Intrapreneur Gets Promoted

Posted on Saturday 6 February 2010

Guest Blog by Scott Annan of mercurygrove.com

In early 2000, just recently out of school, I was recruited by a fortune-500 manufacturing company and worked for them for six years. During that time, I progressed from a business analyst role in the European e-business group to a leadership role in the corporate headquarters as Global Director of sales and marketing systems with over 50 people reporting to me, a $15 million budget, reporting to the CIO and the EVP of worldwide marketing with frequent presentations to the Board of Directors, in the executive development program plus I was earning well over a 6-figure income. I was 28 at the time.

In retrospect, there were three core principles that I applied to become a successful intrapreneur:

1. Vision: constantly presenting new opportunities to management and volunteering to lead new projects;
2. Execution: putting value creation ahead of cost reduction;
3. Passion: upholding the core belief that “we can do and achieve more”.

I’m not sure if people at in the company would have described me as a “visionary” or as a “zealot”. When I had convinced myself about a new project or opportunity, I would spend days putting together a workable plan that outlined my vision, its ROI and a plan to show how it could be executed.

I ensured that I covered all the information that was necessary to get the project off the ground including case studies, financial models, potential concerns and how we could solve those. I would anticipate questions management would have and be prepared to with answers.

Then I would mount a campaign to get in front of the right people whose endorsement or support the project would need. I never thought: “This isn’t really in my department or responsibility or beyond my current scope”. If it was a good idea that had great potential, I would work hard at developing it and seeing it come to life – sometimes without the approval of management. It was my belief (and it still is) that nobody gets fired for working hard to do the right thing for the company.

I would also volunteer to lead these projects. This was important to me and I was able to accept both praise if things went well and criticism if things didn’t work out. As one colleague once put it to me: “Management is constantly give you just enough rope – to either make a success of or hang yourself.”

Many of my colleagues focused a great deal of their time on the cost side of projects (which I have found is a typical corporate focus) but what I learned was that a big corporation shouldn’t care about their costs, they should care about creating value – and, of course, adding to their bottom line.

There is a big difference between cost controls and investing and I always looked to ensure that the money being spent on my projects was an investment, not a cost. Several times I overspent my budget, but I was able to demonstrate a great return on the investment and a much better outcome for the company so I ‘got away with it.’

I always believed in trying to achieve the best outcome for the corporation. In every meeting, I would question whether the current direction was the absolute best decision – no matter whose idea it was. This is a difficult and often unpopular thing to do.

Corporations rely on hierarchy and well-orchestrated teamwork. Many employees and managers feel threatened when people ‘push back’ on entrenched business methods and it is hard for people not to take criticism personally. It does not take long for co-workers or managers to start labeling you as a troublemaker and disruptive to the team. Still, I always questioned and promoted what I thought was the best idea. For me it wasn’t a matter of pride but it was part of generating enthusiasm and commitment to the work we were doing. I couldn’t accept working for a company that wasn’t trying to achieve great things.

I wasn’t working for money or promotions but these were byproducts of the intrapreneurial approach I took. I thought of the business as if it were my own and management could tell.

I also wanted to learn new skills. After working in five different departments and two countries, I ultimately left because my pace of learning had slowed. Much like being an entrepreneur, an intrapreneur is constantly searching for new opportunities, often working against the ‘status quo’ and is potentially a difficult to fit inside a corporation unless they have a culture that tolerates and encourages innovation and change. Still, intrapreneurs are highly sought after and rewarded by corporate executives who realize that companies run on passion, creativity and hard work.

Scott Annan
mercurygrove.com
613-680-1458
Blog: mercurygrove.com/blog
Twitter: scottannan

Postscript: To read a bit more about the entrepreneur’s skill set and the subject ‘Can you hire an entrepreneur to work within your corporation’, refer to: http://www.eqjournalblog.com/?p=408. Prof Bruce

Dr. Bruce @ 5:25 pm
Filed under: Intrapreneurs and Intrapreneurship
Social Media—Blah, Blah, Blah

Posted on Saturday 6 February 2010

Many people feel today that you have integrated social media into your Biz Model because you happen to have a Facebook group or you are on Twitter or you have a blog. To me, this is outbound social media and it is a bit hum drum today. After all, anybody can do it. The air of novelty quickly wore off.

Now it’s true that Facebook et al are ways to (perhaps) get your message out quickly and inexpensively (disclosure: I use all three tools and like them) but the use of the relational data base which was the precursor of social media is, in many ways, far more meaningful for an enterprise and its business model.

For example, Jeff Bezos, Founder of Amazon.com, said one of their most important innovations and one that helped Amazon finally become profitable was the introduction of a seemingly simple question: “Would you like to see what other people who bought this (book, CD, DVD, etc.) also bought?” As a result, the average order size increased substantially for Amazon and the utility of the site increased significantly for users.

Any researcher, say, wanting to build a bibliography, could easily go to the Amazon.com site and see (for free) what other texts were bought by people who had bought books that already appear in his or her bibliography. In effect, the researcher could borrow the brain power of Amazon users to extend his or her own—they were exploiting the wisdom of the crowd.

Who would have thought that a simple URL shortener like www.bit.ly could integrate social media (as I am using the term here) into their biz model—and they do it in two ways. First, any user (you don’t even have to create a user account— bit.ly automatically recognizes your IP address) can see how many clicks have taken place on each link they have created, including individual ones used for, say, an individual client (perhaps even to check on whether the client actually bothered to click on a link you previously sent to them. Thanks to a student of mine for pointing this devious application out.)

Plus you can see what links are being created on bit.ly that are the most popular—i.e., you can find out what the latest trends are before practically anyone else just by looking at what links are being created, how many people are clicking on them and where they will take you.

And by keeping track of all the links that you personally have ever created on bit.ly (you can see them all at a glance—where they link to and how many people have clicked on them since their creation by you), bit.ly keeps their users locked in to a site that otherwise could be easily knocked-off by a competitor.

Can you see a way to integrate the wisdom of the crowd/social media aspects into the core of your biz model; that is, can you harness the data you are generating from your website and your operations to extend your firm’s utility for clients and suppliers as well as for your enterprise?

Let me give you another example. Users of Multiple Listing Services in the US and Canada find these websites difficult to navigate and understand—their user experience is somewhat lacking to be sure. But can you imagine the increase in utility that would be possible if we simply asked Jeff Bezo’s question on MLS.com or MLS.ca: “Would you like to see what other listings people who have looked at this one have also looked at?”

Prof Bruce

Negative Cost Selling and the Pro Sports Team

Posted on Sunday 31 January 2010

Earlier this season, the Ottawa Senators were having some trouble filling their building after years of sell-outs and near sellouts. The causes? Well, the performance of the team (missing the playoffs the previous season and being swept in the first round the year before by the Pens) is obviously a factor. The downturn in the national economy and US economy as well as relentless bad news on CNN also had an effect even though the Ottawa economy itself is isolated in part by the large presence of the national government here. Another factor influencing attendance is the on-going issue of civil servants not being able to accept complimentary tickets—the concern is that they might be unduly influenced by such largesse.

As a result, the Ottawa market (of 1.2 million people in Ottawa-Gatineau and 1.7 million within 60 minutes drive time of Scotiabank Place) is actually quite a bit smaller than the numbers would suggest because you can deduct more than 100,000 people employed in government.

Having said all this, only one team can win the Stanley Cup each year and if Ottawa were to win it on a pro rata basis, the team would only be a winner once every 30 years. Meanwhile, you still have to fill your building.

How do you do that? Negative cost selling can help.

Most pro teams sell their tickets on the basis of it being some type of beauty contest. “Look at our great players!” “How about our beautiful building!” “Did you know you can escape our parking lot in just 25 minutes!” “What a great logo we have and our merchandise, my, my!”
Or they try to guilt or bully you into buying a ticket: “If you don’t buy a ticket, the team will move!” “What kind of a person are you, don’t you have any civic pride?”

But remember, negative cost selling is about understanding your clients business almost as well as they do. Actually, what you want is to understand that plus your clients’ clients’ business almost as well as they do. And you want to be able to put all of that down in black and white, preferably in a spreadsheet that proves you can make money for your clients (by increasing their revenues or reducing their costs or doing both such that higher revenues and lower costs more than offset the cost of buying your product, in this case, tickets, sponsorship, suites or signage…)

I did a sketch (see below) of some examples of negative cost selling that the Sens (or any pro team) could use.

Negative Cost Selling and the Ottawa Senators

Let’s say Jay is a salesperson for the Sens and he is going to drop in on the woman (Dilys) who sourced the mortgage for the home he bought last year. This is a warm call—he already has a business relationship with Dilys and her firm. In fact, this will be a form of reverse selling—why shouldn’t the people you buy from, buy from you?

The answer is NOT that they should buy from you because they sold to you; the correct answer is that they should buy from you because you have a compelling value proposition and you can demonstrate it. The fact that you already have a relationship with them is a plus as is the fact that you know and have learned a great deal about their business (and their clients too). These factors help you get in the door but they don’t close the deal for you—negative cost selling does that.

I show what a negative cost selling approach looks like below and I also provide a link so you can download the spreadsheet. Based on this analysis, Jay, would be able to say to Dilys:

a. “I want you to think about investing in Sens tickets this year and next and making it an integral part of your marketing program.
b. Every homeowner that sources a mortgage through you, is going to get a pair of tickets to a Sens game!
c. The cost to you for two tickets to every regular season home game will be $55 less a 15% discount since you are making a 2-year commitment. [Note: Jay really wants at least a 2-year commitment. He knows that if he only gets a 1-year term on this deal, he’ll forever be doomed to the role of a baseball player—he will have to hit 40 homeruns each season and be subject to the ‘what have you done for me lately’ syndrome from the team. Instead, getting 2-year commitment from his clients (or longer if he can) means that Jay can really build a sustainable business for the long term. And like all good salespeople, he thinks of his sales efforts as his own business since he is earning a commission on top of his salary. He views the team as one of his suppliers!]
d. You are currently spending about $2,945 per year on marketing—if you divert 40% of that to the Sens, your marketing budget is going to increase by about $2,655 but here’s the good news. If you get just two more clients per year, you’ll break even and most of my other clients in this industry are finding that they are generating five or more clients per annum.
e. That means for an extra investment of $2,655 in each of the next two years, you’ll make an additional $6,695 per year or a total of $13,385.
f. Your net cash gain will be nearly $8,075 over that period. This represents a ROI of 152% per annum—a lot better than what you get from your Bank these days on your GICs (about 3.15% p.a.), wouldn’t you agree?
g. I guess what I am basically saying is that your cost to buy your Sens tickets is a negative $8,076.70. I am essentially paying you to buy the tickets from me… [As a student of mine once said: “I’ll pay you to hire me” when he used the negative cost selling technique on a future employer.]
h. In fact, I prepared a spreadsheet for you to go over with me. Notice that I took the Brokerage’s share of your commissions out before I calculated your rate or return. [This shows that Jay really gets his clients’ businesses.]
i. Hey, that reminds me: isn’t it true that if you do more than $10 million a year in mortgage biz, you’ll get a volume bonus from Mortgage Alliance? Well then, it looks like the investment in Sens tickets is just the ticket, so to speak—you’re at $9 million right now and the spreadsheet shows you at $10.125 million at the end of the year so your actual ROI will be even higher and the cost will be even more negative after you nab one of those year-end bonuses. How about that.
j. You just have to initial here, here and here, sign and date there.
k. Thanks. See you soon.
l. Oh, by the way, can I call you at the end of the season for a testimonial for my personal website?”

Sens and Mortgage Broker: Negative Cost Selling

Sens Tickets 41 regular season home games
Number of Tickets per Game 2
Total Number of Tickets 82
Cost per Ticket $55 posted prices
Discount for two year commitment 15%
Actual Cost per Ticket $ 46.75
Annual Cost $ 3,833.50

Typical Mortgage $225,000
Typical Fee $1,912.50 0.85%
Mortgage Agent Share $1,338.75 70%
Number of Mortgage per Annum 40 $9,000,000
Mortgage Agent Revenues $53,550.00 per annum
Mortgage Agent Current Marketing Budget $2,945.25 6%
Percent of Current Marketing Budget Diverted to Sens ($1,178.10) 40.00%
New Marketing Budget including Sens $5,600.65
Increase in Marketing Costs $2,655.40
Number of New Mortgages Needed to Breakeven 1.98
Number of Actual New Mortgages Written 5 $10,125,000
Increased Revenues due to Investment in Sens -ve Cost Marketing Program $6,693.75

ROI on Marginal Increase in Marketing Costs due to Investment in Sens (IRR) 152% per annum

Cashflow Profile

0 ($2,655.40)
1 $4,038.35
2 $6,693.75 $13,387.50
Cash Gain over Period $8,076.70

Note: this example is for demonstration and learning purposes only.

[You can download this as a spreadsheet from our server in .xls format: http://www.eqjournalblog.com/SensMortgageBrokerNegativeCostSelling.xls]

There’s no reason why Jay can’t extend this analysis to all of his clients. In fact, because he understands business modeling, he can take it one step further (we call this 2-D or 3-D biz modeling).

Say, Jay drops in on a restaurant owner. Her name is Shelly. Shelly has told him that the two weeks preceding Fathers’ Day have become more important over the years, coming closer in volume to Mother’s Day bookings but she would like to find a way to drive that volume higher. Jay knows that most of Shelly’s clients during that time are women calling and making reservations. Who are Shelly’s clients’ clients? During that period, they are, of course, men. What do men want? Well, a lot of men like pro sports. So Jay sells Shelly some Sens tickets that she can bundle with restaurant meals. If she breaks even on the Sens tickets but drives her restaurant’s utilization rate higher, it would be a pretty simple job for Jay to show Shelly how the purchase of these tickets was a negative cost.

You can extrapolate from these examples for florists, Banks, auto dealerships, spas, REALTORS, Accountants,… Once you understand the concept, the rest is just ‘making license plates’ (to borrow a phrase from Neal Stephenson’s Cryptonomicon.)

I did another sketch below on how this approach might work for REALTORS and Accountants (actually tax preparers). In the latter case, Jay would want to give his client (the tax preparer) something that would appeal to his clients—the answer again, Sens tickets! Now Jay’s clients’ clients’ client is CRA (Canada Revenue Agency) so he should stop at 2-D. CRA auditors won’t want (and obviously can’t accept) Sens tickets! But you get the picture—look at least 2-dimensions deep and sometimes 3 or more will be appropriate and useful and new ideas and ways of using negative cost selling will occur to you.

More Negative Cost Selling for a Pro Sports Team

The Ultimate Negative Cost: Free

In the summer of 2003, Rob Hall, a brilliant Internet guy and owner of Momentous.ca (Internic.ca, Zip.ca, etc.) came to see me with a new business model. He wanted to enter the domain name backorder business which at that time was dominated by Snap Names. Rob had this idea of giving the product away for free and I had heard a lot of pitches for giving things away for free on the Internet many of which had come to grief so I wasn’t too keen at first.

