Are You Missing Revenue Growth Opportunities Right in Front of Your Eyes?

by Edward Weisberg

We all know that sometimes we just get too comfortable to see growth opportunities that are right in front of us.  We get too complacent and fixed in our ways to be able to take simple steps for growth. Sales and marketing strategies can always benefit from a review and tune-up from an outside expert.  An outsider can usually see opportunities that are being left on the table, as we continue to market the same way we always have.

Ed Weisberg, Managing Partner of CommerceExpertise, suggests a Revenue Growth Stimulation Audit should be done at least once a year.   This is a quick analysis of your business to fine-tune your programs for additional revenue that may be missed as your markets evolve.  An audit should assess the following nine areas of opportunity:

1. Internal Sales Channels and Staffing
   1. Inside Sales
   2. Outside Sales
2. External Channels/Partnerships
   1. Existing
   2. Potential
3. Incentives for customer-touching employees
   1. Consultants
   2. Service providers
   3. Customer Service
   4. Others
4. Trade and Network Relationships
   1. Industry-focused
   2. Regional-focused
   3. Trade Groups
5. Marketing Message
   1. Review all to ensure Calls to Action
6. Advertising Strategy
   1. Ads
   2. Events/Trade shows
   3. PR initiatives
7. Social Media Initiatives
   1. LinkedIn
   2. Facebook
   3. Twitter
   4. Others
8. Customer Leverage
   1. Recommendations
   2. Referral Fees
   3. “Drip” programs to stay top of mind
9. Other Opportunistic revenue sources

Interested?  For more information, call Ed Weisberg at (617) 657-9905, or email him at eweisberg@CommerceExpertise.com 

Edward Weisberg is Managing Director of CommerceExpertise.  He has over 25 year of experience transforming under-exploited market opportunities to success. You can reach him at eweisberg@CommerceExpertise.com

 

Analytics! Why I love Web Marketing

Over the last week I’ve been reading Avinash Kaushik ‘s book, Web Analytics 2.0.  Avinash’s personality, which carries through his writing, actually makes the subject of analytics engaging.   I first met Avinash about 5 years ago, when he and I were on an expert panel together at a Frost and Sullivan Conference.  At the time, he was working for Intuit.  Since then, he has gone on to become the “Analytics Evangelist” for Google, and has built quite a following, (and well deserved!).

Before the Internet, I was always reluctant to recommend massive investments in off-line advertising.  The question was always “Do people really read that?”, “How will we know if this ad was a good investment?”.  While there were always measurement tools and services, such as Nielsen, there was always a shortage of data, and the statistical projections were never complete.

Today, with Internet marketing, the challenge is not that we don’t have data, but rather how to find meaning in tremendous amounts of data.  The web enables us to track clickstream in precise detail, and there are enough free and inexpensive tools to cut and chop the data any way you wish. With all the data available, there are no longer any good excuses for bad marketing decisions.  We must find a meaningful way to get out from under the data to an understanding of what site visitors are doing, and then making the right decisions to win at your business.

Avinash makes an interesting point in his book, which I wholeheartedly support.  He suggests following a 10/90 rule.  With all the free or inexpensive tools out there, don’t spend a lot of money on tools, maybe 10% at most.  Spend the 90% of your analysis budget on smart people who can see beyond the data, and develop insights that can turn into action.

I don’t pretend that I can summarize the 475 pages (plus a CD) of techniques that are presented in the book, but I’ll point out my five key insights that I believe are key to using analytics for successful web marketing:

1:  Experiment!  Take risks with crazy ideas!  The beauty of the Internet is that you can change things every day, instantaneously, to try something new.  Not only that, you can actually measure what works, performing A/B tests with free tools such as Google Website Optimizer. I don’t usually quote Rupert Murdoch, but I agree with his point when he said “Big will not beat small anymore. It will be fast beating slow”.

2:  If you have limited time, focus on your bounce rate.  This is your most important measurement.  If people are leaving your site without even clicking past the home page, you’ve got a problem (which could be on the site, or could be in your keywords that drive visitors to you).  That’s the first thing you need to fix.  If you can’t keep them, you’ve lost the battle before you’ve begun.

