Does Groupon Fail Business Advertisers or do Advertisers Fail Business?

I got a news release today announcing: "Rice University study finds Groupon is more beneficial for consumers than businesses." It goes on:

Social promotions such as those offered by deal-of-the-day website Groupon are wildly popular with shoppers, but they might not be as big a hit for businesses, according to a recent study by Rice University's Jesse H. Jones Graduate School of Business.

Groupon promotions were profitable for 66 percent of the businesses surveyed for the study, but they were unprofitable for 32 percent. More than 40 percent of the respondents indicated they would not run such a promotion again.

Groupon is a social promotion site that features a daily deal for each city in which it operates and offers consumers a significant discount for a local good, service or event. The discount is valid only if a minimum number of consumers purchase the deal.

But there's more to this story ...

The fact that more than 40% businesses advertising on Groupon wouldn't do so again is a symptom of a larger malady: Most businesses just don't know what to do with new customers.

My version of Business 101 has two vital tenets:

1. it's infinitely easier and cheaper to sell to a current customer than a total stranger; and
2. if you aren't building a customer database to market to, you aren't building a business.

By contrast, most businesses (not yours, I hope) fail Business 101 by:

1. spending too much time and money hunting and gathering new customers; and
2. spending too little time and money selling to existing customers.

In his study, our man Dholakia outlined three strategies for success, the best of which was this: "Use promotions for building relationships instead of creating one-time transactions. Instead of offering $60 worth of food for $30, parcel it out to offer $20 worth of food for $10 over the customer's next three visits."

Note well that first sentence, because it holds the key to dependable, recession-proof profits for you: "Use promotions for building relationships instead of creating one-time transactions."

To learn how to build a business that turns transactions into profitable relationships, look at Zappos.

Early on, Zappos chose to spend more on getting current customers to buy again and more frequently, than on convincing strangers to buy. It did this by making customer service the focus of the company.

Answer me these questions three:

1. How much time and money do you spend on advertising?
2. How much time and money do you spend on customer care and retention?
3. How can you invest more in that latter number?

Take your time and get the right answers. They may hold the key to the future of your business.

(For more ideas like these, download Guaranteed Marketing for Service Business Owners.)

How Much is One Phone Call Worth to You?

A fine blog posting by sales trainer Paul Castain got me thinking: When it comes to building relationships with your clients, how much more valuable is a phone call than an email?

Here's Castain on the topic:

I caught myself doing something big time over the last few weeks and for once, I’m proud to say ... I did something about it!

I caught myself getting way too comfy with nice, safe email relationships.

And it's real cool too, because the world and I have seemed to have reached an unspoken understanding that its all good.

We justify it by thinking about how busy everyone is, how much easier it is to shoot a quick email and maybe, just maybe we’re very astute and have flagged this as just the new normal!

In my case, I have the ultimate excuse (don’t we all) I’m knee deep in redesigning a training program for my company and I can’t lose momentum.

Yep ... I suck!

A few weeks ago, I caught myself red freakin handed (an upgrade from red handed) when I was clinging to my email relationships. So I did the unthinkable.

I picked up the phone and engaged in the ancient art of conversation and it blew everyone’s mind . . .

Because who the hell answers an email with a phone call?

I agree: Who calls anyone to reply to an email?

You should, if you want to eliminate potential misunderstandings with a client or prospect.

You should, if you want to convey a complex set of instructions or make a detailed request.

You should, if you want to let your voice fully support your words.

Think about that last sentence. The words themselves carry only a tiny sliver of any message. When your message goes by email, it arrives without your tone of voice, your energy level, and your emphasis on particular words. Not to mention spam filters or misspellings that make you look silly.

In my experience, I find that one phone call is worth about 5-10 emails.

Stated differently, it takes up to 10 emails to build the same level of trust between you and another person as you can achieve in just one phone call.

Heck, even voicemail is more valuable than an email -- you can tell a lot about a person by the message they leave. Do they ramble? Are they friendly? Fast-talking? Intelligent sounding?

What's your opinion on email vs. phone calls? I'd love to know -- please comment below.

(Kevin M. Donlin is author of the Special Report, Guaranteed Marketing for Small Business Professionals.)

Who Are You Copying?

How did Michelangelo, da Vinci, van Gogh, Picasso, and other masters learn to paint so well?

By studying and copying the masters before them ... for many diligent, unglamorous hours.

Same thing with Bob Dylan -- he spent years learning hundreds of Woody Guthrie's songs before hitting it big himself.

And The Beatles -- they played other groups' songs for 6-7 hours a night, 6-7 nights a week at the Star Club in Hamburg before signing a record deal.

So: Before you become a master, you must first learn the moves (mental and physical) of the masters.