But Rob hit another home run with Pool.com. He launched it later that summer and it was a runaway success. Here’s why Pool.com was a “heads Rob wins, tails Rob wins”, revolutionary business model:

1. SnapNames.com was the recognized leader in backordering deleting domain names. So say you owned the domain name MyGreatCompany.ca or .de or .uk or .ne or .com.au, and you wanted the dot-COM TLD (Top Level Domain) equivalent but someone else had it.

2. With Snap Names, clients had to pay $60 USD per year for each domain name they wanted to backorder and if the name you want was deleted by the dot-COM domain name registry (Verisign), then they would try to get it for you (but there are no guarantees).

3. So along comes Pool.com.

4. Now you can register any domain name that you want to back order for free with Pool.com. Hundreds of thousands promptly do. You only pay if Pool.com is successful at getting your backordered domain name.

5. More than 20,000 dot-COM names are deleted each day. (There are about 80 million dot-COM domain names registered as of Q1 2009 (Source: Versign Domain Name Industry Brief). Pool.com is bound to have many names on its list that drop every day.

6. If there is more than one client that has backordered the same domain name, then here is what they do:

“You pay only when we successfully secure a domain for you. We charge a low US$60 fee which includes a 1 year domain registration. In the case of a domain backordered by multiple users, a short auction will take place and the winning bid replaces our standard fee.” Pool.com, December 2003.

7. They are currently doing over 3,000 deleted names a day (at $60+ USD each), 7 days a week. Note that almost 60% of backordered names are wanted by more than one client so mini-auctions are happening all the time, with an average price exceeding $200 USD, so do the math. This became a significant business from nothing in just a few months. Gross margins are in excess of 80%.

8. The $60 USD also includes a one year registration so they are automatically locked in to their domain name registrars and Rob can sell them many other things like email, hosting, etc.

9. Having millions of domain names backordered through Pool.com gives Pool.com a chance to sell them other things even if their backordered domains never come up.

10. Rob has developed a good algorithm for attacking registry sites with multiple channels (as of November 2005, he had over 120 registrar channels to the registry) so his success rate at getting deleted names was more than 60%. (Snap Names at that time was less than 50 %.) Pool.com’s goal is 80 % with maybe 70+ % actually do-able.

11. Many IP lawyers, domain name speculators and sophisticated Internet users moved over to Pool.com in just a few months.

12. This business went through an intense geometric growth period.

So basically if you are an Intellectual Property law firm that had backordered 40 domains with Snap Names at $60 each, Rob’s company can come to you and say for a -$2,400.00, you can back order the next 40 domains with us. Now that is a compelling sales proposition.

Pool.com Negative Cost Selling

Domains Backordered with Snap Names 40
Cost of Backorder with Snap Names $2,400 $60 per backorder
Cost to Backorder with Pool.com $0
Negative Cost of Backorder with Pool.com ($2,400)

Conclusion

Negative cost selling is a technique that finds many applications. Whether you are a former student of mine telling a would-be employer: “I’ll pay you to hire me” or a top-flight HR recruiter showing a CEO how by paying your firm $30,000, they can save and make an additional $390,000, you’ll be much further ahead if you master this technique in many ways.

You and your firm will make more money, not only by selling more but by selling more to each client (the average order size will increase) and your batting average will rise too. That is, you will close a higher percentage of the pitches you make. If you are closing 2 out of every 10 potential clients and you can move that up to 3 or 4, think what that will do to your income and how it will change your place in your company.

I use these techniques and I have been able to improve my closing rate to 7 or 8 out of 10. No one closes every deal but I try.

It also takes a lot of the fear out of selling—you go into each meeting knowing almost as much about your clients’ businesses and their clients as they do. This gives you confidence and confidence is the sine qua non of moving your closing rate upwards. But it isn’t artificial confidence—it’s real, the best kind and its authenticity will shine through—your clients will pick up on it just as they can pick up on the reverse.

Humans are incredibly good at picking up signals that say ‘this person is lying to me.’

Why don’t more people do this?

Some don’t know about it or don’t know how to do it but I find a lot of salespeople are just plain lazy. They figure the beauty contest approach is easy and simpler and will work often enough that they don’t have to put themselves out to learn much if anything about their clients’ business ecosystems. This is not sustainable—in a tough, competitive world, a negative cost selling master will eat their lunch.

If you can’t sell, you can’t be a CEO, Entrepreneur, Founder or a Self Actualizing Human Being. If you can’t sell your ideas, your suppliers, your clients, your bosses, your colleagues, your Bank, your Board of Directors, your Faculty, your sponsors, your patrons, then you can’t be a researcher, a supply chain manager, a sales executive, an upwardly mobile hot-shot product manager, a middle manager, a CFO, a CEO, a Dean, an Executive Director of a Charity or Not-For-Profit or an Architect or Artist. That’s a lot of ‘can’ts’.

If you don’t believe me just think about this for a minute. You are a Product Manager at Cisco. You wake up at 3 am with a super idea and you write a few notes so you won’t forget your brainstorm. The next day you go in to see your boss and tell her: “I have this great idea for a new product or service… It’ll take two years of R&D at a cost of $10 million but the potential market is huge.”

Your boss says: “That’s really interesting. Build a business model, do a biz plan, work up some revenue numbers, get some market research done and then come back and see me. If I still like it, I will take to the Director. If he likes, we can take it to the Vice President and if it passes that test, we get to take it to the CTO. After that, we still have to tackle our CEO and BOD.”

Your shoulders hunched, you walk away thinking this is going to take a long time before you get the green light.

Meanwhile, one of your peers has also approached your boss. She said: “I have this great idea for a new product or service… It’ll take two years of R&D at a cost of $10 million but I got four strategic partners to each pitch in $2.5 million and they are willing to be our launch clients too and take the first 18 months of production plus the potential market is huge.”

She is using the negative cost selling model on her boss and she is an intrapreneur. She has the full skill set* of an entrepreneur but she is applying them within a large established organization.

(* Do you want an employee who has the skill set of an entrepreneur? Do you want someone who can: take initiative, doesn’t need a lot of direction, is innovative, can do everything in parallel, will find launch clients, knows how to build cashflow, understands the value of a client and customer, will use bootstrap capital, can sell/sell/sell, knows how to use guerrilla marketing and social marketing to build the brand and capture market share at a reasonable cost, is not afraid to try new things, understands negative cost selling, knows how to build a sustainable business model with a lot of ‘pixie dust’ in it, can set goals and achieve them, is dynamic and has high energy, can create a business plan and be ready to change it when the market moves in sudden and unexpected directions?)

Now whose project is more likely to get the go ahead, which project is going to launch first and which person is going to be promoted first?

There is nothing more rewarding in your professional life than working on a project you had a hand in initiating and creating. To be there at the first glimmer of an idea, to help it grow and develop, to see it launched into the world, to see it successful and meeting real needs and helping people to achieve their goals—that’s what I mean by being a self-actualized human being. And a self-actualized person is a highly-motivated, serene, confident person who is terrific to have around.

I have hung out with NHL coaches and they are all, to a man, self-actualized people. They make everyone around them feel special; they make everyone around them feel like they are part of something bigger than themselves. They make everyone around them better at what they do. They put round pegs in round holes and square pegs in square holes and they tell you it’s OK if you are a square peg—they have a place and role for you.

That is the essence of leadership and it is an ingredient missing in many working lives. Here is hoping that you will have people like this in your life and that you will be one of those people too.

Prof Bruce

Putting Your Website On The Map

Posted on Wednesday 20 January 2010

Optimizing for Google and Google Maps
By Steve Hampton, Guest Contributor, Search Marketing Specialist – BIGLocal.ca

Introduction

Search engine optimization (SEO) is perhaps one of the fastest growing buzz terms in the business community.

Slowly (and I do mean slowly), Canadian businesses are realizing that consumers have, in general, replaced that notorious, bulky 1,000 page yellow directory with a much more efficient search engine when they are researching a product, service or business.

While SEO is a specialized area of expertise, there is a major distinction you need to be aware of if you are looking to “put your business on the map”.

That distinction is that Google has VERY different algorithms for their organic results (their main search engine product) and their local/maps results (“Local Business Results”).

Depending on your business goals, you will need to adapt different strategies to achieve a page-one result on either of Google’s search engines (SERP’s).

Organic SEO Factors

The first distinction is that there are “On-Site SEO” and “Off-Site SEO”.

While there’s no accurate way to tell, experts suggest that approximately 85% of the weighting Google uses to determine its rankings is attributed to Off-Site SEO.

Let’s look at some of the main areas of Off-Site SEO…

One-Way Links: A one-way link is a link to your site from another site, where you do NOT link back to their site.

Google’s culture can be summed up in one-word: Democratic. Google’s algorithm is setup to allow people to decide what’s relevant & what’s important.

Think of a one-way link as a popularity vote. Every time you go to their search engine and perform a search, the algorithm goes out and “asks” the internet to vote on the most relevant sources of information.

But Google doesn’t take every vote at face value. Google also looks at “Who” is casting the vote – and will give priority to the “most popular”., in their own right.

This means, if you want to make your one-way links count, you need to get them from popular websites with high page-rankings (essentially Google’s “Popularity Meter” – the higher the PM, the more weight that link gets).

Two-Way Links: The difference between a one-way link and a two-way link is reciprocation. If you are being linked to by a site in which your website links back to them, this is a two-way link.

Two-way links are important for SEO. However they do not hold the same weight that a one-way link does.

Anchor Text: Having another website link to you is important. Almost as important is how that link is worded. The wording of the link is called “Anchor Text.”

Here’s an example:

Poor Anchor Text: To Visit xyz.com, click here.

Strong Anchor text: If you are in need of a widget, visit xyzwidgets.com – they are the top supplier of widgets.

The difference between the two as you can see is that important keywords (if your business is selling widgets) are anchoring the link in our “Strong” example.

Whenever you are setting up links with partners, ensure that the right keywords are strategically placed within that link.

Click-Through-Rate: Staying with Google’s democratic philosophy, Click-Through-Rate (CTR) percentages are another important factor when their search engine ranks your webpage’s relevancy.

CTR% measures the percentage of people that click on your link. (For example, if 100 people see your link, and 10 click through then your CTR% = 10%.)

Google believes that if a link exists and people click on it at an aggressive rate, then that information must be relevant information that people WANT to read. Furthermore, if Google displays 10 results, and one of them receives significantly more clicks than the rest, then Google will bump up that particular result.

Online Presence: With the anticipated release of Google Caffeine (Google’s codename for their improved search algorithm), your businesses online presence within social media has become an even more important factor being ranked.

Facebook, Twitter, Yelp and others have become important eco-systems to help your business survive.

Diversity of Links: Google also weights the variety of websites that are linking to your site/page. Having lots of links, from lots of different sources is an important off-site SEO factor.

Negative/Spam Techniques: One of the easiest ways to sabotage your business these days is to try to “scam” your way into results. While there are a variety of “black-hat” tricks out there, getting caught doing just one of them (accidental or not) can get your site a lifetime ban in their search engine.

It’s critically important to only take part in ethical SEO practices. This is one major reason why organizations have opted to hire SEO specialists, since it can be easy to have your site barred by accident.

There are several other factors to off-site SEO that have slight effects on rankings. Typically these factors “take care of themselves” if you follow best practices described above.

The other side to organic SEO is on-site SEO best practices.
Let’s take a minute to look at the most important on-site SEO tasks you can use to boost your website ‘s ranking in SERP’s.

Keyword In Body Text: In order for search engines to even consider your web page as relevant, the body of the page (the content) needs to be relevant to the search term a searcher uses. While there’s no magic number in terms of how often the keyword appears on the page, experts agree that 2-3% keyword density is a great place to start.

It has also been shown that content on the top of the page (especially the top-left of the page) is given the most weight.

You can further increase the importance of your keywords by putting them in bold or italics (but if you go overboard with this, you’ll just get yourself black-listed – once-twice is plenty.)

Just like in off-site SEO, negative, or black-hat tactics will get your page penalized instead of ranked, so having the keyword appear 10 or 20% of the time is NOT a best practice.

The best way to ensure your page is relevant is to simply write passionately about the topic, and allow the keywords to find themselves in the copy. When reading over what you’ve written, you may find some practical places to include a keyword, in which case do it. If you follow this formula, your page will be deemed relevant by Google – which is the first step in getting on the top of results.

Other Important Places For The Keyword To Appear:

Along with having your targeted keyword in the body of the page, there are several other places the search engine looks when determining what your web page is about.

Header Tags: These are the titles and sub-titles within your page.

Title Tag: This is the title to the page (E.g. www.YourSite.com/Page-Title.html). Noticed I used a dash to separate each word in the page title. This is the only way you can ensure Google can read each word. For the most part, the algorithm has a hard time deciphering things like www.mysite.com/thisismypagetitle.html

Meta Tags (keyword & description tags): At the top of the page (in your HTML code), there is a spot available for you to include keywords that sum up what the page is about. Keep in mind that Google and other search engines have gone on record to say they no longer use meta tags in ranking pages,. However, many search engines still rely on meta tags, and there’s still no conclusive evidence that Google doesn’t use meta tags in some capacity.

Navigation Links: Nav links are the links that allow people to visit each of the pages on your site. It’s important to at least theme those link titles to your sites content. For example, consider modifying “Contact US” to “Contact the Widget Experts”.

Alt-Tags: As you can imagine, a search engine is unable to “read” pictures/images. That’s why there are alt-tags. An Alt-tag is a description of the image you are showing on the page. Google relies pretty heavily on these alt-tags to determine what the page and image is about. Instead of labelling a picture “Picture of me”, try instead to label it “XYZ Widgets Expert, John Smith”.

Domain Name: The domain name is still used to weight results by a search engine. It may not be quite as important as it was, say, in 2003, but it is still used. In some of the longer tail keywords (key phrases with more than 3 words in it), having the exact key phrase as your domain name is enough to put you in the number one spot! This is pretty rare, and I wouldn’t use it as my number one SEO strategy; however, it is a good thing to do in a well-rounded SEO plan.

The domain name’s age also plays a small role in ranking the site.

On-Site SEO isn’t all about having keywords in the right place. While keywords are essential to having the search engine consider your content in the first place, there are several other on-site factors the search engine algorithm uses to determine your webpage’s ranking in the SERP’s.

Ensure your SEO strategy addresses these areas as well.

In-Page Links: Having lots of links in your copy is a great way to boost your rankings. In case you haven’t noticed, Wikipedia has secured the top spot for literally hundreds of thousands of keywords. If you look at the elements of a Wikipedia page, you’ll see that throughout the body of every page are dozens of links offering users further information on the subject. Try to emulate this best practice in your own web pages.