3:  Learn to use Google Analytics!  Create custom reports.  Drill down to what’s interesting. Track to your goals.  And remember, even if you are selling product, you may have more than one goal.  In an ecommerce site, it’s just as valuable to have a visitor go to your store locator, as it is for them to buy a product.

4.  Figure out how to integrate data from outside the clickstream to get a full picture.  Include your social media results and even your off-line results if you can.  The data’s not perfect, but the trends should be apparent.

5.  Overall, don’t get analysis paralysis.  With a robust site, you’ve got more information than you will ever need.    Find insights, use alerts, and always come back up for air!  If you do, you should be rewarded everyday with a slight improvement and movement of the needle.  Don’t worry about industry benchmarks; instead focus on ensuring that you are improving results on your site every day.  It’s a competitive world out there, so enjoy success in the numbers, but remember that the endgame is not what the numbers say, but rather what you learn from them.

Good luck, and keep experimenting!

Are you a “Situational” or “Sustainable” Marketer?

As I see it, there are two divergent strategies to drive business growth:  “situational”  solution sales, or “sustainable” solution sales.  Short term volume, or long terms quality.  I quote Dov Seidman, the author of “How: Why How We Do Anything Means Everything…in Business (and in Life)”, who explains the difference:

Leaders, companies or individuals guided by situational values do whatever the situation will allow, no matter the wider interests of their communities. A banker who writes a mortgage for someone he knows can’t make the payments over time is acting on situational values, saying: “I’ll be gone when the bill comes due”.

People inspired by sustainable values act just the opposite, saying: “I will never be gone. I will always be here. Therefore, I must behave in ways that sustain — my employees, my customers, my suppliers, my environment, my country and my future generations.”

Ok… now a dive into the archives … Years ago, before Steve Martin began a national tour playing banjo, before his success as a serious actor  (ie. It’s Complicated), or a hilarious comedy actor (ie. The Jerk), he put out of couple of very funny albums of his standup comedy routines (along with some great  banjo playing).   One of my favorite routines on his 1978 album” A Wild & Crazy Guy” was his analysis of the revenue model for his performances.  I paraphrase:

“If I could fill up a 3000 seat hall at $3.00 a ticket, I’d make $9,000.
If I could fill up the hall at $7.50 a ticket, I’d make $22,500.
but if I could fill it at $800.00 a ticket, I’d make $2,400,000…This is what I’m shooting for – one show, goodbye!”

So do we get the most satisfaction by providing our customers with situational or sustainable solutions?

The answer, of course is never quite that black and white.  If you sell a commodity, and the cost of customer acquisition is low, a situational sale may be fine for you. That’s the basis behind the auction industry, to get a quick sale for whatever today’s situational value is for your product.   But the customer probably won’t come back to see you a second time, unless you have the best situational deal for them again.  Therefore, you survive by responding to the market forces.  But for most products and services, we all know that the cost of obtaining a new customer is much more than the cost of keeping a current customer coming back for more.   Too many businesses who must invest to find customers still focus only on that quick “situational” sale, and too many customers buy the situational product, assuming that the best price is the best value.

Sustainable business is good long term business.  Most sellers of situational solutions never go through the analysis to realize that it’s usually much more profitable (and satisfying) to have 1000 happy sustainable customers, than 10,000 churning customers who are only as good as the next great situational deal.  With a sustainable business model, you manage the market, rather than the market managing you.  To use Steve Martin’s scenario of his big show, if you’re good at what you do, your market will demand that you do it again.  Would Steve Martin really quit performing if he made $2.4 million on one show?  No… he’d do it again, and rake in $4.8 million.

A great illustration of the positive effect of a quality sustainable service was my experience working with Keyword Connects.  Keyword connects generates leads for home improvement contractors.   But not just any leads, high quality leads.  While many online lead generation firms market on the quantity of leads they can produce, Keyword sells ONLY qualified quality leads, turning away more potential clients than they accept.  What a concept!  The clients that “get it” love them. These clients have done the analysis of what a qualified lead really costs them, and have the insight to realize that there is value in quality.   The result? Good profitability for Keyword Connects, Good profitability for the client, and a sustainable business relationship.   And the bonus for Keyword Connects and their loyal clients?  The ability to focus investment on enhancing their service, rather than expanding their sales force to handle client churn.    The net result is a sustainable business for Keyword, their employees, clients, and community.

