Prospects Don’t Swing on the First Pitch

September 30th, 2008 Chris

Oops – I missed a post. Apologies – last week was crazy. We were in the end of a campaign for a specific product and in the middle of everything our phones blew up, our Internet service went down and we had on-going problems with our marketing/sales/CRM system.

And, of course, several days later… everything is still broken. But as they say… the show must go on.

This coming weekend is my university reunion. Which year? you ask dear reader. I’m afraid that vanity prevents me from telling although it’s a depressingly round number. I’m actually not going as I’ve got other things going on and, of course, I left it to the last minute so there is no place to stay in Kingston.

I have to admit that there are many folks that I’ve not seen for many, many years that I’d love to catch up with. Both in the spirit of friendship as well as a morbid curiously to see whose fatter and balder.

There is one gentleman – err… man – I remember very well as being a complete Casanova. It’s not that he was particularly handsome or charming – it’s that he had incredible perseverance. If we were out and there was a girl that he was interested in, he would try and try again to get her number. While sometimes, there would be a threat of a restraining order, just as often he would be successful after multiple approachs. And that was in sharp contrast to those of us who would get shot down and quickly moved on, finishing the evening with no numbers…

I couldn’t help but think of that story in the context of our sales push last week. We had a offering with a relatively high level of investment (~$1K). It was a great deal and we had a three-step sales campaign – that is, three outbound emails to our prospect base.

The response rate for the first email: 0%. I was very sad.

The response rate for the second email: 0%. I was suicidal.

So with trepidation, we sent out the third and final email while I scanned the help-wanted ads. Low and behold – the orders began immediately to come in and were steady for the rest of the day.

So, what happened?

I attribute the last-minute success of the campaign to two important features of our efforts:

1. Multiple Touches

We’ve found that you have to hit people multiple times with an offer. Why? In some cases it’s just that people are busy and won’t necessarily be reading everything you send them.

Also, we have to remember that people buy when they are ready – not when you want. By hitting them several times, you’re more likely build up awareness and interest until finally, when you hit them again, they are ready to take the plunge.

I know someone selling a $5K product who has found it takes, on average, 9 touches before someone purchases.

2. A Deadline

Our offer also had a cut-off day: a final date and time for a prospect to take advantage of this great offer. Our last email blast that generated all the orders went out on that last day of this offer.

Again, people are often busy (and occasionally lazy) and put things off. So, they delay purchase decisions until they are forced to make a decision. If you can remind them of that deadline as it comes up – essentially forcing them to make a final purchase decision – the orders will come. Otherwise, it’s just to easy to put it off until after the offer is no longer available.

So, when you’re designing your marketing and sales campaign – make sure you have multiple steps to hit prospects several times. And make sure your offer has a deadline – even if it’s artificial, it’s necessary to motivate prospects to become customers.

C.

Posted in E-mail, Marketing | No Comments »

It Pays to Bare All

September 23rd, 2008 Chris

I had a frustrating week on the technology front. We use a product that automates many of our marketing activities. For example, it automatically sends out a series of sales tips to customers and at the end offers them a membership in a on-going sales coaching program.

For the last couple of weeks, we couldn’t figure out why no one was opting to join the coaching program. After all, it’s a tremedous value that delivers a host of resources to make an immediate and lasting impact to your sales. Just click here to… Sorry – I got carried away…

We were confronted with the ugly prospect that we are marketing losers, unable to do a basic upsell. Faced with this, I took the next logical step: find someone else to blame. Luckily I did!

As it turns out, our marketing software had broken. They had released a new version and done a crappy job of testing. So for two weeks, when our prospects finished their run of sales tips, they were not getting their upsell pitch. They weren’t getting as much as a Thank you and come again…

So I called my friends at Infusion (the software company) and asked Wat Up?!?!?  The response: Yeah, we know about that. I was dumb-founded. I was losing money and they didn’t let me know? The excuse: We weren’t sure how many users were impacted.