When you copy the masters, you "entrain your brain" with the thoughts they had, the words they wrote, the brush strokes they made.

Your business is no different. If you want to create a product, service, or advertisement that's a masterpiece, start by copying the masters.

Think now: Who are the masters in your field?

Who will you copy today?

Here's the last word on the subject, from Woody Guthrie: "If you want to learn something, just steal it -- that's the way I learned from Lead Belly."

(Kevin M. Donlin is author of the Special Report, Guaranteed Marketing for Small Business Professionals.)

Ms. X and the $5,000 Joint Venture Example

You can call it joint venture marketing, JV marketing, coopetition, co-marketing -- whatever.

They are different names for the same thing: found money.

Because ... when you form a partnership with another business to provide complementary products and services to each other's customers, you can quickly tap into a flood of new revenue, at little or no cost.

All you need to succeed is imagination and a willing partner.

Case in point: "Ms. X," the smart owner of a small Twin Cities service business who just landed $5,000 -- and growing -- in new revenue. Without spending one penny on advertising, new technology, or pay-per-click ads on Google.

While the sum of $5,000 may or may not excite you, the principle should: She got this new revenue for the price of a phone call and a short, in-person meeting with a former competitor (now a joint venture partner).

You can read and profit from my exclusive interview with Ms. X below.

(Why the cloak-and-dagger secrecy? I can't use her real name -- yet -- because she's part of a pilot training program I'm still putting the finishing touches on. You'll get the details when I pull back the curtain in a few weeks.)

Kevin: All right, Ms. X. Tell folks about the several thousand dollars that just fell into the lap of your small service business. What did you do?

Ms. X: We are a small company. We cannot always help our clients because there are things we do not do. For example, we do not do installations, so I wanted to collaborate with a company that did.

It has worked out great. We both have the same service philosophy and integrity. We send them jobs for installations such as the new (product name deleted) they installed for our neighbors. They send us jobs for service calls they cannot handle. It has worked very well back and forth.

I feel good because we have somebody trustworthy to whom we can send clients and, in turn, they feel they have somebody trustworthy to whom they can send clients. We have both given each other the leads with no money passed between us and we have each gained new clients.

Kevin: This was not some sort of mafia don meeting where it was high stress or a bunch of lawyers present, right? You simply called another, bigger company and offered to meet?

Ms. X: Yes. It took all the courage I had to even make that phone call and go to that meeting. I was a little nervous, but it proved to be a non-event. They were very warm and receptive.

Never in a million years would I have thought to start looking to expand our business by going to our competitors. We did, though, and now if we go on vacation, we have an ace in the hole knowing that our clients will be served properly in our absence.

Kevin: Tell me about that big order that fell into your lap as a result of working with this company.

Ms. X: They sent us to repair a (product name deleted) and it needed replacement. We were able to do that.

Kevin: Would you mind sharing the revenue that came in because of that new business lead?

Ms. X: That was a couple thousand dollars from one call and we have had other repair calls. I would guesstimate it was a $5,000 idea that popped into my head.

Kevin: We are only two or three months into your joint venture program and you already have close to $5,000. That really bodes well for compounding revenue and profits in the future, right?

Ms. X: Yes, it is just going to keep growing.

Now, here are 5 action steps for you ...

1) What products or services do your customers need, but you don't provide?

2) What 3-5 respectable competitors in your area could deliver what your customers need?

3) Call competitors and offer to meet, in person, to discuss how you might send them leads in exchange for leads from them, or a slice of the revenue, or both.

4) Keep calling until you form one new joint venture partnership.

5) Repeat until your customers have all their needs met, by you or your joint venture partners.

(Kevin M. Donlin is author of the Special Report, Guaranteed Marketing for Small Business Professionals.)

Flip Your Funnel, Explode Your Profits

In Flip the Funnel, Joseph Jaffe wrote the book I largely base my consulting practice on.

He (and I) believe it is more profitable to grow your business by convincing current customers to buy more often and refer others, rather than spending most of your time and money chasing new customers.

The subtitle of Flip The Funnel says it all: How to use existing customers to gain new ones.

By creating a more memorable customer experience and acknowledging those people who buy from you, you set the stage for increased customer loyalty -- and profits.

Here are three takeaways from Jaffe's book that you can use today:

1. Flip the funnel

Traditional marketing focuses dumps many prospects in at the wide top, to get out a small number of customers at the bottom, where the process ends. This can be time-consuming and costly.

By flipping the funnel, you can start with the first purchase and turn a small number of existing customers into many new ones. This can be faster and less expensive, because you are building from a base of people who already trust you -- your customers.

2. Deliver a memorable customer experience

The customer experience is the sum of all contacts, transactions, and encounters between customers and your company, your brand, your people, and your products and services.

