10 Steps To E-business On A Shoestring
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10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 1
10 Steps to E-Business on a Shoestring by Dr. Ralph F. Wilson Editor, Web Marketing Today, Doctor Ebiz, Web Commerce Today, and NetAssisted Biz Director, Wilson Internet Services September 15, 2002 P.O. Box 308, Rocklin, California 95677, USA http://www.wilsonweb.com US $17.95 Additional copies may be obtained at http://www.wilsonweb.com/ebooks/shoestring.htm Please do NOT distribute this e-book to others. It is for your use only. Unauthorized distribution constitutes theft of my intellectual property.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 2
Acknowledgements This e-book may seem familiar to you, since it distills the basic wisdom previously published in issues of Web Marketing Today, freshened up for mid-2002. The first three steps also appeared in slightly altered form in my book Planning Your Internet Marketing Strategy: A Doctor Ebiz Guide (Wiley, 2002). Nevertheless, I believe you'll find it helpful to have it all gathered in one place as you design your new e-business start-up.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 3
Table of Contents Introduction............................................................................................... 6 Step 1. Define a Unique E-Business Niche.................................................8
Thriving in a Tiny Niche .............................................................................................8 Differentiating Niches from Blocks...........................................................................11 The Elusive Holy Grail of the "Ideal" Product ......................................................... 12 Unfilled Niches ......................................................................................................... 12 Poorly Filled Niches.................................................................................................. 12 Camcordia.com ......................................................................................................... 13 Partly Filled Niches................................................................................................... 14 Creating New Niches ................................................................................................ 15 Brick-and-Mortar vs. Internet Niches...................................................................... 15 Finding and Filling Your Niche ................................................................................ 16
Step 2: Devise an Adequate Revenue Plan ...............................................17 Traditional vs. E-Businesses .....................................................................................17 Advertising Revenue................................................................................................. 18 Referral Revenue ......................................................................................................20 Sales Revenue ........................................................................................................... 22 Multiple sources of revenue ..................................................................................... 23
Step 3. Naming Your Online Business..................................................... 24 1. Develop a clear, simple statement describing your online business.................... 24 2. List all the words that relate to your business idea.............................................. 25 3. Brainstorm business name word combinations................................................... 25 Good Names, Bad Names .........................................................................................26 4. Check domain name availability ..........................................................................28 5. Check trademark availability................................................................................28 6. Purchase relevant domain name(s)......................................................................29 7. Apply for a trademark...........................................................................................30 Naming Resources for Your Online Business .......................................................... 31
Step 4. Assess Your Needs and Resources............................................... 32 Establish Phased Objectives ..................................................................................... 32 Consider Your People Resources.............................................................................. 33 Examine Your Bartering Resources ......................................................................... 34 Inventory Your Equipment Resources ..................................................................... 34 Assess Your Financial Resources ............................................................................. 35 Plan to Reinvest in Your Business............................................................................ 35
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 5. Obtain Professional Website Design............................................ 36 Building Trust ........................................................................................................... 36 Navigation Systems .................................................................................................. 37 Planning for Ease of Maintenance ........................................................................... 37 Move Maintenance In-House ...................................................................................38 What Kind of Designer Should You Look For? ........................................................ 39 Clear Agreements and Specified Payments.............................................................. 39 Hosting and Domains...............................................................................................40
Step 6. Build the Trust Necessary for Success ......................................... 41
Show Photos of Yourself or Your Staff ..................................................................... 41 Show Photos of Happy People on the Front Page.................................................... 42 Tell the Story of Your Business................................................................................. 42 Write in a Chatty Manner ......................................................................................... 43 Display Testimonials from Satisfied Customers ...................................................... 43 Make Credible Presentations.................................................................................... 43 Provide Full Contact Information ............................................................................ 43 Reverse the Risk for Your Customer ........................................................................ 44 Trust-Building Associations ..................................................................................... 45
Step 7. Plan Low-Cost Marketing Techniques ......................................... 46 Marketing Strategy 1: Search Engine and Directory Registration........................... 47 META Tags ........................................................................................................... 47 Search Engines .....................................................................................................48 Directories ............................................................................................................48 Paying for Directory Inclusion .............................................................................48 Marketing Strategy 2: Search Engine Optimization (SEO) .....................................49 Algorithms and Alchemy......................................................................................49 Gateway or Doorway Pages ..................................................................................49 Do-It-Yourself.......................................................................................................50 Paying a Service....................................................................................................50 Marketing Strategy 3: E-Mail Marketing to Your House List.................................. 51 E-Mail List Servers ............................................................................................... 51 Privacy and Permissions ...................................................................................... 51 Collecting Information ......................................................................................... 52 Marketing to Your House List .............................................................................. 52 Marketing Strategy 4: Paid Advertising ................................................................... 53 1. Sponsorships and CPM Advertising ................................................................. 53 2. Pay Per Click (PPC) Advertising....................................................................... 54 3. Cost per Action (CPA) Advertising -- Affiliate Program .................................. 54
Step 8: Determine How to Receive Payments ......................................... 56 Introduction to Internet Money Transfer ................................................................ 56 Comparisons of Low-Cost Funds Transfer Systems ................................................ 57 Shopping Cart or Ordering System .......................................................................... 59
Step 9. Deliver Products and Services Efficiently.................................... 61
Select a Low-Cost Way to Store Your Product ......................................................... 61
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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1. Warehouse Products Yourself .......................................................................... 61 2. Buy from a Local Distributor ...........................................................................62 3. Drop-Ship from a Distributor or Manufacturer ..............................................62 4. Have a Fulfillment House Warehouse and Ship for You................................. 63 Assessing What's Right for You............................................................................ 63 Select a Low-Cost Way to Ship Your Product .......................................................... 63 Digital Delivery System Options ..............................................................................64 How to Select a Fulfillment House........................................................................... 65 Fees and Policies to Ask About ............................................................................ 65 Profiles of Two Small Business Fulfillment Houses ............................................ 67
Step 10. Provide Excellent Service to Your Customers............................68 The Importance of Happy Customers ......................................................................68 The Importance of the Second and Third Sale.........................................................69 An Example of Excellent Customer Service .............................................................69 Finding Ways to Automate Customer Service ......................................................... 70 Investing in Customer Service...................................................................................71 When Not to Automate Customer Service ............................................................... 72 Some Customer Service Resources .......................................................................... 72 Customer Service Is a Management Decision.......................................................... 73 The Golden Customer Service Policy ....................................................................... 74
Conclusion -- Wise Person or Buffoon..................................................... 76 Appendix: Other Resources by Dr. Wilson .............................................. 78 Best-Selling E-Books ................................................................................................ 78 Vital Resource for "NetAssisting" Your "Local" Business........................................ 79 Dr. Wilson's "Real Book" on Strategy Development................................................80
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Introduction shoe·string n. 1. shoelace. 2. a small sum of money; capital inadequate or barely adequate to the needs of a transaction. boot·strap n. a looped strap sewed at the side or rear top of a boot to help in pulling it on. vt. to promote or develop by initiative and effort with little or no assistance. Merriam Webster's Collegiate Dictionary. Tenth Edition (1993)
Why do the two chief metaphors for starting a business from scratch both relate to footwear? Shoestrings. Bootstraps. Perhaps because you feel pretty small and struggling when you hunch over to tie your shoes or pull on your boots. It's a ground-level achievement. There's nothing fancy, no glory, little recognition. But despite tales of high-flying dot-com bankruptcies, there is great opportunity to make a good living developing a small, healthy online business -- if you go about it right. We heard that dot-coms just weren't making any profits. These heavily-funded start-ups needed to make a big splash or go bust in the process. But there are hundreds of thousands of small, very profitable e-businesses -- begun on a shoestring -- that thrive all over the world. You'll need some money -every businesses does unless you possess all the necessary skills in-house -but you may be surprised at how little money may be necessary to succeed. In this e-book we'll be examining how to begin a successful e-business or revive a struggling one. In some cases, you'll realize that your stillborn ebusiness needs a funeral -- nothing will bring it back to life. But in other cases you'll be able to discover the missing pieces, and this time find success. This e-book isn't for the get-rich-quick dreamers who are always looking for the next magic bullet. They'll always be disappointed and disappoint others. This is for serious individuals and small companies who are willing to learn
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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rapidly, teach themselves new skills, master new disciplines, and do all it takes to become successful. The first and crucial step to success requires finding your niche in cyberspace. We'll start there.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 8
Step 1. Define a Unique E-Business Niche Standing at the base the Wailing Wall in Jerusalem and looking up, the immense stone blocks laid one upon another seem to reach to the sky. This most holy site to Jews is all that is left of Herod's Second Temple. It is a place of prayer for the nation. Herod built the Western Wall as part of a retaining wall around the temple mount, formed of massive limestone blocks, some weighing over 100 tons each. But when you look more closely at the Wall, you see the crevices between these giant blocks. In the first two tiers of stone they are filled with papers inscribed with the prayers of the faithful. But above them the crevices are alive. Plants, rooted deeply in the cracks between the stones, abound far above the heads of the worshippers and add character and life to the Wall. When you move from the sacred to the secular, the Wall has a lesson for us. If your company doesn't have the mammoth clout of a Fortune 500 corporation, then you must find a niche between the immense players and adapt yourself to thrive there. The English word "niche" rhymes with "ditch" (though is pronounced NEESH by some). It comes from a French word that means, "to nest." And that's what small companies can learn to do very successfully, filling small voids left by the big players. Thriving in a Tiny Niche How can small businesses thrive if the niches seem pretty narrow indeed? You can purchase kitchen knives at Safeway and KMart, at Macy's and a restaurant supply outlet, as well as a gourmet cooking store. But a shop that specializes in kitchen cutlery? It would take a major metropolitan area of one or two million people to support such a store, and still it might struggle.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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But so long as you can deliver your goods or services across distances, on the Internet your marketplace is the nation, and, if you have the vision for it, the world. As of March 2002 estimates were about 1/2 billion Internet users world wide. Look at the sheer millions of users that constitute your market. English-speaking countries are in boldface: Sorted by Number of Internet Users Nation
Population
Internet Users
% users
(millions)
United States China United Kingdom Germany Japan South Korea Canada France Italy Russia Spain Netherlands Taiwan Brazil India Australia New Zealand
278 1300 59.6 83 126.8 47.9 31.6 60 57.7 145 40 16 22.3 174.5 1000 19.4 3.8
149.0 33.7 33.0 26.0 22.0 16.7 14.2 11.0 11.0 7.5 7.0 6.8 6.4 6.1 5.0 5.0 1.3
54% 3% 55% 31% 17% 35% 45% 18% 19% 5% 18% 43% 29% 3% 1% 26% 34%
Source: CyberAtlas.com, March 21, 2002
If you market to English-speakers, your potential market size is 202 million, 80% of those in North America.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Many countries have a predominance of Internet users -- over 25% in the countries listed below: Sorted by Percent Internet Users Nation
% users
Qatar
61%
Iceland
60%
United Kingdom
55%
Hong Kong
54%
United States
54%
Sweden
51%
Norway
49%
Switzerland
47%
Canada
45%
The Netherlands
43%
Finland
41%
UAE
38%
South Korea
35%
New Zealand
34%
Estonia
33%
Austria
33%
Germany
31%
Portugal
30%
Singapore
30%
Denmark
30%
Taiwan
29%
Belgium
26%
Australia
26%
Ireland
25%
Source: CyberAtlas.com, March 21, 2002
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Countries with a high percentage of Internet users are becoming used to making purchases via the Internet. A kitchen cutlery shop might die in a town of 10,000 or a city of 100,000. But on the Internet, the market is so huge that even a small slice provides a large number of shoppers. Let's take a country like South Korea where 35% of the population are Internet users. Where travel time once prevented shoppers from getting to specialty shops in downtown Seoul, on the Internet, the nation is like one very accessible city. With Korea's 16.7 million Internet users, even a very narrowly-defined specialty business can thrive because of the huge number of potential shoppers. Think of the market as 17 cities of a million people each. That many potential shoppers can support nearly any specialty business. After nearly eight years of intimate involvement with the Internet, I am still awed by its vast potential. To succeed you must be able to see the Internet's hugeness as a market, and at the same time comprehend that even the narrowest kind of business can find enough customers to thrive. The "wall" is so big that the niches between the huge corporate blocks are quite adequate to support a lively small business marketplace. Differentiating Niches from Blocks The phone rang and the caller wanted to set up an online store. "I want to sell something on the Internet," he told me. "What do you plan to sell?" I asked. "Books," he said, "and consumer electronics." I can see him competing head-to-head with Amazon, Barnes and Noble, Borders, Good Guys, and Best Buy. With his puny resources, he doesn't stand a chance against the big players. None. Nada. Zip. I've been asked a dozen times, "What would it cost to build a book store just like Amazon.com?" I grind my teeth. With all the opportunities begging to be explored, why would you want to challenge the top dog? I answer that question by saying, "It would cost you the millions and millions of dollars Amazon spent to build its store." Look instead to the niches.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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The Elusive Holy Grail of the "Ideal" Product I'm sometimes asked, "What is the best product to sell on the Web?" The answer is pretty straightforward; here are the characteristics: • • • • • •
Enables a high profit margin, Offers exclusive sales rights, Delivers by digital download, Offers customers more value via Internet sale than through traditional channels, Fills a universal need, and Must be purchased regularly.
