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Four Keys to Customer Interaction

Four keys to attracting customers

Four keys to attracting customers

I wrote some time ago an article called ‘How to Win – Focus and Speed‘ which was about strategy in business. I use it all the time in my business life and it does work. I read an article today by John Sviolka which reminded of that approach in business planning which talks about an online voucher company in the USA which has differentiated itself very clearly from its competition by doing  just that.

It has been so successful that it has accumulated 675,000 subscribing customers to its service since November 2008 and it is growing them at a rate of 40% to 50% per month. It has a very clear proposition and it works. The lessons it teaches in this competitive market are clear and can be used by any consumer facing business.

Read the article here. You won’t regret it.

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Making the world a better place one tweet at a time

If you ever wanted to understand why Twitter has become such a phenomenon but may have thought it was just a medium for the desperate talking about the dull, then read this article on The Telegraph web site.

Twestival: improving the world with social networks – Telegraph http://ow.ly/oMoK

The Real Pyramid Selling

Spot the pyramid

Spot the pyramid

One of the challenges of any business is dealing with its reputation. Reputation is very important to success. A good reputation is something that most business people aim to achieve and to keep. A bad reputation can break your business. That’s why people protect their reputation. Brands are built upon reputations.

Some industries have bad reputations which have come about through the unscrupulous practices of a minority. Estate agents have a bad name, in general, but most of them work hard to sell your property. Double glazing companies have a bad reputation for sharp sales tactics and over-inflated prices, but not all double glazing companies behave like that.

Business models which are well known for being scams and are illegal as a result include ‘Ponzi’ selling schemes and ‘Pyramid’ selling schemes. The financial crisis we are in has revealed one massive fraud through Bernard Madoff’s Ponzi scheme where people are taken in by large confidence tricks. Pyramid selling has been banned because it involved persuading people in their team (their ‘downline’) to buy products for resale for which there was no market. The products were purchased on a ‘no return’ basis which meant the purchaser was stuck with this worthless stock.  But people confuse network marketing for pyramid selling.

Network marketing works on a completely different basis. It is based upon an individual building a team of motivated people who also build motivated teams. If you start a network marketing business, you gain from other people’s sales. It is a highly leveraged method of building a business and it is a very efficient form of distribution.

But, the teams of motivated individuals are not infinite in depth. The most successful network marketing firms only go three deep. Nobody has to buy a whole load of stock up front which is difficult to sell because it has been marked up so much by the numerous people above you in the chain. The price of the products are controlled centrally.

However, it is common for people to misunderstand network marketing. They think it is ‘pyramid selling’. However, the point I want to make is that we live in a business world which is not so far off ‘pyramid selling’ and it is hard to see why network marketing as a model is so looked down upon when it is so different from ‘normal’ distribution methods and illegal pyramid selling.

Our ‘normal’ distribution model relies on a manufacturer producing their products which are then purchased and resold, perhaps, by a national agent. The national agent sells the products to distributors who might sell it to wholesalers or retailers. All the way down the line, each party takes a cut of the recommended retail price. A pyramid of stock is spread throughout the chain.

Each one of them holds stock and gets a better deal on the products they buy based upon the risk they are prepared to take in knowing how much they can sell. Often, the manufacturer sells their product based upon a limited amount of unsold products that can be returned. This transfers risk from manufacturer to the agent who then might pass this down the line to the distributor to the wholesaler to the retailer. Unsold stock is often sold off cheap, hence the wave of ‘end of season sales’. Sometimes, the retailer is able to return all of their unsold stock to the wholesaler or distributor.

Compare that to network marketing where the distribution channel consists of the manufacturer who is also the distributor, that ships products directly to the end customer or sometimes through the person who is the local networking marketing agent. No stock is held in the pipeline. The networking marketing agent and their team is supplied directly by the manufacturer/distributor.

The team of networking marketing agents are all paid by the manufacturer and the person who built a team below them is rewarded for doing so and paid on their results.

So, why is networking marketing believed to be pyramid selling when traditional distribution methods are far more akin to that sales model? It comes down to reputation. Pyramid selling caused such a scandal that it tainted a very good, efficient and reputable business model. People cannot separate network marketing from pyramid sales models. And, ironically, illegal pyramid selling schemes are far more like mainstream distribution models than you may care to believe.

