story of a business to business social media marketing campaign.  It does not mean that they don’t exist, just that I have not found one.  If you know of any, please let me know.

One issue that this does raise is how well you are managing your customer’s expectations.  Bad expectations lead to bad reviews.  This starts at the beginning of the sales cycle, even before they have purchased your product or service.  But this is a story for a later post.

No Cost Strategies to Increase Sales in this Economy

I have been saying for a long time now that we are not going back to the pre-bubble debt fueled spending binge we enjoyed before the meltdown.  Sorry folks, those were the “good ol’ days…

This is the new normal – fewer prospects with less money to spend, tighter or non-existent credit, and longer payment cycles.

The good news is that there is still is opportunity, but you have to go after it different.  So what changes have you made to your Sales Strategies?  Messaging?  Processes?  If you are still selling the way you did a few years ago, chances are you are not seeing the same results as my some of my clients.

  • From 2009 – 2011, one of my clients saw their sales rise an average 25% year over year.
  • From 2009 – 2011, one of my clients has seen their sales rise an average 12% year over year.   And it gets better, this client is about to double the business from their biggest account.
  • In 2011, one of my clients saw more sales from their biggest partner than in the previous two years combined.
  • In 2012, one of my clients is about to double the size of their business in the next 6 months.
  • In 2012, one of my clients is in the middle of launching a marketing campaign that will significantly increase community awareness and increase sales, with ZERO marketing cost.

We are accomplishing this success by implementing NO COST strategies that involve changing:

  • The way we partner with non-competing companies who sell to our customers.
  • The format and way we present proposals.
  • The internal selling culture.
  • The way we present pricing.
  • The way our customers, prospects, and community perceive us.
  • Proactive, instead reactive, communication with our customers and prospects.
  • The sales message.
  • The sales process.

By the way, none of these strategies has involved Social Media.  As you can see from my previous posts, I am aggressively working on trying to figure out how to incorporate Social Media into these strategies.

What NO COST strategies have you used to increase sales in this lovely economy?

My partial break-up and subsequent make-up with Facebook. And no, you weren’t de-friended…

Today, I thought I would spend some time poking fun at myself, Facebook, and my Facebook experience.  And eat some crow while I am at it…

I had a personal Facebook account but I closed it in a moment of exasperation.  The mindless drivel posing as posts finally drove me over the edge.  The Infinite Monkey Theorem states that 1000 monkeys hitting keys at random on a typewriter keyboard for an infinite amount of time will eventually complete the works of William Shakespeare.  There are many variations of this but I think it is safe to say that the internet and Facebook have proved it wrong. 

I did not tell anybody I was closing my account, I just did it.  It amazed me how people took it personal when they could not reach me on Facebook.  They thought I had de-friended them.  I now realize I broke some kind of social contract of which I am still unaware.  Just another one of those times I feel like Sheldon on The Big Bang Theory…   Shame on me…  Please except my apology.    I did keep the account for my book, Change or Go Broke.  Not sure why though…

Now that I am making another push into the world of social media marketing, I have created another Facebook page (excuse me while I spit out a feather…).  My new page is very lonely right now so please come be my friend…  cough… oops… another feather…

As you read in my last post on this blog, I find the social media marketing world frustrating because of the infinite ways “you are supposed to do it”.  I also have not found any real evidence of a large percentage of people are actually making real money doing it.  I am sorry, but I don’t count “Likes” as revenue.  Maybe that is where I am going wrong…

As I continue to seek understanding of how Facebook can be used as a productive marketing tool, I asked myself “what is Facebook?” and I came to some pretty cynical conclusions…

Recently Facebook filed the largest IPO in history.  I find this very sad.  Why?  What did Facebook create?  The next breakthrough in fighting famine?  Nope.  A cure for cancer?  Nah.  An invention that will radically change the way we use energy?  Nada.  The largest IPO in history is for a product that makes your life easier if you:

A.      Are a stalker…

B.      Are a narcissist…

C.      Don’t actually want to talk to people but just want show others how much better your life is than theirs…

D.      Are a masochist and want to see how much better everybody else’s life is than yours…

E.       Love to get obsessed with mind numbing games where you have to get home in time to harvest your fake corn…

F.       Want to share embarrassing pictures of yourself with everybody you know… and don’t know… forever…

G.     Want to get fired from your job (see E and F)…

H.      Want to give your next potential employer easy access to the reasons not to hire you (see F)…

I.        Don’t want to talk to your relatives, but still want to know what they are doing…

J.        Want to publicly embarrass and humiliate somebody…

K.      Want to get into fight with somebody but don’t want to confront them directly…

L.       Don’t have the cajones to break up with your significant other face to face…

M.    Want to make it real easy for your spouse’s divorce attorney…

N.     Are looking for the excuse “Really!  I am marketing!”…

O.     Don’t like living in the “real world”…

P.      Don’t care that a big evil corporation knows everything about your life and that information is being shared with 3rd parties…

Q.     Think people really care about you have to say…  This one is really directed to me for writing this blog…

Can you think of any others I may have missed?