If you can score with majority of those parameters you probably have a winning product or service. But, frankly, few fit. Don't let your mind wander aimlessly looking for the perfect product. A better way is to look to yourself or to your company. What are you good at? What do you enjoy? On what subject are you considered the "local world's authority"? What are you strong in? What do you have to offer that is fairly unique? How can you leverage your present strengths? Instead of fantasizing about the "perfect," take what you know and let it empower your vision to clearly see the niches out there. Unfilled Niches These days it's hard to find a niche that nobody is filling, but occasionally I run across one. The classic path to success is "Find a need and fill it." So look to the customers you know best. What are they asking for? What would they like? What keeps them from fully realizing their own success? Since you're an "expert," you may have some key insights. You may be able to develop a new or improved product, service, or business process that, coupled with the Internet, can make a big difference. It's your interest and training that give you the vision to see these opportunities. Look closely at the niches. Poorly Filled Niches While unfilled niches are rare on the Internet, poorly filled niches are exceedingly common. I have come to expect so much from the Internet that I'm often frustrated by what is NOT available online. Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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A while ago I was in the market for a camcorder. I knew practically nothing about them -- and I found that the average salesperson at my local stores didn't know much either. I had lots of unanswered questions. I needed information, opinions from people who really knew something about the trade-offs between one recording format and another. But I couldn't find what I was looking for. There have to be other people like me. What kind of site would make this selection an easier task? One site was very good, but called on me to make decisions about which I didn't have enough knowledge. Nor did it provide expert opinion or consumer feedback on questions of format pros and cons, answers to my stupid questions, etc. Another site had a camcorder buying guide, but no individual comments except at the product level. And nothing offered a chart that showed the differences between the models available from a single manufacturer. I was also ready to buy an extra battery pack and a carrying bag, as well as a supply of recording tape, but none of these sites made it easy. Some camcorder sites were only departments in a larger consumer electronics enterprise with little focus on this niche. Camcordia.com I concluded there was no single "greatest place" online to buy camcorders. Maybe I ought to build it myself. In addition to a excellent shopping cart system and check-out procedure, these are the elements I would include: • • • • • • • • • • • • •
Buying Guides FAQs Honest reviews of each manufacturer's product line contrasted with other manufacturers' offerings Easy comparisons within a manufacturer's product line Live chat that allows shoppers to ask questions from a knowledgeable person 8 to 10 hours per day Competitive prices, if not the very lowest Carrying all major manufacturers' products Inventory of best sellers, drop-ship arrangements for less common requests Shipping at a variety of speeds and costs A no-quibble guarantee Links to the "help" pages on manufacturers' websites Addresses, phone numbers, and URLs of repair stations A full line of accessories Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
• • • • •
page 14
A full line of recording media Information and cables to connect camcorders to TVs, VCRs, and computers Online forums where camcorder aficionados discuss detailed questions An affiliate relationship with camcorder dealers in regions of the world where I don't want to risk shipping a $250 to $1,500 item. A monthly newsletter I could call The Camcorder Comrade. :-)
And I'm sure once I got immersed in the process of building, I'd find more to do. We could call it camcordia.com or camcording.net or cambug.com. (These names were available when I first wrote this, but have since been taken.) Isn't this a lot of work? You bet. Of course, you could build a "good" camcorder store fairly easily. But not an excellent one. Excellence takes high standards, sacrifice, great effort, and a drive to achieve the best you can possibly do. If the project isn't worth doing with excellence, my friends, it probably isn't worth even beginning. Life is too short. It would probably take six months of work and several thousand dollars to get it fully ready, and a year or two to get it functioning at full potential. Is it possible? Of course! Would it succeed? I have no doubt! Am I going to build it? No. This one needs someone who lives and breathes camcorders. But camcorders is a poorly filled niche just begging to be filled with excellence. Partly Filled Niches I've often toyed with the idea of setting up a firm that helps small businesses market their websites. One that considers each company's needs carefully and recommends a marketing plan tailored to each company's needs and budget. One that offers exceptional value and a personal touch. One that doesn't rest until the customer's need has been fully addressed. Aren't there plenty of firms that specialize in online marketing already? Yes, indeed. But I believe I could make one succeed, since there are hundreds of thousands of small business website entrepreneurs out there, and only ten or twenty thousand marketing companies, many of which aren't being very effective at all with small businesses. Many excellent businesses exist, but there is still a tremendous need. Do I plan to do this? No, but it could be Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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done quite profitably. This is a partly filled niche longing to be filled more completely. Creating New Niches We haven't nearly exhausted the subject of niches yet. How about creating a new niche where one didn't exist before? I love what JustBalls.com did when they began several years ago. They didn't pump themselves up to think they could tackle the whole sporting goods sector. They weren't a Big 5 or a FogDog. So they sliced sporting goods in a brand new way that it had never been sliced before -- balls only. They didn't sell bats or firstbaseman's mitts. They sold balls. Baseballs, basketballs, footballs, golf balls. If there was a sports ball of any kind, they would carry it. Now they offer laser-engraved sports balls for gifts and presentations. They succeeded because they created a brand new niche, found a catchy, memorable name, developed a customer-centered approach, and opened their doors. (www.justballs.com) Brick-and-Mortar vs. Internet Niches I need to say a word to you who have an existing brick-and-mortar business already. Should you put your business on the Web? By all means, do so! (Unless you're a barber, or something inescapably local, of course.) The stability of your traditional business will give you the time to find your way online. But don't put your entire business offerings online, only those that are unique and especially adaptable to the Internet. Several years ago, Jeff Greene called me for help setting up an online store. Jeff is the longtime owner of The Office Market, an office and art supply store in Conway, New Hampshire, an area of about 20,000 people in the White Mountains. This was before OfficeDepot.com, OfficeMax.com, and Staples.com had developed a strong presence online. He asked me if he should sell both office supplies and art supplies. I pointed him toward the niche market and away from the mass market, and he has since done well with Discount Art Supplies (www.discountart.com) offering a full line of top brand, high quality brushes, paints, and other supplies. If Jeff had tried to put his whole office supply inventory online, the e-business would have lost focus and he wouldn't have been able to carry a full enough line to compete with the big companies (though in his local region The Office Market is the leader). By putting all his energy into the art supply part of his business, he
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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has succeeded admirably on the Web and can compete with others in this field. Determine what aspect of your current business is best for the Internet and put that online; don't load your website with generic products and services that diffuse your focus. Finding and Filling Your Niche The promise of the huge Internet market is there for you, too. While it is intensely competitive, the size and lack of geographical barriers is especially suited to small business people who are blessed with niche vision and a dose of creativity and determination. Look closely, now -- not at the massive blocks but at the niches between them -- and find a niche with your name on it.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 17
Step 2: Devise an Adequate Revenue Plan Of the millions of commercial websites online, only a few have an adequate revenue plan. Most aren't making much money at all. Some are hemorrhaging cash as if it were going out of style. But don't fall into the trap of thinking that no one is making money on the Internet. That's just not true. Tens of thousands of commercial sites are quite profitable, and many hundreds of thousands are making money with the prospect of making more. As the online customer base is building in Europe, Latin America, Asia, and Africa, many more will be able to make money. The key is a clear-sighted revenue plan. Shoestring businesses usually don't have the luxury of spending "other people's money," so small businesses are forced to earn money rapidly or not at all. Traditional vs. E-Businesses Before we consider revenue strategies, however, I want to acknowledge that many commercial websites aren't designed to generate revenue themselves, but to increase sales through other channels -- and that's an entirely legitimate business plan. An auto dealer, for example, might not transact a car sale over the Internet, but the information on his site is designed to bring educated customers into his car lot ready to deal. Your site might represent your brick-and-mortar business on the Web in order to let customers know you're there and what you offer. For several years my site and newsletters were designed to promote my online store design business. I didn't accept any credit cards at all, but enjoyed a successful and growing business communicating with clients by e-mail, fax, phone, and FedEx. Was that an e-business? Sort of, in that all
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 18
my advertising and lead generation was done online. But it also had strong similarities to a traditional service business. In this step, however, I'll be examining e-businesses, which I'll define as businesses designed to generate all or part of their income on the Internet: that is, through services performed or products paid for over the Internet. I agree that this definition is perhaps too narrow, but bear with me for the sake of this discussion. These e-businesses look to three primary sources of revenue: • • •
Advertising Revenue, where advertisers are paying for exposure on your site or in your e-zine. Referral Revenue, affiliate programs, pay for leads generated, or other types of payment made for performance of one kind or another. Sales Revenue, income from products or services performed or sold via the Internet.
I'm sure there are some revenue types that don't quite fall under the Big Three, but let's look at each and see their upsides and downsides as sources of revenue for your business. Advertising Revenue Advertising revenue looks pretty good at first glance. You put banner ads on your webpages and advertisers pay for the privilege. What could be sweeter? Unfortunately, few commercial websites are able to earn much money from advertising, especially banner advertising. Here's why. Advertising revenue is realistic mainly on sites that are both: • •
Destination sites that receive a huge amount of website traffic, and Sites narrowly targeted towards customers whom advertisers are willing to pay big bucks to reach.
But ad prices have plummeted since the glory days of the dot-com boom. If you can sell them, banner ads are going for $1 to $10 CPM (cost per thousand page views). E-zine ads command a larger price, but they've dropped in cost, too.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
Page Views per Month 1,000
page 19
Monthly Revenue at $10 CPM
Monthly Revenue at $1 CPM $10
$1
$100
$10
100,000
$1,000
$100
1 million
$10,000
$1,000
10 million
$100,000
$10,000
100 million
$1 million
$100,000
10,000
The revenue projection above assumes (1) that you sell out your advertising completely each month, and (2) that your costs to sell the advertising allow you to earn a profit. With millions of websites there is often unsold inventory available, especially on untargeted sites. To sell advertising you'll need to develop (1) your own in-house sales force, (2) outsource sales to a representative who'll expect 20% to 50% of the gross ad sales, or (3) sell your inventory to an ad network. While advertising used to be a premier revenue source, several trends make it more iffy: 1. Advertising dollars are being spent more carefully since the dot-com meltdown in April 2000. 2. Sites that carry advertising are getting much more aggressive about selling ads. 3. The increase in sites means that inventory (total advertising space available) exceeds paid advertising, and actual sales prices are in decline. 4. Media buyers find it easier to deal with a few large ad networks than dozens of smaller sites. While advertising might be a substantial revenue source for some sites, at this point don't look at it as your primary revenue source or you'll go broke.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
page 20
Referral Revenue Referral revenue describes income you receive from referring visitors at your site to another site where they make a purchase, sign up, or take some other kind of action. Sometimes this is called CPA (Cost per Action) or PPC (Pay Per Click) advertising. There is a fuzzy line between referral income and advertising. In both cases you are helping to promote another business; you're just getting compensated in different ways. Affiliate Programs are one of the most popular types of referral programs. Typically, the siteowner (affiliate) signs an agreement with a merchant, or a third party affiliate service bureau, such as Commission Junction. If someone makes a purchase as a result of clicking on a link at the affiliate site, the affiliate will receive a sales commission of 3% to 15%, and sometimes more. It sounds like a pretty easy way to make money. No work, just add a link or a banner and wait for the dollars to roll in. I've belonged to dozens of affiliate programs over the last several years and have learned this: 1. Affiliate programs must directly relate to the content of your site, preferably integrating the affiliate link into the text of articles and information. Without this close relationship between content and product, your profits are negligible. 2. Driving large numbers of very targeted audiences to your site is required to realize much income. Alongside affiliate programs I categorize business-systems such as vStore (www.vStore.com) and Quixtar (www.Quixtar.com), the online version of Amway. They automate the ordering process, but margins are often not enough to allow advertising that will bring significant traffic to the entry page and profit at the end of the month. For several years I devoted the right side of each page of my website to Web marketing and e-commerce books, many of which I had reviewed. Each was linked to the appropriate product page at Amazon.com. If someone made a purchase of a book I was directly linked to, I earned 15% of the purchase price. If they browsed around and found another book, I would make 5% of the purchase price. Here was the report for a quarter in 2000:
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
Total shipped to customer this quarter: Total New Customers: 102 Referral fee this quarter: Credit referral fee previous quarter: New Customer Bonus: Total Earnings: Purchased books from my direct links: Total shipped: $4,385.87 Referral fee (at 15%): Browsed and found books: Total shipped: $9,877.22 Referral fee (at 5%): Other Qualifying Products: Total shipped: $541.41 Referral fee (at 5%):
page 21
$14,804.50 $ 1,178.50 $ 0.00 $ 350.00 $ 1,528.50
$657.33
$494.10
$ 27.07
But quarterly checks in the last year are only about a third of that. I share this to point out how much a site with 650,000 page views a month can make on an affiliate program directly related to the content of the site. I've had good success with Ken Evoy's Make Your Site Sell (sales.sitesell.com/myss) and WebPosition Gold software (www.wilsonweb.com/go/to.cgi?l=wpg), and, to a lesser degree, Cory Rudl's Insider Secrets course. http://www.marketingtips.com/t.cgi/15267/ Of course I value the income I receive from affiliate programs, but by themselves, they don't make what I consider "a good living." Now if I had millions of page views, I'm sure I'd do better, but probably the products wouldn't relate as closely to the site content. For many sites, affiliate programs are a good additional source of income, but not a main source of revenue. But there is an exception. In the last two or three years, many entrepreneurs have built mini-sites narrowly focused around a single topic or product designed for a single purpose -- to attract targeted shoppers and send them to the merchant's site where they'll purchase the product, and earn affiliate commissions. Some of these have done very well. Ken Evoy's Site Build It! tool (sales.sitesell.com/buildit/) is designed for just this purpose, and has many built-in features to help you succeed. For more information on this approach, subscribe to and read Allan Gardyne's Associate Programs Newsletter (www.associateprograms.com).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Sales Revenue This leaves us with sales revenue for goods or services that you sell or resell directly. Services. I believe that a great deal of revenue will be generated through services sold via the Internet. The services may be performed offline or online, but the ordering and paying for those services will be online. This includes everything from newsletter subscriptions, access to passwordprotected information, opt-in e-mailing services, tax preparation, database warehousing, and thousands of other services. The more automated the service, the more "productized" it becomes, and you move from selling time to selling a product. The more person-time invested in performing the service, the closer it is to a regular "job." Now don't get me wrong, even though you are selling a time-intensive service over the Internet, you can certainly gather more business through marketing it nationally and internationally. Products. Hard and soft goods can be bought and sold via the Internet in online stores as well as on eBay, in B2B marketplaces, and through eprocurement systems in an increasing number of industries. For more than two decades the US has had a thriving mail-order industry. In a sense, an online store is just an automated catalog. But while the Internet automates the front-end ordering process, the make-or-break decisions of the business often rely on the efficiency and costs of back-end product fulfillment and customer service. Drop-shipping is a way of outsourcing inventory, warehousing, and product fulfillment, but it cuts margins and makes it more difficult to offer excellent customer service. Selling products and services means that you must deal with real customers, some of whom will phone or e-mail you angrily and demand that their concerns be heard. None of this is easy. But I believe that for many siteowners, selling or re-selling goods and services is the primary way to make the Internet positively affect your bottom line. The ins and outs of selling products and services will be the main thrust of the remainder of this e-book.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Multiple sources of revenue Even better than just one of these approaches is to find ways to incorporate two or even all three sources of revenue in creative and innovative ways. The site that can include advertising revenue, referral revenue, and sales revenue is best positioned to leverage its Internet investments in a way that will produce profits. When you're starting an e-business on a shoestring, make sure that you've designed a realistic plan to bring in the revenue you'll need to continue.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 3. Naming Your Online Business After you've found a suitable online niche for your business, and worked out a revenue plan that will make setting up a business worth the long hours it will take, it comes time to name your fledgling business. Don't get this backwards. I've met a few business fools who own some nifty domain names and want to start a business to fit the names. Wrong. Without a niche and a sound business idea, you don't have a chance of success -- even with a good domain name. You're much better off to sell unneeded domain names to someone who can use them (or someone foolish enough hold them for ransom). 1. Develop a clear, simple statement describing your online business The name should evolve naturally from your niche. As I was reading Dan Janal's e-book Branding on the Internet, I came across a wonderfully simple positioning exercise which Janal calls his Fool Proof Positioning Statement. It is an extremely useful fill-in-the-blank approach. First, you need to decide what to put in the blanks: Elements of your positioning sentences
Example
Name of the company or product Acme CeilingGrip (insert your tentative company name here) Category
sheetrock screw
Core audience
contractors
Key benefit
attach sheetrock ceilings more securely
Key differentiating feature
doesn't rust when wet
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Now let's fill in the blanks of the first sentence: _(Name)_ is a _(Category)_ that helps _(Core audience)_ achieve _(Key benefit)_. "Acme CeilingGrip is a sheetrock screw that helps contractors attach sheetrock ceilings more securely." While the first sentence helps you state the benefit clearly, the second sentence helps you differentiate yourself from competitors. Unlike other _(Category)_, _(Company name or product)_ has _(Key differentiating feature)_. "Unlike other sheetrock screws, Acme CeilingGrip doesn't rust when wet." This may seem simplistic, but take a couple of minutes right now to see the power of it for your own online company. You might want to stress different key benefits to different core audiences, but this will give you a start. Keep working on your two or three sentences until they are clear and compelling. Another term for this type of short statement is a Unique Selling Proposition (USP) that describes how your company uniquely meets the needs of your customers. Whatever you call it, the positioning statement or USP will help you name your company. Remember: you don't start with the name, you start with the concept -- and the name flows from that. 2. List all the words that relate to your business idea Next, list all the words that relate to your business idea, its category, products, services, core audiences, and key differentiating factors. The longer this list, the better you are at loosening up your brain so you can come up with a business name that is striking and memorable. 3. Brainstorm business name word combinations The chances are that domain names of each of these keywords has already been taken -- by themselves. But now you take the list of words from Step 2 and begin to form two-word combinations. Ideally, you'll come up with a business name that propels you to stand out from the crowd. While you're not quite at the stage of selecting a domain name yet, the characteristics of a good domain name that I outlined in my article "How to Select a Domain
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Name for Your Company" are apropos: (www.wilsonweb.com/wmt5/domain-select.htm) 1. 2. 3. 4. 5. 6.