So did Steve Martin make his $2.4 million?  Yes, he discovered movie acting, and did quite well.   But what’s he doing now?  He’s back doing what he loves best.  Entertaining fans one at a time, playing banjo… And playing it so well, that his fans will be back to see him again, and again, sustained by a quality performance that sells out every show at a fair price that satisfies him, his fans, the venue, and the community.

David Meerman Scott Live!

Last week I attended a talk by David Meerman Scott, along with Tim Washer from IBM, at Harvard Business School.  David is the author of The New Rules of Marketing and PR , a book which many (including me) consider one of the bibles of Internet marketing.  He is as good a speaker as he is a writer. The fact that I spotted Benson Shapiro in the audience should serve as a testament of his stature.

If you haven’t read the book, you should.  In his talk, in addition to some great engaging YouTube examples of successful campaigns, David made presented some great guideposts for Internet Marketing efforts.  Here is my summary of his points:

1:  Nobody cares about your product except you!  Market to buyer personnas.   The days of developing a product and then figuring out how to push it are over.  You need to identify your customer personas, and define your products or services in relation to their needs.

2: No coercion is required.  In today’s environment you need to earn attention.  In the old days you bought it, and perhaps this can still work, if you spend enough, beg the media enough, and chase them one at a time.  The new way is to earn recognition by publishing and engaging.  On the Web “You are what you publish”.

3:  Think of your viral marketing efforts like a venture capitalist.  A VC invests in multiple businesses, with the expectation that some small percentage of them will turn out to be winners.  You need to set the same expectations with your marketing efforts.

4: Hire Journalists for your marketing department!  You need the creativity.  And they aren’t getting jobs at the newspapers anymore.

5:  Put down roots.  Point the way to your virtual doorstep.  Get people’s attention, and then provide a secondary offer to drive the leads home.

6:  Be willing to lose control.  Gain the exposure, and manage fear.  If people learn about your product and buy for a reason other than what you originally designed it for… let it go.  This is good stuff!

David also borrowed my Grateful Dead analogy in his talk, discussing how they built their fan base by encouraging taping and giving away their music.  But I guess I’ve borrowed a lot of ideas from him as well, so that’s ok.

Overall, a great talk. I recommend his book, and certainly recommend seeing him speak if you have the chance.

Prioritizing Between Clicks and Brand-Building

There actually was a brief time in the early days of the Web when all you had to do was be there, you could buy a URL like “store.com”, and you would be found.  This made marketing decisions very easy, and resulted in both a great brand and tons of business. Those days are long gone. Unlike Kevin Costner in “Field of Dreams” we’ve all learned that the old adage “if you build it, they will come” just doesn’t work anymore for ecommerce.  In the bricks and mortar world, we can often leverage location, in addition to both offline and online efforts to drive people into our stores.  On the web, location, in the traditional sense doesn’t matter. Location in the search engines and media does, but there are too many search engines and media outlets to know which one counts.  So how do we drive customers and business to the site?

I like to view marketing and advertising efforts in a continuum between brand building investments and click generation initiatives.  It is interesting how they reinforce each other, but don’t be fooled into thinking that they are the same.   A known brand makes it easier to drive clicks, by providing credibility (or Whuffie!), thus making your lead gen ads much more likely to be clicked on, and conversely, clicks drive brand recognition.  Click generation is the priority for the short term, and should always be your core goal.  Over time though, investment in your brand makes it easier and cheaper to drive clicks.  The good news is that, if you’re just starting out, you can “borrow” a brand, by advertising a known product that you sell on your site, or a celebrity brand endorsement (Tiger Woods—NOT).  This may not get you the sale, since these popular brands will most likely be also promoted by your competitors, but will at least get you the credibility to encourage someone to click on your ads.  From there it’s up to you to convert the visitor to a buyer.