I can forgive software bugs. I have been around the industry long enough to know that s**t happens. What I can’t forgive is not being notified. If I had been notified I could have done manual follow. I would have been grumpy but I would still have business continuity.

When companies hold back this information, it is because they are being huge wimps. They don’t want to get beat up and deal with complaints. It’s tough – I’ve been there. I’ve been physically threatened by customers not happy with the fact there is a bug and the resolution time frame. But that is life in software. Deal with it.

You want to make customers really mad – hide the truth from them. Then when they find out (they always do) and realize the damage done, it is medieval time.

Here was my response to Infusion:

…You have to remember that most of us rely on this for our livelihood. I can tell you first hand when there is a bug in Infusion where a marketing campaign doesn’t run or a credit card doesn’t get processed, my pay goes down. Nothing ignites passions like one’s wallet.

And to be frank, most business-to-business software companies do a far better job at transparency with known issues. I cannot count the number of times that I’ve called Infusion support with an critical issue and been told that, “oh yeah – we know about that.” Yet at the same time on this forum, there is no mention of the bug under “known issues.”

Top this up with the frustration of a new application that has broken many, many things. While I question the prioritization of a new interface versus stability and features, regardless the new app appears to have been released prematurely.

What I expect from Infusion is a table, updated daily, with the following:

1. A list of every open Pri 1 and 2 issue. No filtering just because the number of users impacted isn’t known.
   
2. A statement about who is impacted by situation. For example: “users who perform this type of operation…”
   
3. Any known workaround. Even if all that can be done is check that one has the problem and do some painfully manual workaround.

I have been around the software business for a long time. Let me assure you, you will lose more customers by hiding serious issues than by coming clean.

Chris Voice

How about you? Are you honest with your customers? Even when you look bad?

C.

Posted in Customer Support, Technology | 2 Comments »

A Cozy, Small Pond

September 19th, 2008 Chris

Pardon my tardiness with this post. I am teaching twice a week at night and it is killing me. After over a year of de-compressing from corporate life, I had gotten into a very relaxing routine that seldom required working at 10pm at night, as well as seldom wearing pants, shaving and other personal hygiene necessities whose details, dear reader, I will spare you.

I had a great question in class this week that I thought I would share with you as I think it’s a critical issue for the micro business. Basically, a student asked if it’s better in business to be a big fish in a small pond or a small fish in a big pond.

In other words, it is better to focus on a smaller, more narrow market, or a larger more general market. On the surface, it would seem that a larger pond is more attractive: more customers, more potential sales, etc…

But – especially as a micro business – that means more competitors who may be much larger than you. And as a consequence those larger competitors will be able to invest more in a product or service that has wider appeal to that target customer. And likewise, they will be able to spend more on promotion and be more able to handle aggressive pricing, etc…

The reality of the situation for you is that you may not have the resources to compete in a large, broad, general market. But don’t fret – a small pond still can be extremely lucrative.

The idea here is that if you identify a small market – something that the big fish don’t focus on, you can tune your offering to that small market. And then you can rule the pool (OK, pond – but it didn’t rhyme).

Here is an examples to make it more clear…

Let’s say I’m a small company developing a software product that helps people manage their budgets. Well, that’s a big market with lots of competitors (Intuit, Microsoft, etc…) – competitors with much more money for development, advertising, sales people, etc…

But, if I focus my product on a smaller, more narrow market – say College and University students – then I can focus on the features that those prospects care about (ex. managing tuition, student loans, etc…). And I can promote it through channels they care about – in student mags, on facebook, etc… The large competitors can’t be bothered to focus there – it’s just not lucrative enough for them.

So if you’re a student – wouldn’t you want a product that was tailored to your needs? As the business making that software, this gives you an edge and you have a shot of being the big fish in that small pond.

Oh, kind reader, but you say that this limits your growth. Well, yes it does. But it doesn’t stop you from venturing out into multiple small markets, one at a time. The “bowling pin” strategy (from the classic book Crossing the Chasm) involves winning one small market, then taking on another small market, etc… Success in the first narrow market funds your foray into the second.

