Inventing A Successful "New" Business Model

Do you have any idea how hard it is to keep a business going year-round in a resort area? I remember reading several years ago that the summer population of the town where I live is 20,000; it goes down to 5,000 for the winter months. If you consider that the peak season is no more than 10 weeks long, with “shoulders” on either side, you begin to understand the problem. Add to that the difficulty of finding housing for seasonal workers, and you have a prescription for small business woes.

Having emphasized with the businesses where I trade for a long time, I was intrigued with one I ran across recently. Two young women have invented a business model that allows them to solve the seasonality problem. The video is about two years old, so the statistics are out of date, but the energy and charm of these two entrepreneurs is much in evidence.



Megan Murphy and Catherine Bean have a single retail location in downtown Hyannis. That’s a high-visibility tourist destination and their store obviously does well in the spring, summer and fall months. Their website supports the retail store, but it does more. They close the shop from December to March, but they don’t cease operations; they just shift to the Internet. They stay fully occupied running online parties and fundraisers. When I
talked to Megan a few weeks ago, they were booked through Christmas. I checked the site and they are now booking for February and March 2010, so they continue to move right along.

How did they invent this business model—one which is different from the usual Bricks & Mortar? As stay at home Moms, they gave product parties in their homes, so moving parties online didn’t seem like too much of a stretch. They found a supportive marketing services supplier, and they were off. From a few email addresses collected in the store, they now have a list of over 20,000 that grows with every party.

What is the moral of this story? Give eparties? While I think virtual events have a great future, it’s more than that.

These two women used their own experience, their own background; they just moved their offline activities online. Think about your last online retail experience. Did the site “suggest” other items to you the minute you put something in your shopping cart? That’s what a good retail salesperson does, just moved online. That’s the moral—move successful offline marketing activities online.

There was a blog post last week by Mack Collier that got a lot of mileage on Twitter. I don’t disagree that we need fewer social media stars and more great social media ideas. My reaction was, “How do you know it’s really a great idea?” And then I thought about Megan and Catherine. Product parties had already worked for them in one context. They moved the same winning idea into another context, one where they could achieve even greater reach.

It’s a great example of not having to reinvent the wheel to develop a winning business model!

Now It's a Twestival!

Marketing Charts had a good summary yesterday of the recent Pew Report on Twitter use (get the full report here). Marketing Charts says it’s 10% of adult Internet users and Pew says 11% of them use Twitter or a similar update source. A little rounding error between marketers is not significant—Twitter has become a phenomenon.

So I was interested when C.C. Chapman used my Facebook page to invite me to a Twestival last week. I’ve been watching from afar; it seems to be the first Twitter effort of this kind in support of the non-profit Charity:Water.

This is a personal timeline:

• I saw C. C. Chapman’s post on my Facebook page via his Feed on or about February 10. It was interesting and unusual, so I clicked through to the Boston page.
• I checked out the main site. At that time, it was inviting people to the event. It has since been updated with results.
• I found out that David Karp from First Giving was going to use it as a case history in my social media class last night. He did a great job and the students were intrigued by this application of a tool that, interestingly, few of them use. (Wonder if that’s changed since last night. . .)














• When I opened my email this morning, there was a message from Scott Harrison of Charity:Water. The content was a report on a particular well project; he does a great job of bringing home the value of contributions to his charity. He had a thank-you and update on the Twestival at the bottom.
• According to what I see there were 199 cities besides Boston that held Twestivals on February 12. That’s reach!

The people I know who were involved are part of the social media community, as I’m sure are many I don’t know. They are connected; they communicate. If you take a look at the Twestival site, you’ll see that they also know how to build a website to support this kind of global activity.
This is all food for thought. The word spread on the Internet; people attended live events around the world; Charity:Water raised at least a quarter of a million dollars. This was done with a lot of volunteer effort and some corporate sponsorship.

It used multiple social media channels (including eBay—see the Auction button; is that social?); it engaged a lot of people who actively communicate.

Probably few organizations—either non-profit or for-profit—can entirely replicate this. But they can look and learn. And one important thing to keep reminding ourselves is that no one channel reaches everyone these days. Neither does random effort. It takes a lot of work, a lot of expertise to pull off something like the first Twestival. And it helps if you have a huge network of contacts!

So go forth, and keep building your networks!

Is It Newsletters or Blogs?

I’ve had the same question asked in slightly different ways recently, so I’ll take a stab at answering. Last week in the “Starting the Conversation” webinar a small business owner observed that all this looked really labor intensive and asked what a small businessperson should do. I had some conversation afterward with a sole proprietor who faces the same challenge as she tries to build her business. In the webinar I agreed that much of the social media activity—while it can be free in terms of direct costs—is definitely labor intensive. The first issue is to prioritize how you spend your communications time. That’s true, but it isn’t very helpful.