You can spend a fortune experimenting for results. So the challenge becomes, how do you find the time and expertise to effectively run and manage an online campaign to be in the right place at the right time?  What’s the mix between banners, contextual ads, Facebook, social media, paid placement on Google, Yahoo and other search engines, and how do you drive towards that elusive goal of organic optimization.  (And even more so, does your marketing organization understand all these terms?) The good news is that, unlike the offline world, we can measure our efforts, pay for performance, and, if we use our analytics well, maximize our return on our advertising and marketing efforts on the fly.

If you have the expertise, and the time to experiment, you can do this yourself, discovering your own keywords, managing a Google Adsense program, and tracking and optimizing around word choice, time, date, and competitive pressure.  You can also manage your own social network campaign, as long as you have the time to Tweet, Digg, and Blog.  Unfortunately, this effort requires constant attention for cost-effective results. You also need to keep a pulse on the latest trends for your particular audience:  Gen X’ers and older still search on Google, while many Gen Y’s find what they need through Facebook and Youtube.  Unless you can dedicate yourself or a knowledgeable staff to constant optimization, you probably are best off with external help to start.

Help comes in many forms.  You could hire a traditional ad agency.  Most of these firms can manage a web effort. But be careful!  Traditional agencies are modeled around brand building, not lead generation.  They also tend to bill based on time, not results.  Hopefully, you will eventually get to the point of needed their brand building expertise, but I don’t believe that’s the place to start.  The best way to drive traffic is with a firm that focuses strictly on lead generation and SEO optimization.  A firm such as Overdrive Interactive, who provides this service for a fee, is a viable option.  Ideally, you should consider a firm that that has already learned the competitive landscape in your niche, and provides lead generation service on a full pay-for-performance basis.   This may be a double-edge sword, as anyone who is already successful in your market runs the risk of competing with themselves to drive advertising costs up.  But if you can “steal” this service from your competitor, it minimizes your risk, and gives you a partner who is fully committed to the same goals as you:  If they can’t drive business they don’t get paid.  With aligned goals, and focused energy, your risk is minimized, and you are certain of successful growth.

Best wishes to all of my readers for a happy, healthy, and optimized 2010!

I Got Them to My Site – Now How Do I Keep Them? – 10 Primary Obstacles to Conversion

Most of my blog entries have been about marketing and driving traffic to your sites.    Clearly the topic of conversion requires lots of in-depth discussion.  But here, as succinctly as I can, is a laundry list of the top 10 no-brainer audits that you should do on your site to keep people from abandoning the cart and leaving before they buy.  Look at your site, and think about these challenges.  It’s a shame to lose a customer after all that you invest in bringing them there!

1: Pay attention to design

Once they’re on your home page or in your store, design and usability are crucial!  Not only must your site be attractive, but calls to action need to be obvious (or more than obvious if possible), so visitors:

• See your site as credible
• Understand your offerings
• Know how to buy
• Can see where to click
• Are not overwhelmed with too many choices on the home page or any sub-page.

2:  Don’t ask for too much information too quickly.

Some people would love to be on your mailing list, others just want to buy.  Don’t require registration.  It should be just an option after they checkout. Don’t worry, you can always email them and ask them to register later.   Offer some value, even if it’s just discount offers or a chance to win a prize, to get them on your list.

3:  Write for humans.

Yes, you need to have SEO terms for our friends at Google.  But first and foremost, the customer who visits needs to understand what you are talking about.  Good content first, SEO optimization second.

4:  Fill your categories with product, and remove items when they are out of stock

No one wants to look at a category page with less than 5 items.  Keep your category pages broad enough to include 10-30 items.  And unless you are the only seller of an item, if it’s out of stock remove it!  Sell them something you have.  Otherwise they will just go find that out of stock item somewhere else, thanks to your excellent merchandising.

5:  Save cross marketing and recommendations until after the cart entry.

Keep the sales goal in mind.  Get the first item sale into the cart before you send the customer off looking at accessories.  Otherwise, you might lose the whole sale!

6:  Keep the checkout simple.