Account Structure: It’s important that Google’s spider (the program that crawls across the web, indexing everything) can actually find all your pages. This means having a clean, logical account structure throughout your site. You can also help the search engine by submitting a site map that includes links to all your sites content.

URL type: Some of you may be using dynamic URL’s (URL’s that change themselves based on the search term used) in your site. Google’s crawler (spider) doesn’t index these URL’s as often as they used to, because many spammers are setting them up in a way that they have infinite URL’s, which as you can imagine overloads the spider while indexing. It is much better to have static html URL`s (URL`s that stay the same all the time).

Site Updates: If you build a site, and then never update it, you might as well forget about the search engines as a means for generating customers. Search engines look very heavily at how often the site is updated, as well as the amount of content/pages within the site.

Daily updates are ideal; however, at a minimum, you should be updating your site on a weekly basis. This doesn’t necessarily always have to be new pages (although that is best), it could be that you update information you previously posted on your site to freshen it up, or update it based on new developments.

Leaving a site stagnant is the worst thing you can do in SEO (besides getting yourself banned for black-hat tricks).

Web page load time: Speed is an essential part of the “new Internet”. A large reason for Google’s success has been the speed with which it has been able to return results. Google founders, Larry Page & Sergei Brin have been obsessive about load times for their results, and that philosophy has moved into the algorithm’s ranking strategy. We all want a fast experience as an Internet user. Ensure your pages load quickly. Things like java & outside hosted images as well as video can cause slow load times.

Domain Name Length: Having a domain name like, www.mywidgetsarethebestwidgetsintheworld.com is an easy way to have your site ignored (or simply ranked on page 248). Short precise domain names are looked at as professional by search engines, and will at least get you a seat at the table during a keyword ranking.

Domain Name Type: .org .edu & .com are among the best weighted domain names. All things being equal, if a search engine needed to rank mysite.com, mysite.net & mysite.tv – they would likely be ranked in that order.

Server Reliability/Uptime: If the crawler finds that the server returns an error more than 0.2% of the time, your site will be penalized in the rankings. Ensure you are hosting your site on a reliable server that guarantees 99.9% up-time.

Content Uniqueness: Google (and other search engines) rely on engineers who can “cut the fat” out of the indexing process. One way they have managed to do this is by refusing to index pages that have duplicate content. If your page includes content that was copied and pasted from another source, the original source will be indexed as normal, but your page will not.

Amount of Content: For indexing purposes, the more content the better. Having said that, it’s been proven in multiple tests I’ve been a part of, that less content generally means more sales. This means, you have a decision to make when creating a page on your site, which is; do you want to design a page that will sell products/services, or do you want to design a page that is ideal for researching a product or service, for a later purchase.

Mis-Spellings & Grammatical Errors: If your page includes multiple spelling errors, or sentences that don’t make sense, the algorithm will identify them, and penalize your ranking.

Use of “Robot.txt File”: A Robot.txt file is a simple text file that tells the spider what pages you don’t want indexed. While this file may not always be necessary, having the page there shows the search engine you know a thing or two about web site creation, and therefore they will give your site a slight bump in rankings.

Age of site: The age of the site is used in determining the rankings. The reason behind this is that the majority of websites created are abandoned by their owners within the first 6-months. To weed out abandoned sites, Google typically ranks older sites first.

Trust Factors: There are several things Google looks for when determining the trustworthiness of your site. Things such as a privacy policy, terms of service, and badges from eTrust/Hackersafe are important factors for the area of trust.

Popularity of Website: Things such as number of unique visitors, length of time on site, and bounce rate are looked at when determining your site’s popularity.

While this list may look like a pretty exhaustive one, there are a reported 200+ main factors in the Google algorithm! Obviously, when you look at all the sub-sets of those 200 factors, you can be looking at tens of thousands of factors that go into ranking the world’s webpages for each individual keyword searched in search engines.

Having said that, if you can focus on the areas listed above you will have a clear advantage in your market.

Local Business Listing SEO

The algorithms used to determine organic results and the “Local Business Listing” are very different.

Most of the organic results best practices I’ve listed above will go 80% of the way to helping your business being ranked on page one of the Local Business Listing search results (i.e., in Google Maps). Simply by adding the geographic region you want to target in your keyword (e.g. Organic Keyword: Widgets – LBL Keyword: Widgets Ottawa, Ontario), you are there.

But there are several additional, VERY important factors in getting your results ranked on the first page of a Google Map search.

Again, there are both off-site & on-site factors used in determining your LBL ranking.

Off-site factors – Local:

Local Directories: Possibly the single most important factor for being ranked at the top of local results is having a strong presence in local directories. For Canadian businesses, look to be included in the Internet Yellow Pages, Canada411.ca, wcities.com, where.ca, ziplocal.com and yelp.ca. Speculation is that directories published by the Better Business Bureau and your local Chamber of Commerce are also used by Google’s local algorithm; however, there’s no conclusive evidence.

Restaurants, hotels & other tourist related businesses should also look to be included in TripAdvisor, VirtualTourist, IgoUgo & restaurant.ca.

Google Local Business Center: Google has begun creating “Place Pages” where information about your business is listed in a webpage format for users of local business listings. These pages exist for most businesses whether you do anything or not. Business owners are able to claim their place page, and include all the important information about their businesses. An essential first step in optimizing for local results is to claim your company’s places page, and update it until the status shows 100% updated. This means adding images, hours of operation, videos, etc.

Google Local Business Center Reviews: The user reviews section of the Place pages has proven to be a very important factor in ranking local results. There’s some great ways to get customers to review your business through Google including running a contest, or asking them to review it on your in-store computer immediately after helping them with something. You can also give away a free gift if they print off their review and bring it in.

Geographic Location: The dynamic part of local results is that Google will boost or drop your rank based on where you are relative to the searcher’s location (and yes – Google knows where you are when you search on their search engine – at least for most of you).
Local News: Having your business mentioned in a local news story is a great way to boost your local business ranking. A very well known local blog mention can also help.

Paid Search: This is perhaps one of the most controversial subjects; whether or not advertising in paid search (using local keywords) affects your rankings in the LBLs. My own personal research has shown than it does help, but if you search around, you’ll find there`s as much evidence to suggest it does not.

Local Groups & Social Media: The Internet has turned social. Twitter, Facebook, Yelp, Digg & other sites/services are looked at very heavily by search engines when determining local results. They look at where your circle lives geographically, how many people reference your business locally, and several other factors that suggest your local presence is prominent. Make sure to put your business in ALL of these social eco-systems, and remain active within them.

Updated WHOIS Information: If your WHOIS information is from a different geographic region than you are trying to rank for, it will have a negative impact on your LBL. If, however, the owner of your domain name is local to the area you are targeting, make sure the information is not hidden, and is fully updated to correspond to the contact info on your site and on your outside directory listings.

You can use the on-site SEO list for organic ranking to boost your local business listing by simply adding the geographic region to the keywords you’re looking to rank for. Local rankings also include several other important factors that would not be factored into organic rankings.

Here’s a list of the most important on-site SEO factors for local business listings:

Address & Phone Number: If you want to rank well for your geographic region you can’t simply have your contact information on a single page in your web site. It’s essential to have your phone number & address prominently displayed on every page on your site. The most traditional place for your phone number is on the right hand side of your header. Your address can be placed on the bottom of each page.

Also – 800 numbers have been proven to negatively affect your local ranking! Ensure that you have a local number listed.

Keywords to Match LBC Categories: When claiming your Google Local Business Listing, you are able to place your business in up to 5 categories. To boost your ranking within those categories, ensure the name of each category is within your site (without being “spammy”).
Google Map-Widget: Google has an easy to place map widget that allows you to place a map on your site with your address pinned to it. For best results, place this map on every page of your site (typically in the left or right column).

Links to Local Information: If you have the opportunity, place links to local sources of information within the content of your page(s). For example, if you’re talking about widgets and your local newspaper has a great article on the subject, reference & link to it in your page copy.
HCard: Many of you are familiar with VCard’s (Microsoft Outlook’s Virtual Business Card File Format). Perhaps less well known is the HTML version of these, called “HCard’s”. This helps the search engine’s spider find your contact information, as it is formatted in a clear, concise way that the spider recognizes right away.

KML File: A KML file is basically an XML file that is formatted for Google Maps/Earth. It allows you to place custom information in Google Maps/Earth where your business is. You can submit this file as well as include it in the structure of your website.

Conclusion

Canadian businesses, in general, have a lot of work to do to get up to speed in the area of Internet marketing. With a majority of people professing to using search engines exclusively to make purchasing decisions in virtually every vertical, there’s no excuse for prioritizing things like flyer delivery, and telemarketing above search engine marketing.

If while looking over this list you begin to feel overwhelmed, just remember that you don’t need to do everything all at once, and you don’t need to be perfect every time. Keep at it, and if you ever feel overwhelmed just remember that what you are actually doing is improving your customer service. They rely on search engines as their primary source of information, and it’s up to you to ensure they get the information they want.

To Your Success!

By Steve Hampton, search marketing specialist – BIGLocal.ca

BIGLocal is a full service search engine marketing agency based in Canada’s Capital, Ottawa, Ontario. BIGLocal specializes in pay per click search marketing, and guarantees to place your business on the front page of Google & every other major search engine every time a potential customer searches for your product, your service or your business. You can reach BIGLocal by calling (613) 424-3867 or visiting biglocal.ca.

The Complete Business Model

Posted on Saturday 16 January 2010

Introduction

The Business Model (BM) has come a long way in the last few years from a one page pictogram (or flowchart) of the ‘engine of your business’ to a many faceted model that fully describes the ‘engine room’ of the enterprise.

Let’s recall what the basic BM is: your clients are usually on the RHS (Right Hand Side) of the page, your business is in the middle and your suppliers are on the LHS. Typically, products and services flow from left to right—from your suppliers to you where you add some type of value and then through you to your clients and customers. Usually, money flows in the opposite direction: from clients to you and then from you to your suppliers when you pay them.

There is an orthogonal dimension in the model—a marketing dimension, which is where you demonstrate that you can (hopefully) acquire clients and customers in a cost effective manner.

We have also learned that a fuller picture of the enterprise can be formed when you look at least two dimensions deep on either side (and sometimes more). That is, you also look at who the clients of your clients are and who the suppliers to your suppliers are. In this way you may discover new relationships amongst the players and stakeholders and creative new ways to enhance your business. You are now looking at your enterprise as part of an overall business ecosystem and when you cement your place as a trusted part of that ecosystem, your business longevity is likley to increase.

In an earlier article (http://www.eqjournalblog.com/?p=684), I wrote that there are five things that the Internet can do for business models in the 21st Century that were never possible before including:

1. Create custom outputs from standard inputs (http://www.dramatispersonae.org/CustomeOutputsFromStandardInputs.htm).

2. Reverse out the work to clients and suppliers (http://www.dramatispersonae.org/GTBR/GettingTheBusinessModelRight.htm).

3. Embed your enterprise in a networked business ecosystem made up of your clients, your suppliers and yourself plus your clients’ clients and suppliers’ suppliers (http://www.eqjournalblog.com/?p=581).

4. Match making—directly connecting your clients to your suppliers making service industries scalable for the first time ever (http://www.dramatispersonae.org/TheInternetIsEatingAHoleInTheGlobalEconomy.htm).

5. Mass communication planet-wide through social media and other Internet tools at almost no cost (http://www.dramatispersonae.org/EntrepreneurialistCulture/FutureVision.htm).

The more of these elements that you can incorporate in a new or existing model, the more you are likely to prosper.

I want to elaborate a bit more on the implications of match making because it is not a widely understood phenomenon. Service industries are notoriously labor intensive and hard to scale: i.e., more output requires more input in a more or less linear relationship or, heaven forbid, you may even find yourself in a position where your ratio of marginal output to marginal input is less than one. This happens when a service business is too complex to manage effectively as it grows; that is, you find that there is an optimum size for the enterprise beyond which the business should not grow. In consulting, that size is often one person. As soon as you grow beyond a single practioner, your effective earnings may actually go down while the time to produce those earnings goes up. This is not a happy event and explains why you find so many one person service firms in real estate, management consulting, IT consulting, accounting, legal, plumbing, electrical, carpentry, Mr. Fix It industry, roof repair, mechanic, appliance repair, PC repair and maintenance, Network management and so forth.

But let’s look at one industry—the computer repair industry. If you are GradeATechs.com, say, and you view you’re your tech repair and network management specialists as your suppliers (i.e., not employees) and you can connect them directly to your clients through your website and call centre, you suddenly start to see your business in a different light. If clients can come online or phone your call centre to: a) tell GradeATechs.com what the problem is and b) when they are available for a site visit by a techie and your techies can log on and see what work is available for them and what calls they will take, you have reversed out a lot of the work to both your clients and your suppliers and taken the first step in making your service business scalable. When we actually draw up a business model, this match making capability is usually drawn like a ‘brain’ (since that is what, in effect, it is as these systems become more capable) over top of the business with lines linking to it from both clients and suppliers.

The Complete Model

The complete Business Model is today made of the following ten elements:

1. A one page pictogram (flowchart) showing the whole business ecosystem (your enterprise embedded in a network of relationships with clients, clients’ clients, suppliers and suppliers’ suppliers with an orthogonal marketing dimension showing how the enterprise will acquire customer and clients in a cost effective manner.) The business model shown below demonstrates the evolution of business models over the period 2000 to 2010.

From a simple Barber Shop that uses a revolving ‘barber pole’ as its only means of marketing and where all customers want basically the same things at the same price (a hair cut and a shave for $15) to a spa with diverse services and products that mass customizes its offerings and markets through c-list to a-list celebrities, this model has evolved to the point where for the first time in recorded history, a service business can become scalable.

Barber Shop and Spa Business Model Circa 2000 to 2010

2. A spreadsheet that shows the value proposition for a single customer or client. That is, you understand and can demonstrate in a clear and concise way how your new enterprise/product/service/division creates either lower costs or higher revenues (or hopefully some combination of both) for one customer. (For an example of how to demonstrate your value proposition, go to: http://www.eqjournalblog.com/?p=73. I did this to help a number of residential REALTORS I work with. The spreadsheet is at: http://www.ottawarealestatenews.com/ValuePropositionFSBOVersusAgency.xls.) Essentially, negative cost selling happens when you understand your customer’s business almost as well as they do. (For more about negative cost selling, refer to: http://www.eqjournalblog.com/?p=425).

The corollary here is that you should insist that your suppliers provide you with their value proposition too. Why should you expect less of your suppliers than you do of yourself?

3. A second spreadsheet is required that provides you with a financial model of your enterprise. Having done quite a bit of work in the field of urban economics, it has always amazed me that most cities, for example, don’t have a financial model that can tell them what the fiscal implications are of one more resident or, for that matter, one more firm locating in their town. Most cities have budget processes that are a mess. I produced a financial model for a backorder domain name service that you can safely download from our server at: http://public.sheet.zoho.com/public/profbruce/backorderdomaincorpfinancialmodel. From this model, the firm can see what impact each additional client has on the top line of the firm. The firm is also able to test the sensitivity of its top line to changes in the success rate of backorder capture, changes in its COGS (Cost of Goods Sold) and other variables.