A Digital Community

Networking is an important part of what I do to meet prospective customers and partners. Jon Moss organises a networking group called Hull Digital which meets once a month in the city. It’s an interesting mix of people who either work or who are interested in the all things digital. Later this month, I will be doing a presentation to the group about 2-D codes.

Here’s a short video of interviews with some of the group members from the meeting in July.

Thank goodness for the recession

Generation M wants to be great at doing stuff that matters

Generation M wants to be great at doing stuff that matters

Before you get upset by my heading, I really do mean this as a personal comment. I know several people, including friends, who have been badly affected by the recession in their businesses. I too have had a couple of tough years, most of which came from starting a business at the beginning of 2008 which is still going but for which I am no longer working on.

Bad timing, perhaps, and the recession did not help. The business strategy was ambitious. We were taking a new product to markets we thought we knew well but the clients were cautious and they did not buy as much as we thought despite the benefits available to them. I have learnt a lot in the last two years of my business life and my home life.

One of the main consequences of the business last year is that I have had to look through my personal finances to adjust my lifestyle according to my funds. And it has been a valuable exercise in highlighting how inefficient my household had been in the last ten years with the way we were spending money.

For example, we had borrowed money to extend our current house in a modest way. It improved the house, for sure, but the house has a limit to what people were prepared to pay for it and the growth in the equity has not improved enough to have made it worthwhile. We are selling our house and moving, hopefully, into a new town house which has energy bills half that of our current house. We will drop our mortgage by £100,000 by moving into the new house and it feels good.

Furthermore, it will save us having to drive our children from our current village house to school in town. The children can now walk to school and we save a lot of money on petrol.

Also, I have downsized my car to a car which does 70 miles per gallon (mpg) and 80 mpg if I drive a little more carefully. What was I doing beforehand in a car which only managed 25 mpg? Also, the tax on it is much lower than the previous car.

I admit that I am now becoming a bit obsessive about what I use day to day and I question even the humblest products and their value. For instance, why the heck do I need a razor which has five blades? How close can a razor get before it starts taking your face off anyway? Two blades are fine and the shaving foam I use now is a supermarket brand which is a third of the price of the branded equivalent and just as good. I don’t seem to be the only one either who is changing their ways either. Caroline Eveleigh at Anatec Software and Systems is doing the same with her lighting.

The main point is that we will soon have a great deal more ‘disposable income’ so that our family can invest in the really valuable things in life such as giving our children the best education we can, investing money for the long term, and actually having some fun.

And this is what we are doing in our business, of which I am now a part, too. We question the value of all of our investments very closely. We are investing in the skills of the team. We are investing in building relationships with our new and existing clients. We are making sure we have some fun as business too.

And as the tough conditions continue for businesses and people alike, it seems like their is change in the atmosphere in how people perceive their environment. Umair Haque wrote a very interesting article where he pointed out a change in society in a group which he calls ‘Generation M‘. Generation M is searching for greater meaning in a world which is “full of big, fat, lazy business” but which is seeking “small, responsive, micro-scale commerce“.

I am part of Generation M. I have moved out of big business and into small business where I can make a difference. I am glad that I am downsizing so I am no longer burdened with an oppressive mortgage. I don’t buy products which purport to make me a better human being because the brand tells me so. I am buying products which do a good job and no more. I am getting my life back and getting some meaning into it so that I can enjoy what I do, spend time with my family and friends and just enjoy a simpler life.

Don’t Be Snobbish About Network Marketing

Network marketing companies are strong, profitable and growing

Network marketing companies are strong, profitable and growing

If you run your own business, I expect there have been times when you wondered why on earth you started it. You might even be in a business where you are responsible for bringing in new customers and sales. The pressure is on to perform and you have moments of self doubt. “Can I do this?” “Am I good enough?”

The times that make you wonder why you are putting yourself through this pain often come down to one of two things. Money and people.

With the money, you are worrying about getting sales, whether they are profitable sales, whether you have enough money in the bank to to pay your current bills while you wait for the money to come in from the sales, chasing debtors and then working out whether you have made any money at all at the end of each month.

With people, it can be that you have tough customers who do things like ask you to show them exactly how you do what you do so that they don’t have to use you anymore. Or you have some tricky relationships at work where you feel as though you are not entirely on safe ground because your boss is being particularly distant from you.