Now, often people clang with this, assuming it means that any customer not from your target market is essentially a leper and must be avoided at all costs. Of course this is not the case – embrace anyone’s wallet but reserve much of your investments only for your target.

Another issue is that typically, a micro business hasn’t started with this focus and it’s simply not practical to shift the whole business at once. Do you really abondon a general marketing approach that’s bringing in revenue and start from scratch targeting a new one? Short answer, nope. You transition.

Our business started as a generic sales training business and we continue to serve customers across a variety of target markets. A couple of years ago, we identified an opportunity in a particular narrow market (specific to one industry) and extended our efforts to target it. So, for example, we have a bi-weekly newsletter that goes out to our base and we also recently launched a version of it specialized for this narrow target market.

This “extension” plan takes longer as resources are spread thinner, but it’s really the only practical thing you can do where you start with a more generic base.

Having trouble identifying a target smaller market on which to focus. Try this exercise: print out a list of your customers from last year and try to spot something common trends: is there a large number from a particular industry, company size, age demographic, geographical region, income level, etc… These are the first clues to where you’ve already got an edge… And if it’s already not full of competitors also focusing on those targets – it may be the right small pond for you.

C.

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Payments Part III: The Final Frontier

September 17th, 2008 Chris

Sorry I’m late with this post … I have to admit that I’ve been a bit distracted with a bad couple of days in the financial markets. Merrill – gone. Lehman – gone. AIG – terminal. All because of the credit crunch.

So let’s get back to how we can use credit to put more borrowed money into the hands of the banks. What could go wrong?

In this final installment, we’ll look at the back end credit card processing. We’ve already covered how we collect orders from customers via the store front and shopping cart.

Payment Gateway

As I mentioned previously, think about the Payment Gateway as the virtual equivalent of the Point of Sale device at your local retail store. It gets the order information from your shopping cart and confirms the good standing of the credit card. If the Payment Gateway is happy, the order is processed and you’ll get your money. If the order is rejected, then you’ll get a failure notice and the user will be told that their order has been rejected.

Don’t worry – all that user interaction is managed by the shopping cart software behind the scenes. You just need to tell the shopping cart which Payment Gateway you are using along with your Payment Gateway account number.

Gotcha Warning – You need to make sure that the Payment Gateway you use is compatible with the Shopping Cart you want to use. My recommendation here is to pick the Shopping Cart first and then figure out what Payment Gateways it supports.

What are the factors in choosing a Payment Gateway? Here, I believe, size matters. When we chose ours, we picked the most established Payment Gateway supported by the shopping cart because that would mean the least risk that the integration with would ever break. The reality is that whenever you connect two pieces of technology, a change on either end often breaks that integration. By picking the biggest Payment Gateway, the risk that something goes wrong with the connection to the shopping cart is minimized (the prospect of all those angry customers ensures that a lot of diligence is taken in making sure nothing ever breaks).

We picked Authorize.net – one of the biggest in the business. In general, most of the big Payment Gateway companies have similar features – most of which we don’t use. One thing to note that is if you also process telephone orders, you’ll want to make sure your Payment Gateway has a “virtual terminal” which allows you enter order information directly into the Payment Gateway via your computer (instead of having to call it in yourself – a pain).

If you are doing physical orders, you have two choices: use the “virtual terminal” per above or get a Point-of-Sale terminal. For the sake of brevity (err… at least not so much longevity) I’ll ignore the latter.

Gotcha for “foreigners” – something thing to watch for you international operators (ex. Canadians selling in the $US), is that multi-currency operation is a large pain in the neck! Most Payment Gateways (especially not affordable ones) only operate in one currency. Authorize.net, for example, only operates in $US. That means, for us, all our prices are in $US and everyone’s cards are charged in $US.

There are some higher end Payment Gateways that do support multi-currency, but they are much more expensive and don’t have the same shopping cart support. Another option is to set up separate Payment Gateways – one for $US and one for $Cdn (or other foreign currency). This implies that you need to be able to set up your shopping cart to use multiple Payment Gateways, which many can do.