Short Memorable Not easily confused with others Hard to misspell Relates to your core business Sounds solid to your target audience
Hopefully, you'll find some word combinations that fit many or most of these criteria. Run them past some other people to see how they react. Good Names, Bad Names I'm a bit mystified at companies that name their products or business with words that don't have any meaning in their target language. At the risk of offending, let's look at the name Hewlett Packard selected for a major spinoff company -- Agilent Technologies (www.agilent.com). I'm guessing that Agilent is a combination of the word "agile" and a common English suffix. It expresses HP's corporate desire to move quickly and agilely to innovate in the Internet space. But "agile" isn't immediately obvious unless you think about it. Nor does it express a clear category, product, or service. To be fair, HP needed a name that bridged more than one category. But in order to firmly imprint and position "Agilent" in their potential customer's mind, they're going to have to rely entirely on hard advertising to make the name familiar since they're starting nearly from scratch. Small businesses have the advantage that their names can help position them and be memorable. In a number of ways, coming up with a company name is like creating a brand. It shouldn't sound stogy. Reading music isn't enough. A good name should be able to sing, as well. Let me illustrate. Wilson Internet Services. When I began my company in 1995, I called it Wilson Internet Services. Stodgy -- and easily confused with the type of name used by Internet Service Providers. When I look back on it, I think that kind of naming was a mistake. I named the company without a clue that I was naming a brand. I did better with the domain name,
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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wilsonweb.com. It is memorable and sings much better than the company name. Web Marketing Today and Web Commerce Today. My next attempt was Web Marketing Today® (www.wilsonweb.com/wmt) my flagship email marketing newsletter. It's better. Each word in the name adds to the meaning. And it's somewhat memorable. The domain name webmarketingtoday.com is pretty clumsy, however. When I named my premier e-commerce newsletter Web Commerce Today® (www.wilsonweb.com/wct) in 1997, I made a mistake. I wanted to build on my success and reputation with Web Marketing Today, but I succeeded in confusing people. The name didn't provide a clear way to distinguish between my two publications. By 2000, however, I was beginning to understand the importance of branding. I launched two publications that year, the weekly JesusWalk: Disciple Lessons from Luke's Gospel (www.jesuswalk.com) and DoctorEbiz, a weekly Q&A column for small business about doing business online. (www.doctorebiz.com). In each case I looked for word combinations that would explain exactly what the product was about, and I feel I succeeded pretty well: JesusWalk®. The words indicate the goal, to help individuals learn about Jesus from simulating the kind of training that his twelve disciples internalized by just walking along with him. The name is memorable, descriptive, and simple (www.jesuswalk.com). Doctor Ebiz®. The words indicate that this is an e-business doctor, someone who helps diagnose and cure e-business problems. And that's exactly what this weekly column is designed to do. The name is memorable, descriptive, and simple. The only problem with the name is that "doctor" can be abbreviated and the name can be hyphenated in different ways, which required me securing a number of domain names for the most common misspellings (www.doctorebiz.com). Remember, your online business name may be different from the name of your traditional brick and mortar business. You may need to file with your local government a Fictitious Business Name Statement for a new business name -- but that's usually not too expensive. Don't be blocked by a poor existing business name; take advantage of going online to brand your business well. Copyright © 2002, Ralph F. Wilson. All rights reserved.
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4. Check domain name availability Only when you have developed a number of possible company (or product) names should you begin the domain name search. The reason is this: so many good domain names are taken already that you might be influenced to only use what is left over. A good place to check your domain name possibilities is the Whois database at 000domains.com. (www.wilsonweb.com/go/to.cgi?l=000domains) or VeriSign (www.netsol.com/cgi-bin/whois/whois). Beyond the .com, .net, and .org domain names, also consider the newer .biz, .info, and .us designations. For countries other than the United States, consult a domain name registrar in your country (www.norid.no/domenenavnbaser/domreg.html). Check all of your top name choices and minor variations of them. Note which domain names are available as a .com (or with your country designation, such as .fr or .de). Also note which have already been purchased. These days there are many more domain names than there are active websites. In many cases, over-eager domain speculators have bought up blocks of names and are having a difficult time unloading them at the level of prices for which they were hoping. 5. Check trademark availability Just because there isn't a corresponding domain name doesn't mean that your business name isn't being used by others who have a prior claim on it. A trademark is a graphic logo or a unique name that is used in trade to identify a business, product, or service. In general, the first company to use a name in trade owns it. Make sure you check the trademark database for your country -- it's probably online. Make sure you search your own country first for similar names, then other countries where you want to avoid confusion. Some online databases are: US Patent and Trademark Office (tess.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d=trmk) To be thorough, consider checking you state trademark database, too. Canada (strategis.ic.gc.ca/cgi-bin/sc_consu/trade-marks/search_e.pl) UK (www.patent.gov.uk/tm/dbase)
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Australia (www.ipaustralia.gov.au/trademarks/T_srch.htm) More international links can be found in Gregory H. Guillot's All about Trademarks (www.ggmark.com). If you don't find competing companies that have already registered a trademark for your desired name, then move ahead. But if you find trademark problems, it's much easier to find another business name. 6. Purchase relevant domain name(s) I used to be concerned about the price of my favorite already-owned domain name getting jacked up if I were to show an interest. No more. This is how I suggest you handle it. Discover the owner from the Whois directory and then write an e-mail similar to this: Dear domain owner, I've been thinking about starting an online business selling sheetrock screws to contractors. I've come up with about a dozen really good possible domain names, one of which is yours. If you're interested in selling, I'd like to see if we can come to an agreement about price. Fortunately, since I've identified a dozen good domain names, I'm not under pressure to purchase the one you own, but if your price is right, it might help me select yours, and put some fast Christmas cash into your pocket. Sincerely, John Doe Sheetrock screws par excellence! This way you don't sound too eager, but willing to deal; additionally, the domain name owner knows you have other options so he can't push the price up too high. Venture capital funding initially drove up domain name prices and fed greed among speculators. But VC money has pretty well dried up for start-ups, and there are many, many domain names waiting for the right business. My guess is that if you were to get your hoped-for domain name appraised for a modest fee, you could use that as leverage to purchase a pretty good name for your business. You also should consider having others appraise your domain name picks at Afternic.com Copyright © 2002, Ralph F. Wilson. All rights reserved.
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(www.afternic.com). Purchasing the domain name may cost you $100 or $250 or $500 or $1000 depending upon the owner's and your respective negotiating abilities, but a memorable domain name is an important marketing investment -- don't skimp here! 7. Apply for a trademark If you plan to use a trademark, you should place the letters "TM" in superscript next to the trade name to indicate your intention to use it as a trademark. The letters "SM" indicate "service mark," though the usage often blurs with that of the word "trademark." To protect your right to use a particular business name, you ought to register the trademark with the official government agency in your country, and other countries where you expect to do much business. In the US this can cost $500 to $1,000 (including search and attorney fees) and take a year or two to be completed. If you are successful and your trademark is registered, you are entitled to use the ® symbol to indicate registration of your trademark. Many online businesses have learned the hard way that it's cheaper to register the trademark up front than to wait until another company files for registration ahead of you. If you can't afford the filing and legal costs, I understand, but make this one of your early priorities as soon as some revenue is generated if it looks like your business has commercial potential. Just because you own a domain name doesn't automatically mean you own the corresponding trademark. Since your business is likely to be national or international on the Internet, you can't afford to ignore the legal threats you may face to your unique business name. More information is available on my website (www.wilsonweb.com/cat/cat.cfm?page=1&subcat=mm_Law). If you're interested in US trademark law, you might read the book Trademark: Legal Care for your Business and Product Name (Nolo Press, 2001), by Kate McGrath and Stephen Elias or look at these authors' Trademark Registration Kit (Quick & Legal Series; Nolo Press, 1999).
I hope this will help you see the process involved in naming your online business. As one who has made some serious marketing mistakes here, I hope that my advice will save you some headaches. Remember, the main costs of naming your business are: Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
• • •
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Fictitious Business Name Statement. Local government. $10 to $50. Domain name. $10 to $500, or more, depending upon your country and the price you have to pay for an already owned domain name. Trademark registration. $400 to $750 or more, depending upon your country and whether you file forms yourself or get legal assistance.
Even if you're trying to name your business on a shoestring, make sure you don't scrimp where it counts.
Naming Resources for Your Online Business Other resources you may find helpful include: Naming Consultants. Yahoo! Directory section on Marketing and Advertising | Naming BrandFidelity.com Automated, online naming and branding services (www.brandfidelity.com/services.htm) NameBoy. A creative tool that helps you combine words to come up with interesting, and often humorous, domain name combinations (www.nameboy.com). Brainstorm from VeriSign helps generate domain name ideas (www.netsol.com/en_US/name-it/keywords.jhtml). Domain Fast Find. From Register.com, another name generator (www.register.com/DisplayFastFind.cgi). E-gineer Dominator. Finds other combinations, with links to dictionaries and synonyms, rhymes and trademark searches (www.egineer.com/domainator). Web Marketing Info Center Domain Name section and Legal section (www.wilsonweb.com/cat)
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 4. Assess Your Needs and Resources Starting your business on a shoestring takes discipline -- the discipline to tether your dreams to realities. Let them soar, yes. But make sure they are firmly grounded to the earth. Many Dot-Com companies have lacked the patience and fortitude to start small and grow. They wanted it all now, and many of them are now paying the price. Planning your business is some of the hardest work you'll do, and in this step I'll only skim over the surface. You can find much more detail in my book Planning Your Internet Marketing Strategy (Wiley, 2002). But let's consider certain aspects of this process. Establish Phased Objectives If you're starting from scratch, you probably have a dream of where you'd like to be someday. But unless you have unlimited resources, you'll have to phase your objectives. Here's an example for an online shop specializing in tall ship models: Phase 1. Store set-up. Set up online store, obtain merchant account, locate drop-shippers, and go online with name TallShipShop.com (available as of this writing). Phase 2. Marketing. Develop a very targeted campaign to get listed in search engines, and obtain reciprocal links with complementary sites. Become an active part of three e-mail discussion groups on
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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model-making and tall ships. Establish e-mail newsletter for visitors and customers. Phase 3. Advertising. Experiment with paid advertising, both online and in targeted magazines. Determine conversion rate in your online store and calculate the cost of customer acquisition for each form of paid advertising. Phase 4. Customer Service. Stock in-house inventory of best-selling model kits so you can ship quickly. Develop customer service with real-time help and order tracking. Once you've made a small profit, invest that in more inventory. Phase 5. Gear Up for the Holiday Season. Develop affiliate program with hand-picked sites with links on complementary pages of their sites. Your phased plan may look entirely different. The point is to make sure you don't try to do everything at once, but that you have a plan to develop the essentials of your site and marketing plan. You'll want to prepare a rough budget for each phase, but make a detailed list of the items you'll need in Phase 1, and the amount it will cost you to reach your Phase 1 objectives before you can expect any revenue. With this sort of plan you can hope for some revenue in Phase 2 to fund Phase 3. And enough in Phase 3 to fund Phase 4, etc. Consider Your People Resources Of all your business resources, people are most important because they will form the team you need to succeed. For some of you, the main people resource may be you -- especially if you are multi-talented. If not, you'll need to find others who can help you. Perhaps it's you and your spouse, a true "Mom and Pop" store. Don't laugh. There have been many, many successful mom and pop stores and businesses. The partnership begun with marriage now extends to a venture to help earn a living. Since it is, hopefully, a stable relationship, it will provide stability for your business as well. Some will join forces with a friend or two or three. Since there may be little or no money involved, you might be tempted to make the relationship very
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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informal. I recommend that you write out clearly, agree upon, and sign a memo of understanding that details: (1) the responsibilities of each person involved, (2) what investment each brings to the task, (3) how profits will be shared after expenses are paid, and (4) what happens when a person leaves the business. How much, if anything, does a partner take with him? When you get a little money, you'll want to formalize this with the help of an attorney. Many small businesses fail because the partners don't have a clear agreement. Clear written agreements form the basis of good business relationships. You can find a lot of help at the Inc.com website (www.inc.com) and Nolo Press books on small business (www.nolo.com). An alternative to partnering with others is outsourcing to independent contractors. Besides saving a lot of hassle with employment taxes and forms, outsourcing allows you a lot more flexibility when your business needs to change, expand, or contract. One source of virtual contractors can be found at the eWork Exchange (www.ework.com/exchange.cfm). Examine Your Bartering Resources Since you're starting on a shoestring, don't forget that bartering and swapping goods and services is an important way you can leverage your own skills. You help others with your skills and resources; they help you with theirs. I've found this an important avenue for bootstrapping a business. Just make sure that the person really has the skills you need and that you have a clear written agreement with clear expectations. Inventory Your Equipment Resources Make a list of the equipment and services you need for your online business. By definition, you'll need a computer, a web server ... and the list continues. I suggest a list of Phase 1 "must have" items, with less vital items planned for later. Then determine the costs of your Phase 1 list. Consider purchasing used equipment, borrowing a scanner from your brother-in-law until you can purchase your own, swapping for services, and bartering. The nice thing about an online business is that you don't need to impress anyone's ego but your own, so your office can be pretty basic for now. Consider starting in space you already have, such as a garage, basement, or extra bedroom. Hewlett-Packard was famously begun in a garage in Palo Alto. Follow a legend. As the business grows you'll be able to -- and may be forced to -- move the business to its own space.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Assess Your Financial Resources Consider your financial resources now in comparison with your needs. You have tremendous advantages not seeking venture capital or large bank loans. Realize that credit card purchases that aren't paid off every month are very expensive bank loans. Instead look to savings and to part-time jobs that can provide for a basic investment. Consider pooling financial resources with friends, partners, or co-founders of your company, but make sure you are crystal clear in writing about the arrangements. Consider relatives -- your great aunt Samantha who has always liked you. Perhaps she'll loan you some of the money you need and feel very good about helping you. But I encourage you strongly: don't mortgage your home in order to finance your bootstrap business. New businesses are risky, even when they're well planned. Only invest what you can afford to lose if the business's success doesn't meet your expectations. Plan to Reinvest in Your Business Finally, plan to take at least some of your early profits and reinvest them in the business, especially in marketing, since marketing provides the lifeblood of your business via new customers. As you consider your absolute start-up needs and assess your resources -especially your hidden ones -- you may well find that you're not that far away from beginning your business.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 5. Obtain Professional Website Design I can hear you asking, "Why should I pay a professional to design my website? I can do an okay job with Microsoft FrontPage or Macromedia DreamWeaver. Besides, it'll cost me a lot to hire a website designer, and I just can't afford it." On the contrary, you can't afford not to. Unless you're thinking mighty small indeed, there are several important reasons why you should pay to have your site professionally designed. Let me explain: Building Trust The most important reason to have your site professionally designed is to build trust with your clients. That takes a high level of competency. When my daughter was young she would bring home a drawing or painting she had done at school and we would make a big fuss over it. It would hang in a place of honor in the kitchen and finally be gently laid to rest in a folder to be looked at later. Were these painting really good? Well, they were good for a seven-year-old, especially a seven-year-old who is our daughter. But are they really good on some objective standard when compared with artists older and more experienced? Of course not. The danger of doing it yourself is that you may think your work is really, really good. You're wild about what you can do with this software. It's so easy! While in fact, as websites go, it is pretty shoddy and filled with problems. Only you don't have enough taste or humility to know the difference. I am a strong believer in learning to maintain the website yourself. But for the initial design, you really need a professional. The result will be something you can be proud of. And when a visitor comes to the site, she Copyright © 2002, Ralph F. Wilson. All rights reserved.
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will feel intuitively that this is a well-run business. The website will convey many hidden messages that evoke trust. And trust is absolutely necessary for the success of your online business. Navigation Systems Second, a professional website designer has learned a lot about constructing navigation systems that work well and minimize confusion. When you are buying a website, a big part of what you are buying is a navigation system that is good enough to allow you to expand considerably before it becomes outmoded. The typical storeowner just doesn't have the experience to produce an excellent navigation system and user interface. Planning for Ease of Maintenance I have built literally hundreds of websites. What I've learned along the way is that you can create maintenance nightmares for yourself unless you design the site in a modular fashion. When I began, I would construct template pages and then insert my content into them. But the only way to change the design of the whole website would be to do a "global search-andreplace" on all the pages. Inevitably, I would have made tiny changes in certain pages and they wouldn't update properly. The result was a humblejumble headache. To fix it I would have to take my new template and manually insert every webpage into it again, one-by-one through the entire website. In 1997 I learned about Server Side Includes (SSIs). Each SSI is an individual "boilerplate" file that makes up part of the whole template. At a minimum you have an SSI for the top of the webpage, one for the left menu, and another for the bottom. Computer nerds tell you that SSIs slow down the server, and that's true. But in my opinion, computers are made to do grunt work. They certainly save a lot of time. Here is a simple template for my DoctorEbiz.com pages: <TITLE> -- Doctor Ebiz <META NAME="KEYWORDS" CONTENT=""> <META NAME="DESCRIPTION" CONTENT="">
by Dr. Ralph F. Wilson, E-Business Consultant
Each line such as calls one of these boilerplate files and places it into the file before the visitor's web browser ever sees it. The beauty of this is you can modify only a single file that effects a change on every page of your website. It is extremely powerful. When I think of how much work I used to do to maintain my sites, I've decided never again to build a website without SSIs. The problem is that the average storeowner just doesn't have the experience to build this kind of system. It looks deceivingly simple, but there are little SSI gremlins that like to taunt you. Insist that your website designer builds your site with SSIs (or "include" statements, as FrontPage 2000 calls them). The time you save in maintenance will be very substantial. You can learn more about SSIs in Craig McFetridge's SSI Tutorial (www.carleton.ca/~dmcfet/html/ssi.html). For the three reasons listed above: • • •
A professional look that builds trust, A well-designed navigation system, and Server Side Includes to simplify maintenance
I recommend hiring a professional to build your website. Move Maintenance In-House But, just as strongly, I believe that you, or someone in your business, needs to learn HTML well enough to maintain your website. That is, to change the text, add a picture, and add pages to the site. Anything beyond that you could ask your designer to do for you. You can learn to do this at an inexpensive community college class or from a how-to-do-it Copyright © 2002, Ralph F. Wilson. All rights reserved.