Companies like Apple, USAA Insurance, Virgin America, Zappos, and others put serving the customer ahead of profits in the NOW, when customer service happens. This has made them highly successful -- and profitable -- over the months, quarters, and years.

3. Do more of what really matters

You can grow your business in four ways: getting more clients, getting them to buy more often, getting them to spend more, and getting them to refer their friends.

Most businesses spend most of their time on money on the first goal only. This is insanity. Don't be insane.

Instead, follow the ADIA model:

• Acknowledge - Clients, like all people, crave recognition. Examples: a personal thank-you note, regular progress reports, a gift. 
• Dialogue - Encourage clients to engage in conversation by giving them multiple ways to contact you, such as Twitter or the old-fashioned phone. 
• Incentivize - Encourage clients to recommend your business to their friends. Example: Reward them, either in cash or with gifts, for every new client they send your way. 
• Activate - Use social media to communicate with your clients, and encourage them to pass the word via blogs, Twitter, Flickr, YouTube, and Facebook. Example: Create a money-saving tip sheet that clients can download from your blog and share with friends.

My own "inside marketing" model departs from Jaffe's in several ways, especially when it comes to marketing for small office/home office (SOHO) service business owners -- my specialty.

But we agree on the same basic premise: Stop stepping over the dollars that lie hidden inside your business (in the form of existing customers) to chase pennies down the street (in the form of prospects who don't know you from Adam).

Instead, start using existing customers to gain new ones.

(For more ideas like these, download Guaranteed Marketing for Service Business Owners.)

3 Tested Advertising Methods

If you write ads for your small business, you should know about John Caples.

His book, Tested Advertising Methods, is perhaps the best ever on advertising copywriting.

Here's why: Caples' insights were all backed up by extensive mail-order advertising, dating back to 1919.

In mail-order ads, which are a form of direct-response advertising, results are tracked to the dollar.

These ads are salesmanship in print. In writing them, you quickly learn what works and what doesn't based on which ads pull the most sales. You can spot mail-order ads by their strong headlines, calls to action ("Order Now"), deadlines, and other key elements.

Institutional ads, by contrast, aim to be clever first and sell later (or never). You can spot them by their funny (or missing) headlines, lack of calls to action, lack of deadlines ... and lack of results.

I could go on, but won't.

Instead, here are 3 lessons you can learn from John Caples (of at least 57 I could give you) ...

1. The key to success in your advertising lies in continual testing.

Thanks to free technology like Google Website Optimizer, you can test your online ads in a fraction of the time and hassle that Caples had to endure when testing via mail order.

What is testing?

It's pitting one or more ads against each other to find the one that sells more. The most common form is split-testing (also called A/B testing), wherein you run two ads that are identical except for one element, such as the headline or price. One ad will beat another. Create a new ad and try to beat it. Repeat. Repeat. Repeat ... and your sales will always go up, up, up -- never down.

2. The headline is the most important part of most ads.

The most effective headlines appeal to the reader's self interest or give news. Long headlines that say something are more effective than short headlines that say nothing. One headline can outsell another by as much as 19.5 times.

3. The simplest way to test any ad you write is to put it aside and read it the next day.

When you do, you will read it with fresh, analytical eyes. You will see things you missed the day before. Your ad will always improve as a result. Always.

Note: Don't hire any copywriter to write so much as a grocery list for you if s/he hasn't read Tested Advertising Methods at least three times.

(Kevin M. Donlin is author of the Special Report, Guaranteed Marketing for Small Business Professionals.)

The $40-Million Marketing Secret from Seth Godin #sethgodin

Looking back over my notes from Seth's lecture last month at the Pantages Theatre in Minneapolis, I found this nugget:

Little Miss Matched is not in the sock business. They are in the conversation business.

When 12-year-old girls get a 3-pack of non-matching socks from Little Miss Matched, they can't wait to tell their friends.

And with socks starting at $8.00 for 3 (plus shipping), there's plenty of profit left over for Little Miss Matched, which did $40 million in 2009, according to Godin.

The breakthrough for Little Miss Matched -- like most successful businesses -- came after they discovered the business they were really in.

It turns out, as you'll see in the video below, Little Miss Matched is in the business of starting conversations ... conversations that equate to millions of dollars in word-of-mouth sales.

Zappos isn't really in the shoe business. They are in the business of delivering happiness. (Sounds like a book title! -- #irony)

FedEx isn't really in the express shipping business. They are business of making your shipping department look good.

Action Step: Ask yourself this $40-million question: "What business are we REALLY in?"

Pick a niche. Deliver an unexpected experience that's remarkable -- literally worth remarking about to other people. Then clean up.




(Kevin M. Donlin is author of the Special Report, Guaranteed Marketing for Small Business Professionals.)