My recommendation: keep life simple. Pick one currency. We do get customers occasionally complaining but we’ve never lost business because of it…

Merchant Account

A Merchant Account is used to pass the actual money between the card holder’s bank and your bank. They also provide the Payment Gateway with information on the status of the credit card which is used to accept or decline transactions.

A single merchant account is used for Visa and MasterCard. In most cases, a merchant account can be applied for and obtained through your Payment Gateway provider which makes it convenient to get. If you want to use AMEX, then you will need a separate merchant account directly from AMEX (you can go to their web site and apply on-line.

Merchant Account allows you then to receive proceeds from the credit card transaction and have them deposited directly to your bank account.

Gotcha for “foreigners” – If you are doing business outside of the $US, you can only accept $US Amex cards if you have a physical presence (i.e. an office) in the $US. If you don’t, perhaps it’s time to call your buddy down South and ask him for a favour (note – to complete the illusion, spell it f-a-v-o-r). But wait – there’s more! You also need a $US bank account physically in the States for AMEX. We got the help of our banker at RBC to help us open one in Florida through their U.S. subsidiary, Centura. Another reason to bank with RBC – they are great for small business…

Gotcha for “foreigners” – What – another one? Yup. To accept $US from Visa and MasterCard, you need to have a $US currency account. The good news is that it can be physically in your country which is easily done at most banks. To support this, you need to work with a Merchant Account provider in your country, Here in Canada, we chose Paymentech.ca - a subsidiary of Chase.

If you don’t get a Merchant Account from your Payment Gateway provider, make sure you understand the Payment Gateway compatibility requirements. To make a long story short, each Payment Gateway provider supports certain processing platforms and you need to make sure that your Merchant Account provider supports them. Did you head explode? Mine did when going through this ourselves. I just copy and pasted the requirements and emailed it to our Merchant Account provider and asked “OK?”.

Once you’ve done all this, you’re good to go! Although you may be left with the distinct impression that it’s just not worth it…

Last Thoughts

While it does seem complicated, much of the complications arise from multi-country operation.

If you’re in one country, I would simply follow the recommended vendor chain: pick a Shopping Cart. Many of them offer payment gateway and merchant accounts solutions that they resell from others. Take advantage of it. If they don’t, ask the top 2 vendors of each type that they recommend.

If you’re operating internationally, the first decision is if you think you need to operate in multiple currencies. If you can live with just one – do it. Also think about if you need AMEX – it does complicate life but depending on your target market, you’ll need to have it.

You’ll note I really haven’t talked much about price. Shopping Cart pricing varies a fair bit, and that needs to be a factor in your evaluation. For merchant account providers, we found that with just a bit of negotiation, they match each others pricing – although your pricing will be dependent on the specific financial situation of your business. Finally, Payment Gateway pricing seemed to be pretty consistent… I’d also apply my “fire your suppliers” strategy to these vendors as well – just make sure to watch for any “setup” and “disconnect” fees which may make it harder to switch.

In the end, setting this up is a pain, but a necessity. Like it or not, credit cards are the life-blood of most micro businesses.

C.

Posted in Payments | No Comments »

Payments, Part II: The Cart Strikes Back

September 11th, 2008 Chris

First of all, don’t even think about asking me to explain the post title. I’ve got no idea – just kind of reminded me of Star Wars.

Last post, I gave an intro to all the working parts of online credit card processing. Sounds complicated? It is and the good news is that today, I’ll cover the easy part: the storefront and the shopping cart.

Storefront

As I’ve mentioned before, I’m pretty anal about how we present ourselves to our customers so our #1 requirement here was to be able to look very professional and do service to the different products and services we offer.

Because we don’t offer that many things to purchase (less than 20), the easiest thing for us was to design the storefront ourselves. That is, to create the web content for each of the products along with the necessary descriptions.

Where this won’t work is if you have a large number of products where it just would be too labour intensive to code up content for each page. Think amazon.com and all those books – their web pages are all database driven. That have entered raw product info and when you search for a particular book, it grabs that data and generates the web page on the fly.