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book such as Elizabeth Castro's HTML 4 for the World Wide Web Visual Quickstart Guide (4th edition, Peachpit Press, 2000) or Nolan Hester's FrontPage 2002 For Windows: Visual Quickstart Guide (Peachpit Press, 2001). Using a WYSIWYG (what you see is what you get) tool such as FrontPage 2000 makes maintaining your webpages rather easy. In far too many cases a designer will produce a great website, but it becomes obsolete and non-functional because the siteowner or his 17-yearold son didn't bother to learn to maintain the site. In-house maintenance is a must. What Kind of Designer Should You Look For? For a well-funded e-business you'll probably want to hire a well-established website design shop that employs a number of individuals, each with a particular specialty. However, for a shoestring website, you can probably find an individual who works out of her home and produces very nice websites for smaller businesses in the $1,000 to $2,000 range. Find these people by telephoning the local dial-up ISPs and ask if they know of any good freelance website designers in the area. Also ask at your local Chamber of Commerce and print shop. Look in the Yellow Pages under "Web Site Services," "Web Page Design," or "Internet-Marketing Services." Look in the search engines for "web design" in your local community or a nearby city. When you find the person or business, explain what you want, and then ask to see other similar small business websites she has built. If she hasn't built any, pass her by and find someone who has. You're paying for experience. Get the phone numbers of a couple of these former clients and ask them about the process and how well the website designer worked out. Clear Agreements and Specified Payments I recommend putting an agreement into writing, with milestone dates and payments attached to them. A clear agreement will save you lots of headaches and keep the arrangement on a business footing. I still have online some forms and contracts I used when I was in the website design business (www.wilsonweb.com/worksheet).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Hosting and Domains Many website designers would like to do your website hosting for you, as this creates an additional income for them. However, if you need to move to another server, it can sometimes be very sticky. I would encourage you to specify a nationally known web hosting service, such as Lexiconn Internet Services (www.lexiconn.com) or Interland.com (www.interland.com). Make sure you get some basic instructions on how to upload and download files using FTP, and get the password to your website before making the final payment. Also insist that your name is listed as both the administrative and billing contact for your domain name, and that your company -- not your website designer's company -- is listed as the owner of the domain. A number of legitimate website designers both host client websites and keep their names as administrators of the domain names in order to take good care of their clients. But I've heard too many horror stories to be comfortable with this arrangement. Hold those accounts in your own name if possible. The only exception is this: if your website requires interface with a database, then take your designer's advice on hosting since databases need special care. Yes, it is possible to build a website without a designer, but make sure you know what you are giving up when you do so. Trust from your customers is paramount. If your shoestring operation means your website looks too pitiful to trust, then you've cut a corner that will keep you from succeeding. My advice: find a website designer to build your initial small business website and then plan on doing your own website maintenance after that.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 6. Build the Trust Necessary for Success Your small businesses can build a website and get on the Internet for a few hundred to a few thousand dollars in the first year. But to succeed, you need to establish trust. Your online business must be seen as both believable and attractive. Trust is the essential lubricant that allows business transactions to take place -- in the physical world and in the cyber world. Large companies spend tens of millions of dollars to build a brand. This expenditure buys name recognition and the confidence that goes with it, a favorable position or association in the mind of the consumer, and a belief that a company with so much invested in its reputation would not disappoint its customers. Investments in brand development pay rich dividends. But smaller companies just can't afford the money it takes to establish a national brand. Instead of relying upon an established reputation, they are required to build trust and confidence from the moment customers land on their site. Big companies have their brands, but small companies have the advantage of a personal face and a personal character -- and connecting personally can be a very powerful sales motivator indeed! Show Photos of Yourself or Your Staff For years I've displayed a photo of myself on my website. I went to a professional photographer to get as good a photo as I could. But, frankly, I'm not handsome enough to win customers. I don't display the photo out of vanity. I show it for one reason: so people will perceive me as a person and therefore begin to establish a relationship with me through my writing.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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In a sense, you are what makes your small business different from all the rest. You are your own brand. If you hesitate to display a photo of yourself, perhaps you can show a group photo of your staff or sales team. Professional photos taken for this purpose can project the personal service you show your customers. They put faces behind the names. And people connect with people. Give people the choice of doing business with a cheerful, competent person rather than a faceless corporation, and they'll choose the person every time. Wells Fargo talks about "your personal banker," Wal-Mart features its own employees in national TV ads, and MicroWarehouse.com's "brand" includes a picture of one of its phone order-takers.
If you have an existing brick-and-mortar business, show a photo of the building, too. Even if it doesn't look spectacular, it demonstrates that your business isn't just a cyber-mirage pretending to be an online establishment. Show Photos of Happy People on the Front Page But don't stop with photos of yourself and your staff. Instead of animated letters and blue buttons, provide centers of human interest on your front page. Find photos of happy people who are part of the demographic target group you've determined are your best customers. To see how this is done, take a look at Wal-Mart (www.walmart.com). You can secure royalty-free people shots for your website from Getty Images for about $40 each -- a small price to pay for attractive models and excellent photography (creative.gettyimages.com/photodisc). Shoppers will relate to the people they see at your site. If they look confident and at ease, it will help to lessen a shopper's natural distrust of unknown Internet shops. Tell the Story of Your Business To build trust you'll also want to tell the story of your business. You may think that shoppers won't care about the details. But it's precisely these details that show your store is for real, that values of honesty and hard work Copyright © 2002, Ralph F. Wilson. All rights reserved.
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underlie your whole business. I've read some business stories that really made me want to make a purchase because I liked the people I was reading about. Write in a Chatty Manner Let the big companies write in their pompous, elevated, third person, slightly distant tone. But you need to write in the same way you would talk to a shopper if she were directly across from you. It'll help you build a bond of friendship and trust that will produce sales. Display Testimonials from Satisfied Customers As you develop satisfied customers who tell you how much they like your business, ask whether you can use the kind words they've written for your promotional materials. Nearly always they'll agree. Then excerpt two or three sentences for the testimonial. Make sure you use a variety of topics -one about your great customer service, another about your selection and prices, a third about how you took special time to explain something, a fourth about how they recommend your site to their friends, and a fifth about the promptness of your e-mails and shipping. Feel free to remove extraneous phrases or clauses from the final testimony, but make sure you don't change the wording or intent of the key items you leave in. Use full names with their permission, where they live, and ideally, a phone number to contact them. (Listing an e-mail address will subject your top customers to a barrage of spam.) The personal touch is a powerful way to build trust. Make Credible Presentations Most customers distrust products promoted with hype and unbelievable claims. Though exaggeration can be effective with some shoppers, most of the time wild claims will backfire. The storeowner needs to present products in such a way that all of a shopper's anticipated questions are answered in a believable manner. Provide Full Contact Information Make it easy to find full contact information -- address, phone, e-mail address, etc. Too many sites restrict ways in which potential customers can Copyright © 2002, Ralph F. Wilson. All rights reserved.
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ask questions and make contact. This breeds frustration and distrust. Consumers are wary of online stores that hide phone numbers or mailing addresses. The shopper wonders, If I can't get in touch with this storeowner when I have a question, what happens when I have a problem after the sale? Why doesn't he accept phone calls? I, too, am wary of companies I can't contact through traditional communication channels. Reverse the Risk for Your Customer One of the reasons people hesitate to place orders in your store is the risk to which they feel they are exposing themselves. If you can reverse this so that you the merchant take all the risk and your customer takes none, you'll substantially increase the number of orders completed and expand your profit at the end of each month. You build trust by taking the risk on yourself. For many years, Sears has clearly displayed its simple policy: "Satisfaction Guaranteed or Your Money Back." Do you think this policy has lost Sears money over the years? Hardly! It is one of the reasons people shop at Sears in the first place. Small business storeowners are often afraid to make strong, iron clad, noquestions-asked guarantees for fear that unscrupulous people will take advantage of them. And a few moral rejects will take advantage of them, but not many. Overwhelmingly, those who offer a money-back guarantee have found that it creates much more business than problems. Make sure you have easy-to-find links to your ordering policy page. You'll need to include: • • •
Return Policy Guarantee on Products Shipping policies
The clearer you are, the more confidence you inspire. The more generous you are, the more trust you build. And remember, trust is the one essential business element.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Trust-Building Associations A final way to establish your business credibility is to associate your site with names known for their integrity. Each of these organizations requires some kind of investigation or accountability from you. In exchange for accountability and some money, you can use the organization's logo on your website. Here are some to consider: •
• •
BBBOnline. The online version of the Better Business Bureau monitors how member businesses handle complaints and provides a reference to consumers on what kinds of complaints have been registered. In addition to their "Reliability Seal" program, BBBOnline also offers a "Privacy Seal" for both kids sites and general sites (www.bbbonline.com). TRUSTe. Helps monitor privacy statements and policies (www.truste.com). BizRate.com. After an online sale, buyers can rate the merchant on BizRate, and the aggregate of this rating is open to shoppers on the site (www.bizrate.com).
If you implement the suggestions I've made, you'll be investing dozens of hours improving your website. But the pay-off will be substantial. You'll get customers who otherwise wouldn't consider you at all, and you will have laid one of the essential paving stones on your road to Internet business success -- trust.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 7. Plan Low-Cost Marketing Techniques Marketing an online business is harder and more expensive than it used to be. One of the greatest difficulties of businesses starting on the Internet is getting noticed amidst the clutter of 30 million websites and billions of webpages. You can find a fairly complete menu of promotion techniques in my updated article "Web Marketing Checklist: 29 Ways to Promote Your Website" (www.wilsonweb.com/articles/checklist.htm). But I've selected four approaches to discuss in some detail in this chapter -- strategies which I believe will give you the best results for the money expended. • • • •
Strategy 1: Search Engine and Directory Registration Strategy 2: Search Engine Optimization Strategy 3: E-Mail Marketing to Your House List Strategy 4: Paid Advertising
Without actively marketing your website, it will never succeed. And marketing these days requires some investment. Even shoestring businesses need to cobble together the money to execute the four basic strategies outlined here. It will probably cost a minimum of about $550 for the first three strategies. Paid advertising will cost more, but there are some excellent low-cost ways to get the word out. You'll notice also that on my own site I provide some low-cost advertising opportunities for small businesses. Especially, consider 2-Line Ads (www.wilsonweb.com/ads/2-line-ad.htm) in Web Marketing Today and Doctor Ebiz. (10% off when you place 3 or more ads at a time.) and Sponsored Links (www.wilsonweb.com/ads/splinks.htm) at the bottom of each page that offer amazing click-throughs. Note: You'll find that I often join the affiliate programs of the products I mention in my newsletters and e-books, so long as the products are excellent and the affiliate programs don't
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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require exclusivity. I also link to many products or services that don't offer affiliate programs -- I want to send you to the best resources I know and I do my best to be objective. But to keep my business afloat I use affiliate links where possible. For a complete absence of affiliate links you'll probably need to read publications fully funded by advertising -- that are still in business. :-)
The four brief strategies below are basic, but even experienced marketers may find some clues that have eluded them. Marketing Strategy 1: Search Engine and Directory Registration Registering means to let search engines and directories know that your site is up and ready to be included among their listings. Just be aware that registering and actually being listed are two different things. You have to be patient and persistent. Here's how to go about it. META Tags
It's important to design your website so that each webpage includes a clear page title, because when your site shows up on a search engine the webpage title will be displayed. This isn't the headline that you place between HTML tags, but the title placed between HTML <TITLE> tags. The title of each page ought to be both descriptive and provocative. For example, "Widget Specifications" might be better titled "Acme Widgets Have Won Five International Awards for Quality." Think of the webpage title as a vital marketing tool. Two other META tags are important to search engine listings of your site. The description META tag is used by some search engines as the sentence or two they display below your webpage title. Limit this to about 200 characters or so. The keywords META tag will include half dozen to several dozen words that someone might search on in order to find your website. Lately I've been inserting keywords separated by spaces rather than commas, because experts I trust tell me that this allows search engines to better create their own combinations of keywords. Both science and old wives tales contribute to META tag lore. You can learn more in the Search Engine section of our Web Marketing Info Center (www.wilsonweb.com/cat/cat.cfm?page=1&subcat=mp_Search) and at Danny Sullivan's SearchEngineWatch.com (www.searchenginewatch.com/webmasters).