This week I was asked a question by a board member of a non-profit that I didn’t have time to deal with. The question was “which is better, a newsletter or a blog.” That gets to the issue of prioritization and the situation is essentially the same—too much to do; too few resources.

This doesn’t cover the waterfront of social media options, but it’s a good place to start for almost any organization, large or small. These probably are the two most viable options for most resource-constrained organizations.

On one hand, newsletters are a staple of marketing. In the “olden days” of print newsletters and similar reminders were especially important to the small local business, either using rental lists or their house lists. They still serve that function cost effectively. However, you can’t do a good HTML newsletter free. It requires a services supplier. There are some essentially DIY suppliers that are reasonably priced. There are also industry-specific, or at least industry experienced, suppliers that may be worth an additional expenditure. Think carefully about what you need.

The other piece of good news about e-newsletters is that they are really quick to put together and send as compared to print. However, they are not easy, and a lot of small businesses don’t want to get involved in trying to figure out why the format isn’t working right or how to embed a video. I’d suggest that unless there’s someone with a smattering of HTML (and a lot of patience!) in your organization, that you think carefully about a newsletter. You may wind up spending a lot of time and experiencing massive frustration!

I don’t want to overstate the fact that blogs are easier to implement, because they are HTML templates also. But the fact is that a simple blog post is easier than a newsletter with several items. It is also more flexible in terms of timing and can take up several small chunks of time instead of the large investment of time every month or quarter to put an e-newsletter together.

There’s free software out there. I’ve been quite happy with Blogger, finding the basic operation quite user friendly. I find the most time-consuming issues to be sidebars, widgets, and add-on of all kinds; they often don’t work well across various applications. The exception is the e-mail and RSS subscription services, which I’d describe as essential. FeedBurner is relatively easy and reliable. I’m happy with the Mippin mobile subscription service. The traditional KISS is good advice for the novice. It’s also good to know that you can just delete the add-on if it doesn’t work.

The big drawback to blogs is building traffic. You may partially overcome that by using blogging software that’s provided by your website host. That means that people who visit your website have access to your blog—but it doesn’t mean they’ll read it!

And that’s the rub. Whether it’s a blog to which you must draw traffic or a newsletter which you must entice recipients to open and read, e-communications aren’t a magical solution. First and foremost they require good content that provides real value to readers. Then livening them up with images and videos is almost as essential in this e-media-cluttered world.

I’ve made the point before that this may be easier in B2B than in B2C. Business customers have serious motives for informing themselves about your products and services, and this may be the beginning of an eventual community initiative. In B2C markets you have to get out your marketing hat and market your e-communications just as you would any offer of value that you are making to current and potential customers.

That’s a quick look at blogs and e-newsletters. There are many more options. Here’s a good post for the beginner from Chris Brogan and a recent summary post that has a really useful set of links.

Do you have any success (or otherwise!) stories with blogs and newsletters that you’d like to share?

My PSAs

You may have had some of these during election season also; this is by far the best I’ve seen. So take a minute to view the video and to think about the power of personalization.


Then I’d encourage you to see how Boone Pickens is tying his energy program to election day.

Then go vote!

The Fastest-Growing Community?

T. Boone Pickens announced his energy plan and social networking site in early July. According to Ad Age (July 21) he planned to spend $58 on advertising and PR for the initiative. That’s not chump change, but it’s also not huge by corporate budget standards. He’s been all over TV since then, but it’s the building of his “ New Energy Army,” a community to support his plan, that is fascinating. I joined in September and put the badge over on the sidebar.

I got two or three emails from him last week urging me to attend an e-rally after Tuesday’s presidential debate. I signed up for it, but wasn’t interested in firing up my computer at that time of night. But I was really curious, so I watched the 43-minute video today. If you don’t want to take the time, I’ll give you a few high points.

It was a discussion between Pickens and Carl Pope, the Executive Director of the Sierra Club. That’s might be viewed as strange political bedfellows, but in the realm of alternative energy it’s not. They talked about issues related to alternative energy production and transmission but mostly they talked about having the political will to solve the US dependence on foreign oil. The way they position it is interesting—creating clean alternative energy sources will create enough US jobs to get the economy moving again. That’s a pithy summary, but it captures the essence of their common perspective. They took a few viewer questions, but Pickens reminded people several times to send in their comments; all would be in the hands of the candidates “within 48 hours.” He also asked them to call their friends and ask them to join the army.

