When Launching A New Business, What Should Consume Your Time?
- In launching new businesses, many entrepreneurs do the opposite of spending 80% of their time of their time on selling.
- They spend most of their time, attention, energy and capital on things such as setting up an office, designing logos, printing business cards, filing forms, writing contracts, and refining the product.
- They have the impression that they are doing things in a logical order – getting everything just right before they open their doors.
- In fact, they are wasting valuable resources on secondary and tertiary endeavours.
- It is enough to have the product and customer service just okay at the outset. Perfecting them can be done a little later, after you have gotten feedback from your customers.
- Sell as soon as you can – if possible before you have spent a lot of time and money making it perfect.
The Story of the New York Realtor
- A New York realtor spent $10,000 on a website to sell surplus office space.
- Listings were free for the first year and would then cost $59.95.
- No one took advantage of the free offer.
- He hadn’t tested his assumption – that he could attract lots of free postings and then convert them into paid advertisers.
The Story of the Car Repairman’s Neon Lights
- A car repairman thought he could sell neon lights for underneath cars.
- He started with $1,000, $350 of which built 2 crude prototypes – one for his car, one for his friend.
- Then he spent all of his spare time and remaining $650 selling.
- He worked from home. He spent his time travelling to custom auto shops and Auto-events trying to make sales.
- After talking to potential buyers he made adjustments to his product, his pricing, and the way he presented it.
- For months he earnt nothing, reinvesting cash into sales.
- At year one he started fixing up a shop, bought tools and inventory.
- 12 years later he had generated $23 million in sales.
Priorities when starting a business:
- Get the product ready enough to sell it, but don’t worry about perfecting it
- Sell it
- Then, if it sells, make it better
Front-End, Back-End Strategy
- Consider offering your product at below the market rate to build a list that you can sell more stuff to – “the backend”.
- The purpose of the front-end sale is to acquire a new customer. The purpose of the back-end sale is to produce a profit.
- Test the market by offering your existing customers evaluation versions for free
Speed of Execution is Key
- Accelerate failure
- Ready, fire, aim
- 2 reasons why most good business & product ideas never get off the ground:
- A desire for perfection
- Little chores
What is your Unique Selling Proposition?
- Find something about your product that is different from, or better than the competition.
- Eg FedEx – Overnight delivery. 7-up – the uncola.
- Look at all the other similar products on the market and try to identify gaps by recognising “unfilled customer needs” such as:
- Faster service
- Better prices
- Superior quality
- Personal service
- A better guarantee
Unique Selling Proposition – “USP”
The Story of the Brewery’s USP
- Schlitz beer, emphasised the painstaking brewing and bottling processes – which all beer makers go through, but no one had told the customers.
- They generated distinction and prominence – a USP. The common claim of “pure” took on a very different and tangible meaning for their brand.
3 Aspects of a Solid USP:
- The appearance of uniqueness
- Usefulness. Better to select a useful feature that isn’t entirely original and make it seem unique , rather than a feature that is unique but is useless
- Conceptual simplicity. Nothing sells well that is difficult to explain.
Fill in the blanks for your business:
The only ______ that _________
- Eg The only chain of retail stores for women that gives 10% of its proceeds to breast cancer research.
- Eg The only natural health website that is created by a panel of international experts
How to sell the USP:
- The Big Idea. This is the headline for your ads
- The Big Promise. How you will improve your customers life
- Specific Claims. What could the customer potentially achieve?
- Proof of those claims. Testimonials
Mentoring and Being Mentored
- Never be afraid to ask questions. Even obvious questions
- Have multiple mentors
- Ask for ideas from up, down and sideways
- Show your appreciation with notes, gifts
- Make your own decisions and take responsibility for them
Your Products: Brand-new or Old? Copy or Innovate?
- Consumers aren’t looking for brand-new products. They are looking for clever new adaptation of products they already know and love.
- When it comes to new, the human brain can take only a little bit of it. 80% of the old and 20% of the new is a good ratio.
- When you create me-too products, you are imitating something that is already being sold. You are following the market. You must anticipate the market, not follow it. To do that, create products that are not entirely new, just a little bit better than the hottest thing out there.
- You are after the tipping-point effect which is the one extra droplet of water that is added to many more that have been dropped before.
- Imitation doesn’t work, because it is always too little too late. Instead, notice what products are working and then create products with features that are somehow more advanced. Its about evolution, not revolution.
- The secret to breaking into new markets or reviving a flagging business is to create tipping-point products
- The secret to creating tipping-point products is to find hot products in rising markets and come up with some way to make them new and different
- You need tipping-point products for your front end, but you can make lots of money on the back end with ordinary products, so long as you make the effort to sell them to your existing customers
Need Product Ideas? Use the Magic Product Cube
- Generate 3 dimensions for each category: Price, Product Type and USP. Giving you 27 product variations.
- Price: inexpensive, moderate, expensive
- Product type: golf clubs, golf balls, golf clothing
- USP: 3 golf pros for endorsements
The Story of the Candy Company Trying to Cut Costs
- A candy company wanted to save money so they cut out 1 of the 38 ingredients (which was costing $8.6 million a year.
- In tests, customers couldn’t tell the difference.
- They repeated this process several times.
- Sales started tumbling.
- They found an old bag of lollies, they tasted great! The new lollies tasted crap.
- They had been comparing each version to the previous version so they couldn’t tell the difference.
- They should have bee comparing to the benchmark.
- This is a warning about increasing profits by decreasing costs.
Lessons About Customers
- Customers don’t care about you or your business. They care about themselves.
- Why do customers buy? To feel good about themselves and/or to solve a problem
- Customer complaints and objections are the key to better selling
Take Advantage of the Buying Frenzy
- By selling more to a person that is buying at that moment
- Don’t let them cool off
- Send a thank you note and a bounce-back promotion
- Who would you rather sell a carry-on bag too? A person with 15 at home, or a person without 1? The answer is the guy with 15.
- 3 factors that stimulate buying frenzy’s:
- Having the feeling that I have more money than I need
- Being exposed to psychologically effective selling signals
- The good feeling I get from buying
What Is Easier To Sell – Commodity Items or Discretionary Items?
- When selling commodities you are meeting a need. But customers won’t be loyal to you. They will always try to pay as little as they have to
- When selling discretionary items (especially luxury items) it is easier to convince your customer that your particular products are unique, and that by purchasing them he can get the psychological benefits the items offer
- When buying discretionary items, your customers will never be satisfied with a single purchase. In fact, the more they buy, the more they will want to buy, because their purchases are stimulated by desires, not needs. Desires can only be satisfied temporarily.
- Stimulate desires such as acceptance, recognition, admiration, love
The Story of How to Become a Movie Maker the Ready-Fire-Aim Way
- Marc Singer was fascinated with the story of an underground city of homeless people in New York. He found them, and even lived with them.
- Someone suggested he make a movie.
- He had always wanted to be a movie maker, so it took action.
- He did it on the cheap and “Dark Days” won several awards at 2000 the Sundance Film Festival.
- And his career is flourishing.