page 1
10 Steps to E-Business on a Shoestring by Dr. Ralph F. Wilson Editor, Web Marketing Today, Doctor Ebiz, Web Commerce Today, and NetAssisted Biz Director, Wilson Internet Services September 15, 2002 P.O. Box 308, Rocklin, California 95677, USA http://www.wilsonweb.com US $17.95 Additional copies may be obtained at http://www.wilsonweb.com/ebooks/shoestring.htm Please do NOT distribute this e-book to others. It is for your use only. Unauthorized distribution constitutes theft of my intellectual property.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Acknowledgements This e-book may seem familiar to you, since it distills the basic wisdom previously published in issues of Web Marketing Today, freshened up for mid-2002. The first three steps also appeared in slightly altered form in my book Planning Your Internet Marketing Strategy: A Doctor Ebiz Guide (Wiley, 2002). Nevertheless, I believe you'll find it helpful to have it all gathered in one place as you design your new e-business start-up.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Table of Contents Introduction............................................................................................... 6 Step 1. Define a Unique E-Business Niche.................................................8
Thriving in a Tiny Niche .............................................................................................8 Differentiating Niches from Blocks...........................................................................11 The Elusive Holy Grail of the "Ideal" Product ......................................................... 12 Unfilled Niches ......................................................................................................... 12 Poorly Filled Niches.................................................................................................. 12 Camcordia.com ......................................................................................................... 13 Partly Filled Niches................................................................................................... 14 Creating New Niches ................................................................................................ 15 Brick-and-Mortar vs. Internet Niches...................................................................... 15 Finding and Filling Your Niche ................................................................................ 16
Step 2: Devise an Adequate Revenue Plan ...............................................17 Traditional vs. E-Businesses .....................................................................................17 Advertising Revenue................................................................................................. 18 Referral Revenue ......................................................................................................20 Sales Revenue ........................................................................................................... 22 Multiple sources of revenue ..................................................................................... 23
Step 3. Naming Your Online Business..................................................... 24 1. Develop a clear, simple statement describing your online business.................... 24 2. List all the words that relate to your business idea.............................................. 25 3. Brainstorm business name word combinations................................................... 25 Good Names, Bad Names .........................................................................................26 4. Check domain name availability ..........................................................................28 5. Check trademark availability................................................................................28 6. Purchase relevant domain name(s)......................................................................29 7. Apply for a trademark...........................................................................................30 Naming Resources for Your Online Business .......................................................... 31
Step 4. Assess Your Needs and Resources............................................... 32 Establish Phased Objectives ..................................................................................... 32 Consider Your People Resources.............................................................................. 33 Examine Your Bartering Resources ......................................................................... 34 Inventory Your Equipment Resources ..................................................................... 34 Assess Your Financial Resources ............................................................................. 35 Plan to Reinvest in Your Business............................................................................ 35
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 5. Obtain Professional Website Design............................................ 36 Building Trust ........................................................................................................... 36 Navigation Systems .................................................................................................. 37 Planning for Ease of Maintenance ........................................................................... 37 Move Maintenance In-House ...................................................................................38 What Kind of Designer Should You Look For? ........................................................ 39 Clear Agreements and Specified Payments.............................................................. 39 Hosting and Domains...............................................................................................40
Step 6. Build the Trust Necessary for Success ......................................... 41
Show Photos of Yourself or Your Staff ..................................................................... 41 Show Photos of Happy People on the Front Page.................................................... 42 Tell the Story of Your Business................................................................................. 42 Write in a Chatty Manner ......................................................................................... 43 Display Testimonials from Satisfied Customers ...................................................... 43 Make Credible Presentations.................................................................................... 43 Provide Full Contact Information ............................................................................ 43 Reverse the Risk for Your Customer ........................................................................ 44 Trust-Building Associations ..................................................................................... 45
Step 7. Plan Low-Cost Marketing Techniques ......................................... 46 Marketing Strategy 1: Search Engine and Directory Registration........................... 47 META Tags ........................................................................................................... 47 Search Engines .....................................................................................................48 Directories ............................................................................................................48 Paying for Directory Inclusion .............................................................................48 Marketing Strategy 2: Search Engine Optimization (SEO) .....................................49 Algorithms and Alchemy......................................................................................49 Gateway or Doorway Pages ..................................................................................49 Do-It-Yourself.......................................................................................................50 Paying a Service....................................................................................................50 Marketing Strategy 3: E-Mail Marketing to Your House List.................................. 51 E-Mail List Servers ............................................................................................... 51 Privacy and Permissions ...................................................................................... 51 Collecting Information ......................................................................................... 52 Marketing to Your House List .............................................................................. 52 Marketing Strategy 4: Paid Advertising ................................................................... 53 1. Sponsorships and CPM Advertising ................................................................. 53 2. Pay Per Click (PPC) Advertising....................................................................... 54 3. Cost per Action (CPA) Advertising -- Affiliate Program .................................. 54
Step 8: Determine How to Receive Payments ......................................... 56 Introduction to Internet Money Transfer ................................................................ 56 Comparisons of Low-Cost Funds Transfer Systems ................................................ 57 Shopping Cart or Ordering System .......................................................................... 59
Step 9. Deliver Products and Services Efficiently.................................... 61
Select a Low-Cost Way to Store Your Product ......................................................... 61
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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1. Warehouse Products Yourself .......................................................................... 61 2. Buy from a Local Distributor ...........................................................................62 3. Drop-Ship from a Distributor or Manufacturer ..............................................62 4. Have a Fulfillment House Warehouse and Ship for You................................. 63 Assessing What's Right for You............................................................................ 63 Select a Low-Cost Way to Ship Your Product .......................................................... 63 Digital Delivery System Options ..............................................................................64 How to Select a Fulfillment House........................................................................... 65 Fees and Policies to Ask About ............................................................................ 65 Profiles of Two Small Business Fulfillment Houses ............................................ 67
Step 10. Provide Excellent Service to Your Customers............................68 The Importance of Happy Customers ......................................................................68 The Importance of the Second and Third Sale.........................................................69 An Example of Excellent Customer Service .............................................................69 Finding Ways to Automate Customer Service ......................................................... 70 Investing in Customer Service...................................................................................71 When Not to Automate Customer Service ............................................................... 72 Some Customer Service Resources .......................................................................... 72 Customer Service Is a Management Decision.......................................................... 73 The Golden Customer Service Policy ....................................................................... 74
Conclusion -- Wise Person or Buffoon..................................................... 76 Appendix: Other Resources by Dr. Wilson .............................................. 78 Best-Selling E-Books ................................................................................................ 78 Vital Resource for "NetAssisting" Your "Local" Business........................................ 79 Dr. Wilson's "Real Book" on Strategy Development................................................80
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Introduction shoe·string n. 1. shoelace. 2. a small sum of money; capital inadequate or barely adequate to the needs of a transaction. boot·strap n. a looped strap sewed at the side or rear top of a boot to help in pulling it on. vt. to promote or develop by initiative and effort with little or no assistance. Merriam Webster's Collegiate Dictionary. Tenth Edition (1993)
Why do the two chief metaphors for starting a business from scratch both relate to footwear? Shoestrings. Bootstraps. Perhaps because you feel pretty small and struggling when you hunch over to tie your shoes or pull on your boots. It's a ground-level achievement. There's nothing fancy, no glory, little recognition. But despite tales of high-flying dot-com bankruptcies, there is great opportunity to make a good living developing a small, healthy online business -- if you go about it right. We heard that dot-coms just weren't making any profits. These heavily-funded start-ups needed to make a big splash or go bust in the process. But there are hundreds of thousands of small, very profitable e-businesses -- begun on a shoestring -- that thrive all over the world. You'll need some money -every businesses does unless you possess all the necessary skills in-house -but you may be surprised at how little money may be necessary to succeed. In this e-book we'll be examining how to begin a successful e-business or revive a struggling one. In some cases, you'll realize that your stillborn ebusiness needs a funeral -- nothing will bring it back to life. But in other cases you'll be able to discover the missing pieces, and this time find success. This e-book isn't for the get-rich-quick dreamers who are always looking for the next magic bullet. They'll always be disappointed and disappoint others. This is for serious individuals and small companies who are willing to learn
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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rapidly, teach themselves new skills, master new disciplines, and do all it takes to become successful. The first and crucial step to success requires finding your niche in cyberspace. We'll start there.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 1. Define a Unique E-Business Niche Standing at the base the Wailing Wall in Jerusalem and looking up, the immense stone blocks laid one upon another seem to reach to the sky. This most holy site to Jews is all that is left of Herod's Second Temple. It is a place of prayer for the nation. Herod built the Western Wall as part of a retaining wall around the temple mount, formed of massive limestone blocks, some weighing over 100 tons each. But when you look more closely at the Wall, you see the crevices between these giant blocks. In the first two tiers of stone they are filled with papers inscribed with the prayers of the faithful. But above them the crevices are alive. Plants, rooted deeply in the cracks between the stones, abound far above the heads of the worshippers and add character and life to the Wall. When you move from the sacred to the secular, the Wall has a lesson for us. If your company doesn't have the mammoth clout of a Fortune 500 corporation, then you must find a niche between the immense players and adapt yourself to thrive there. The English word "niche" rhymes with "ditch" (though is pronounced NEESH by some). It comes from a French word that means, "to nest." And that's what small companies can learn to do very successfully, filling small voids left by the big players. Thriving in a Tiny Niche How can small businesses thrive if the niches seem pretty narrow indeed? You can purchase kitchen knives at Safeway and KMart, at Macy's and a restaurant supply outlet, as well as a gourmet cooking store. But a shop that specializes in kitchen cutlery? It would take a major metropolitan area of one or two million people to support such a store, and still it might struggle.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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But so long as you can deliver your goods or services across distances, on the Internet your marketplace is the nation, and, if you have the vision for it, the world. As of March 2002 estimates were about 1/2 billion Internet users world wide. Look at the sheer millions of users that constitute your market. English-speaking countries are in boldface: Sorted by Number of Internet Users Nation
Population
Internet Users
% users
(millions)
United States China United Kingdom Germany Japan South Korea Canada France Italy Russia Spain Netherlands Taiwan Brazil India Australia New Zealand
278 1300 59.6 83 126.8 47.9 31.6 60 57.7 145 40 16 22.3 174.5 1000 19.4 3.8
149.0 33.7 33.0 26.0 22.0 16.7 14.2 11.0 11.0 7.5 7.0 6.8 6.4 6.1 5.0 5.0 1.3
54% 3% 55% 31% 17% 35% 45% 18% 19% 5% 18% 43% 29% 3% 1% 26% 34%
Source: CyberAtlas.com, March 21, 2002
If you market to English-speakers, your potential market size is 202 million, 80% of those in North America.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Many countries have a predominance of Internet users -- over 25% in the countries listed below: Sorted by Percent Internet Users Nation
% users
Qatar
61%
Iceland
60%
United Kingdom
55%
Hong Kong
54%
United States
54%
Sweden
51%
Norway
49%
Switzerland
47%
Canada
45%
The Netherlands
43%
Finland
41%
UAE
38%
South Korea
35%
New Zealand
34%
Estonia
33%
Austria
33%
Germany
31%
Portugal
30%
Singapore
30%
Denmark
30%
Taiwan
29%
Belgium
26%
Australia
26%
Ireland
25%
Source: CyberAtlas.com, March 21, 2002
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Countries with a high percentage of Internet users are becoming used to making purchases via the Internet. A kitchen cutlery shop might die in a town of 10,000 or a city of 100,000. But on the Internet, the market is so huge that even a small slice provides a large number of shoppers. Let's take a country like South Korea where 35% of the population are Internet users. Where travel time once prevented shoppers from getting to specialty shops in downtown Seoul, on the Internet, the nation is like one very accessible city. With Korea's 16.7 million Internet users, even a very narrowly-defined specialty business can thrive because of the huge number of potential shoppers. Think of the market as 17 cities of a million people each. That many potential shoppers can support nearly any specialty business. After nearly eight years of intimate involvement with the Internet, I am still awed by its vast potential. To succeed you must be able to see the Internet's hugeness as a market, and at the same time comprehend that even the narrowest kind of business can find enough customers to thrive. The "wall" is so big that the niches between the huge corporate blocks are quite adequate to support a lively small business marketplace. Differentiating Niches from Blocks The phone rang and the caller wanted to set up an online store. "I want to sell something on the Internet," he told me. "What do you plan to sell?" I asked. "Books," he said, "and consumer electronics." I can see him competing head-to-head with Amazon, Barnes and Noble, Borders, Good Guys, and Best Buy. With his puny resources, he doesn't stand a chance against the big players. None. Nada. Zip. I've been asked a dozen times, "What would it cost to build a book store just like Amazon.com?" I grind my teeth. With all the opportunities begging to be explored, why would you want to challenge the top dog? I answer that question by saying, "It would cost you the millions and millions of dollars Amazon spent to build its store." Look instead to the niches.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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The Elusive Holy Grail of the "Ideal" Product I'm sometimes asked, "What is the best product to sell on the Web?" The answer is pretty straightforward; here are the characteristics: • • • • • •
Enables a high profit margin, Offers exclusive sales rights, Delivers by digital download, Offers customers more value via Internet sale than through traditional channels, Fills a universal need, and Must be purchased regularly.
If you can score with majority of those parameters you probably have a winning product or service. But, frankly, few fit. Don't let your mind wander aimlessly looking for the perfect product. A better way is to look to yourself or to your company. What are you good at? What do you enjoy? On what subject are you considered the "local world's authority"? What are you strong in? What do you have to offer that is fairly unique? How can you leverage your present strengths? Instead of fantasizing about the "perfect," take what you know and let it empower your vision to clearly see the niches out there. Unfilled Niches These days it's hard to find a niche that nobody is filling, but occasionally I run across one. The classic path to success is "Find a need and fill it." So look to the customers you know best. What are they asking for? What would they like? What keeps them from fully realizing their own success? Since you're an "expert," you may have some key insights. You may be able to develop a new or improved product, service, or business process that, coupled with the Internet, can make a big difference. It's your interest and training that give you the vision to see these opportunities. Look closely at the niches. Poorly Filled Niches While unfilled niches are rare on the Internet, poorly filled niches are exceedingly common. I have come to expect so much from the Internet that I'm often frustrated by what is NOT available online. Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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A while ago I was in the market for a camcorder. I knew practically nothing about them -- and I found that the average salesperson at my local stores didn't know much either. I had lots of unanswered questions. I needed information, opinions from people who really knew something about the trade-offs between one recording format and another. But I couldn't find what I was looking for. There have to be other people like me. What kind of site would make this selection an easier task? One site was very good, but called on me to make decisions about which I didn't have enough knowledge. Nor did it provide expert opinion or consumer feedback on questions of format pros and cons, answers to my stupid questions, etc. Another site had a camcorder buying guide, but no individual comments except at the product level. And nothing offered a chart that showed the differences between the models available from a single manufacturer. I was also ready to buy an extra battery pack and a carrying bag, as well as a supply of recording tape, but none of these sites made it easy. Some camcorder sites were only departments in a larger consumer electronics enterprise with little focus on this niche. Camcordia.com I concluded there was no single "greatest place" online to buy camcorders. Maybe I ought to build it myself. In addition to a excellent shopping cart system and check-out procedure, these are the elements I would include: • • • • • • • • • • • • •
Buying Guides FAQs Honest reviews of each manufacturer's product line contrasted with other manufacturers' offerings Easy comparisons within a manufacturer's product line Live chat that allows shoppers to ask questions from a knowledgeable person 8 to 10 hours per day Competitive prices, if not the very lowest Carrying all major manufacturers' products Inventory of best sellers, drop-ship arrangements for less common requests Shipping at a variety of speeds and costs A no-quibble guarantee Links to the "help" pages on manufacturers' websites Addresses, phone numbers, and URLs of repair stations A full line of accessories Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
• • • • •
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A full line of recording media Information and cables to connect camcorders to TVs, VCRs, and computers Online forums where camcorder aficionados discuss detailed questions An affiliate relationship with camcorder dealers in regions of the world where I don't want to risk shipping a $250 to $1,500 item. A monthly newsletter I could call The Camcorder Comrade. :-)
And I'm sure once I got immersed in the process of building, I'd find more to do. We could call it camcordia.com or camcording.net or cambug.com. (These names were available when I first wrote this, but have since been taken.) Isn't this a lot of work? You bet. Of course, you could build a "good" camcorder store fairly easily. But not an excellent one. Excellence takes high standards, sacrifice, great effort, and a drive to achieve the best you can possibly do. If the project isn't worth doing with excellence, my friends, it probably isn't worth even beginning. Life is too short. It would probably take six months of work and several thousand dollars to get it fully ready, and a year or two to get it functioning at full potential. Is it possible? Of course! Would it succeed? I have no doubt! Am I going to build it? No. This one needs someone who lives and breathes camcorders. But camcorders is a poorly filled niche just begging to be filled with excellence. Partly Filled Niches I've often toyed with the idea of setting up a firm that helps small businesses market their websites. One that considers each company's needs carefully and recommends a marketing plan tailored to each company's needs and budget. One that offers exceptional value and a personal touch. One that doesn't rest until the customer's need has been fully addressed. Aren't there plenty of firms that specialize in online marketing already? Yes, indeed. But I believe I could make one succeed, since there are hundreds of thousands of small business website entrepreneurs out there, and only ten or twenty thousand marketing companies, many of which aren't being very effective at all with small businesses. Many excellent businesses exist, but there is still a tremendous need. Do I plan to do this? No, but it could be Copyright © 2002, Ralph F. Wilson. All rights reserved.
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done quite profitably. This is a partly filled niche longing to be filled more completely. Creating New Niches We haven't nearly exhausted the subject of niches yet. How about creating a new niche where one didn't exist before? I love what JustBalls.com did when they began several years ago. They didn't pump themselves up to think they could tackle the whole sporting goods sector. They weren't a Big 5 or a FogDog. So they sliced sporting goods in a brand new way that it had never been sliced before -- balls only. They didn't sell bats or firstbaseman's mitts. They sold balls. Baseballs, basketballs, footballs, golf balls. If there was a sports ball of any kind, they would carry it. Now they offer laser-engraved sports balls for gifts and presentations. They succeeded because they created a brand new niche, found a catchy, memorable name, developed a customer-centered approach, and opened their doors. (www.justballs.com) Brick-and-Mortar vs. Internet Niches I need to say a word to you who have an existing brick-and-mortar business already. Should you put your business on the Web? By all means, do so! (Unless you're a barber, or something inescapably local, of course.) The stability of your traditional business will give you the time to find your way online. But don't put your entire business offerings online, only those that are unique and especially adaptable to the Internet. Several years ago, Jeff Greene called me for help setting up an online store. Jeff is the longtime owner of The Office Market, an office and art supply store in Conway, New Hampshire, an area of about 20,000 people in the White Mountains. This was before OfficeDepot.com, OfficeMax.com, and Staples.com had developed a strong presence online. He asked me if he should sell both office supplies and art supplies. I pointed him toward the niche market and away from the mass market, and he has since done well with Discount Art Supplies (www.discountart.com) offering a full line of top brand, high quality brushes, paints, and other supplies. If Jeff had tried to put his whole office supply inventory online, the e-business would have lost focus and he wouldn't have been able to carry a full enough line to compete with the big companies (though in his local region The Office Market is the leader). By putting all his energy into the art supply part of his business, he
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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has succeeded admirably on the Web and can compete with others in this field. Determine what aspect of your current business is best for the Internet and put that online; don't load your website with generic products and services that diffuse your focus. Finding and Filling Your Niche The promise of the huge Internet market is there for you, too. While it is intensely competitive, the size and lack of geographical barriers is especially suited to small business people who are blessed with niche vision and a dose of creativity and determination. Look closely, now -- not at the massive blocks but at the niches between them -- and find a niche with your name on it.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 2: Devise an Adequate Revenue Plan Of the millions of commercial websites online, only a few have an adequate revenue plan. Most aren't making much money at all. Some are hemorrhaging cash as if it were going out of style. But don't fall into the trap of thinking that no one is making money on the Internet. That's just not true. Tens of thousands of commercial sites are quite profitable, and many hundreds of thousands are making money with the prospect of making more. As the online customer base is building in Europe, Latin America, Asia, and Africa, many more will be able to make money. The key is a clear-sighted revenue plan. Shoestring businesses usually don't have the luxury of spending "other people's money," so small businesses are forced to earn money rapidly or not at all. Traditional vs. E-Businesses Before we consider revenue strategies, however, I want to acknowledge that many commercial websites aren't designed to generate revenue themselves, but to increase sales through other channels -- and that's an entirely legitimate business plan. An auto dealer, for example, might not transact a car sale over the Internet, but the information on his site is designed to bring educated customers into his car lot ready to deal. Your site might represent your brick-and-mortar business on the Web in order to let customers know you're there and what you offer. For several years my site and newsletters were designed to promote my online store design business. I didn't accept any credit cards at all, but enjoyed a successful and growing business communicating with clients by e-mail, fax, phone, and FedEx. Was that an e-business? Sort of, in that all
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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my advertising and lead generation was done online. But it also had strong similarities to a traditional service business. In this step, however, I'll be examining e-businesses, which I'll define as businesses designed to generate all or part of their income on the Internet: that is, through services performed or products paid for over the Internet. I agree that this definition is perhaps too narrow, but bear with me for the sake of this discussion. These e-businesses look to three primary sources of revenue: • • •
Advertising Revenue, where advertisers are paying for exposure on your site or in your e-zine. Referral Revenue, affiliate programs, pay for leads generated, or other types of payment made for performance of one kind or another. Sales Revenue, income from products or services performed or sold via the Internet.