What reminded me to watch the post-debate video was an email I received yesterday:

Army

We're really close. Let's get to 1,000,000 today. Sign up just one more person at http://action.pickensplan.com/tellafriend.

-Boone

Yes, he has an HTML weekly newsletter, but this was a simple, direct, text appeal. Interesting. It seems to be typical. Yes, he’s recruiting directly through his TV ads and other media appearances. A lot of the “Army” recruitment is being done through his site, which has all the new media bells and whistles. Today’s home page has a brief post-debate video and the continuing appeal to reach 1 million strong today. The tell-a-friend appeal in conveyed in many ways.


In my opinion, one doesn’t have to agree with every element of the plan to know that something needs to be done. If as a citizen you are moved to do so, join. If as a marketer you are moved to examine the site for the various community-building and communications devices they are using, you can only be impressed. Pickens is focused, direct, and as far as I can tell, transparent about what he’s doing (except for who’s his agency; I still can’t find out; that keeps the focus on the content where he wants it, I think).

Whatever your perspective, this initiative is worth watching for superb use of social networking tools.

Succeeding in the Blogosphere

There are a number of recent reports that shed light on what’s going on in the blogosphere and how to succeed there, especially for business bloggers. Time to take a look and try to bring some of them together.

Technorati’s State of the Blogosphere 2008 surveyed bloggers themselves as well as analyzing its own stats. The stats on the number of blogs make it clear that the blogosphere is huge and active. A lot of blogging is personal, but business blogs are quickly assuming a prominent role in the communications strategies of companies large and small. This chart shows some of the downsides for the business blogger, but the outcomes are generally positive and include industry and enterprise visibility. That should encourage employees to blog.

The report also makes it clear that products and brands are important subjects of posts for both personal and business bloggers. The degree to which bloggers consider blogs an important and valid source of information is striking. Ok, they are biased, and you do have to consider the source of your information before deciding to trust it. People are, for better or for worse, placing considerable trust in the information they acquire. More about that tomorrow. The report has a lot of information; it’s worth a read.

How do businesses make the blogosphere work for them? Two recent studies from Compendium Blogware provide strong recommendations.

The first is a whitepaper about blogging for search. The rules for making your blog posts visible in search results (organic results are the most effective, good news for those who can’t afford a lot of PPC) are the same as they are for web sites. You just have more control over how you do it on a blog. The basic rules are to use keywords in post titles and content. Links can be helpful. Keeping content current, while not eliminating the old, is an advantage of blogs over websites. Blogs need to be active and they need clear focus. I’d add that tagging can be very useful in bringing in traffic through search.

Why is that traffic so important? It’s the best acquisition method, bar none. It brings unique new visitors to the blog and site. The other whitepaper uses Marketing Sherpa data to look at the critical relationship between blogging—to acquire new potential customer contacts—and email for ROI—read that conversion. That relationship alone is enough to encourage corporate blogs, although it’s important to note that acquisition of potential customer contact information doesn’t happen by accident. It has to be carefully designed into the overall communications program. The report points out that there’s also a benefit in terms of content. The business has to produce a lot of content for its blog. Using content wisely between blogs, email, and dynamic site content can leverage the value of that content.

The value and credibility of traditional advertising approaches seems to be on an irreversible downward slide. The value, credibility and consumption of user or employer-generated content are all on the rise. What marketer doesn’t want to take advantage of a more cost-effective channel of communications that has greater credibility with the target audience? That’s the value of business blogging in a nutshell.

Politics, Community and Social Networks

Political marketing is fascinating, and today my inbox is so full of political messages that I can’t resist some comments. There are the usual emails from the candidate, the vice-presidential candidate and various members of the campaign staff. The marketing question is whether they’re overdoing it. In one respect, it’s definitely overkill. On the other hand they don’t have much time, and they have to make use of it. I also got one from the Massachusetts campaign office that’s definitely appealing to community.

The one that struck me most, though, was from the AARP. I used some of their data in an earlier post on seniors on the web and it’s one of the many newsletters I follow. The one today shows just how far we’ve gone—not just the young on Facebook, which gets most of the attention, but their elders via email—in changing the way politics works in this country.

I’m being asked to submit a question for the candidates. That’s becoming standard. But reaching out to your entire email list seems less common. Even more unusual is their promise to give all questions to the candidates—not just a selected few. That’s a powerful appeal and may be especially relevant to this older target audience.

I can’t help also noticing that AARP understands its constituency in other ways. I size-reduced the text in the newsletter so you could see as much as possible; it’s clearly larger than normal newsletters. I’ve compared it to an excerpt from one of today’s WSJ newsletters so you can see for yourself.