Your value proposition for your clients and their impact on your business (which is measured in your financial model) are mirror images of each other. We complete the business ecosystem when your suppliers provide you with their value proposition and you also insist that they have a financial model of how your business impacts them. Why should you care if your supplier’s have a workable financial model? Well, the long term viability of your firm depends in part of a stable supply chain and it won’t be stable if your suppliers are failing on a frequent basis.

4. You should score your business model using our Business Model Scoring Test: http://www.dramatispersonae.org/BusinessModels/BusinessModelScoringTest.htm. You can compare your score with some major firms that we ran through the test a few years ago at: http://www.dramatispersonae.org/BusinessModels/BusinessModelScoring.htm.

5. One of the themes we return to often is that your enterprise will not be successful unless it can acquire clients or customers in a cost effective way. This is just as true of NGOs, Not-For-Profits or Charities. (It is also true that these types of enterprises also need to have complete Business Models including a financial model, its value proposition and the other elements described here—no one likes to give money to a charity, say, that burns up a lot of the funds they raise in administration. They need to be efficient too.) If your new enterprise requires heroic efforts to land clients, you won’t be around long and all the good things you planned to do will just not get done. So Guerrilla Marketing (and now Social Marketing) have to be part of your business model. You can test your GM using another online tool we developed: http://www.dramatispersonae.org/GuerrillaMarketingAndFinance/BMGGuerrillaMarketingTest.htm. Your GM Test score should also form part of your BM.

6. Having a great business model without the ability to execute is not very useful. That is, execution counts/ideas by themselves, even great ideas, are not enough. Take the online ECQ Test to find out more about your entrepreneurial ability: http://www.dramatispersonae.org/ECQTest/ECQ(ns)TestAuto.htm. Show your score in your overall Business Model too.

7. If you need to run Super Bowl commercials before you can get your first client, your new enterprise is unlikely to be successful. Similarly, there are business models that do not easily lend themselves to entrepreneurial startups. Perhaps they need enormous amounts of capital that simply can not be raised by entrepreneurs. The focus here is on enterprises that can be bootstrapped/self capitalized. So the business models we are looking for use Bootstrap Capital to start their new enterprises. VC-funded startups are excluded from consideration here. Hence, you need to show where the capital is coming from and how you are going to self-capitalize your business model. Read more at: http://www.eqjournalblog.com/?p=45.

Here is an example of a home building business that was started for $500 and is, eight years later, doing about $30 million in volume per year. Now it’s true, Best Homes 4 U (not the real name of the startup) got started by doing what is essentially a ‘consulting’ type business: they built decks, fences, gazebos and did small renovations and additions to begin with. But even there, the two Founders (Bill and Josh, not their real names) knew they needed a Bootstrap Capitalization model.

For example, if they got an order for an $8,000 deck, they would take a $4,000 deposit upon signing of their Agreement with the homeowner. Then they would take two progress payments of $2,000 and $1,200 during construction leaving only $800 to be paid when they completed the job. Furthermore, they arranged trade credit from a lumber company (with 30 day terms) to give them more room to breathe (so to speak).

Bill and Josh understood the ‘golden rule’: “He (or She) who has the gold, rules.” They ‘got’ how important it is to have cash in the bank. [In fact, entrepreneurs and CEOs of much, much bigger enterprises also understand this. They manage their businesses by basically tracking cash and cash flow using three simple measures: AR and AP at the beginning and end of each month as well as their bank balances at the beginning and end of each month. Cash doesn't lie while accounting statements often confound even the most sophisticated analyst.]

When Josh and Bill were ready to tackle bigger things, they optioned a $2 million piece of property for just $500 from a friendly landowner, stuck a few signs up, created some great house plans and spent a summer pre-selling from a trailer on-site. They got supplier credit from Trade Contractors (drywallers, lumber companies, footing and foundation installers, truss manufacturers and the other 25 or so trades they needed to complete their homes).

That summer, they also pre-sold ten homes, collected $40,000 deposits on each home, signed APSs (Agreements of Purchase and Sale) at an average price of $550,000 per home and then pledged those APSs to their Bank for a LOC (with a LTV (Loan to Value) ratio of 50%) to raise another $2.75 million. They also put a value on their time and effort (to do the designs/do the marketing/do the sales/manage the project and construction) of $400,000.

So instead of sitting around and bellyaching that they needed $8 million in financing before they could even start their business, they went out and used what is essentially ‘free’ capital sourced from the deal flow: from suppliers (who trusted them; e.g., the landowner got paid for his lots only when they sold each home), from launch clients’ deposits, from their clients’ strong credit scores and PBSs (Personal Balance Sheets) which they pledged to their Bank and from their own sweat equity.

Here is their Bootstrap Capital Model for your perusal:

Boostrap Capital Model/Best Homes 4 U

8. To succeed, a startup does not necessarily have to find a never-before-tried-idea. Perhaps the reason it has never been tried is that it is a bad idea. Maybe instead, you decide to tackle an existing industry. But at a minimum you need to have something that differentiates you from existing firms—you need some Differentiated Value or ‘Pixie Dust’. As part of your BM, you need to be able to succinctly explain your value proposition (http://www.eqjournalblog.com/?p=394) and convincingly demonstrate that it contains significant pixie dust (http://www.eqjournalblog.com/?p=9).

9. Another aspect of a BM that will help you make sure that ‘the harder you work the more money you will make’, is the Cash Conversion Cycle. What good is a fast growing business if you go broke in the process? Don’t think that can happen to you? Sure it can if your CCC is too long. Basically, this means that if it takes too long for you to collect your receivables or you have to pay for your inputs too long before you can deliver your product or service, your enterprise is doomed. The entrepreneur’s credo is ‘collect early/pay late’ for a reason. Some businesses grew as fast as they did (like Dell for example) because they took this to heart. Dell didn’t make anything it its early days unless they were prepaid—they kept practically nothing in inventory. Consumers and businesses pre-ordered and pre-paid for their PCs and, hence, Dell had a CCC that was negative—which meant the more they sold, the more cash they had on hand which for a startup is absolutely essential. The CCC is calculated as follows:

CCC = ART + INVT – APT,

Where:

ART is Accounts Receivable at Year End,
INVT is Inventory at Year End,
APT is Accounts Payable at Year End.

You can read more about this at: http://www.eqjournalblog.com/?p=610. The actual calculation of CCCs are surprisingly complex and so I put a spreadsheet online to help you with this: http://www.dramatispersonae.org/BusinessModels/CashConversionCycleMeasurement.xls.

10. Lastly, we developed an online tool, the BMG (Business Model Generator) to help you get started. The landing page is at: http://www.dramatispersonae.org/BusinessModels/BusinessModelGeneratorLandingPage.htm and the actual Generator is at: http://www.dramatispersonae.org/bmg/. It seems to work best using IE (Internet Explorer) and, even though I use Chrome for almost everything, I use IE when accessing the BMG. This tool is something to help you get started but I expect that you will take what you have learned by using it and what you have learned here and develop something much better.

Conclusion

Business modeling is a relatively new field of research and practice and will undoubtedly evolve extensively in just a few years. The Internet is having a profound impact on the way we design business models and the way we execute them. I predict that this will continue for a long time yet—the Internet is just a baby and will subsume everything in its path—perhaps even including RL (Real Life) as we are already starting to see technologies that overlay information on the reality we perceive around us. However, if you are able to ‘get’ what we are driving at above, you will be way ahead of the curve as it exists today.

Prof Bruce

The Project Wonderful Launch

Posted on Friday 15 January 2010

How to Populate a Site

Many people believe that marketing for the launch of a new product or service is a mysterious process. Not so. There is no ‘secret’ to marketing success. There is no magic button that you push and then sit back, relax and watch the traffic counter on your website suddenly go to warp speed. You still need to use ‘shoe leather’, that is, stop trying to push on a string. Sometimes, all you need to do is to ask people (either in person, by phone, by email or through your network of friends on the Internet) to support you and they will. It also helps if you have the endorsement of some influential people in your industry.

I recently asked Ryan North how he launched his democratic and transparent advertising engine, ProjectWonderful.com (which has become terrifically successful) and this is what he answered:

a) Qwantz.com was the main thing. It taught me the value of a “celebrity” endorsement. (The celebrity Ryan is talking about is himself, a well known writer of the daily dinosaur comic strip found at Qwnatz.com, Ed.) We had tons of people using PW on day one—I talked directly with everyone (sometime by phone, sometimes by email and sometimes by blogging about it on my site and others that I respect) and they were just waiting, eager for me to launch—so much so that I had to throttle signups just to keep up. It was one of the most flattering things ever to happen to me, even if I have to be a bit egotistical to refer to myself as a c-list Celebrity here.

b) It also helped that I have an IT background and was using PW myself. As a content creator, I knew what other publishers were looking for and needed. I also understood the other part of the equation—what advertisers were looking for, for example, I gave them control over the pricing for their own ads. That is, they were able to make their own determination about what the traffic on any site (and the quality of that traffic) was worth to them. I also protected the publisher because the price of each ad is posted right underneath each PW display ad and another advertiser can come along at any time and outbid the first advertiser. So rates are set by advertisers in a completely fair and transparent way while at the same time, content creators get full and fair value because the advertisers compete for the space.

c) Twitter would certainly have helped but PW launched before Twitter had traction, and I wasn’t using it then. If I had been, though, I would’ve posted about it. At the time I used blogs and other social media in much the same way.

d) Having a good product that solves a real problem as I did with PW was key but even so if you want to fast forward word of mouth and grassroots growth, having an opinion-maker (which doesn’t have to be a celebrity, but someone who others respect) using your product really helps. I think this is why companies send products out to people for their review but a product review is sort of a pale echo of what I actually was able to do with PW. An opinion leader reviewing your product/service is good; the same person actually USING the product/service day-to-day is way, way better.

I hope this helps! And yes, please feel free to share it with your students.

Ryan
qwantz.com

Ed. Note: I think Ryan’s pixie dust (other than the fact that he is a brilliant tech guy) is his quirky personality which people picked up on with PW. He spread the gospel of an open advertising platform through a vertical—comics, socially aware content creators and off beat personalities who ‘get’ Ryan. It then spread fast. But Ryan’s own recommendation and his ability to make direct contact with hundreds of launch clients was huge as well…

The Internet Revolution and the Business Model

Posted on Thursday 14 January 2010

Humans have been trading on this planet for 100 centuries. Never in all that time has it been possible to produce, for example, custom outputs from standard inputs. If you were an artisan (we now call them consultants), you produced unique results from a unique input (the highly trained artisan himself or herself). Or if you worked on an assembly line (such as the line that produced Henry Ford’s Model T), you produced standard products from standard inputs. As Mr. Ford said: “You can have any color of car you want as long as it’s black.”

Now for the first time you could create a business model for, say, a home building firm that produces unique homes for every individual using standard inputs. By allowing your clients to visit your website to configure their lot, their design and their finishes from 1,000s of choices, every homeowner could have a unique building. Costs may also be lower because your firm has reversed out so much of the work to a more than willing customer.

So here are five things that the Internet can do for the business models of your 21st Century enterprises that were never possible before:

1. Create custom outputs from standard inputs.
2. Reverse out the work to clients and suppliers.
3. Embed your enterprise in a networked business ecosystem made up of your clients, your suppliers and yourself plus your clients’ clients and suppliers’ suppliers.
4. Match making—directly connecting your clients to your suppliers making service industries scalable* for the first time ever.
5. Mass communication planet-wide through social media and other Internet tools at almost no cost.

This is just the start. I predict that the Internet will take as long as electrification did (about 120 years) to find its way into every aspect of our lives and revolutionize the way we do things in every respect. If that is correct, we will still be improving and changing our business models as the Internet continues to mutate circa 2114.

Prof Bruce

* Scalable means that MR/MC > 1.0. i.e., Marginal Revenues/Marginal Costs are greater than one.

Secrets to Attracting and Keeping Clients

Posted on Sunday 3 January 2010

For Lawyers, Accountants and Other Professionals

The Power of the Brand

Most people don’t understand why branding is important—it might be a personal brand (i.e., yourself) or a company brand you are trying to build—whatever it is, branding is important for one over-arching reason:

People like to buy from people they like and trust,” Prof Bruce, Ottawa, Canada.

Or put another way: “Have you ever bought anything from someone you didn’t like or trust?” The answer is probably “No” or if it is “Yes” then you only did it once and never again.

You build your brand (or in the case of an individual, your reputation, which is your personal brand) because it engenders trust. Trust is the most important thing in business and probably in life. I can easily convince my students of this simply by asking them a question: “What if your girlfriend (or boyfriend) was fooling around behind your back, what kind of relationship would that be?” You can see their eyes go back and forth as they recall a situation they may have experienced—then they understand.

What a well respected brand creates is the opportunity to sell successfully. Here is how it works:

1. You work hard (for years) to establish a reputation for good work, high ethical standards and trustworthiness.
2. Trust creates an environment for you where clients will send you more and more of their work.
3. Trust creates an environment where your clients will refer other clients to you.
4. Trust gives you breathing room when you do make a mistake: people will cut you a lot of slack even then because they trust you.
5. Trust creates a personal brand for you individually, independent of your firm.
6. If you change firms, many of your clients will follow you because they trust you and have confidence in you.
7. Trust creates a brand and a brand creates a marketing opportunity and you can turn that market into sales or as my wife, Dawn likes to call it ‘IGA money’, money you can touch, feel and spend.

Here is the process in a diagrammatic format:

Marketing Creates Trust in your Brand and Trust Powers Sales

[Marketing Creates Trust in your Brand and Trust Powers Sales]

A good example of this process at work is the marketing that Clarica Life Insurance (now a Sunlife Financial member) did when they first came on the scene. For example, a man is seen in a restaurant waiting for someone to come out of one of the W/Cs because it isn’t clear to him which is the men’s and which is the women’s. The ID signs are ambiguous. When finally someone does exit, the person is so androgynous that the poor guy still can’t figure out which is which. Fortunately, a Clarica agent is waiting in the wings to clarify the situation. A whole series of television ads were done using this theme and a sense of humor and they made an impact on the marketplace. But why did Clarica invest tens of millions of dollars in a marketing campaign like that? It is instructive to find out why.

First, let me ask you another question. How many of you have wanted to get up off the couch after watching an insurance commercial and place a call to an insurance agent to buy some life insurance? Right. Zero.

There isn’t even a call-to-action at the end of these Clarica commercials; selling life insurance is not like the type of selling that Vince (aka Billy Mays) uses for ShamWow! products. “Call now. Operators are standing by to take your order at 1-800-555-5555 and if you call right now, we’ll give you an extra set for FREE!” doesn’t work for most products and services.