Cut out unnecessary questions.  Eliminate the VISA/MC/AMEX question, you can figure out what kind of credit card they’re using from the number.   Consider filling in the town/city from the zip code.  Remember me (if I opt-in) for my next order.  If you asked my zipcode for shipping, don’t ask again at checkout. And avoid Captcha image phrases, unless you enjoy frustrating your customers.

7:  Explain shipping time and shipping cost up front.

If the customer needs to pay shipping, tell them how much, and how long shipping will take, right up front.  Don’t make them click around to find the choices, and certainly avoid surprising them at that end, unless the surprise can be a lowered cost.  (It never hurts to delight the customer).

8: Make it easy to contact you.

Don’t hide your contact information, offer a number, email, chat, and any other means for them to talk to a person and get answers quickly – ideally while they are still shopping!

9:  Offer customer reviews, and don’t be afraid of negative ones.

Customers appreciate both the positive and negative reviews.  Don’t be afraid of the bad ones, and don’t edit them out (other than the occasional angry ranter and raver).  If the reviewer’s concerns resonate with the buyer, better we all find out now.  Returns that could have been avoided eat into profit, and don’t build loyalty.

10:  Make sure your product search tool is refreshed often and effective:

If someone is searching for an item, and you have it, it’s an absolute sin to turn them away.  Implement a search tool that pre-fills, accepts miss-spellings, and is as effective as possible in finding the customer what they need.

This list is far from all-inclusive.  But if you start here, I guarantee you can increase conversions, customer satisfaction, and a better return on the investments you keep making to bring new customers to your site.

How Much Whuffie Do You Have In The Bank?

Whuffie is a concept that was developed by Corey Doctorow is his sci-fi book Down and Out in the Magic Kingdom.  Doctorow created a world where the economy has grown beyond cash currency as we know it today.  Instead of money, the currency of his world is Whuffie, a “reputation currency”, similar to what we sometimes call social capital.  You earn Whuffie by being nice, helping people, and adding value by providing access to ideas, talent, and resources. I believe that, in the world of ecommerce, Whuffie drives business.

Charles Andres introduced me to this book in a comment on my blog last week.  The book is available as a free download or free podcast, costing only Whuffie.  You can also buy it in the traditional form from Amazon if you aren’t quite there yet.

Tara Hunt has built a following by developing a guidebook of how Whuffie applies to the world of social media marketing, called the The Whuffie Factor.   Tara breaks down the process of earning Whuffie into 5 basic steps.

1. Stop talking and start listening to your customers.  (I might add that you must also prove to them that you are listening by providing feedback and adding value to their thoughts).
2. Become part of the community that you serve.
3. Create amazing customer experiences
4. Embrace the Chaos!  Entropy is growing, so you better learn how to ride the chaos wave!
5. Find your higher purpose.  Figure out how to give to the community and still be profitable.

The more I read about the Whuffie economy, the more I recognize that embodies the raison d’être for web-based marketing for ecommerce success.  Historically, retailers were successful by becoming an integral part of the local economy.  Merchants were known and trusted as part of their neighborhood, and merchandising was done to accent the best features of products for sale.  Whuffie was transparent: We knew the seller, we touched the product, and buying was a great experience.   Alternatively, if none of the above was true, say the store was run by a grumpy sales person that we didn’t trust, the business never survived.

For successful marketing online, the challenge, as we know, is how to scale that hands-on reputation and value beyond the local neighborhood.  The concept of Whuffie embodies this goal. Cory Doctorow gives away access to his books, making profit on his higher purpose of explaining his philosophy in live talks and future book sales.  The Grateful Dead figured this out long ago by listening to the fans’ desire to tape and trade their concerts (an amazing customer experience), thus creating a aura and community that has transcended well past the death of Jerry, selling more tickets and albums along the way, and spawning an entire genre of music (a higher purpose) that rides on the chaos of musical improvisation.

Traditional marketing and advertising can drive great short term results.  Well developed TV and radio, or paid placement ads, can drive short term business, and are valuable to jumpstart awareness of your brand.  But once you gain this awareness, the only sustainable way to keep it is to rapidly move to a Whuffie currency.  You need to think about how to engage that customer, add value, and keep them involved with your product.  In other words, scale with Whuffie.  Thus, the challenge becomes:

• How do you listen to your customers, and encourage them to listen to you?
• How do you engage them in a community which serves both you and their purpose?
• How do you engage them to make them enjoy visiting and buying on your site?
• How do you move that relationship to serve a higher purpose while earning profit?