Now that I have re-read my list… why am I doing this again?

Banging my head against social media marketing… because it feels good when I stop…

We all hear the constant drumbeat of “Social media is the marketing tool of the 21st century!”  So I jumped in headfirst to see what would happen when I became a “digital marketer”.  This is my tale, in short form… 

My hope was that I could use Facebook to generate new consulting clients and sell more books.  So I did what the “experts” told me to do and created a personal page and a page for my book.   

But wait, they said, “Facebook is not enough, you need a blog!”  So I started this blog. 

“Now you need to TWEET!” So I signed up for Twitter.  I am supposed to use Twitter to drive traffic to my other digital sites.  What the hell do I say in a 140 characters?  I was told “Use profound quotes, people love quotes!”  How is a quote from Benjamin Franklin going to promote my business?

 “Now you need to market using Linked-in!”  So I modified my Linked-in profile.   

“Now connect all of these to create an awesome web presence!”  So I connected this blog, my two websites, my Twitter account, Linked-in, and Facebook.  I tweeted, blogged, posted, and joined “Groups” like a good little digital marketer.   

One strategy was to get as many “friends” as I could and hope that eventually one might turn into a customer.  The secret was spending countless hours “bonding” with my “digital” friends and giving away my intellectual property for free so I could get more friends. 

Another strategy was to drive people to my websites via Facebook.  Or was it the other way around…?   

Results?  Zero prospects, Zero customers.  I may have sold a couple of books but the outcome was not worth the effort.   

The problem they said was “You are not posting enough!”  Oh, now I get it!  I do not spend enough time posting about kittens and playing Farmville to promote my business!  My bad!  I admit I could have posted, blogged, and tweeted more than I did but I actually had to do some real work.  If they can figure out a way for me to play Halo and promote my business at the same time, count me in!   

“Write a paper on how to increase sales and give it away!”  they said.  My response was that knowledge is my intellectual property and it is what I sell.  “Yeah, but you can get their email address and drip market the crap out them and hope they buy your services someday!”  Why would they buy my services if I am giving them my product for free?  Still waiting for that answer… 

Now I am told that Pinterest is the way to go.  Damn!  So I started a board and connected it to all of the above.  Problem is I can’t figure out how to associate pictures of dresses and recipes with my consulting business.  Any help would be appreciated… 

 Just so it is clear for everybody, this is what I learned.  What you need for a social media / digital strategy is Facebook, Linked-in, Twitter, a website, a newsletter, and Pinterest.  Make sure they are all connected.  And if you feel like giving your product away, sites like Groupon and Living Social will be more than happy to help you.  I am sure there are couple more sites that have popped up since I started writing this that you need to use.  Now find the time to write something of value in each one of these mediums or give just give away your product or service.  Success is waiting!

 I am still waiting on the “revenue” part of the equation.  But the hell with the revenue, look at the number of “friends” I have!

Pretty much describes my driving style…

mirror

Groupon: A potential mine field for small business

As a Business Consultant, I am always researching newer and better ways of marketing for my clients.  In today’s difficult marketing environment, traditional marketing strategies are producing fewer and fewer leads, if any.  As a result, small businesses are desperate to find the “next great thing” when it comes to marketing.  So I spent some time investigating Groupon and thought I would share with you my results.

My intent is not to pick on Groupon specifically.  This blog post is about this kind of marketing in general.  Others, like LivingSocial and restaurant.com, fall into the same category.  I single out Groupon because they seem to have the most buzz these days.

What is Groupon?  It is an online coupon distribution system with a really good marketing campaign behind it.  A business signs up with Groupon to run a campaign offering a 50%-70% discount on their product or service.  Groupon typically receives 50% of the revenue.  For example, if you offer a 50% deal on a $100.00 product, the product sells for $50.00.  The customer pays Groupon the $50.00 and then Groupon takes their $25.00 before paying the business their $25.00.  So the business will typically get 25% of the revenue.  Groupon then takes up to 60 days to pay the merchant in full.

What is Groupon supposed to do for small business?  Most business owners I speak with fall into two basic categories in their understanding of Groupon.

  1. Groupon is a revenue generating marketing campaign designed to drive prospects to their place of business to purchase goods and services.
  2. Groupon is a marketing campaign designed to increase awareness of the business and generate reoccurring NEW customers.