So why did Clarica run these commercials? If you look at the diagram above, Clarica was marketing by way of a marketing process to build their reputation and brand. A good reputation and solid brand created trust in Clarica in the minds of the public. So then, when a life insurance salesperson sits down with John and Sally Smith in their living room to sell them life insurance, John might say: “Oh, I have heard of you!” John and Sally already trust the salesperson before their first meeting ever takes place.

Right off the bat, they trust Clarica a heck of a lot more than they trust, say, a representative from the Pirate Insurance Company of Kinakuta (a fictional country featured in Neal Stephenson’s novel, Cryptonomicon). So if you are thinking about trusting the future of your family to either someone representing Clarica or the Pirate Insurance Company (who you have never heard of before and who hasn’t spent a ton of money creating their brand and a reputation), you are probably going to go with Clarica.

Note that Clarica doesn’t sell a thing through their marketing; they have established a separate sales process to do that (i.e., having thousands of life insurance agents out there, making meetings and actually doing the selling.) If you meet anyone whose biz card reads, say, ‘VP of Marketing and Sales’, say hello to someone who doesn’t have a clue as to what their job really is.

So a sale, any sale, actually gets completed because of trust: the client trusts you and, therefore, they are willing to buy from you. That’s the real secret to successful selling: creating trust. Again remember, people like to buy from people they like and trust.

Ethics and Branding

Let me start with ethics. There is nothing more important for you and your career than your reputation. When I was just starting out in business in 1982, a wealthy lawyer by the name of Kent Plumley (he made a lot of his money as an early stage investor in Mitel and later in Newbridge) told me: “Bruce, the number one thing you have to remember is: protect your reputation.

I thought that was easy for Kent to say, given that he was sitting on millions. But as I grew older I realized he was right. Do you know why?

When I was starting out, one of the real estate lawyers who helped me also helped herself. We noticed that whenever we were closing on a property, another developer always seemed to be in the same area, sniffing around. It wasn’t long before we figured out there was a leak in the law office we were using at the time and, with the help of the senior partner, we set about trying to prove it. Unfortunately, it turned out to be the case. It was a devastating blow to the firm and the lawyer involved was summarily dismissed. She was never a significant player after that in the real estate business in Ottawa.

I don’t care what city you are in (a small city like Ottawa, a mega city like NYC or a city like Buenos Aires, the Paris of South America). Every city is controlled by a small number of business and political leaders. In Ottawa, the number of real movers in tech or real estate or any other major economic engine probably numbers no more than 600. In NYC, it’s more but probably not more than 2,500. So it’s a small number really.

What that means is that if you muck up your reputation, you probably have to move. Better to keep it in the first place, right?

‘Intricate’ Your Clients

You all know the one about the Ford Motor Car Accountant who sat on their BOD? At every BOD meeting, he kept pressing the Board to shutter factory after factory. That was his entire contribution to the debate on going at the time (circa the 1980s). Finally, one of the other Board members told him: “Imagine how much money Ford could save if we closed all of our plants?

It’s thinking like this that has led the Big Three North American car producers to the edge of the abyss and it’s also why newly installed GM Chairman, Ed Whitacre has sacked just about every senior GM manager including their most recent CEO. Big Ed needs new people with new ideas who can turn GM around.

In today’s world, you need to do more for your clients than tell them the obvious. I can’t believe how many accountants add little value to their clients’ businesses. If he or she tells me that if next year you increase revenues by x% and reduce your costs by y%, you’ll make more money next year than you did this year. Gee, I had to pay $350 an hour to hear that? It reminds me of what one Manager said to his star player when the Atlanta Braves were perennial losers and the player came in to ask for a raise. The Manager said: “I reckon we could’ve finished last without you.

If you want loyal clients, clients who send you work year in year out, you’ll have to better than this: you have to make yourself indispensable. As my friend, the late Elliot Richardson, former Attorney General of the United States, said when we were trying to Bring Back the Senators: “Bruce, first we’ll intricate the NHL. Then we’ll get the franchise.

(In Elliot’s honour, I added his word to UrbanDictionary.com: http://www.urbandictionary.com/define.php?term=intricate+)

How do you do this? One of the ways you intricate your clients is simply by the passage of time. If for example, it’s legal or accounting work you are doing for a client, the fact that you have their entire history is a huge advantage for you. If your client is buying real property, mortgaging it, doing a merger or acquisition, starting a new division, whatever, the fact that you have their files is very important.

But I can’t believe how many law firms and accounting firms don’t harness the data to make themselves indispensable*.

(* The data can be as simple as remembering and filing your clients’ clients and suppliers’ contact information. Recently, a client of mine complained to me that every time he need his lawyer’s assistant to do something for him, he needed to give the legal secretary the telephone numbers, fax numbers and email addresses over and over again. This is ridiculous. If you are going to be a ‘deal maker’ type of lawyer or accountant, then you need to be able to talk to the clients and suppliers of your client.

If, say, you are trying to get a real estate transaction closed for a client, you may need to talk to your client’s Banker, Surveyor, Environmental Consultant (for, say, a Phase 1 Environmental Assessment), Insurance Broker (for an insurance binder), Title Insurer, Mortgage Broker, Appraiser and a half dozen other suppliers to your client as well as your client’s client (perhaps the Seller, the Buyer or Investors). I can’t tell you how many lawyers just sit and wait to be told what to do instead of taking the initiative to contact on behalf of their client all the stakeholders involved in a closing. And then they or their legal assistants can’t find or remember their contact info including email addresses, web sites, fax numbers, telephone numbers (not just at work but cell numbers and even home numbers too), snail mail addresses, etc. Your clients will thank you and become more loyal to you if you relieve them of a lot of this burden and they won’t mind paying you and your staff extra because paying you to do these things let’s them concentrate on growing their businesses while you focus on getting deals completed for them. They won’t want to move to a new law firm or accounting firm for a lot of reasons, one of which is that they will need to train a whole new crew to become familiar with their business’ ecosystem.)

I tell my wife that in my consulting practice, my true J.O.B. description is that I am a file clerk. She laughs (thanks, Dawn) but it’s true. My clients are generally hopeless at keeping their files straight so they are always coming to me. Simple but true. You can do it too. I put a huge amount of effort into capturing data electronically; I must PDF a few thousand documents every year for clients and I can get their information much faster than they can. Information is power. (I also make sure I capture the data on multiple backups too BTW.)

Technology and You

I remember trying to convince my law firm way back in 1982 to buy a fax machine. They were recalcitrant in the extreme or, at least, that’s what I thought. “Why do we need a fax machine,” my lawyer said. “We have couriers!

One of the most important aspects of providing your clients with the highest possible service level is raw speed. I tried for over a year to get them to invest in a bloody fax machine. Fax machines are a classic case of network effects: what is the value of owning the only fax machine in town? Not much. As more people adopt them, the value of my fax machine goes up: I have someone to talk to!

Speed is key. Fax machines allowed us to increase the speed with which we were able to do things in business in the 1980s. The Internet is capable of increasing the ‘speed limit’ in your city even more. (I’ll elaborate on this in a minute.)

I think that every city economy (which is really a city-state in the sense that, for most people these days, your economic well being is probably far more tied to how well your local economy is doing than the national or global economy) has a certain ‘speed limit’ intrinsic to it. It is the maximum speed at which a local economy can move which is limited by many local factors such as how fast your lawyer moves, how fast your local financial institutions react to your requests for financing, how fast your customers make up their minds, how fast your suppliers can move, etc.

My perception is that business moves a lot faster in Hong Kong, NYC and Singapore than it does in Toronto, Calgary or Sydney. And Toronto, Calgary and Sydney move a lot faster than folks tend to in places like Ottawa and Vancouver say. Anything that increases speed in your city-state will increase overall productivity and increase overall financial well being there. The reverse is, unfortunately, also true.

The investment we all made in computers and, especially, personal computers didn’t really pay off until we added a communication aspect to them: email, the browser and today social networking. Email is a push technology while the browser and social networking are pull technologies. The so-called killer app on the Internet in the 1990s wasn’t email or pornography or video on demand or any of the things that you may have thought it was: it was the browser. Today, it’s social networks—sites like Twitter that allow you to follow and be followed by hundreds or thousands of people in your business ecosystem and to communicate with them effectively in seconds by pulling them to you instead of pushing yourself on them…

Mark Andreeson’s invention of the Mosaic Browser (which later became Netscape) really was the key invention for sharing (communicating) information on the Internet in its early days. Think about your own use of the Internet in its infancy: how many times are you using Google for research, how many times are you checking out websites for information? It is a far more important use than email.

Facebook, Twitter and WordPress are the harbinger of new ways to organize our business communities and professional communities online.

(You can follow me on Twitter at: http://twitter.com/ProfBruce or read my blog at: http://www.eqjournal.org/.)

Selling Your Services

The THREE TOP THINGS in entrepreneurship are SALES, SALES, SALES. It doesn’t matter if you are a professional and an expert—you still need to be able to sell because you are also an entrepreneur even if you don’t call yourself that.

If you want to make a sale, here is my list is how you communicate (in descending order of priority):

1. Face to face meetings are ALWAYS preferred.
2. By phone.
3. By social network and blog.
4. By Browser.
5. By Fax.
6. By IM.
7. By Snail Mail.
8. By Email.

Notice how social network, blog and Browser rank third and fourth, respectively on my list. I know that many professionals think of their online presence as nothing more than a glorified brochure—a static document that rarely gets changed. Well, think about that for a minute: your website is narrowcasting 24/7 to your audience the same thing over and over. It’s like every channel on your TV broadcasting reruns of I love Lucy; no, it’s worse than that. It’s like every channel broadcasting the same episode of I love Lucy all the time.

So maybe you think that what I am getting at is you should tell your office managers to get with the program and change the background colour of the home page every once in a while? Nope. What you need to think about is that your firm’s website is a method of two-way communication. Clients can come to your website to find things out but they can also come there to contribute too. This is called reversing out the work* and is a huge part of what the Internet revolution is all about. It’s a huge boon to productivity and to speed too. Let me give you an example.

(* For more detail about how to get custom outputs from standard inputs, you can go to: http://www.dramatispersonae.org/CustomeOutputsFromStandardInputs.htm. This is by far one of the most important changes that the Internet has brought to our global economy. For the first time in history, it is possible to give customers customized products using standard parts. It’s sometimes called ‘mass customization’. It’s what made Michael Dell billions of dollars.)

Let’s say you are a lawyer working for a large homebuilder in Tampa; you know your client is likely to sell 800 homes next year. The way the system works now, their sales people sit down with homebuyers (for many hours) and fill in paper APSs (Agreements of Purchase and Sale). These APSs are submitted to head office where they are signed and a copy is returned to the sales office for transmission to the happy couple; one copy goes to their lawyer, one copy comes to you (the homebuilder’s lawyer) and one stays in head office for later transmission through to the accounting department and later to their auditors.

Of course, homebuyers will want a few changes to their Agreement after they have thought up a dozen or more changes in their house plans and finishes, so there has to be another process to capture those COs (Change Orders) and make sure they get paid for as well.

But what if we had a different process that went something like this? The homebuyer goes to the homebuilder’s website. They can ‘build’ their own home online: select a lot, add finishes, change the design a bit, whatever and they can also see what all this will cost them. If it’s too much, they can take out some of the options themselves. When they’re ready to buy, the APS reflects the work they have done and is automatically submitted to their lawyer, to you and your client, the homebuilder.

Much of the work has now been reversed out to your client’s clients. Your client’s clients actually like interacting with the homebuilder’s website. And this saves an incredible amount of time for the builder’s salespeople.

The retail customer is a special breed: they are huge time wasters. Even if the salespeople had to spend an hour showing each set of clients how to use the homebuilder’s website (to makes use of the online construction engine and price calculator), they could easily save ten or more hours of fussing with customers as they try to decide on their flooring, carpeting, cabinetry, vanity, lighting, counter top or plumbing packages.

Now you may ask why should you care? You’re only providing legal services. But you know what I said above about ‘intrication’, if you are part of your client’s processes and eco system, then you are much more valuable to them and very hard to dislodge.

Also, capturing your APSs online will hugely speed up the sales process and your closings too. Speed goes up, productivity goes up and your income does too.

Now I had a devil of a time trying to convince my brother, Peter (a lawyer in Victoria) to even buy a computer. He has since discovered email and that’s good but as you have probably gathered here, I believe that this is a lesser benefit of what the Internet actually can actually deliver. It doesn’t worry me or disappoint me that the Internet revolution is so slow. It took decades for electrification to reach pretty much every corner of the economy to the point at which I am sure that you can not contemplate operating a modern economy without it. I know that the Internet is not even close to reaching its full impact on us. That is still a few decades away*.

(* If you are interested in getting some idea of what the Internet will do, read Neal Stephenson’s Snow Crash. When you read it, remember it was written in 1989 to 1991 before the browser, social networking and blogging. It is that much more impressive because of when it was written. Ignore the story. It’s the actual uses that the main character puts the Internet to that are of interest. Stephenson calls the Internet the ‘Metaverse’, a better term I think than cyberspace. It’s a whole other essay to tell you what the productivity implications are of the Metaverse but suffice it to say it will dwarf what we are doing today. A lot of research is going on to turn the Internet into ‘stereo space’ but you’ll have to read the book or wait for another essay to get more info on it.)

Peter likes email today, but it has its limitations: notably the spam problem as well as the fact that email can not clearly convey either the importance of a subject or the nuances that are so important in human communications. Another problem is that it is a push technology. One of my clients, a CEO of a major corporation, told me that while he used email to communicate company policy to his employees and to spread the company’s message and culture, an important part of creating a team out of all the diverse characters at any firm, fewer than 15% of his colleagues even bothered to pen his emails.

That is how many actually open his emails on average. We don’t know how many of them actually read it. When an email is more than a few paragraphs practically everyone prints them out* if they are going to read them at all.

(* That’s why email newsletters are often quite useless. Sure they’re practically ‘free’ to distribute but you get what you pay for. Readership is very low. No one has the time to read them and, if they do, they will want to first print them in order to read them. Starting a newsletter to keep in touch with your clients can take a lot of effort. Is it going to be read? Many firms still find that if they want clients to read their newsletters, they still have to snail mail them.)

What we did for our CEO client instead is we created a personal website (PWS) for him on their Intranet where he could post his thoughts and his employees could browse them when they had time, when they needed information on company policies, directives and direction. We taught him a few basics in less than an hour: like how to post something to his PWS, how to add an image or graph and a few other simple development skills.

He can get up at 3 am and post important notices on his PWS: this is pull technology. The next day he can alert the people who need to know by phone or in F2F meetings that the info they need is there. This works much better and is a far more productive use of both the CEO’s time and his employees’ too.