The good news is that today, with Twitter, Facebook, and other social media forums, we now finally have the tools to implement these efforts.  We can talk and share with our customers and community.  But these tools do not replace or embody the underlying Whuffie, they’re just the checkbooks and credit cards of this new economy.  The Whuffie itself has to be earned, and that can only happen with hard work and genuine focus on your business.

The formula is simple… 5 easy steps described above. The tools are available, Twitter, Facebook, and other forums.  All you need is the awareness of your business’s value, the passion to involve your customer community, the dedication to make it work for you, and some serious investment of Whuffie to drive great sales results.

Putting Twitter in Perspective: Evolutionary Steps to Success

Ok, ok, so everyone says “you need to use Twitter to drive your business”.  But is it true?   I would vote for a resounding YES!  While it did take time to mature, today Twitter is an extremely valuable channel, when properly used, to drive visibility of your brand, your site, and increase your web-based business among the 32 million active tweeters.

Twitter has finally grown up.  It’s true that in its infancy, many people tweeted about inane things, such as where they drank their most recent cup of Starbucks.  We now must recognize that these were baby steps that marketers were taking to develop their “Twitter voice”, kind of like HAL singing “Daisy, Daisy, give my your answer do…”.  Unfortunately, there are still thousands of social media marketers who are still at this early phase.  Why?  Because to successfully leverage the Twitter channel requires the dedication of time and effort to mature and become a part, and ultimately a pillar, of the community.

Cartoon by Tony Gigov

You may have already learned that  maintaining a meaningful blog requires an investment of time and continuous focus on your core proposition. Twitter, with its limit of 140 characters per tweet, requires an even more focused strategy.  Unless you, (or a designated employee or writer) are prepared to dedicate a portion of your time each day to Twitter, your messages will quickly become lost in the noise.

So how should you drive this?

I believe there are 3 major evolutionary phases for effective use of Twitter for social networking:

1:  Ensure that your own understanding of your message is crystal clear, and use it to drive thought leadership.

Twitter, more than any other channel, requires a clear, defined marketing message. With so few words in each message, you need to make every tweet count.  What this message looks like depends on your business mission. For companies with defined products, your goal may be to share new ways that customers use your products.  With dynamic market driven products, such as tickets, Twitter can be used constructively to broadcast out the latest deals, or ski areas can use tweets to broadcast slope conditions.  For companies with less concrete product or service offerings, social networking may be best used to develop or elevate the recognition of your brand, both online and offline, or improve your credibility.  With your goal in mind, start the conversation by generating your own content that is focused on your customers’ needs.  Exhibit thought leadership that makes you unique. Learn what works! If you are new to social media marketing, I suggest you start with a blog, which still provides you with some editorial control. Begin commenting in other communities, such as forums, Digg and Yahoo Answers to develop your “voice”.  Once you are comfortable with blogging and commenting, then expand to Twitter to build your own community and following. Eventually you will  graduate to posting YouTube videos and using other channels as well.

2:  Listen to your customers, competitors, fans and detractors.

You should already be listening to your customers with tools like Google Alerts and other monitoring services.  Twitter is another place to hear their comments. Remember, good news travels fast, and bad news travels even faster.  Set up an alert, using a tool like Tweetdeck, to watch for mentions of your brand, so you can react very quickly with your new-found voice and clarify any misunderstandings, or fix any perception issues.

3: Communicate and Participate!

You are now a member of the community.  In addition to messages that you generate for your customer, like new deals, you will now have customers creating topics for you.  Embrace them!  When that happens, you’ve reached an important plateau.  Respond to your community’s needs, their concerns, and help them use your product or service better. Build on the good news, and clarify the bad news by asking for elaboration or encouraging their participation in a solution to the problems.  You now have a one-to-one relationship with customers who demand attention, backed by a whole universe who can see how well you handle their issues.