The message is short, straightforward, and it’s focused on a single message. They use a powerful (not particularly pretty) color combination with bold and underlining for emphasis. The call to action is emphasized in a box. All good direct marketing techniques.

I don’t pretend to know where this is going, much less where it will end, if at all. However, what I do know is that candidates and organizations are building huge email lists. Many of them have great potential for segmentation. Consider the AARP. “Submitted a question” is a potential identifier of an activist segment. What is the potential for using more advanced segmentation—question included the term “health care” or the term “health care for veterans”? The potential seems enormous if the organization has a use for segmentation at that level.

There’s an exciting communications frontier ahead of all of us. One aspect is to use email better—not to “blast” your email list as politicians do, maybe out of necessity. Segment and deliver relevant messages—that’s the email challenge.

Basho EMail Promotes Community

Not long ago I wrote about Basho Technologies, a sales training firm in Cambridge, MA, that has a robust approach to building community on its website. Later I commented that B2B community makes a lot of sense—people are motivated to join communities that offer them value, and good B2B communities can offer useful job-related benefits.

A few days ago I got their e-newsletter and realized they were using it in an interesting way. Most corporate newsletters offer information and try to get you to buy things. Basho is using this edition to help build their community. There’s some selling, but it’s extremely soft.
The main feature is a contest for the best sales close; there will be a runner up. But there’s also a category for “worst.” We can learn a lot from mistakes (hopefully other people's, not ours!), so that’s a great idea. I also love the prize; it includes a free hour of consultation with one of their sales trainers. Oh, yes; it includes an iPod Nano, just like the other two categories. I’d love to know how many responses they get; something tells me that the response will be substantial.

Is their approach working? There are two workshops listed on their newsletter. Both are sold out. That should mean something.
When I clicked through, I got a landing page with a reasonably detailed case study instead of their home page, which I thought was interesting. That’s nice integration at a time when they are (were, actually) promoting workshops.

I’m enjoying following this company. They have a thoughtful approach to marketing their service. They also have a sense of humor. What more can you ask for in the enervating days of high summer? Year-round—what more can you ask for in a community of sales warriors?

Personalization--Part 1 - The Front End

The CMO Council has just released a study of personalization, covered in Marketing Charts yesterday. The Council surveyed over 700 senior marketing and executive officers in companies around the world to learn how they gauged the impact of personalization and the extent to which they were using it.

Personalization is hardly a new topic to marketers. Direct marketers have been using it for years, especially in mail marketing. Some has been good and effective, some has been silly or downright awful. You’ve seen it all. Even reasonably well done, personalization does work. The carry-over to email marketing is obvious. According to the CMO Council:

• Spending on direct-mail advertising (an integral part of personalized communication applications)shows no sign of abating; investments by marketers totaled $58.4 billion in 2007, and that figure isexpected to increase to more than $70 billion by 2011 (source: Winterberry Group).
• More than $3 billion was spent in the U.S. alone on e-mail marketing (source: EmailInsider).
• Yet, an overwhelming 56 percent of marketers believe personal communications out-performs traditional mass market delivery; digital, database-driven channels (email, web, contact centers)reportedly offer the most upside potential for engaging in customized communications (source:The Power of Personalization)

What exactly does personalization accomplish? According to the report it improves customer retention and loyalty by increasing conversion, close and action rates and increasing website traffic. I’d add another outcome; used creatively personalization can increase the chance of a communication going viral. Here’s a global example, a Dutch politician to be precise. This is apparently the politician, Jan, standing under a sign with the recipient’s name, Eelke. The political email included the usual “send it to a friend” with a twist. When you forwarded it to the friend, the name of the recipient showed up in the sign, according to the Dutch marketer who sent me the example. That is a creative—effective—front-end use of personalization!

I define "front end" as all the activities that lead up to a sale--all the things we do to attract the attention of customers and put them in a frame of mind to take action. The action can be a visit to a website, a request for information, sale of a product or service, or in this case support of a political candidate.
In spite of its effectiveness, marketers are not making extensive use of personalization according to the survey (download the report from the CMO Council). Not because it doesn’t work, but because their organizations and their back-end systems are not with the program.

So tomorrow, the back end of personalized marketing.
Sphere: Related Content

Relating to Gen Y

The generation of consumers born between 1980 and 2000 numbers over 70 million. Many are well into their 20s and in the labor force. All, through their own earnings or through influence over household expenditures are a powerful consumer force. They are a prime target for many retailers. They have been raised on media and the Internet is their chief channel. They are a leading indicator, and often an influencer, of cultural change. Their opinion matters. New York magazine had a provocative article (free registration required)about their values and behavior recently.