I'm sure there are some revenue types that don't quite fall under the Big Three, but let's look at each and see their upsides and downsides as sources of revenue for your business. Advertising Revenue Advertising revenue looks pretty good at first glance. You put banner ads on your webpages and advertisers pay for the privilege. What could be sweeter? Unfortunately, few commercial websites are able to earn much money from advertising, especially banner advertising. Here's why. Advertising revenue is realistic mainly on sites that are both: • •
Destination sites that receive a huge amount of website traffic, and Sites narrowly targeted towards customers whom advertisers are willing to pay big bucks to reach.
But ad prices have plummeted since the glory days of the dot-com boom. If you can sell them, banner ads are going for $1 to $10 CPM (cost per thousand page views). E-zine ads command a larger price, but they've dropped in cost, too.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
Page Views per Month 1,000
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Monthly Revenue at $10 CPM
Monthly Revenue at $1 CPM $10
$1
$100
$10
100,000
$1,000
$100
1 million
$10,000
$1,000
10 million
$100,000
$10,000
100 million
$1 million
$100,000
10,000
The revenue projection above assumes (1) that you sell out your advertising completely each month, and (2) that your costs to sell the advertising allow you to earn a profit. With millions of websites there is often unsold inventory available, especially on untargeted sites. To sell advertising you'll need to develop (1) your own in-house sales force, (2) outsource sales to a representative who'll expect 20% to 50% of the gross ad sales, or (3) sell your inventory to an ad network. While advertising used to be a premier revenue source, several trends make it more iffy: 1. Advertising dollars are being spent more carefully since the dot-com meltdown in April 2000. 2. Sites that carry advertising are getting much more aggressive about selling ads. 3. The increase in sites means that inventory (total advertising space available) exceeds paid advertising, and actual sales prices are in decline. 4. Media buyers find it easier to deal with a few large ad networks than dozens of smaller sites. While advertising might be a substantial revenue source for some sites, at this point don't look at it as your primary revenue source or you'll go broke.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Referral Revenue Referral revenue describes income you receive from referring visitors at your site to another site where they make a purchase, sign up, or take some other kind of action. Sometimes this is called CPA (Cost per Action) or PPC (Pay Per Click) advertising. There is a fuzzy line between referral income and advertising. In both cases you are helping to promote another business; you're just getting compensated in different ways. Affiliate Programs are one of the most popular types of referral programs. Typically, the siteowner (affiliate) signs an agreement with a merchant, or a third party affiliate service bureau, such as Commission Junction. If someone makes a purchase as a result of clicking on a link at the affiliate site, the affiliate will receive a sales commission of 3% to 15%, and sometimes more. It sounds like a pretty easy way to make money. No work, just add a link or a banner and wait for the dollars to roll in. I've belonged to dozens of affiliate programs over the last several years and have learned this: 1. Affiliate programs must directly relate to the content of your site, preferably integrating the affiliate link into the text of articles and information. Without this close relationship between content and product, your profits are negligible. 2. Driving large numbers of very targeted audiences to your site is required to realize much income. Alongside affiliate programs I categorize business-systems such as vStore (www.vStore.com) and Quixtar (www.Quixtar.com), the online version of Amway. They automate the ordering process, but margins are often not enough to allow advertising that will bring significant traffic to the entry page and profit at the end of the month. For several years I devoted the right side of each page of my website to Web marketing and e-commerce books, many of which I had reviewed. Each was linked to the appropriate product page at Amazon.com. If someone made a purchase of a book I was directly linked to, I earned 15% of the purchase price. If they browsed around and found another book, I would make 5% of the purchase price. Here was the report for a quarter in 2000:
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
Total shipped to customer this quarter: Total New Customers: 102 Referral fee this quarter: Credit referral fee previous quarter: New Customer Bonus: Total Earnings: Purchased books from my direct links: Total shipped: $4,385.87 Referral fee (at 15%): Browsed and found books: Total shipped: $9,877.22 Referral fee (at 5%): Other Qualifying Products: Total shipped: $541.41 Referral fee (at 5%):
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$14,804.50 $ 1,178.50 $ 0.00 $ 350.00 $ 1,528.50
$657.33
$494.10
$ 27.07
But quarterly checks in the last year are only about a third of that. I share this to point out how much a site with 650,000 page views a month can make on an affiliate program directly related to the content of the site. I've had good success with Ken Evoy's Make Your Site Sell (sales.sitesell.com/myss) and WebPosition Gold software (www.wilsonweb.com/go/to.cgi?l=wpg), and, to a lesser degree, Cory Rudl's Insider Secrets course. http://www.marketingtips.com/t.cgi/15267/ Of course I value the income I receive from affiliate programs, but by themselves, they don't make what I consider "a good living." Now if I had millions of page views, I'm sure I'd do better, but probably the products wouldn't relate as closely to the site content. For many sites, affiliate programs are a good additional source of income, but not a main source of revenue. But there is an exception. In the last two or three years, many entrepreneurs have built mini-sites narrowly focused around a single topic or product designed for a single purpose -- to attract targeted shoppers and send them to the merchant's site where they'll purchase the product, and earn affiliate commissions. Some of these have done very well. Ken Evoy's Site Build It! tool (sales.sitesell.com/buildit/) is designed for just this purpose, and has many built-in features to help you succeed. For more information on this approach, subscribe to and read Allan Gardyne's Associate Programs Newsletter (www.associateprograms.com).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Sales Revenue This leaves us with sales revenue for goods or services that you sell or resell directly. Services. I believe that a great deal of revenue will be generated through services sold via the Internet. The services may be performed offline or online, but the ordering and paying for those services will be online. This includes everything from newsletter subscriptions, access to passwordprotected information, opt-in e-mailing services, tax preparation, database warehousing, and thousands of other services. The more automated the service, the more "productized" it becomes, and you move from selling time to selling a product. The more person-time invested in performing the service, the closer it is to a regular "job." Now don't get me wrong, even though you are selling a time-intensive service over the Internet, you can certainly gather more business through marketing it nationally and internationally. Products. Hard and soft goods can be bought and sold via the Internet in online stores as well as on eBay, in B2B marketplaces, and through eprocurement systems in an increasing number of industries. For more than two decades the US has had a thriving mail-order industry. In a sense, an online store is just an automated catalog. But while the Internet automates the front-end ordering process, the make-or-break decisions of the business often rely on the efficiency and costs of back-end product fulfillment and customer service. Drop-shipping is a way of outsourcing inventory, warehousing, and product fulfillment, but it cuts margins and makes it more difficult to offer excellent customer service. Selling products and services means that you must deal with real customers, some of whom will phone or e-mail you angrily and demand that their concerns be heard. None of this is easy. But I believe that for many siteowners, selling or re-selling goods and services is the primary way to make the Internet positively affect your bottom line. The ins and outs of selling products and services will be the main thrust of the remainder of this e-book.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Multiple sources of revenue Even better than just one of these approaches is to find ways to incorporate two or even all three sources of revenue in creative and innovative ways. The site that can include advertising revenue, referral revenue, and sales revenue is best positioned to leverage its Internet investments in a way that will produce profits. When you're starting an e-business on a shoestring, make sure that you've designed a realistic plan to bring in the revenue you'll need to continue.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 3. Naming Your Online Business After you've found a suitable online niche for your business, and worked out a revenue plan that will make setting up a business worth the long hours it will take, it comes time to name your fledgling business. Don't get this backwards. I've met a few business fools who own some nifty domain names and want to start a business to fit the names. Wrong. Without a niche and a sound business idea, you don't have a chance of success -- even with a good domain name. You're much better off to sell unneeded domain names to someone who can use them (or someone foolish enough hold them for ransom). 1. Develop a clear, simple statement describing your online business The name should evolve naturally from your niche. As I was reading Dan Janal's e-book Branding on the Internet, I came across a wonderfully simple positioning exercise which Janal calls his Fool Proof Positioning Statement. It is an extremely useful fill-in-the-blank approach. First, you need to decide what to put in the blanks: Elements of your positioning sentences
Example
Name of the company or product Acme CeilingGrip (insert your tentative company name here) Category
sheetrock screw
Core audience
contractors
Key benefit
attach sheetrock ceilings more securely
Key differentiating feature
doesn't rust when wet
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Now let's fill in the blanks of the first sentence: _(Name)_ is a _(Category)_ that helps _(Core audience)_ achieve _(Key benefit)_. "Acme CeilingGrip is a sheetrock screw that helps contractors attach sheetrock ceilings more securely." While the first sentence helps you state the benefit clearly, the second sentence helps you differentiate yourself from competitors. Unlike other _(Category)_, _(Company name or product)_ has _(Key differentiating feature)_. "Unlike other sheetrock screws, Acme CeilingGrip doesn't rust when wet." This may seem simplistic, but take a couple of minutes right now to see the power of it for your own online company. You might want to stress different key benefits to different core audiences, but this will give you a start. Keep working on your two or three sentences until they are clear and compelling. Another term for this type of short statement is a Unique Selling Proposition (USP) that describes how your company uniquely meets the needs of your customers. Whatever you call it, the positioning statement or USP will help you name your company. Remember: you don't start with the name, you start with the concept -- and the name flows from that. 2. List all the words that relate to your business idea Next, list all the words that relate to your business idea, its category, products, services, core audiences, and key differentiating factors. The longer this list, the better you are at loosening up your brain so you can come up with a business name that is striking and memorable. 3. Brainstorm business name word combinations The chances are that domain names of each of these keywords has already been taken -- by themselves. But now you take the list of words from Step 2 and begin to form two-word combinations. Ideally, you'll come up with a business name that propels you to stand out from the crowd. While you're not quite at the stage of selecting a domain name yet, the characteristics of a good domain name that I outlined in my article "How to Select a Domain
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Name for Your Company" are apropos: (www.wilsonweb.com/wmt5/domain-select.htm) 1. 2. 3. 4. 5. 6.
Short Memorable Not easily confused with others Hard to misspell Relates to your core business Sounds solid to your target audience
Hopefully, you'll find some word combinations that fit many or most of these criteria. Run them past some other people to see how they react. Good Names, Bad Names I'm a bit mystified at companies that name their products or business with words that don't have any meaning in their target language. At the risk of offending, let's look at the name Hewlett Packard selected for a major spinoff company -- Agilent Technologies (www.agilent.com). I'm guessing that Agilent is a combination of the word "agile" and a common English suffix. It expresses HP's corporate desire to move quickly and agilely to innovate in the Internet space. But "agile" isn't immediately obvious unless you think about it. Nor does it express a clear category, product, or service. To be fair, HP needed a name that bridged more than one category. But in order to firmly imprint and position "Agilent" in their potential customer's mind, they're going to have to rely entirely on hard advertising to make the name familiar since they're starting nearly from scratch. Small businesses have the advantage that their names can help position them and be memorable. In a number of ways, coming up with a company name is like creating a brand. It shouldn't sound stogy. Reading music isn't enough. A good name should be able to sing, as well. Let me illustrate. Wilson Internet Services. When I began my company in 1995, I called it Wilson Internet Services. Stodgy -- and easily confused with the type of name used by Internet Service Providers. When I look back on it, I think that kind of naming was a mistake. I named the company without a clue that I was naming a brand. I did better with the domain name,
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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wilsonweb.com. It is memorable and sings much better than the company name. Web Marketing Today and Web Commerce Today. My next attempt was Web Marketing Today® (www.wilsonweb.com/wmt) my flagship email marketing newsletter. It's better. Each word in the name adds to the meaning. And it's somewhat memorable. The domain name webmarketingtoday.com is pretty clumsy, however. When I named my premier e-commerce newsletter Web Commerce Today® (www.wilsonweb.com/wct) in 1997, I made a mistake. I wanted to build on my success and reputation with Web Marketing Today, but I succeeded in confusing people. The name didn't provide a clear way to distinguish between my two publications. By 2000, however, I was beginning to understand the importance of branding. I launched two publications that year, the weekly JesusWalk: Disciple Lessons from Luke's Gospel (www.jesuswalk.com) and DoctorEbiz, a weekly Q&A column for small business about doing business online. (www.doctorebiz.com). In each case I looked for word combinations that would explain exactly what the product was about, and I feel I succeeded pretty well: JesusWalk®. The words indicate the goal, to help individuals learn about Jesus from simulating the kind of training that his twelve disciples internalized by just walking along with him. The name is memorable, descriptive, and simple (www.jesuswalk.com). Doctor Ebiz®. The words indicate that this is an e-business doctor, someone who helps diagnose and cure e-business problems. And that's exactly what this weekly column is designed to do. The name is memorable, descriptive, and simple. The only problem with the name is that "doctor" can be abbreviated and the name can be hyphenated in different ways, which required me securing a number of domain names for the most common misspellings (www.doctorebiz.com). Remember, your online business name may be different from the name of your traditional brick and mortar business. You may need to file with your local government a Fictitious Business Name Statement for a new business name -- but that's usually not too expensive. Don't be blocked by a poor existing business name; take advantage of going online to brand your business well. Copyright © 2002, Ralph F. Wilson. All rights reserved.