What does it really do for small business?  Based on my research, it:

  1. Crushes profits
  2. Strangles cashflow
  3. Trains your existing customers to only buy when they have a coupon

Harsh?  Not really.  Just Google “Groupon worst business decision ever” and read about the business owners who nearly went out of business after running a Groupon campaign.  Here is one example: http://www.dailymail.co.uk/femail/article-2068373/Cleaned-gambling-Groupon-Few-firms-realise-huge-risks.html?ITO=1490.

Some even call it a Ponzi scheme.  http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/.

Here is a good article from the NY Times that does the math on a restaurant Groupon campaign:  http://boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/

The problem does not seem to be the “number” of respondents Groupon can deliver for a business.  Groupon is very good about delivering the “quantity”.  The problem is the “quality” of the leads and the business mechanics and financial aspects of delivering the goods and services.

For most small businesses, 25% of revenue does not cover the costs of goods, payroll, overtime, etc, so they are going to take an immediate hit on cashflow.  So if you decide to run a Groupon campaign, understand that you are probably going to lose money on every deal sold.  Make sure you have the cash reserves (and cashflow) to handle the campaign.

What about the perception that a Groupon campaign will deliver new customers and drive repeat business?  My research has found business owners saying that less than 10% of the customers ever come back.  The vast majority of customers are just bargain hunters – thus the “quality” issue.

Others have hoped that the customers will spend more than the value of the Groupon which will help offset the costs.  One business owner found that less than 5% actually do this.  Why?  Again, most people using Groupon are bargain hunters.  And these days, most of us are bargain hunters.  Even if you are a regular customer of a restaurant that offers one these programs, why would you not use Groupon (or something similar) if they want to give you free food?

So if you are thinking about running a Groupon campaign, you absolutely need to know the following about your business:

  1. What is your objective?  If you are a brand new company with a start-up marketing budget for awareness, this may be a good strategy.  If you are looking at this as a traditional marketing campaign to get new customers and increase revenues / profits, probably not a good idea.
  2. Your average dollar sale.  One business owner’s average dollar sale was $5.00.  She ran a $13.00 Groupon.  Here is her story:  http://techcrunch.com/2011/06/09/groupon-single-worst-decision/
  3. The actual cost to produce or supply your product.
  4. The breakeven point for the campaign (if any).
  5. The maximum amount of cash you are willing and able to outlay.
  6. The maximum number of Groupons you can supply and service.  In one of the linked articles, a business owner almost went out of business because she had to pay overtime and rent extra ovens to meet the demand.
  7. AND MOST IMPORTANT:
    1. You absolutely need a process in place to track the on-going costs of the campaign.
    2. Have a system in place to capture customer information so you can continually market to the 5%-10% who may come back.

For most small businesses, Groupon is at best a very expensive marketing campaign.  At worst, it is an unprofitable marketing campaign that drains cash and ties up resources that could be better spent on more profitable business.

In summary, I think I have found a real life example of the old adage:  “I lose money on every deal, but I make up for it in volume…”

The cost of a bad Sales Rep – it can put a small business out of business. Part 2

In my last post, I listed 5 reasons why sales rep fail in small business.  But here is the #1 reason why most sales reps fail in small businesses: small businesses cannot afford the salaries and comp plans necessary to hire the “great” reps so they are stuck with the “C” players.  It is simple math – in the good ol’ days, six figure sales reps would not work for a company that could not afford six figure comp plans that included high salaries.  So the business was/is forced to hire mediocre sales reps, then they put them into an environment with no real sales management or process and expected them to succeed.  In the good ol’ days, this sometimes worked because of the economy.  Not now –  in today’s economy this strategy can put a company out of business.  How?

  • Lost sales:  Every deal is important because the number of leads is down and the competition is fiercer than ever.  Still competing with a minor league team?
  • The cost of the sales rep’s salary and benefits and its impact on cashflow:  Small businesses can no longer afford the ramp up time required to get the rep producing.
  • Poor customer relations:  Mediocre sales reps usually do a poor job of setting customer expectations during the sales cycle.  They over promise and under deliver because they are desperate to get the sale.  Once this it occurs, it is difficult to reset the expectation without the customer becoming angry and disenchanted.
  • Wasted time and energy:  How much time, energy, and money have you wasted listening to the excuses and lies of underperforming sales reps?  “I swear!  It is closing this month!”, “I don’t know what happened!  They said they were going to buy!”, “How was I to know they could not afford it!”  Tired of the excuse yet? 

Whether it is the owner of a small business who does the selling or a team of sales reps, the success, or failure of the company will depend on the sales team.  So what is the solution?  I am about to announce a sales outsorcing program for small businesses.

The rules have changed – have you?

 

The real cost of a bad Sales Rep? It can put a small business out of business. Part 1

One of the most important aspects that will determine the success or failure of a company is the sales team.  In today’s economy, this has never been truer.  Now, you actually have to sell – not just generate a lot of quotes.  Waiting for the phone to ring and giving a price no longer makes the grade.