4: Be honest and sincere, and watch your community grow.

Credibility is key in social networking.  While you must avoid being pushy, you still have a right to promote your products.  People understand that you are in business to sell your products and services, and might find it odd if you don’t.  The key to success is working that fine line between promotion and a sales pitch.  As long as you truly believe that your product brings value to your customer (which we take as an assumption), then this should not be difficult for you.  Just keep that message clear, and you’ll find that neither you nor your customers will be forced into the idle discussion of your latest cup of Starbucks, nor will you ever regress to singing “Daisy Daisy” again.

Here An Affiliate, There An Affiliate, Everywhere An Affiliate, An Affiliate…

Here An Affiliate, There An Affiliate, Everywhere An Affiliate, An Affiliate…  Can you say that 10 times fast?

Every time I talk with a company about strategies to grow their business, the idea of developing an affiliate program is a major element of the discussion.  Why not?  It should be a no brainer, right?  They can make money “off of us” simply by sending customers our way.  And with Twitter and social media, this should be easy, right?  Well…maybe.

In these days of Twitter, Facebook and social networks, it’s easy to get your name out.  You’ll even get some good references and mentions, and there is clearly value in building a cadre of Twitter followers and Facebook fans.  But when it comes to driving business, these social media relationships are pretty informal, almost like flirting. Flirting is ok for branding. To develop a productive partner or affiliate program requires the development of intimate working relationships that go beyond the casual.  When you give them the attention they need, affiliate partners can truly share in a win-win relationship.

Everyone wants to be an affiliate, and we all want them.  It’s relatively easy to set up a program with Commission Junction or Linkshare, where sites can simply sign up to be your partner. However, once you launch a program you quickly learn the challenge.  Unless you pay careful attention, you’ll generally find that 80% of these “partners”  will end up costing you more than they return in value.  Some of them will start bidding up the price of your brand name for paid placement (despite your contract terms to the contrary).  Others may create a scam which results in a lot of purchases, followed by a lot of returns.  Others will simply be needy and require too much of your time.  But alas, there will be a few who can truly help increase your sales.

So how should you move forward?  Although it’s tempting, don’t just accept anyone to be an affiliate. Having a lot of affiliates may create links to help with SEO rankings, but they will cost you in terms of time, energy, and risk of control of your brand.  If links are your goal, you’re better off creating your own feeder sites.  Only accept affiliates whose sites make sense to you, meaning that they are a portal of products like yours, or they sell complementary products, and they can bring unique value to your sales process.

Once you identify them, it is important to stay in touch with your key affiliates. They are, in fact, another sales channel.  Thus, they need to have insights into your business, new products, and special deals.  Before the internet, annual partner/affiliate sales meetings were important. (My wife even knows this, as she’ll always remember how we had to cut our honeymoon short so I could make it back for one of these events!).  Today, you don’t need big events,  but you still need to be available and communicative.  For major (meaning they sell a lot) partnerships, face to face meetings are still important.

I also believe that to make an affiliate program work well, you need a dedicated internal affiliate sales manager.  This has to be someone who is creative and resourceful.  The manager needs to provide feedback and let your partners know how they’re doing, and hopefully how big a check they are going to get each month.  Affiliates often have unique ideas of ways to sell your product.  Your manager has to have the knowledge and judgement to be able to either go with the vision, or explain why it is not acceptable.  Ideally, you are as key to the affiliate’s income stream as they are to yours, so they need to know you are available when they need you.

At the end of the day, the success of an affiliate program has more to do with quality than quantity.  A properly managed affiliate program can drive tremendous new business opportunities your way.  A poorly managed program will just eat up your energy and time, with little or no sales results.

Ring in the New, and Bring out the Old

 

Years ago, before the dawn of the Internet, I was the regional manager of a consumer electronics company.  I sold products to merchants throughout the Northeastern US.  I sold to some interesting companies, many of whom were as creative at buying than they were at merchandising.  Some of these people are now in jail (Crazy Eddie), many were left behind and went out of business (Lechmere, Caldor, Ames), and some learned to embrace the changing environment and thrive (Staples, CVS).  I have to say, one of my favorite retailers of the time was Spag’s.