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4. Check domain name availability Only when you have developed a number of possible company (or product) names should you begin the domain name search. The reason is this: so many good domain names are taken already that you might be influenced to only use what is left over. A good place to check your domain name possibilities is the Whois database at 000domains.com. (www.wilsonweb.com/go/to.cgi?l=000domains) or VeriSign (www.netsol.com/cgi-bin/whois/whois). Beyond the .com, .net, and .org domain names, also consider the newer .biz, .info, and .us designations. For countries other than the United States, consult a domain name registrar in your country (www.norid.no/domenenavnbaser/domreg.html). Check all of your top name choices and minor variations of them. Note which domain names are available as a .com (or with your country designation, such as .fr or .de). Also note which have already been purchased. These days there are many more domain names than there are active websites. In many cases, over-eager domain speculators have bought up blocks of names and are having a difficult time unloading them at the level of prices for which they were hoping. 5. Check trademark availability Just because there isn't a corresponding domain name doesn't mean that your business name isn't being used by others who have a prior claim on it. A trademark is a graphic logo or a unique name that is used in trade to identify a business, product, or service. In general, the first company to use a name in trade owns it. Make sure you check the trademark database for your country -- it's probably online. Make sure you search your own country first for similar names, then other countries where you want to avoid confusion. Some online databases are: US Patent and Trademark Office (tess.uspto.gov/bin/gate.exe?f=login&p_lang=english&p_d=trmk) To be thorough, consider checking you state trademark database, too. Canada (strategis.ic.gc.ca/cgi-bin/sc_consu/trade-marks/search_e.pl) UK (www.patent.gov.uk/tm/dbase)
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Australia (www.ipaustralia.gov.au/trademarks/T_srch.htm) More international links can be found in Gregory H. Guillot's All about Trademarks (www.ggmark.com). If you don't find competing companies that have already registered a trademark for your desired name, then move ahead. But if you find trademark problems, it's much easier to find another business name. 6. Purchase relevant domain name(s) I used to be concerned about the price of my favorite already-owned domain name getting jacked up if I were to show an interest. No more. This is how I suggest you handle it. Discover the owner from the Whois directory and then write an e-mail similar to this: Dear domain owner, I've been thinking about starting an online business selling sheetrock screws to contractors. I've come up with about a dozen really good possible domain names, one of which is yours. If you're interested in selling, I'd like to see if we can come to an agreement about price. Fortunately, since I've identified a dozen good domain names, I'm not under pressure to purchase the one you own, but if your price is right, it might help me select yours, and put some fast Christmas cash into your pocket. Sincerely, John Doe Sheetrock screws par excellence! This way you don't sound too eager, but willing to deal; additionally, the domain name owner knows you have other options so he can't push the price up too high. Venture capital funding initially drove up domain name prices and fed greed among speculators. But VC money has pretty well dried up for start-ups, and there are many, many domain names waiting for the right business. My guess is that if you were to get your hoped-for domain name appraised for a modest fee, you could use that as leverage to purchase a pretty good name for your business. You also should consider having others appraise your domain name picks at Afternic.com Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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(www.afternic.com). Purchasing the domain name may cost you $100 or $250 or $500 or $1000 depending upon the owner's and your respective negotiating abilities, but a memorable domain name is an important marketing investment -- don't skimp here! 7. Apply for a trademark If you plan to use a trademark, you should place the letters "TM" in superscript next to the trade name to indicate your intention to use it as a trademark. The letters "SM" indicate "service mark," though the usage often blurs with that of the word "trademark." To protect your right to use a particular business name, you ought to register the trademark with the official government agency in your country, and other countries where you expect to do much business. In the US this can cost $500 to $1,000 (including search and attorney fees) and take a year or two to be completed. If you are successful and your trademark is registered, you are entitled to use the ® symbol to indicate registration of your trademark. Many online businesses have learned the hard way that it's cheaper to register the trademark up front than to wait until another company files for registration ahead of you. If you can't afford the filing and legal costs, I understand, but make this one of your early priorities as soon as some revenue is generated if it looks like your business has commercial potential. Just because you own a domain name doesn't automatically mean you own the corresponding trademark. Since your business is likely to be national or international on the Internet, you can't afford to ignore the legal threats you may face to your unique business name. More information is available on my website (www.wilsonweb.com/cat/cat.cfm?page=1&subcat=mm_Law). If you're interested in US trademark law, you might read the book Trademark: Legal Care for your Business and Product Name (Nolo Press, 2001), by Kate McGrath and Stephen Elias or look at these authors' Trademark Registration Kit (Quick & Legal Series; Nolo Press, 1999).
I hope this will help you see the process involved in naming your online business. As one who has made some serious marketing mistakes here, I hope that my advice will save you some headaches. Remember, the main costs of naming your business are: Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
• • •
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Fictitious Business Name Statement. Local government. $10 to $50. Domain name. $10 to $500, or more, depending upon your country and the price you have to pay for an already owned domain name. Trademark registration. $400 to $750 or more, depending upon your country and whether you file forms yourself or get legal assistance.
Even if you're trying to name your business on a shoestring, make sure you don't scrimp where it counts.
Naming Resources for Your Online Business Other resources you may find helpful include: Naming Consultants. Yahoo! Directory section on Marketing and Advertising | Naming BrandFidelity.com Automated, online naming and branding services (www.brandfidelity.com/services.htm) NameBoy. A creative tool that helps you combine words to come up with interesting, and often humorous, domain name combinations (www.nameboy.com). Brainstorm from VeriSign helps generate domain name ideas (www.netsol.com/en_US/name-it/keywords.jhtml). Domain Fast Find. From Register.com, another name generator (www.register.com/DisplayFastFind.cgi). E-gineer Dominator. Finds other combinations, with links to dictionaries and synonyms, rhymes and trademark searches (www.egineer.com/domainator). Web Marketing Info Center Domain Name section and Legal section (www.wilsonweb.com/cat)
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Step 4. Assess Your Needs and Resources Starting your business on a shoestring takes discipline -- the discipline to tether your dreams to realities. Let them soar, yes. But make sure they are firmly grounded to the earth. Many Dot-Com companies have lacked the patience and fortitude to start small and grow. They wanted it all now, and many of them are now paying the price. Planning your business is some of the hardest work you'll do, and in this step I'll only skim over the surface. You can find much more detail in my book Planning Your Internet Marketing Strategy (Wiley, 2002). But let's consider certain aspects of this process. Establish Phased Objectives If you're starting from scratch, you probably have a dream of where you'd like to be someday. But unless you have unlimited resources, you'll have to phase your objectives. Here's an example for an online shop specializing in tall ship models: Phase 1. Store set-up. Set up online store, obtain merchant account, locate drop-shippers, and go online with name TallShipShop.com (available as of this writing). Phase 2. Marketing. Develop a very targeted campaign to get listed in search engines, and obtain reciprocal links with complementary sites. Become an active part of three e-mail discussion groups on
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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model-making and tall ships. Establish e-mail newsletter for visitors and customers. Phase 3. Advertising. Experiment with paid advertising, both online and in targeted magazines. Determine conversion rate in your online store and calculate the cost of customer acquisition for each form of paid advertising. Phase 4. Customer Service. Stock in-house inventory of best-selling model kits so you can ship quickly. Develop customer service with real-time help and order tracking. Once you've made a small profit, invest that in more inventory. Phase 5. Gear Up for the Holiday Season. Develop affiliate program with hand-picked sites with links on complementary pages of their sites. Your phased plan may look entirely different. The point is to make sure you don't try to do everything at once, but that you have a plan to develop the essentials of your site and marketing plan. You'll want to prepare a rough budget for each phase, but make a detailed list of the items you'll need in Phase 1, and the amount it will cost you to reach your Phase 1 objectives before you can expect any revenue. With this sort of plan you can hope for some revenue in Phase 2 to fund Phase 3. And enough in Phase 3 to fund Phase 4, etc. Consider Your People Resources Of all your business resources, people are most important because they will form the team you need to succeed. For some of you, the main people resource may be you -- especially if you are multi-talented. If not, you'll need to find others who can help you. Perhaps it's you and your spouse, a true "Mom and Pop" store. Don't laugh. There have been many, many successful mom and pop stores and businesses. The partnership begun with marriage now extends to a venture to help earn a living. Since it is, hopefully, a stable relationship, it will provide stability for your business as well. Some will join forces with a friend or two or three. Since there may be little or no money involved, you might be tempted to make the relationship very
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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informal. I recommend that you write out clearly, agree upon, and sign a memo of understanding that details: (1) the responsibilities of each person involved, (2) what investment each brings to the task, (3) how profits will be shared after expenses are paid, and (4) what happens when a person leaves the business. How much, if anything, does a partner take with him? When you get a little money, you'll want to formalize this with the help of an attorney. Many small businesses fail because the partners don't have a clear agreement. Clear written agreements form the basis of good business relationships. You can find a lot of help at the Inc.com website (www.inc.com) and Nolo Press books on small business (www.nolo.com). An alternative to partnering with others is outsourcing to independent contractors. Besides saving a lot of hassle with employment taxes and forms, outsourcing allows you a lot more flexibility when your business needs to change, expand, or contract. One source of virtual contractors can be found at the eWork Exchange (www.ework.com/exchange.cfm). Examine Your Bartering Resources Since you're starting on a shoestring, don't forget that bartering and swapping goods and services is an important way you can leverage your own skills. You help others with your skills and resources; they help you with theirs. I've found this an important avenue for bootstrapping a business. Just make sure that the person really has the skills you need and that you have a clear written agreement with clear expectations. Inventory Your Equipment Resources Make a list of the equipment and services you need for your online business. By definition, you'll need a computer, a web server ... and the list continues. I suggest a list of Phase 1 "must have" items, with less vital items planned for later. Then determine the costs of your Phase 1 list. Consider purchasing used equipment, borrowing a scanner from your brother-in-law until you can purchase your own, swapping for services, and bartering. The nice thing about an online business is that you don't need to impress anyone's ego but your own, so your office can be pretty basic for now. Consider starting in space you already have, such as a garage, basement, or extra bedroom. Hewlett-Packard was famously begun in a garage in Palo Alto. Follow a legend. As the business grows you'll be able to -- and may be forced to -- move the business to its own space.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Assess Your Financial Resources Consider your financial resources now in comparison with your needs. You have tremendous advantages not seeking venture capital or large bank loans. Realize that credit card purchases that aren't paid off every month are very expensive bank loans. Instead look to savings and to part-time jobs that can provide for a basic investment. Consider pooling financial resources with friends, partners, or co-founders of your company, but make sure you are crystal clear in writing about the arrangements. Consider relatives -- your great aunt Samantha who has always liked you. Perhaps she'll loan you some of the money you need and feel very good about helping you. But I encourage you strongly: don't mortgage your home in order to finance your bootstrap business. New businesses are risky, even when they're well planned. Only invest what you can afford to lose if the business's success doesn't meet your expectations. Plan to Reinvest in Your Business Finally, plan to take at least some of your early profits and reinvest them in the business, especially in marketing, since marketing provides the lifeblood of your business via new customers. As you consider your absolute start-up needs and assess your resources -especially your hidden ones -- you may well find that you're not that far away from beginning your business.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 5. Obtain Professional Website Design I can hear you asking, "Why should I pay a professional to design my website? I can do an okay job with Microsoft FrontPage or Macromedia DreamWeaver. Besides, it'll cost me a lot to hire a website designer, and I just can't afford it." On the contrary, you can't afford not to. Unless you're thinking mighty small indeed, there are several important reasons why you should pay to have your site professionally designed. Let me explain: Building Trust The most important reason to have your site professionally designed is to build trust with your clients. That takes a high level of competency. When my daughter was young she would bring home a drawing or painting she had done at school and we would make a big fuss over it. It would hang in a place of honor in the kitchen and finally be gently laid to rest in a folder to be looked at later. Were these painting really good? Well, they were good for a seven-year-old, especially a seven-year-old who is our daughter. But are they really good on some objective standard when compared with artists older and more experienced? Of course not. The danger of doing it yourself is that you may think your work is really, really good. You're wild about what you can do with this software. It's so easy! While in fact, as websites go, it is pretty shoddy and filled with problems. Only you don't have enough taste or humility to know the difference. I am a strong believer in learning to maintain the website yourself. But for the initial design, you really need a professional. The result will be something you can be proud of. And when a visitor comes to the site, she Copyright © 2002, Ralph F. Wilson. All rights reserved.
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will feel intuitively that this is a well-run business. The website will convey many hidden messages that evoke trust. And trust is absolutely necessary for the success of your online business. Navigation Systems Second, a professional website designer has learned a lot about constructing navigation systems that work well and minimize confusion. When you are buying a website, a big part of what you are buying is a navigation system that is good enough to allow you to expand considerably before it becomes outmoded. The typical storeowner just doesn't have the experience to produce an excellent navigation system and user interface. Planning for Ease of Maintenance I have built literally hundreds of websites. What I've learned along the way is that you can create maintenance nightmares for yourself unless you design the site in a modular fashion. When I began, I would construct template pages and then insert my content into them. But the only way to change the design of the whole website would be to do a "global search-andreplace" on all the pages. Inevitably, I would have made tiny changes in certain pages and they wouldn't update properly. The result was a humblejumble headache. To fix it I would have to take my new template and manually insert every webpage into it again, one-by-one through the entire website. In 1997 I learned about Server Side Includes (SSIs). Each SSI is an individual "boilerplate" file that makes up part of the whole template. At a minimum you have an SSI for the top of the webpage, one for the left menu, and another for the bottom. Computer nerds tell you that SSIs slow down the server, and that's true. But in my opinion, computers are made to do grunt work. They certainly save a lot of time. Here is a simple template for my DoctorEbiz.com pages: <TITLE> -- Doctor Ebiz <META NAME="KEYWORDS" CONTENT=""> <META NAME="DESCRIPTION" CONTENT="">
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Each line such as calls one of these boilerplate files and places it into the file before the visitor's web browser ever sees it. The beauty of this is you can modify only a single file that effects a change on every page of your website. It is extremely powerful. When I think of how much work I used to do to maintain my sites, I've decided never again to build a website without SSIs. The problem is that the average storeowner just doesn't have the experience to build this kind of system. It looks deceivingly simple, but there are little SSI gremlins that like to taunt you. Insist that your website designer builds your site with SSIs (or "include" statements, as FrontPage 2000 calls them). The time you save in maintenance will be very substantial. You can learn more about SSIs in Craig McFetridge's SSI Tutorial (www.carleton.ca/~dmcfet/html/ssi.html). For the three reasons listed above: • • •
A professional look that builds trust, A well-designed navigation system, and Server Side Includes to simplify maintenance
I recommend hiring a professional to build your website. Move Maintenance In-House But, just as strongly, I believe that you, or someone in your business, needs to learn HTML well enough to maintain your website. That is, to change the text, add a picture, and add pages to the site. Anything beyond that you could ask your designer to do for you. You can learn to do this at an inexpensive community college class or from a how-to-do-it Copyright © 2002, Ralph F. Wilson. All rights reserved.
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book such as Elizabeth Castro's HTML 4 for the World Wide Web Visual Quickstart Guide (4th edition, Peachpit Press, 2000) or Nolan Hester's FrontPage 2002 For Windows: Visual Quickstart Guide (Peachpit Press, 2001). Using a WYSIWYG (what you see is what you get) tool such as FrontPage 2000 makes maintaining your webpages rather easy. In far too many cases a designer will produce a great website, but it becomes obsolete and non-functional because the siteowner or his 17-yearold son didn't bother to learn to maintain the site. In-house maintenance is a must. What Kind of Designer Should You Look For? For a well-funded e-business you'll probably want to hire a well-established website design shop that employs a number of individuals, each with a particular specialty. However, for a shoestring website, you can probably find an individual who works out of her home and produces very nice websites for smaller businesses in the $1,000 to $2,000 range. Find these people by telephoning the local dial-up ISPs and ask if they know of any good freelance website designers in the area. Also ask at your local Chamber of Commerce and print shop. Look in the Yellow Pages under "Web Site Services," "Web Page Design," or "Internet-Marketing Services." Look in the search engines for "web design" in your local community or a nearby city. When you find the person or business, explain what you want, and then ask to see other similar small business websites she has built. If she hasn't built any, pass her by and find someone who has. You're paying for experience. Get the phone numbers of a couple of these former clients and ask them about the process and how well the website designer worked out. Clear Agreements and Specified Payments I recommend putting an agreement into writing, with milestone dates and payments attached to them. A clear agreement will save you lots of headaches and keep the arrangement on a business footing. I still have online some forms and contracts I used when I was in the website design business (www.wilsonweb.com/worksheet).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Hosting and Domains Many website designers would like to do your website hosting for you, as this creates an additional income for them. However, if you need to move to another server, it can sometimes be very sticky. I would encourage you to specify a nationally known web hosting service, such as Lexiconn Internet Services (www.lexiconn.com) or Interland.com (www.interland.com). Make sure you get some basic instructions on how to upload and download files using FTP, and get the password to your website before making the final payment. Also insist that your name is listed as both the administrative and billing contact for your domain name, and that your company -- not your website designer's company -- is listed as the owner of the domain. A number of legitimate website designers both host client websites and keep their names as administrators of the domain names in order to take good care of their clients. But I've heard too many horror stories to be comfortable with this arrangement. Hold those accounts in your own name if possible. The only exception is this: if your website requires interface with a database, then take your designer's advice on hosting since databases need special care. Yes, it is possible to build a website without a designer, but make sure you know what you are giving up when you do so. Trust from your customers is paramount. If your shoestring operation means your website looks too pitiful to trust, then you've cut a corner that will keep you from succeeding. My advice: find a website designer to build your initial small business website and then plan on doing your own website maintenance after that.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 6. Build the Trust Necessary for Success Your small businesses can build a website and get on the Internet for a few hundred to a few thousand dollars in the first year. But to succeed, you need to establish trust. Your online business must be seen as both believable and attractive. Trust is the essential lubricant that allows business transactions to take place -- in the physical world and in the cyber world. Large companies spend tens of millions of dollars to build a brand. This expenditure buys name recognition and the confidence that goes with it, a favorable position or association in the mind of the consumer, and a belief that a company with so much invested in its reputation would not disappoint its customers. Investments in brand development pay rich dividends. But smaller companies just can't afford the money it takes to establish a national brand. Instead of relying upon an established reputation, they are required to build trust and confidence from the moment customers land on their site. Big companies have their brands, but small companies have the advantage of a personal face and a personal character -- and connecting personally can be a very powerful sales motivator indeed! Show Photos of Yourself or Your Staff For years I've displayed a photo of myself on my website. I went to a professional photographer to get as good a photo as I could. But, frankly, I'm not handsome enough to win customers. I don't display the photo out of vanity. I show it for one reason: so people will perceive me as a person and therefore begin to establish a relationship with me through my writing.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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In a sense, you are what makes your small business different from all the rest. You are your own brand. If you hesitate to display a photo of yourself, perhaps you can show a group photo of your staff or sales team. Professional photos taken for this purpose can project the personal service you show your customers. They put faces behind the names. And people connect with people. Give people the choice of doing business with a cheerful, competent person rather than a faceless corporation, and they'll choose the person every time. Wells Fargo talks about "your personal banker," Wal-Mart features its own employees in national TV ads, and MicroWarehouse.com's "brand" includes a picture of one of its phone order-takers.