Of course, today, CEOs, COOs and others can use online tools for free that are self taught in a few minutes of effort.

Notice how this is disintermediating the techies. Our CEO client learned basic web development skills (in less than an hour). All of my students are required to learn basic web skills and I encourage you to do it too. If I can learn how to do this in my 40s and 50s, by golly, you can too.

This is heresy to most IT departments plus marketing and office managers as well as compliance officers aren’t going to like it either. They like controlling the firm’s website and messaging; they don’t want you to have access to your little piece of it. Too bad and tough luck, I say. The productivity gains for you, the higher revenues you will generate and the better service levels you will offer your clients outweigh their concerns about every corner of the website having the same look and feel and avoiding any possible increase in liability.

Intra-company email can be an even bigger time waster with all its unnecessary cc and bcc emails than outside spam is. In one tech firm I advise, we introduced a no cc or bcc policy—if you needed to send a cc to someone, you had to go into your sent files and forward it directly to the third party with an explanation as to why they need to see this email. The resulting reduction in intra-company email was formidable.

Let me give you another (and last) example to try to drive home this point. I am a consultant to a real estate company active in industrial leasing. I maintain a lease agreement for them which is stored on the server side of our IT infrastructure. What that means is that it isn’t stored on my PC’s hard drive. The client, the client’s clients and the client’s legal firm can all get access to the server (just to the little piece of it that stores their data). This means that if their lawyer needs to make a change to their standard lease agreement, she can get at it in only one place: our server. She updates it and saves it, to the server. This is known as source control; there is only one copy of the document but everyone can share it and you know that you are always working with the latest version.

This is hugely different from passing around lease documents (or any legal document or accounting record for that matter) by email for people to use or to comment on or to redraft or update. You are never sure if you have the most up to date copy and you might be adding your changes to an older version of the document. So you can end up with a dozen different documents, none of which contains all the necessary changes. This is very inefficient and opens up the law firm or accounting firm to unnecessary liability if their clients are using defective documents.

You have all experienced this problem. The answer is working on what is called server-side documentation. For my client and his salespeople, they know that if they download the document using a browser* (or for the somewhat more technologically sophisticated, using FTP (File Transfer Protocol) software), they are always using the right lease agreement.

(* They can use a Browser since we land them on a secure page that requires them to use their personal password that generate for them.)

Now you can see how efficient this can be and you can see how I have intricated myself into my clients affairs (I control their documentation: information is power.) So build a PWS, use social networking tools and use them for more than just a nice brochure or puff piece about yourself.

Deal Maker or Deal Breaker?

The passage of time and being good at keeping files only gets you so far. You need to be a deal maker rather than a deal breaker to really become a permanent part of your clients’ ecosystem.

As an Accountant, it is much easier to simply be a bean counter; do the double entry bookkeeping and leave it at that. But anyone can be good at that and therefore you can be replaced pretty quickly if someone else will do it a bit cheaper.

One accounting firm that I know, intricates their clients by providing their management and ownership with what I call Personal CFOs; that is, they know, how busy these people are so they have bookkeepers visit them in their offices or in their homes to do personal bill paying, make personal deposits and generally handle personal financial affairs. These bookkeepers tie into their tax practice: so that personal tax returns are a breeze. And because they are doing the personal work, they can provide advice on tax strategies for the business too. As my father, the later Professor O. J. Firestone once told me: “Son, be proud to pay your taxes in a great country like Canada. But don’t pay more than you have to.

One young lawyer I worked with in my early days, Bill (not his real name) was a funny, profane, charismatic guy who was a terrific deal maker. He had so much charm that he could get away with saying practically anything. I remember at one meeting we had with a fantastically wealthy home builder, Ian (not his real name either), Bill said: “Now Ian, I know you want to pay $6 million and Bruce wants to sell for seven. There’s no f’ing way Bruce is going to sell at your price and no f’ing way you’re going pay his price so let’s stop frigging around and cut the crap and you both agree to six and a half and let’s go get a glass of wine right f’ing now.

I couldn’t believe it but Ian, who was a real gentleman, burst out laughing and we made the deal. Not I am not suggesting that you brush up on your slang but I can tell you without a doubt that the vast majority of accountants and lawyers that I have known are deal breakers not deal makers. You want more clients, better clients, more interesting work? Then be the latter type of professional, OK? Find ways to make things happen for your clients.

Quick what do Gary Bettman and Bob Goodenow have in common? They are both lawyers. Together, they led the NHL and NHLPA into the abyss during the NHL’s 2004-2005 lockout of their players. Why would you send two lawyers into a room by themselves to work out or negotiate anything?

Lawyers are trained to state the case for their client in a forceful and convincing manner. No doubt Gary and Bob do this supremely well. They are both super bright, talented guys but I wouldn’t call either of them deal makers. They needed to have players and owners in the room without which, nothing was going to happen.

It takes years to unlearn what your schooling and profession have taught you. But if you want to become indispensable to your clients, you need to do this.

Billing your Clients

Clients hate the feeling of being nickel and dimed.

I can remember the day that Ted Beament completed a large and complex negotiation for my family. It was a long time ago now—1972 and the final agreement had been reached to gift the Firestone Family Group of Seven Art Collection to the people of Ontario. The Ontario Heritage Foundation took ownership and control of the Collection and the family home in Rockcliffe Park (which was then used as a museum to hold the Art).

Mr. Beament, a former Captain in the Canadian Armed Forces and a WWII hero, had returned to Ottawa after the War to create his own legal practice. He was successful; his reputation for integrity and competence was exemplary.

Ted had two bills that day for my father, Professor O. J. Firestone. “Jack,” he said. “I have two bills for you. The first one totals $ _______ which is for our time and disbursements in this matter. The second one is for $ _______ more. Now if you don’t want to pay the second one, I’ll tear it up right now. But in the past, you know that sometimes I have adjusted our firm’s billings down because the results for you weren’t worth paying those kinds of fees for and I didn’t think it was fair for you to pay them. But in this matter, I feel that the results have been extraordinary for you and your family and I think our services are worth more to you than just our time on this.

My father picked up the second invoice and said: “Ted, you’re right.

Customer Churn and Horsepower

I tell my students, that it takes years to create a great business. Sir Terrence Matthews (founder of Mitel, Newbridge, March Networks and many other firms) told me it takes at least 7 to 12 years to build a great business. If it takes Terry 7 to 12 years, it’s probably going to take you and me longer. I also tell them that if you want to learn how to get rich quick, you can leave now. I don’t know how to get rich quick and I am pretty sure that you have better odds of getting rich quick by buying lottery tickets than you do in professional practice or business.

You can’t plan on winning the lottery but you can plan to get rich, slowly. Build your practice one client at a time. Even mighty IBM starts off every year at $0. They don’t suddenly go out and sell 85 billion dollars worth of stuff on day 1 of their new fiscal year: they build their business one customer at a time just like you do.

If you have great clients, even if the number of them is small, and you keep them happy, your practice will grow. There is practically nothing worse for a business than customer churn. Churn is very expensive: it takes time, effort and money to attract clients in the first place and to replace them if they leave. The customer that comes in the door and needs a tax return for herself and her spouse isn’t a $1,500 customer. If they stay with you for ten years and all they do with you are personal tax returns, they are a $15,000 client. But if they bring you their business audit and other work and referrals too, they represent a lot more than that.

As your clients develop their careers, they can bring you along for the ride. One of the things that I look for especially in legal work is horsepower. When we were closing the purchase of an expansion franchise with the NHL in December 1991, I remember stopping counting the number of lawyers working on the transaction in Ottawa, Toronto and NYC when I got to 35. As your clients’ businesses grow so do their demands and you need to be able to grow with them.

Timeliness is another one of those crucial elements: you just can’t be late. Whether you are preparing tax returns, closing a transaction, conveying real property, whatever, don’t be late, ever.

A client of mine just fired his law firm of 15 years because they were chronically late. The partner in charge always had a number of good reasons why they were late. But so what? He got fired anyway.

Here is a comment from Dan Warren, CA, who has built a very successful accounting practice by paying attention to quality, reputation, service and also being a part of the solution for his clients instead of being part of the problem:

I tell our people that if they focus on the quality of their work, have frank and honest communication with their client and (as you say) try to make themselves indispensable, they will be successful.

I have found that as some professionals age, they act as if they are more important than their clients. While they did not start out being arrogant, some seem to develop that attitude. This is the starting of the end in my view. A good dose of humility now and again keeps professionals grounded and focused.

One attribute that is worth mentioning again is responsiveness. I think it is very important for a professional to get back to their clients on a timely basis. Clients notice this and appreciate it. Now it is not always easy to do. I started this email to you this morning and had to run out to a one hour meeting. During that time, I have received 15 emails and 4 phone messages. As already noted, it is a challenge to manage one’s communications, but it is necessary. Being responsive I think is a key attribute.

My final thought deals with providing your client with something more than just the core service—a legal agreement or a financial statement. This is often hard for a young professional to come to grips with. They may feel that they do not have enough experience or that the client may dismiss their ideas. That is a risk that one has to take but in the end; I have found that clients recognize that you are trying to go beyond the core service and give you credit for that.

Now if you want to have a good meeting with your Banker every year, you need to remember one thing: make a profit. Do you think your Banker wants to hear how many cold calls you made, how many presentations you made, how hard you worked, how much effort you put into business development? No, they really don’t care about any of that. They just want to hear that you got results.

You need to manage your clients, not the other way round. You need to worry about their businesses as if they were your own. You need to push your client so that they are not a roadblock to their own (and your) success.

I have always liked Sigourney Weaver’s character, Ellen Ripley, in the Alien film series. She was the first woman I ever saw in any film that didn’t scream and wait for some hero to come rescue her. She took charge. She adapted well to very rapid changes in her environment. No matter what bad news came her way, she coped. She didn’t sit around trying to figure out who to blame. She just figured out how to survive.

I don’t care whose ‘fault’ it is, just get it done. That’s what your clients really want from you.

Prof Bruce

Copyright. Professor Bruce M. Firestone, Founder, Ottawa Senators, Entrepreneur-in-Residence, Telfer School of Management, University of Ottawa, Executive Director, Exploriem.org, Ottawa, Canada.

Guerrilla Marketing Basics

Posted on Tuesday 29 December 2009

Introduction

Guerrilla marketing (GM) is just another term for ‘smart marketing’. The unofficial credo for civil engineers is: “Do for a dollar what any fool could do for two.” The guerrilla marketer is really similar—someone who uses leverage to efficiently and effectively get the enterprise’s message out there either by way of media attention (aka, ‘earned media’) or through more direct means.

GM is used by SMEEs (Small and Medium Sized Enterprises) because they are in the business of substituting brains for cash in the marketing wars—they want a place at the (economic) table but can not afford to purchase the type of mass marketing available to larger firms. So they resort to GM. Of course, GM is not limited to SMEEs; larger firms, not-for-profits, even charities have been known to engage in this type of promotional marketing.

Taco Bell’s brilliant coup years ago of floating a target in the South Pacific for Mir to hit comes to mind. They stationed a floating rubber target off the coast of Australia which, if any pieces of the decommissioned Mir Space Station were to hit it, would entitle everyone in the continental USA to a free Taco. (Taco Bell took out insurance against this, by the way.) A photo of their floating target was carried by major news outlets across the planet. Even Taco Bell’s NYSE symbol is a bit of GM; their symbol is ‘YUM’. Most companies would perhaps have used ‘TBC’ for Taco Bell Corporation. YUM is so much better for a food company, don’t you think?

GM exists in a grey legal area, which needs careful consideration before attempting any of these types of things. One should never do anything that is illegal or unethical or places any persons or property in danger.

Here we are going to look at some smart guerrilla marketing, some guerrilla marketing research and guerrilla selling. I provide an extensive list of GM techniques below (60 things you can try*) based on simple, proven ideas many of which have been used for generations.

(* If you just want to read the list, skip ahead to ‘Getting a Place at The Table‘.)

Guerrilla Marketing Research

What is Guerrilla Marketing Research? Well, many new products and services don’t easily lend themselves to traditional market research techniques. When we were trying to Bring Back the Senators (a team that hadn’t played in the NHL since 1934), we did some market research in Ottawa. It was a NHL prerequisite for entry into the League.

Our market research consultants asked the question: “Would you purchase season tickets if the NHL were to return to Ottawa?” They followed up with questions about how much people would pay for their season’s tickets. For NHL-starved fans in Ottawa, the answers were astounding. When projected over the whole population from the representative sample they used, the consultants found that the Sens should be able to sell 100,000 season tickets at almost any price.

People when faced with a hypothetical question, answered: “Yes! I would buy season tickets for NHL hockey in this city; in fact, I would pay practically anything to help get the team here.

We duly sent the study to NHL offices in NYC but, frankly, I had my doubts. The Chicago Blackhawks in a city much larger than Ottawa worked very hard at the time (the early 1990s) to sell 15,000 season tickets and privately I thought that we might be able to sell 12,000. Although, we have less competition for the sports dollar here in Ottawa, we are a smaller city and a high percentage of employees here work for the GOC (Government of Canada) who typically buy fewer tickets than private sector workers.

It turns out that 12,000 season tickets has, in fact, been the ceiling for Sens season tickets over the last 18 seasons. One has to wonder about the reliability of market research in general—can you accurately test for acceptance of a new product or service in the marketplace? Maybe the only way to do that is to convince people that they are actually making a buying decision—one where they will really have to dig into their pockets to pay for the new product or service. That is where GM Research may be of assistance.

In the 1980s, when trying to determine if there was a market and real demand for mini offices in Ottawa, one of our executives (Greg Graham, who later successfully managed the business for us and is now President of Cardel Ontario) ran a series of ads in a local newspaper. When people responded, they were directed to a telephone answering machine (literally in a cupboard at head office) where they were asked to leave their names and phone numbers and someone would get back to them shortly, which Greg did. Sure, Greg was selling ‘vaporware’ but he got a real sense of market demand—a more reliable type of data than perhaps any other marketing survey could have produced.

People were faced with a real buying decision; Greg was asking them to commit to a lease for a mini office for a minimum of three months at a fixed lease rate. The response was so strong that within two weeks we were building out one floor in a west end tower we owned and putting tenants in temporary offices at HQ. The business (TCCL, Terrace Corporate Centres) eventually became the largest mini office provider in eastern Ontario with 164 mini offices in two locations (one downtown and one west end) with an occupancy rate that regularly exceeded 94%. It was profitable in its own right but it also acted as an important source of new lease deals. Apple, when they first came to Ottawa, started in TCCL and when they grew out of their mini offices and needed expansion space, we had already established a good relationship with them.

(We later sold TCCL as part of the effort to raise capital for the purpose of acquiring the Ottawa Senators.)

A more recent example of a use for GM Research came up about three months ago. A developer needed to know what rents he might be able to get for new, two-bedroom units being built in the west end of Ottawa—his property manager was telling him $900 per month and his REALTOR said $1,100 per month. Who was right and how to test it?