Unfortunately, ask the owners of most small to medium size businesses what has been one of their most frustrating and expensive problems in growing their business and they will tell you it is the hiring and retaining of good sales people.  This was a problem during the good times prior to the economic meltdown, now it is mission critical.

After years of working with small and medium size businesses, I have concluded that the following are primary reasons for the failure of these sales people:

  • Lack of a hiring process.  Hiring somebody because they seemed like a good sales rep during the interview no longer cuts it.  I will let you in on a little secret – sales rep will lie during an interview.  I know, it is hard to believe.
  • Poor interview technique:  A good interview is not telling the applicant about your company and then hoping he/she will come work for you.
  • Failure to use Behavioral Assessments:  Interviews and reference checks are only part of the hiring process.  You need to understand how the candidate thinks and what motivates them.  Behavioral assessments give you that knowledge.  Again, believe it or not, people will lie during an interview.
  • Lack of effective sales management:  Asking a sales rep everyday what they are going to close is not sales management.  Good sales management can overcome a lack of process, but good processes cannot overcome bad sales management.
  • Not managing the sale rep(s) to a set of clearly defined set of expectations:
    • 30/60/90 day forecasts
    • Key Performance Indicators
    • Managing to a Quota

In my next post, I write about what I think is the #1 reason why most sales reps fail in small business.  It is probably not what you think…

What does your driving style say about your business style?

The other day I was navigating some irritating traffic and talking on the phone to a friend of mine.  At one point, a driver did something in front of me that I did not appreciate so I honked my horn.  Upon hearing the horn, my friend noted that every time he speaks to me on the phone while I am driving, he hears me honk at somebody.  That led us to a humorous discussion about our offensive driving style.  Our conversation led me to think about how driving styles and leadership style can be a reflection of each other.  For example: 

When driving, do you look only at the car right in front of you or several cars ahead?  I am constantly looking 4-5 cars ahead to see what is happening in front of me.  If an accident occurs, I am more prepared to do something about it.  Are you focused on what is just in front of you or are you on the look-out for the unexpected trouble/opportunity ahead? 

Do you drive in the HOV lane – SLOWER than the flow of traffic?  This drives me nuts.  It is like the person driving says “I have 2+ people in my car so I HAVE to get into the HOV lane”.  Are you being a sheep and just “following” the rules because that is what the sign says? 

When driving in interstate traffic, do you stay in the same lane, regardless of whether the lanes next to you are going faster?  I cannot stay in the same lane.  I am always looking to gain position.  Sometimes it works sometimes it does not.  Are you stuck in the same lane, even if it is not the best lane to advance your company? 

Are you looking up ahead in traffic to see where the gaps in traffic are forming?  I am always trying to anticipate what is going to happen next by observing the traffic patterns around me.  If an opportunity presents itself, I am ready to act.  Are you looking for the next opportunity? 

Do you find yourself competing with traffic to get where you are going a few minutes quicker?  When I am stuck in traffic, I find myself picking a semi-truck way up ahead of me and seeing if I can get ahead of it.  Once I accomplish that goal, I pick another truck.  What is your next goal? 

When coming up to a traffic light, do you look at the cross-walk signal to see how much time you have before the light changes?  Why do this?  It lets me know how much time is left on the green/yellow light because in my world, yellow means speed up.  Unfortunately, red light cameras are starting to cramp my style.  Are you using all the information available to you make split second decisions? 

When driving, are you oblivious to what is happening around you?  It is amazing to me how some people can be so completely out of touch with their surroundings.  Are you oblivious to the business climate around you and just keep doing the same thing over and over again hoping for a different result? 

These are just a few examples.  Do you have any you can share?

 

Corrupt Government Morons

NBC LA has a story about how it is taking the state of California months to process new drivers licences.  The following is a comment to the story posted by a reader named FANTUM.  He nailed it!  You really need to read this!

Corrupt Government Morons:

The U.S. Postal Service was established in 1775. You corrupt morons have had 234 years to get it right and it is broke.

Social Security was established in 1935. You corrupt morons have had 74 years to get it right and it is broke.

Fannie Mae was established in 1938. You corrupt morons have had 71 years to get it right and it is broke.

The War on Poverty started in 1964. You corrupt morons have had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more.

Medicare and Medicaid were established in 1965. You corrupt morons have had 44 years to get it right and they are broke.

Freddie Mac was established in 1970. You corrupt morons have had 39 years to get it right and it is broke.

The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. You corrupt morons had 32 years to get it right and it is an abysmal failure.

You corrupt morons have FAILED in every “government service” you have shoved down our throats while overspending our tax dollars.

AND NOW YOU WANT AMERICANS TO BELIEVE YOU CAN BE TRUSTED WITH A GOVERNMENT-RUN HEALTH CARE SYSTEM?

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