You can purchase storefront software solutions. When I say software, I mean both that some can be hosted somewhere else where you load your product data up and it is presented to your customer on their site, while some you install on your own web server and load up the product data locally.

My advice here is that if you don’t have a huge stable of products, go with your own storefront and don’t buy a product. It’s much easier to integrate into the look and feel of your brand and you’ll save money…

If you’re interested, you can see what our store looks like – and please feel free to buy something while you are there…

Shopping Cart

Once someone is interested in a product in your storefront, they click “Add to Cart” or “Buy Now” or whatever button you’ve implemented. That button contains a link to the shopping card which indicates which product is being added. This sends the product to the shopping cart where is held until the user checks-out (i.e. pays) or leaves. Here is an example screen grab from ours:

Forget doing this puppy by yourself – too complicated… You need to go out and get one (and there are many, many different carts). Just try googling shopping cart and stand back.

One that I can recommend (because we used to use it) is 1ShoppingCart (www.1shoppingcart.com). It is pretty reasonably priced ($35 to $100 a month) and had all the features we were looking for. The only reason we still don’t use it is that we went with a single solution that does other things our business also needed.

What features you ask. Well, we learned from experience what we wanted in a shopping cart. A well equiped shopping cart can be a sales engine itself. Above and beyond simply gathering selected products, showing the price and then taking payment information, we wanted to be able to do things like:

• Support both one-time purchases as well as subscriptions (example, $20 per month). The latter can be complicated as the software needs to remember to charge the user’s credit card each time.
• Calculate shipping and taxes on the order. Regardless of where you are, someone government probably wants a slice of your sales. We just wimp-out ourselves and say that all tax is included, then back it out when we do the books.
• Coupons, Discount or Promotional offers. If you want to promote a product, you can provide certain users with a code they can enter to get that discount. Very important to have…
• Upsell. The ability, based on what products are in the cart, to recommend other products at the time of check-out.
• Email receipts and invoices. Be able to automatically generate and email out the necessary invoices and receipts for customers so you don’t have to worry about it.
• Email auto-responders. Once someone has bought something, triggering a follow-up set of emails can be very powerful. You can get feedback on the product and/or offer them another upsell.
• Customization. The ability to customize the look and feel so that even if the user has gone to a different site that hosts your shopping cart, they’ll have the same experience. In short, you want your shopping cart page to look like your web page – even if they’re hosted in different places.

As I said, there are many products out there. If you’re looking for both a storefront as well as a shopping cart, the good news is that most storefront solutions include a shopping cart so you won’t have to implement two different things.

There are some other considerations which you must look at before finalizing your decision on a shopping cart. It must be compatible with the rest of the payment processing chain. More on that next time…

What’s Next

Next time we’ll talk about the even more confusing world of payment gateways and merchant accounts. Now it gets interesting. OK, I realize that this stuff may be considered quite far from interesting but if you’ve got to do it, hopefully this helps…

C.

Posted in Payments | 1 Comment »

Payments Post-Grad, Part 1

September 9th, 2008 Chris

I must confess that I am a bit of a geek. I actually enjoy a technology challenge when there is a problem to be solved in our business, and I have to be a bit of a Macgyver to sort it out.

I’ve never actually worked as an engineer or software designer, despite my engineering degree. However, in the various places I’ve worked, I’ve had to become proficient in the technologies associated with the work. It’s been a necessity and I’ve usually picked it up relatively quickly.

So when I joined our micro business, I was feeling pretty confident. Whether it be upgrading to a new CRM system, setting up the office network or updating our web site, I was able to rise to the task and get it done.

That is, until a problem so complex, so insidious, that it put my technology prowess to shame. What was most embarrassing is that I knew that thousands, even millions of people had already sorted it out.

I’m talking about accepting credit cards on the web.

I was recently asked by a colleague of Colleen’s about how hard it is to set this up and I was a bit embarrassed to say that I probably spent two weeks figuring it out. Our situation was especially complicated as we are a Canadian company who operates in U.S. dollars.