The subject property was on a major street which was both good and bad—lots of nearby services for residents to use but also lots of noise and traffic.

The Property Manager had a bias—he felt that lower rents would make it easier for him to fill the new units. (Cautionary note: the reverse may also be true. If rents are set too low, it may scare off main stream renters who fear that the place may be dangerous and that is why you have priced it so low—remember, a price conveys a lot of information beyond just the dollar figure.)

The REALTOR also had a bias—he wanted to sell the units to investors so he wanted to show the highest possible rent and the highest possible cap rate to investors so they would snap up the units.

My suggestion was simple: in today’s Internet age market test it FOR FREE.

Put two free ads on http://ottawa.kijiji.ca/: each ad would describe the place slightly differently and each ad would have a different REALTOR’s name to call.

It turned out that they received about the same number of calls on each ad which happily (from the investor’s POV) meant that a rent of $1,100 per month would work.

They also definitely picked up the sense that people calling for units at the higher rent were associating the higher price with concepts like ‘new’, ‘higher quality building’, ‘higher quality space’ and ‘better class of tenant’.

That is why you do this kind of research.

Think about GM Research like this:

1. It’s not hypothetical market research—it’s guerrilla marketing research for three reasons: a) it’s free or very low cost, b) you are asking about units that don’t yet exist and c) you are not asking a theoretical question (at least as far as the respondent is concerned), you are getting a real call from a real person looking for an apartment.
2. It’s not really ‘vaporware’ either—these units are for sale and for rent and will be built in the next eight months.
3. Typical of GM research, you are leaving out the fact that they are not ready right NOW so you are in a gray ethical area but still, the renter could be looking for later in the year anyway…

Getting a Place at the Table

Let’s face it, most large firms and established players don’t want to give you a place at the trough. They have their snouts in there but don’t want to share it with you. And most entrepreneurs don’t have bucket loads of cash to throw into marketing to get their share of the market. So they are forced to use GM and social marketing.

When I was teaching at Carleton University’s School of Architecture, the Chief Designer of the Students Design Clinic (SDC) came to see me. She wanted to know how the SDC could generate more clients for the Clinic on a limited budget.

The SDC is a wonderful student-run enterprise that allows third and fourth year students (and exceptional second years) to experience what it is like to run their own architecture practices. Each summer about 15 to 20 students are gainfully employed by the Clinic at above market wages; they design basic stuff such as fences, decks, gardens, gazebos, retaining walls, small additions, basement renovations, granny flats, etc. for clients in the local area.

The SDC is passed on from one student generation to the next with junior designers becoming senior designers and the most accomplished senior designer becoming Chief Designer. It is an oral tradition and a very successful one—last time I checked they had generated a surplus (over and above what they pay to the students) of more than $80,000 which no one apparently had any idea what to do with it.

The SDC is itself a guerrilla institution—officially frowned on by the University’s Administration (they are concerned about liability in case there is a dispute over fees or one of the designs is sub-standard). But since all of their designs (above a certain size and complexity) are submitted for building permit and must meet the OBC (Ontario Building Code), liability seems quite manageable.

The GM program we laid out for the Clinic is simple and some of the techniques they use are old but that doesn’t make them less relevant to today’s entrepreneur. Many of my students think GM is this: a) do a stunt, b) get national press, c) send out a mass email, d) put out a tweet on Twitter, e) stand back and watch the traffic meter on their new website spin out of control. Bad news, folks—it isn’t that easy.

Sometimes, there is no substitute for ‘shoe leather’. When getting ready to launch Digg.com, Kevin Rose and his partner decided to populate the site the old fashioned way—by calling people on the telephone. They wanted to start Digg.com with at least 3,000 committed contributors. That’s a large number but when you break it down, it becomes more doable—if Kevin and his partner each made 30 calls a day for 50 days, they could reach 3,000 people in less than two months. That is what they did. They didn’t ‘push on a rope’. They didn’t send out 10,000 emails. If they had, I predict they would each have gotten less than a .3% response rate—that is, they would have launched Digg.com with 60 contributors. And those 60 people wouldn’t have really understood what Digg.com was trying to do. It would have flopped.

To get to where they needed to be, they had to talk to people. You need to hear their voices, the nuances, the emphasis and their explanation of what they are doing and why you are an important part of it.

The result was a runaway hit on the Internet for their news agglomeration site which has probably made a billionaire out of Kevin.

So don’t be lazy.

Here is the program we put together for the SDC:

1. Use lawn signs: if politicians use them, it’s because they work and are cheap. On-site signage is great: pylon signs, lawn signs, sandwich boards, window decals, whatever—they’re cheap and they keep working 24/7. Maybe you want to bring back the walking billboard (a person wearing a sandwich board) or better yet: a person wearing a sandwich board giving out handbills which have a call to action on them. So use lawn signs at all your job sites with your Students Design Clinic logo and telephone number and URL clearly visible.
2. Lawn signs should cost no more than $10.00 each. Leave them up forever or until your client takes it down.
3. Add some type of call to action. How about: “Free One Hour Consultation”
4. Put your tag line and your logo on your lawn signs. You are a design clinic so your marketing stuff has to look sharp otherwise it is reverse marketing (don’t do this!)
5. Create a second web address that points to existing Carleton address (www.arch.carleton.ca/clinic) which is a bit clumsy. Note: check out www.domainsatcost.ca which is one of Canada’s largest domain name registrars. Try for something like: www.studentsdesignclinic.ca or www.designclinic.ca. (Editor’s note: these URLs are not currently active.)
6. Create both private and public spaces on your website. The private password protected space is and will become your ‘institutional memory’ of what works and doesn’t work over a period of years. (The same thing was done for www.kosmic.ca so that students aren’t starting from scratch every year for goodness sake.) Put in things like how to hire and fire; what to pay people; how to monitor performance; how to interview and select team members, what marketing worked and what didn’t—all the hidden keys to success…
7. Use PSAs (Public Service Announcements) addressed to print, TV and radio outlets. Your PSAs should go to local publications too such as the Kanata Kourier Standard not just the Ottawa Citizen and the Ottawa Sun. Give them visuals as well.
8. Get testimonials for your website and your flyer.
9. Create a logo for the Clinic and a tag line that is on everything. Terrace Corporation (the first parent company of the Ottawa Senators) was in the real estate business; they used “Great Space for Great People”. You’ll want something different—it is much too commercial but you need something that speaks to the core competencies of the clinic and your mission.
10. Keep a customer data base of tel. #s, fax #s and especially email addresses. The best place to look for new clients and new work is from your existing clientele.
11. Every year you should email your past client base with the “news”—what is up with the clinic this year.
12. Do a flyer drop not just around the University but also in Kanata, Nepean and Orleans as well as downtown—anywhere people are doing a lot of renovations. Flyers to the home or office are cheap and cheerful and often effective. But don’t wait too long to get them out. They need to go out in February or March not May or June, that’s far too late. Don’t forget to include your call-to-action like ‘Free Quote’ or ‘Free One Hour Consultation’ or ‘10% off’ or ‘Fill in the attached ballot and return it to win great prizes’ or whatever. You can use a variant of the Flyer—the Handbill. It’s a bit different in the sense that it is exactly what it sounds like: a ‘bill’ that passes from your hand to a potential client’s hand directly. It is an old marketing concept but it can be remarkably cheap and effective. And you know that it got to the recipient for sure. Handbills can be given out at a trade show, for example. Something else to remember: marketing is about consistency and repetition. When our family was a partner in a tool and equipment rental chain, we found that our flyers became more effective over time. People began to expect them and to use them more often when we repeated the drops in the same neighborhoods a second, third or even a fourth time over a period of two years.
13. Do a customer satisfaction survey. This is where you will get testimonials, references and permission to use them. Put them on your website and on your flyers even in your PSAs.
14. Let your clients know that you are never too busy for referrals.
15. Avoid expensive advertising and major media like radio, television and daily newspapers.
16. Use word of mouth, flyer drops, PSAs and lawn signs.
17. Your website is just a support tool but an important one.
18. Put photos of finished work on your web site—create a Design Clinic portfolio.
19. Everyone is in sales—Chief Designer, Assistant Manager, Senior Table Leaders, Table Leaders, Senior Designers and Designers.
20. Make sure you have 24/7 telephone messaging and design clinic email accounts.
21. DON’T call your Junior Designers ‘Junior Designers’; just call them ‘Designers’.
22. Your next level up is Senior Designer. And so forth—yes, it’s title inflation but it works well in marketing your services. No one likes to be called ‘junior’ and no one wants to hire anyone called ‘junior’.
23. Put ‘Free One Hour Consultation’ everywhere—on your website, on your brochure and on your lawn signs. People love FS (Free Stuff).
24. Put on your website a few simple to understand reasons why people should choose the Clinic like supporting students, like the exceptional quality of your work, like getting really top notch people to work for them at a fraction of the price they will command just a few years down the road.
25. Your flyer should use colour—it is more costly but you are in the design business. Last year 1,000s of good quality colour flyers (8.5 x 11) were printed (one side) for less than 25 cents each.
26. Put a copy of your flyer on bulletin boards in stores like IGA, Loblaws, Canadian Tire, Walmart, Home Depot, Home Hardware, building supply stores, etc.
27. Coroplast signs are very inexpensive (about $5 to $10 each for 18 inch by 32 inch signs with either two-colour or full colour decals). With the SDC URL, logo and tag line, they make good posters which can be put up with a stapler or plastic ties on hydro poles or city owned fences. (Note you should probably ask for permission from the municipality but in guerrilla marketing people often don’t.) If you put them up high (use a ladder for this), your signs tend to stay up longer. City workers don’t like to get out of their vehicles to unload a ladder, carry it, erect it and climb up the pole to tear down your signs. They’ll call you and you can volunteer to take them down yourself. Perhaps they may reappear somewhere else in the City.
28. You can offer to do a few free design jobs using your trainees and the local media can be invited to review the work. Better yet, do a few free designs for high profile persons in the community and get them to talk about it on their shows, blogs, what have you. Get a free endorsement or plug from a local celebrity.
29. You can offer to let people buy ‘gift certificates’ for design services for friends and family.
30. You can run a contest on your website. The winner receives, say, $200 of design services with first, second and third runners up receiving $75, $50 and $25. The winners always end up spending more.
31. Contests could be something like: putting a piece of a famous structure (the Roman Coliseum, the Acropolis, Scotiabank Place, for example) on your website, add to it every day and the first person to email you with the correct identity, wins.
32. You can develop a $20 coupon program and give out the coupons to clients and to others to give to their friends. You can also print the $20 SDC coupons in local newspaper ads and folks can clip them out and bring them to the clinic.
33. You need to visit established architecture firms to co-opt them into your business ecosystem. Many architecture firms don’t have time for gazebos, decks, fencing, basement renovations or small additions. They would prefer to refer these clients to the SDC.
34. Faces are very important in marketing and that includes GM. You need to put a picture of yourself and your team on your marketing materials (web, flyer, maybe even your lawn signs). That way people can see the faces of all your happy, smiling, enthusiastic designers. If there is one ad with a face in it and another without one, the former will get a lot more attention.
35. Because this is a design studio, you should probably also have a watermark in addition to your logo. The watermark reflects the underlying principles of your work and is used as a half tone (or a sidebar) on all your drawings, contracts, marketing materials.
36. Can you accept Visa? You should probably ask your bank for that service—folks love paying by Visa and even though you have to actually pay a fee (probably 2.75 to 3.25% of each transaction) it will save you a huge amount of time and frustration actually getting paid and the amounts people will spend on design services will also go up! This is a double whammy on your bottom line—collect faster and collect more.
37. Don’t forget to ask for a retainer up front. It should be around 45%. Try to get another 45% when the drawings are submitted for building permit. Get the last 10% when you actually get the permit.
38. You can set up a referral system—for each client referred to the Clinic that signs a contract, you can offer a premium like a really fantastic SDC t-shirt. This is more promotion for the Clinic—people walking around wearing your logo (and URL)!
39. Let people buy your branded promotional stuff. You are, after all, a design shop. Why just limit yourselves to designing real property? Why not use those skills in your marketing as well to create really insanely great branded clothing and promotional items?
40. Put out media releases every time you do something newsworthy and feed the press regularly. Make the title catchy: how about Third Wall Theatre Group in Ottawa who put out a press release with the title: “Directors Stab CEO in Boardroom Uprising” to promote Julius Caesar. They got attention in a hurry from the media.

Today, we would add a few new things to the above list including:

41. Use social media—start your own Facebook group and use Twitter to develop a following; use these as tools for CRM (Customer Relationship Management) as well.
42. Start a blog for the SDC highlighting interesting and challenging jobs you have tackled.
43. SEO, Search Engine optimization can do wonders for your website. By increasing your profile in search engine results, you can turn your website into a big lead generator for da nada. SEO includes things like link trading with all your friends’ websites so that more sites link to you. Search engine algorithms look for how many sites link to you as an indicator of how important you are.
44. Give your company or organization a name and a website address that are identical so you don’t waste any effort branding different names.
45. Go to trade shows like the Ottawa Home and Garden Show and use giveaways (promo items) that are branded with your logo, name, tag line, contact info and some type of call-to-action.
46. Network like crazy and use your employees’ and suppliers’ networks too.
47. Try to sell to people you buy from (reverse selling). Your AP, Accounts Payable can be a good source of leads. At the Sens, if we needed a plumber he or she was certainly going to be a season tickets holder.
48. Volunteer for worthwhile causes in your local community.
49. See if you can create an event that’s fun and helps promote your business and doesn’t cost you anything or maybe even generates revenue for you.
50. Do some polling: people love to be asked their opinion on just about anything.
51. Create a market survey: people like to be asked for their views. They’ll answer your survey, which will also generate information and leads for you.
52. Create some type of scoring test on a subject of interest like when to know when it is time to replace your roof or windows…
53. Follow the trail of really bad marketing to see who needs your help in your industry. Maybe a local builder needs the SDC’s help with one of their design issues.
54. Make sure you can explain your value proposition in three to five separate points to give people a few simple, compelling reasons to buy from you.
55. Find sponsors or patrons for your business or organization. Create something that they can sponsor and benefit by.
56. Bid on jobs even if you know you might lose: you end up knowing everyone involved with the process; you can build up your network this way for next time. It’s a kind of win-by-losing strategy.
57. See if you can get volunteers to help you.
58. Don’t forget the Yellow Pages and its related website. Yellow Pages ads are expensive but I have found that even a three line ad can be effective. This give you enough room to have your name, tel. #, URL and tag line. If you can afford it, add one or two more lines for a call to action like ‘Free Quote’ or ‘One Hour Free Consultation’. Your logo would be nice too. You can also sometimes place your ad in a non traditional category where you can stand out. Maybe sneak your design shop into the building supplies category by asking one of the big advertisers there to add your design shop to their ad. Perhaps you could convince them to do that for free…
59. Try negative cost selling: it’s huge and works really well. Show the client (preferably with a spreadsheet) how he or she either makes money from buying your products or services, or reduces costs or both. This requires a level of understanding about your client’s situation, which you should have anyway. For example, show them how a basement renovation or adding a granny flat is a negative cost when compared to, say, putting your mother-in-law in one of the those vertical warehouses called a retirement home. (To read more about Negative Cost Selling, please refer to: http://www.eqjournalblog.com/?p=482.)
60. Use co-branding. Who is in your business ecosystem? Would they want to pay some (or all or more than all!) of the costs of your marketing? For example, maybe there is a building supplies retailer who provides lumber and other construction materials. Or a builder or landscaper who is winning lots of work designed by the Clinic. Perhaps they want to co-market with the SDC and pay some of your marketing costs. (For more on co-branding and cross-selling, see: http://www.eqjournalblog.com/?p=571 and http://www.eqjournalblog.com/?p=571.)