I’ve had a couple of interesting encounters with the more broadly defined 18 – 35 demographic lately that have started me thinking. Both center around one of their favorite retailers, Gap.

In a recent class I assigned a short Internet marketing exercise. It started with my usual “select a website that interests you, one that you are reasonably familiar with.” Eight teams of graduate students worked industriously for about 20 minutes, with little or no conversation between groups. At the end, when we debriefed the exercise, two out of eight had chosen the Gap site. Not too surprising until I realized that both had focused on the (Product) Red ™ promotion.

Members of both teams had been following the promotion and gave every indication that it would affect their purchasing behavior and they wanted to encourage others to participate. Cause-related marketing can be powerful for young adults.
Their support of (Product) Red ™ lead to a broader discussion of social issues. The class occurred just a few days after the news about child labor in one of Gap’s supplier plants in India. They had been following that also, including being aware of how and how quickly Gap president Marka Hansen responded to the allegations and how quickly her response was posted on the Gap home page. They are paying attention. And always remember they are communicating. I searched Technorati and found 136 posts for “gap child labor india.” When I broadened the search to “gap child labor” I got 506 posts. I counted 13 video clips on the subject. All this has happened since the story broke in the British publication The Observer on October 28, and the posts continue.

What I heard from this small, unscientific sample is that they were giving a trusted brand the benefit of the doubt. Gap has a pretty good record for dealing with this type of issue and the reaction to this revelation was swift and decisive. So far, so good, but they are being watched.

A few days later a communication from another member of the target demographic revealed that Gap, too, has marketing feet of clay. The opt-in email offers a nice promotion. Unfortunately on the day it was offered, the entire site was down for a scheduled upgrade. Do Marketing and IT talk to one another? Not in this instance! And the site was back up a day later, so the promotion could easily have been postponed. Will the young adult continue to patronize the Gap? Probably, but they likely lost a sale this time.












Whether they are identified as Gen Y, Gen X or the 18-35 demographic, these consumers are connected and demanding. Their demands include the behavior of corporations as well as the products they offer. A trusted brand is built slowly, with considerable effort. It can provide a margin of error for unforeseen events. But news is viral among these consumers and marketers have to react quickly and effectively.
Sphere: Related Content

More Marketing Dollars or Smarter Marketing Dollars?

Several times recently I’ve been in involved in discussions that centered around, “Is it the time to be spending more money on marketing?” In each case I’ve patiently tried to explain that it’s probably not the right question. The question is, “How can I get more out of my marketing dollars?” I think this is the voice of sweet reason, but it’s amazing how hard it is to get C-level executives to focus on the implications of the question.

Part of the answer is straightforward. It’s the reason that Internet advertising is growing between 20 and 30% this year. It’s the reason that both email marketing and email advertising expenditures are growing by leaps and bounds around the world. The online tools reach more people more cheaply than offline media. And those are just what I call the “traditional (Web 1.0) tools.”

What about the Web 2.0 tools? Everyone has their own list. Mine is:
• Blogs
• RSS
• Social Networks
• Personalized Search
• Wikis
• Podcasts
• Mash Ups
• Collaboration Tools.
What is yours?

What do these tools have in common? They all allow for the kind of “non-linear” communications Don Schultz talked about. You can find free hosting services or free software for all of them. Each allows marketers and users to communicate directly, without communications being filtered, without having to call on IT for assistance. The barriers are down!

Marketers currently spend a lot of their dollars on traditional mass media. That can be expensive. If the Web 2.0 media are essentially free, that’s a huge opportunity for saving those marketing dollars.

But wait a minute! The cost of these media is the time of people whose expertise is in short supply. In June eMarketer quoted (“E-Mail Marketing Budgets Boom,”June 22) a study of 630 marketing executives by Jupiter Research. It found that expenditures on email marketing personnel increased from an average of $169,710 in 2005 to $182,067 in 2007. Average salaries of individuals increased from $50,526 to $63,547 during that time. If you can find them, that is!

In that enewsletter David Daniels of Jupiter said, "While salaries are up, they are not up enough to support most companies' ever-burgeoning e-mail marketing efforts. E-mail marketing budgets do not match the strategic importance of actual marketing programs." And here again, we are talking about one of the established Web 1.0 tools, not the newer Web 2.0 tools.

Where is the barrier in your own firm? Is it lack of understanding of the new media? Is it inability to design and execute new media programs? And what should you be doing about that?