So, in the next couple of blog postings, I’ll try to provide a detailed look on what it took for us to go from accepting credit cards on the phone, to accepting credit cards on line. Fasten you seat belts… it’s a rough ride.

In the beginning…

Like many micro businesses, we accepted payment in one of two ways. We could process orders by phone by taking credit card payment information by phone or fax, then calling in to our credit card processor.

For on-line orders, we used paypal. It was very convenient although you pay for that convenience… Not to mention that as a Canadian company, we could not process AMEX cards from the U.S.

Our requirements:

I think we’re representative of many online businesses. We want to use our web site to sell products and services (I’ll refer to them all as products going forward). Specifically:

• Present our products online with one-time payment and on-going payment plans (ex. five payments over five months, or $x per month in perpetuity).
• Have customers select one or more products and be presented with a final bill for confirmation.
• Allow customers to specify a particular credit card, along with personal info, and use it to pay.
• Have that payment processed and deposited into our bank account.

What you’ll see definitely added to our headaches was accepting American Express cards. They do things differently than Visa or MasterCard. But for us, AMEX made sense since many of our products are purchased by individual sales persons in medium to large companies where AMEX has very high penetration as the corporate credit card. As it turns out, about 10% of our credit card business is on AMEX.

Definitions:

Today, I’ll start by providing a quick set of definition of all the moving parts so we can see what needs to be considered when implementing this. Yes, this list of definitions you need to know is way too long – just another sign of how complicated this is…

Storefront – This is the component that displays the products that you are offering your customers. Think of going to a web site and seeing the various products being offered, where you can select them to get more information or add them to your shopping cart.

Shopping cart – This is the component that collects the list of products that the customer has indicated an interest in purchasing. It includes a product catalogue, allowing the user to be presented with order information on each product selected like price, part number, additional product details, etc… It also collects or retrieves customer information that is necessary to process the credit card (card type, card number, name, billing address, etc…) and other functions like shipping (shipping address, shipping method, etc…).

Payment Gateway – In a physical store, think of this as the point-of-sale device with which your credit card is wiped and subsequently goes off to ensure that your credit card is valid and in good standing. In the online world, it is a service that receives payment information and talks to the back-end card companies to make sure all is good and you can accept that card.

Merchant account – Think of this like a bank account- but not from your bank necessarily. Obtaining a merchant account allows this bank to give you money for the credit card transaction while it deals with processing the funds with the card-holder’s bank in the back-end.

Your Bank – This one is mercifully easy. It’s where the transaction proceeds get deposited. As long as an account with the same currency as your payment gateway and merchant account. And as long as it’s in the U.S. if you want to accept $US AMEX cards. And as long as… Never mind. So much for mercy…

Next

In the next post or two, I’ll go through our lessons learned as we actually implemented this. I’ll also look at the particular challenge for a micro business not located in the $US that wants to accept $US credit cards.

I won’t focus on all the behind-the-scenes stuff that happens in credit card processing (which I don’t pretend to fully understand). Instead, I’ll hopefully give you practical tips that will make it easier for you to actually implement.

C.

Posted in Payments | No Comments »

What Have You Done for Me Lately

September 4th, 2008 Chris

In class last night, I was discussing how critical it is for organizations to strive to achieve an on-going relationship with customers. Not for some airy-fairy reason but because it’s the only way to survive these days in business.

Why? Well, basically it’s a heck of a lot cheaper and faster to sell to a current customer than a new customer. That improves profits. And if you keep customers for multiple transactions, then you can afford to lose money on the first. That means you can out-spend the competition to get that first customer and then keep them to turn it into a profitable relationship.

In many industries, it’s all about who can spend more to win the customer.

And that reminded me that on the flip side – in our business – I need to fire a few more suppliers for whom I am a repeat customer.

Ok, not fire per se, but check to make sure that we continue to get the best deal possible. Once you start to do business with a supplier there is a fair bit of impedance to switching. You may have a personal relationship and as long as you’re getting good service, you don’t question their prices. It’s convenient to go back to someone you know – they understand your business and give you what you.