Spag's Store

Spag’s was a one store wonder, the original “mass merchant” which sold everything you needed, with no frills, at a great price.  It was founded by, of course, Spag, Anthony Borgatti, who opened the store in 1934.  Spag was the ultimate merchant of his day.  (Does anyone know if there was even a “Mr. Caldor”?) He believed in a simple principle: give the best value to your customers, build trust with your employees, and treat your vendors fairly. 

Spag’s was know as “no bags Spags”, offering boxes to customers to carry out their merchandise to save overhead.  They didn’t take credit cards, there were no frills in their displays, and they remained closed on Sundays so employees could be with their families.  Spag’s was an integral part of the Shrewsbury/Worcester Mass community.  As a customer, you always knew that you would get the best price at Spag’s. More interestingly though Spag always got the best prices from his vendors, without any wild buying tricks, Why?  Because as a vendor, you were as much a part of his community as his customers.  Spag always paid vendors on time, asked for minimal “market development funds”, and made selling to them enjoyable.  Generally, as a vendor, you sold product to the the salesman on the floor of the store, as there were no formal buying efforts, no games, just fair deals. And if you had a chance to interact with Spag himself, it made everything you gave them worthwhile. I have a vivid memory of Spag walking into a meeting that I was having with my buyer one afternoon and starting to tell stories about his store and his life.  Next thing I knew, it was 7pm on Friday night, and I was learning so much from his experience that I still didn’t want to leave.

Spag made a fortune in his store, much of which he gave back to his community through various foundations and grants. One would also often hear stories about how a family in need would see Spag himself drive up to their house in his old station wagon, leaving a crate of food and household goods at their doorstep, as anonymously as he could.  He took care of his customers, community, and vendors. He was truly an amazing man.

Spag was successful because he embraced his community, developed a great reputation, gave great value, treated his employees and vendors well, all the time running a profitable business.  His store was part of him, and he was a part of the community.  This is the attitude that we need to be truly successful in business.  With social media tools, we now have the ability to interact with our larger community just as Spag did with the Worcester community.  It’s up to us to use these tools correctly

Spag's Website, 1997

Spag himself passed away in 1996, before he had a chance to bring his community online.   His daughters took over the business, and made a noble attempt at continuing the business.  I even built them a website in 1997.  They weren’t ready to consider eCommerce, but they used it as a means to try and communicate their values with the community. Our strategy was to leverage the Internet to allow people outside of the local newspaper area to see what was on sale each week. They had all the good intentions, but they could not make the leap as to how to extend their value and community to the web. They lost their uniqueness:  They began having bags, taking credit cards, and opening the store on Sundays. The business was ultimately sold to Building 19 in 2004 and faded into the history books.  If only…!!!

Spag knew how to build community the old fashioned way.  Can you imagine what he could have done if he had lived to embrace the web?  All the blogging and tweeting in the world can’t replace those core values of community building, but boy can they leverage it.  In some ways you can argue that building an Internet Retail site and community is easier than building a retail store.  All you need to do is buy some key words, do some tweeting, and put optimize your site for SEO, right?  No!  If you want to survive, you need to be more than the ad or the tweet of the day.  While you need these tools to build awareness, you also need to build and embrace your community. You need to build trust, legitimacy, and unique values.  You need to make it easy and fun to shop on your site and do business with you.  You need to build a loyal following that will think of you first, turn to you for advice, and tell their friends to visit your site.  Ultimately it becomes a matter of brilliant use of all you have at your disposal.  Spag knew how to merchandise in unorthodox ways.  But he most importantly he knew how to build the confidence of his community, and keep people coming back for more.

There is so much that can be learned from the principles that made Spag’s store successful. On the Internet, everything you do is much more transparent than before.  You can learn how to use the new social media tools pretty quickly, with no instruction, and become pretty effective at it.  You can implement software to have a shopping cart in a matter of hours.  But you can’t replace the lessons that you can learn from a man with 60 years of success.  Neither the experience, or knowing how to use the tools on their own will survive in today’s ecommerce environment.  But figure out how to bring them together the old and the new… and you will most definitely succeed.