There are so many ways to use GM, the list really is endless and today, through the Internet, a small enterprise can leave big tracks.

Marketing is a bit of a mystery. Maybe we think we now have evidence that shows us that we don’t need our Yellow Pages ads any longer or our fliers aren’t working like they once used to do. Everyone we ask about where they heard about us or how they found us seems to be saying: ‘on the Internet using Google’. So, as a result, we get rid of our Yellow Pages ad for next year and stop putting out flyers. Lo and behold, our volumes drop. How is that possible? Maybe what your customers are really saying is that their last stop before they called you was Google but forgot to mention that they first heard of you by picking up a flyer or looking in the Yellow Pages. Marketing works in subtle ways and GM is no different.

Publicity Stunts

As noted above, Guerrilla Marketing often involves entrepreneurs and intrapreneurs in gray areas—things that are either ethically questionable or legally questionable. Obviously, you should never do anything illegal or unethical but if you are a small business, a startup, a new skunk works (often part of a large company but separate from it—either spatially or managerially or both), how do you get noticed, how do you earn media attention instead of buying it and how do you get a place at the table with the big boys?

You use GM.

Promoting your new video game with packages lashed to bridges with flashing lights on them is probably not a good way to promote yourself in the US post 9/11 unless getting arrested is on your list of to dos for next year.

One of my former colleagues had a cute idea for the brokerage we were both working at the time. He wanted to mount commercial real estate signs (FOR SALE signs or FOR LEASE signs) with most of the information upside down except for the phone number and a slogan—“We turn the market upside down for you!” Like I said, it was a cute idea but too radical for that brokerage.

But clearly it meets the test of what is acceptable.

Years ago, we got annoyed with the major newspaper in our city—their only competitor had gone OOB (look it up, it’s in urbandictionary.com)—and they decided to jack up their advertising rates. So, what the heck, I had seen the Boston Business Journal on one of my trips to that city, let’s start one of our own—Ottawa Business News (now Ottawa Business Journal) was born.

Let’s ask the three questions again:

• how do you get noticed,
• how do you earn media attention instead of buying it, and
• how do you get a place at the table with the big boys?

We decided to bring 150 paper boxes to Ottawa. At that time there were no paper boxes here. The Ottawa Citizen and the Globe and Mail dominated the newspaper scene. Now what would you do: ask for permission or just do it?

If you decide to ask the City of Ottawa for permission, they were likely to do the following:

1. Say ‘No’. That is the bureaucrats’ answer to almost everything.
2. If they don’t say ‘No’, they will use their second best answer: ‘We’ll study it.’ Cities and bureaucracies know that they can make you do studies, attend meetings, consult with the community, fill in forms and do endless, mind numbing things until either you go away or die, whichever comes first.

Now you also know that entrepreneurs would rather ask for forgiveness than beg for permission so we planned to drop 150 boxes on streets all over Ottawa without asking permission. We had a tractor trailer load of those paper boxes waiting at the Canada/US border.

But before we dropped them, we needed what is called political cover.

So for about a week before we dropped the paper boxes, we had one of our employees (in a cape and mask no less, looking like Hanna-Barbera’s Quick Draw McGraw dressed as El Kabong) go around Ottawa and drop 25 cents into parking meters that were about to expire. That got us some decent media attention and positive attention—we were seen as good guys saving drivers from the Green Hornets and City parking tickets.

(Note: when we did this, it was a new stunt. Soon after we did it, others copied us but we may have been the first to try it. The City of Ottawa wasn’t impressed though—they soon passed a spoil-sport By-law making it illegal to put money in a parking meter being used by a third party, i.e., not your own car.)

Paper boxes are a powerful way to promote your brand—they are inexpensive and sit at crowded intersections and tirelessly work for you 24/7. If you bought billboards, you would pay (in Ottawa) around $1,500 per side per location per month. So buying a paper box for $150 (a one-time cost) and dropping it on a sidewalk and chaining it to a post is pretty good signage at a very, very low CPM (cost per thousand pairs of eyeballs per month).

What entrepreneurs and intrapreneurs must do is be like the North Vietnamese—cause your enemy to expend a lot more resources than you to put a soldier in the field with bullets and this gives you leverage. If you have 50 million North Vietnamese and Viet Cong facing 250 million Americans, you might think that the Americans will win given a simple power ratio of 5:1 (250 million divided by 50 million). But if the Viet Minh have a supply line of 300 miles and the Americans have one that is 10,000 miles long, this means the correct power ratio is (250 x 300)/(50 x 10,000) or 1:6.667, practically the inverse!

If entrepreneurs and intrapreneurs can’t use leverage in their fight with their elephant-sized competitors, their enterprises will soon be dead anyway.

Paper boxes were that kind of leverage for OBN.

Now if we had asked the City of Ottawa for permission, they probably would have convened a committee of stakeholders. Who do you think would be on that committee? Well, the Mop and Pail (G+M) and the Ottawa Citizen for starters. Do you think they would be inclined to give a new competitor that kind of leverage? How about Joe and Jane Q. Busybody? People from the community who volunteer for these types of committees tend to have too little to do in their lives. They undoubtedly would have cried foul—paper boxes would have been compared to billboards and ‘visual pollution’.

Plus how long would the Committee have taken to make a decision? A year? Two years? And then it would have been ‘no’ anyway.

Entrepreneurs don’t have time for this.

So we dropped them overnight and chained them.

Entrenched competitors howled.

But we were ready. Under the then new Canadian Charter of Rights and Freedoms, we wrote to the Mayor and made it an issue of freedom of the press. If the City touched one of our paper boxes, they were going to get sued for breaching our rights under the Charter.

Now politicians like two things—money and power and they are of course related to one another. We had another strategy ready as well.

After the first commotion died down a bit, we suggested to the City: “Why, wait here a sec. Instead of forcing OBN to remove its paper boxes and face a lawsuit, why don’t you charge a fee for paper boxes? We suggest $50 per box per year!”

The G+M and the Ottawa Citizen did, of course, put out their own paper boxes. But they put out thousands. OBN was just fine with 150 in strategic locations. So we made them spend a ton of money on paper boxes, filling them each day (we only came out weekly) plus pay a fee for each box to the City (the City accepted our idea but they upped the license fee to $75.)

So there it is—creating leverage through GM while using political cover and learning from the success of others.

Ethics

One of the keys to success in any enterprise is to become an accepted part of your business ecosystem. Once you are embedded in a business ecosystem, you are very hard to dislodge. How hard would it be to duplicate Digg.com’s site? Not hard at all. How hard would it be to duplicate Digg.com’s community of more than 45 million monthly readers and contributors? Really hard.

The reason for that is that Digg.com has become an important part of that community (a largely male demographic aged 15 to 55 with an interest in technology, science, politics and odd ball stuff). It is way for that community to talk amongst itself, to express itself and to compete to see who can get their stories on the front page.

Digg.com works for these reasons and for another reason—Digg.com readers and contributors trust the site. They trust Digg.com to produce interesting material that they could not themselves find on their own (to, in effect, curate the stories that matter to its community*). They also trust Digg.com not to change its algorithm to favour its own material.

(* I wrote that one of the professions to watch out for in the 21st Century is (surprisingly) the curator. See: http://www.eqjournalblog.com/?p=487.)

At the end of the day, trust is the most important quality any of us has. So while GM is essential for the success of most new enterprises, you can take it too far. This means you need to use sound judgment on when it’s OK to use GM and GM research and when it isn’t.

Prof Bruce

Postscript: here are a few examples of some successful GM campaigns:

• A local high tech company doesn’t have the marketing budget to put inserts into the local newspaper for distribution to their target market. So early one morning, the founders go out with abundant pocket change and they open the paper boxes and insert their marketing brochure; then close up the boxes and wait for the phone to ring. Student note: this is probably illegal. Don’t do this but it is an example of clever thinking nonetheless.
• Another tech company, looking to recruit top talent, put up hundreds of $2 placards along the main drag where techies working for their competitors tended to drive. They put them up on a Thursday night after city workers had gone home and they remained up for six days before the City had the (illegal) signs removed. The campaign was cheap, cheerful and successful.
• A local Subway franchisee takes over a loser of a location. Every day at 10:30 am, he ’sneaks’ over to the megamall parking lot across the street and puts $1 off coupons under the windshield wipers of 500 cars. He runs back to his shop and waits for the traffic to come in the door. He also visited every local office within five kilometres of his location between 11:00 am and noon each weekday over an 18 month period. He brings in a huge platter of finely cut subs and a bunch of $1 off coupons. He talks his way past the receptionists and security people and gets into even the most highly secure buildings to hand out free food and coupons by the bucket load. Within two years that location alone is making over 120 grand for him and his family.
• What type of car do you drive? If it is relatively new and if you keep it clean, then you could consider adding your corporate logo and web address to the passenger side, driver’s side, rear and front (in mirror image). This is free advertising for you that works 7 days per week. But is has to be done well. DO NOT USE THOSE HORRIBLE RUBBER MAGNETIZED MATS THAT STICK TO THE CAR. This would be reverse marketing. Bill Renaud, one of Ottawa’s most successful real estate agents, uses his vehicles this way. If you do it, it has to be done well and depending on what type of business you are in, it can be done in an understated kind of way.
• How can you collect email addresses with the permission of and indeed the willing participation of your target market? This is a campaign Labatt Brewery undertook a few years ago. They looked good as a result and were able to direct people to their beer.com site where they collected e-mail and contact information—the campaign spread fast on the net. Al at almost no cost.

‘Subject: Another Long Weekend!

Labatt Blue Light is petitioning the Ontario government for a new long weekend in June. This is serious…they’re really doing it.

The petition comes on the heels of a national survey that says about HALF of Canadians don’t have enough free time and that they have less free time than they did five years ago.

Make your voice heard now. Go to http://www.enlist.com/cgi-bin/re/freeyourtime and sign the petition. And pass this along!’

(Editor’s Note: This is an example of guerrilla marketing by Labatt that uses a supposedly third party to promote Labatt Blue and it uses the power of the web for geometric growth.)

• When cruising down the Queensway in Ottawa, I took a picture out my front windshield of a Napa Auto Parts vehicle. It was not a very good picture—kids don’t do this at home. Driving at 100 kph while looking through a 5 mm aperture is not a good idea. It’s like driving while using a periscope. Anyway, the bumper sticker on this Napa Auto Parts vehicle, read: “How’s my driving?” and gives a 1-888 phone number. One could imagine that, if you were to actually call that number, they might try to market something to you?
• The Canadian Taxpayers Federation put 82 lawn signs (pig figures, one for each member presumably) on the lawn outside the Alberta Legislature to protest against the ‘obscene’ increases in Alberta politicians’ pay. The cost for this stunt was about ten bucks a lawn sign. They got national exposure for their story, as a result.
• Many companies have entered into litigation with registrants of the ‘acmecompanysucks.com’ domain name. This automatic knee-jerk response is that the (insert your company name here)sucks.com holder is infringing on your company trade mark right? The www.sucks.com people (Dan Parisi) have maintained that these sites are places and spaces where people can go to vent their sometimes legitimate complaints—that the right to freedom of expression will, in effect, outrank the right of the trademark holder, a rather persuasive argument. Some companies like Intel and American Express are a lot smarter; rather than sue, they say the sites are o.k. They provide management with feedback that they probably couldn’t get any other way. Middle managers usually aren’t as forthcoming as, say, an irate customer. It is a form of inexpensive, independent product research—another example of guerrilla marketing research, if you will.
• You can turn cost centres into profit centres by seeing assets where before there were only liabilities. For example, Roger has a small real estate company in Ottawa. He is budgeting $50,000 for marketing in the upcoming fiscal year. His accountant, Claire, notes that many of the ads they run and a lot of their marketing mention partners; people like home builders, framers, landscapers, lawyers, well drillers and other suppliers. Claire goes on to point out: “This is like the ‘mini-office’ concept applied to our newspaper ads, our on-site signage, our website and marketing generally. We now own valuable marketing and advertising space which we bought at basically a wholesale price. Perhaps we can lay off some of our costs on our partners so that we can market our company at a reduced cost or possibly even a negative cost.
• Bain Capital made an offer in 2005 to buy all 30 NHL teams. Was this a serious offer or a bit of GM? I think this was a form of Guerrilla Marketing for Bain Capital. They are a reputable Boston-based private equity firm but they must have known that this would not go anywhere. From time to time, these kinds of offers circulate. There was a similar one for the CFL about ten years before this. They never go anywhere because there is a concern (rightly, I believe) about competitiveness. If one firm owned all 30 NHL teams as Bain suggested and operated each NHL team as a company-owned franchise, then it would be mighty tempting to pre-select the Stanley Cup winner every year for heightened dramatic or commercial effect much as, say, the WWE does with wrestling matches. They pre-determine the winner for maximum drama and ratings. It would be relatively easy to do if, for example, one team decided to trade all its top stars to another just before the playoffs and then somehow got them all back at the start of the next season… Also, buying the teams without their buildings would be incredibly stupid and the people at Bain Capital are really smart people so I am pretty sure this was just a stunt. They got mainstream media coverage: huge television, radio, newspaper and Internet exposure and buzz. It was all free ‘earned media’ attention.

The Seven Measures of Business Success

Posted on Monday 28 December 2009

I think that business success occurs when you can say that you achieved all or most of the following. You:

1. Set the bar high for yourself, your colleagues and stakeholder group (your entire enterprise and business ecosystem) in terms of not only your financial goals but also in terms of engendering trust, protecting your reputation and achieving non-financial goals as well.
2. Used your talents, creativity and energy to the maximum and made each day count.
3. Took care of the business so that the business could take care of your family and your family could take care of you.
4. Didn’t become a burden on your society.
5. Made a profit.
6. Took care of your stakeholder group and, to the extent you could, your fellow human beings.
7. Kept what you worked so hard to create and, when it was time, you passed it on successfully.

Prof Bruce

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