And there in lies the rub – they’ve won your business and don’t need to be aggressive with pricing going forward. And in a micro business, cash is king – it’s your salary.

Our process is that every year or so we look at alternative suppliers for everything we do. I’ve written before about how changes in technology providers’ business models really help micro businesses. It applies to all your suppliers.

For each supplier, we typically look at two or three alternative – getting quotes for what we need. As long as we’re happy with our current service, we give the current supplier the opportunity to match the pricing. They usually do. And if they won’t – you need to switch.

Just last week, we cut our CD reproduction costs in half, just by giving a couple of other shops a quick call and getting a quote.

Sometimes it’s a tough conversation with your supplier and people can even be offended. But remember – if they aren’t giving you their best price, they are taking salary out of your pocket. Are you so concerned about their feelings that you’d take money out of your own pocket and give it to them? That’s called charity and has no place in a business relationship.

Make it a point each year to get a couple of competitive quotes for every supplier in your business. They are making their profit on your repeat business. Make sure they deserve it.

C.

Posted in Financial | 2 Comments »

Hold the Gin. Pass the Spreadsheet.

September 2nd, 2008 Chris

I spent a bit of time over the long weekend prepping for my first class tonight. I am teaching this term at the University of Ottawa’s MBA program – specifically on Strategic Marketing.

I always get a bit frustrated when talking to people about marketing as most assume it’s pretty much the same as advertising. The image many have is a bunch of people in a conference room engaging in random right-brain exercises. It almost sounds like a party. In fact, back in my former job, we actually used icons of stick men with martinis (shown here for your enjoyment) as a representation of marketing.

The reality, of course, is much different. Marketing is a discipline and the objective of my first class this week is to ensure that the myth is put to rest.

One of the simplest ways of doing that is to ask: What is the most important tool a marketeer must master?

My answer is the spreadsheet. Especially in a micro business, you cannot effectively market if you can’t master Excel. You simply can’t manage what you can’t measure.

And what is one of the most important things you need to manage: your Return on Investment (ROI). In other words, your job is to maximize the revenue you get from your marketing investment.

A real life example from our business is Google AdWords. We use AdWords to advertise on a bunch of sales-related key words. What we do is we advertise a free ten day eCourse with ten of Colleen’s best sales tips. Then we offer folks that take the eCourse, a membership in Colleen’s monthly sales coaching program (where we start making money).

So we need to determine our investment:

     = Click throughs  x  click through cost

And we need to determine our return, first with the number of customers we get:

     = Number that click through  x  % who sign up for the eCourse  x  % who purchase the coaching program

And multiply that by how much revenue each customer is worth. In our case:

     = Average number of months a customer stays in the coaching program  x  per month charge.

That is a fair bit of math, but it’s critical to determining if the investment in AdWords is worth the return.

First of all, it’s critical to ensure you’re getting more revenue back than you are investing. I took us literally months to determine the best strategy for our use of AdWords. For example, originally, we tried to get people to purchase the coaching program right from the ads but the conversion rate was too low – we were losing money. We then moved to the multi-stage conversion with the eCourse and voila – we made money.

There is definitely a right-brain part to marketing and that makes this measurement stuff even more critical. In our example, prospects will respond differently to different Adword ad wordings. So we have a couple of ad variations and we measure to see who each one performs. So now we’re doing the math above twice.

And we have different landing pages from the Ad with different text for the eCourse sign-up. So now that’s 2 x 2 = 4 different sets of numbers.

In other words, we continually test and refine our marketing to discover what works best, implement it, and do another test. You can only figure this out by running the numbers.

This applies to all your marketing. Every marketing effort needs to be likewise tracked. Every article and ad we use has a unique tracking code so that we can determine how many people click and if they ever buy something. Otherwise, we’d literally be guessing if we were making or losing money (aka gambling).

Are you measuring your marketing? If not, then you’re not managing it. Write down a list of all your marketing investments in descending level of investment. Start at the top, fire up Excel and start measuring. I bet you’ll be surprised at the results.

C.

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