The hardest thing that people have to deal when they are running their own business and selling for the first time is the fear of rejection. Getting turned down by the customer who you thought would buy your product or service without doubt is a hard thing to deal with in business when you are not used to it. That’s why cold calling is loathed by most sales people. Rejection after rejection, day in, day out is not only demoralising, it’s boring.

But dealing with rejection from prospective customers is one thing. Dealing with rejection from friends or family is another. When you start your own business, you start it with optimism, enthusiasm and fear. You are giving up that regular salary  and the certainty which that brings. The support that your friends and family give you is vital to making you feel as though you are not entirely on your own.

But when you don’t get that support, it can be very difficult to deal with. Belief in your products or service is what holds you together and the determination to win against all odds is one of the characteristics of an entrepreneur.

Someone I know well has started their own business and that person is one of the most determined people that I know. In five years, they have taken their business from zero to £500,000 in turnover having started it part time. That person is now being joined by their spouse in the business who has given up their highly pressurised but well paid nine to five job.

But their family does not see their business with the same enthusiasm as they do. In fact, they don’t see it as a proper business because it is a network marketing business. And that’s not really a ‘proper business’. Network marketing is regarded with quite a bit of snobbery in this country. People think you are selling them some sort of ‘pyramid-ponzi’ scheme where they will have to buy a load of ridiculous water filters or similar which you can’t sell.

But this is old thinking. For sure, some network marketing schemes in the past have given the model a bad name. But this is not the same. Network marketing is becoming a phenomenally successful and influential route to market for many companies who do it well. If network marketing is bad, why do you see so many brands using social networking to get their name out there to help them sell products?

The plain fact is that the world has become wise to the effectiveness of networking, network marketing and social networking. The days of brands marketing at you are declining rapidly. We no longer accept what marketers tell us about their products. We tell them what we think about their products and not just by refusing to buy them.

Networking is a people-centred activity. People buy from people they trust. People buy from people who sell good products. Network marketing is built upon that principle but people seem to think that just because the product was purchased in this way that it is less than legitimate.

You know what? If that’s the way you think then all I can say is “Get over it”. The best network marketing companies are strong, profitable, growing and they are quietly making the people who work in the businesses a lot of money. In fact, I might just join them.

Explaining What You Do – 5 Top Tips

05/08/2009 1 comment
Being clear about what you do helps you and your prospects

Being clear about what you do helps you and your prospects

Most people in business have heard of the ‘elevator pitch‘ which is an a summary of your product, service or idea which you deliver to people that you want to invest with you. The elevator pitch may sound like a piece of business jargon but the principle behind it is sound.

If you can’t explain to someone what you do in a concise and clear manner which makes it easy to understand for the person that asked you the question then you should stop what you are doing and work it out now. Without this clear understanding about your business, idea or project then you put yourself in a weak position from which you will lose opportunities to sell, influence and connect with people.

It’s no good saying that what you do is very complicated and it can’t be explained in a sentence. People don’t have the patience to listen to long winded explanations and, in a competitive world, you will be replaced by someone else quickly who can explain what they do quickly.

When you have worked your pitch out, it has an amazing effect on your marketing and how your team think about their work and where the business is going. Your pitch will then influence how you write copy on your web site, it will affect how you write your emails, it will affect how you express yourself on your stand at shows and how you differentiate yourself from your competitors.

Prospective clients will know whether it is worth talking to you and you will know whether it is worth talking further with them. Your elevator pitch will save you time and help you to either sell more, gain investment or gain important contacts.

Here are my five top tips for working out your elevator pitch:

  1. Ask yourself what you are good at. Not what you want to do but what you are really strong at doing.
  2. Recall moments when you felt as though you were in your element when working with previous or existing clients.
  3. Reduce your ideas and words from the previous point into one or two clear, easy to read sentences.
  4. Test your elevator pitch out with some existing clients or prospects and note the difference in how they react to it.
  5. Practice what your pitch out loud and then practice, practice, practice until you know it off by heart.

Our business is going through this exercise right now. Our strap-line says ‘Digital Communications Agency‘ but it does not tell people what we do. It hides our deep skills and experience in a particular area and it affects how we explain what we do and how we can help. This is changing as I write and we will soon have a new, clear way of quickly explaining to people what we do.