If you have an existing brick-and-mortar business, show a photo of the building, too. Even if it doesn't look spectacular, it demonstrates that your business isn't just a cyber-mirage pretending to be an online establishment. Show Photos of Happy People on the Front Page But don't stop with photos of yourself and your staff. Instead of animated letters and blue buttons, provide centers of human interest on your front page. Find photos of happy people who are part of the demographic target group you've determined are your best customers. To see how this is done, take a look at Wal-Mart (www.walmart.com). You can secure royalty-free people shots for your website from Getty Images for about $40 each -- a small price to pay for attractive models and excellent photography (creative.gettyimages.com/photodisc). Shoppers will relate to the people they see at your site. If they look confident and at ease, it will help to lessen a shopper's natural distrust of unknown Internet shops. Tell the Story of Your Business To build trust you'll also want to tell the story of your business. You may think that shoppers won't care about the details. But it's precisely these details that show your store is for real, that values of honesty and hard work Copyright © 2002, Ralph F. Wilson. All rights reserved.
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underlie your whole business. I've read some business stories that really made me want to make a purchase because I liked the people I was reading about. Write in a Chatty Manner Let the big companies write in their pompous, elevated, third person, slightly distant tone. But you need to write in the same way you would talk to a shopper if she were directly across from you. It'll help you build a bond of friendship and trust that will produce sales. Display Testimonials from Satisfied Customers As you develop satisfied customers who tell you how much they like your business, ask whether you can use the kind words they've written for your promotional materials. Nearly always they'll agree. Then excerpt two or three sentences for the testimonial. Make sure you use a variety of topics -one about your great customer service, another about your selection and prices, a third about how you took special time to explain something, a fourth about how they recommend your site to their friends, and a fifth about the promptness of your e-mails and shipping. Feel free to remove extraneous phrases or clauses from the final testimony, but make sure you don't change the wording or intent of the key items you leave in. Use full names with their permission, where they live, and ideally, a phone number to contact them. (Listing an e-mail address will subject your top customers to a barrage of spam.) The personal touch is a powerful way to build trust. Make Credible Presentations Most customers distrust products promoted with hype and unbelievable claims. Though exaggeration can be effective with some shoppers, most of the time wild claims will backfire. The storeowner needs to present products in such a way that all of a shopper's anticipated questions are answered in a believable manner. Provide Full Contact Information Make it easy to find full contact information -- address, phone, e-mail address, etc. Too many sites restrict ways in which potential customers can Copyright © 2002, Ralph F. Wilson. All rights reserved.
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ask questions and make contact. This breeds frustration and distrust. Consumers are wary of online stores that hide phone numbers or mailing addresses. The shopper wonders, If I can't get in touch with this storeowner when I have a question, what happens when I have a problem after the sale? Why doesn't he accept phone calls? I, too, am wary of companies I can't contact through traditional communication channels. Reverse the Risk for Your Customer One of the reasons people hesitate to place orders in your store is the risk to which they feel they are exposing themselves. If you can reverse this so that you the merchant take all the risk and your customer takes none, you'll substantially increase the number of orders completed and expand your profit at the end of each month. You build trust by taking the risk on yourself. For many years, Sears has clearly displayed its simple policy: "Satisfaction Guaranteed or Your Money Back." Do you think this policy has lost Sears money over the years? Hardly! It is one of the reasons people shop at Sears in the first place. Small business storeowners are often afraid to make strong, iron clad, noquestions-asked guarantees for fear that unscrupulous people will take advantage of them. And a few moral rejects will take advantage of them, but not many. Overwhelmingly, those who offer a money-back guarantee have found that it creates much more business than problems. Make sure you have easy-to-find links to your ordering policy page. You'll need to include: • • •
Return Policy Guarantee on Products Shipping policies
The clearer you are, the more confidence you inspire. The more generous you are, the more trust you build. And remember, trust is the one essential business element.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Trust-Building Associations A final way to establish your business credibility is to associate your site with names known for their integrity. Each of these organizations requires some kind of investigation or accountability from you. In exchange for accountability and some money, you can use the organization's logo on your website. Here are some to consider: •
• •
BBBOnline. The online version of the Better Business Bureau monitors how member businesses handle complaints and provides a reference to consumers on what kinds of complaints have been registered. In addition to their "Reliability Seal" program, BBBOnline also offers a "Privacy Seal" for both kids sites and general sites (www.bbbonline.com). TRUSTe. Helps monitor privacy statements and policies (www.truste.com). BizRate.com. After an online sale, buyers can rate the merchant on BizRate, and the aggregate of this rating is open to shoppers on the site (www.bizrate.com).
If you implement the suggestions I've made, you'll be investing dozens of hours improving your website. But the pay-off will be substantial. You'll get customers who otherwise wouldn't consider you at all, and you will have laid one of the essential paving stones on your road to Internet business success -- trust.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 7. Plan Low-Cost Marketing Techniques Marketing an online business is harder and more expensive than it used to be. One of the greatest difficulties of businesses starting on the Internet is getting noticed amidst the clutter of 30 million websites and billions of webpages. You can find a fairly complete menu of promotion techniques in my updated article "Web Marketing Checklist: 29 Ways to Promote Your Website" (www.wilsonweb.com/articles/checklist.htm). But I've selected four approaches to discuss in some detail in this chapter -- strategies which I believe will give you the best results for the money expended. • • • •
Strategy 1: Search Engine and Directory Registration Strategy 2: Search Engine Optimization Strategy 3: E-Mail Marketing to Your House List Strategy 4: Paid Advertising
Without actively marketing your website, it will never succeed. And marketing these days requires some investment. Even shoestring businesses need to cobble together the money to execute the four basic strategies outlined here. It will probably cost a minimum of about $550 for the first three strategies. Paid advertising will cost more, but there are some excellent low-cost ways to get the word out. You'll notice also that on my own site I provide some low-cost advertising opportunities for small businesses. Especially, consider 2-Line Ads (www.wilsonweb.com/ads/2-line-ad.htm) in Web Marketing Today and Doctor Ebiz. (10% off when you place 3 or more ads at a time.) and Sponsored Links (www.wilsonweb.com/ads/splinks.htm) at the bottom of each page that offer amazing click-throughs. Note: You'll find that I often join the affiliate programs of the products I mention in my newsletters and e-books, so long as the products are excellent and the affiliate programs don't
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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require exclusivity. I also link to many products or services that don't offer affiliate programs -- I want to send you to the best resources I know and I do my best to be objective. But to keep my business afloat I use affiliate links where possible. For a complete absence of affiliate links you'll probably need to read publications fully funded by advertising -- that are still in business. :-)
The four brief strategies below are basic, but even experienced marketers may find some clues that have eluded them. Marketing Strategy 1: Search Engine and Directory Registration Registering means to let search engines and directories know that your site is up and ready to be included among their listings. Just be aware that registering and actually being listed are two different things. You have to be patient and persistent. Here's how to go about it. META Tags
It's important to design your website so that each webpage includes a clear page title, because when your site shows up on a search engine the webpage title will be displayed. This isn't the headline that you place between HTML
tags, but the title placed between HTML <TITLE> tags. The title of each page ought to be both descriptive and provocative. For example, "Widget Specifications" might be better titled "Acme Widgets Have Won Five International Awards for Quality." Think of the webpage title as a vital marketing tool. Two other META tags are important to search engine listings of your site. The description META tag is used by some search engines as the sentence or two they display below your webpage title. Limit this to about 200 characters or so. The keywords META tag will include half dozen to several dozen words that someone might search on in order to find your website. Lately I've been inserting keywords separated by spaces rather than commas, because experts I trust tell me that this allows search engines to better create their own combinations of keywords. Both science and old wives tales contribute to META tag lore. You can learn more in the Search Engine section of our Web Marketing Info Center (www.wilsonweb.com/cat/cat.cfm?page=1&subcat=mp_Search) and at Danny Sullivan's SearchEngineWatch.com (www.searchenginewatch.com/webmasters).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Search Engines
There's an important distinction between search engines and directories. A search engine is an automated indexing system that periodically sends a robotic "spider" to your website to "crawl" (that is, scan and index) some or all of your webpages. A directory, on the other hand, is a listing describing your website edited by humans. In order to get on the search engines' radar you need to register your webpages. Here are some of the most important North American search engines with which to register: AOL Search, AltaVista, Excite, FAST Search, Google, HotBot, Inktomi, Lycos, MSN Search, NBCi, and Netscape Search.. Each of these has a URL where you can suggest your own webpage, but nearly all the search engines can be submitted to at one time using a free submission system such as at JimTools SubmitBot (www.jimtools.com -- but skip his FFA submissions). After you submit your webpages, be patient. The time lapse from you registering your site until the time the listing actually appears on the Web can be weeks. Directories
Search engines are vital, but directories arguably drive as much or more traffic to your site. And increasingly, search engines are combined with directories, so they'll include information from both human-edited directories and automatically-indexed webpages. The most important directory by far in most countries of the world is Yahoo! (www.yahoo.com). But they are very picky about what they'll include in a listing and reject many listings because of shoddy websites. You'll also want a listing in the DMOZ Open Directory Project (www.dmoz.org) since its materials are also used by Netscape Search, AOL Search, Google, Lycos, HotBot, DirectHit, and hundreds of others. A third important directory is LookSmart (www.looksmart.com) -- not because it gets a lot of hits itself, but because its listings feed into search results from MSN, About.com, Netscape, InfoSpace, CCN.com, and CNET.com. Another directory you should submit to is Ask Jeeves! (www.ask.com). Paying for Directory Inclusion
Commercial sites need to pay $299 for a listing to be considered for Yahoo! Directory listing. This is one of your best marketing investments. You'll sometimes see ads such as, "We submit your site to 500 search engines for only $50." Don't bother! Only a dozen or so search engines are important to Copyright © 2002, Ralph F. Wilson. All rights reserved.
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you anyway -- the rest are essentially wannabes or disguised spam mongers. Beware.
Marketing Strategy 2: Search Engine Optimization (SEO) While important, just registering your webpages with the search engines isn't likely to lift you above the clutter of billions of webpages currently on the Net. If your site doesn't appear in the top 10 or 20 search results for your important keywords and keyphrases, your site will seldom be visited. To achieve high ranking you need to enter the complex world of search engine optimization (SEO) or search engine positioning. Algorithms and Alchemy
Every search engine has a complex method of determining which webpages come up as the top 10 choices when you put in a search word. Long gone are the days when you could repeat the words "widget widget" 100 times hidden in white text at the bottom of your webpage and trick the engines into placing you in the number one spot. Now the placement algorithms or formulas are very complex and are constantly changing to outsmart the army of determined positioners vying for top positions on competitive keywords. The exact algorithm that a particular search engine uses is a closely guarded secret, but positioners are constantly doing tests to see what works best. The algorithms seem to include "keyword density" in various sections of the webpage -- the title, keyword META tag, the first 100 words of body text, headlines, etc. Search engines aren't looking for high keyword density, but what they consider "normal." Gateway or Doorway Pages
While it's wise to design your webpages to score high on search engines, you don't want to make your content subject to the changing vagaries of search engine preferences. Instead, you build a series of gateway or doorway webpages that point to your main website. Sometimes these gateway pages may employ an HTML frame system that contains your main webpage within it. That way the words in one frame of the system can be altered without changing the content of your main webpages.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Let's say you wanted to show up in the top 10 of a search for the keyphrase "economy widgets." Since each major search engine has different and sometimes conflicting algorithms, you need to build a separate webpage -fine-tuned for "economy widgets" -- for each search engine, perhaps 6 to 10 different gateway pages per keyword or keyphrase. If you desire to score high for several search words or phrases, you'll need to create a set of gateway pages for each. You can see how this can get complicated (and, unfortunately, increase clutter on the Web even further). Then throw in the complication that algorithms often change. Furthermore, you need to be careful, since some search engines have been known to ban domain names or IP addresses associated with search engine spamming. Consequently, these gateway pages may be hosted on a domain other than your primary website. Do-It-Yourself
It is possible to do search engine optimization yourself. There's only one product that I know of that enables do-it-yourselfers (and professional positioners) to do search engine optimization adequately -- WebPosition Gold (www.wilsonweb.com/go/to.cgi?l=wpg) which costs $149 for up to five domains. This software is constantly updated to provide you with the latest intelligence about changing search engine algorithms. Its Page Critic feature will analyze your webpages, compare them to top-scoring pages, and point out elements you need to change to help you score higher on a particular search engine. In addition, you can use WebPosition Gold's automatic submission and reporting features to monitor your progress. I use the program myself for regular submissions and monitoring, and was able to achieve a #1 ranking for the very competitive search word "ecommerce" on Infoseek and #2 on Excite -- for a short time. The problem is that the amount of time required to maintain your position on competitive search words is considerable. And it must be sustained over a period of months as you submit, wait weeks for new rankings to appear, monitor your progress, make appropriate adjustments, and then resubmit again for a new cycle. Paying a Service
Because of the tedium and time investment involved in search engine positioning, I recommend that small businesses consider outsourcing this task to experts. Expect to pay $1,000 to $1,500 for an initial positioning, and then $100 to $300 per month to maintain your position. You can find Copyright © 2002, Ralph F. Wilson. All rights reserved.
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vendors in the Search Engine Optimization Services section of the Yahoo! Directory. Be sure to ask for references and then contact them before you sign a contract. If possible, ask to have the gateway pages hosted on your own website under a domain name that you own, or you may find your hard-won positions disappear the moment you stop paying a monthly maintenance fee. You want to own your position, not rent it, in case you decide to maintain it yourself or switch to another search engine positioning firm.
Marketing Strategy 3: E-Mail Marketing to Your House List Once you get visitors to your website, your next important task is to secure their e-mail addresses and their permission to e-mail them your newsletter, occasional updates, or new product information. Failure to collect e-mail addresses of site visitors is a common and often fatal error. Getting visitors to your website is hard work. But getting them back again is much easier once you can contact them inexpensively via e-mail. E-Mail List Servers
You're naive if you think that you can just collect e-mail addresses for use in your Outlook or Netscape e-mail program. To conduct e-mail marketing you need a program that's specifically designed to handle lots of e-mail address -- and provide for constant e-mail address changes, deletions, and obsolescence. Two excellent free programs are Yahoo! Groups (www.yahoogroups.com) and Topica Exchange (www.topica.com), which pay for their services by attaching ads to outgoing e-mail messages you send. If you have some money to spend, consider three hosted solutions that start at $20 to $30 per month: Topica Email Publisher (www.emailpublisher.com) EmailFactory (www.emailfactory.com), and ProAutoResponder (scc.proautoresponder.com). Privacy and Permissions
It's important to understand two related trends that affect a house e-mail list. First is your visitors' understandable desire to maintain privacy of their personal information, so that it is not sold or distributed without their knowledge. Second is the importance of obtaining permission to send emails to your site visitors and customers. Single personal e-mails don't need Copyright © 2002, Ralph F. Wilson. All rights reserved.
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permission. And where you have some kind of marketing relationship with a person you have a kind of implied permission. For example, if someone asked to receive free information from your autoresponder, they have initiated a sort of relationship reciprocal relationship with you. After all, nothing's really free. But using bulk e-mail extraction software to suck email addresses off webpages and bulk-blast them to siteowners is called spamming and can earn you a lot of enemies -- including having your ISP and web hosting services abruptly terminate your accounts. I strongly recommend that you develop and post a privacy policy in accordance with the guidelines at TRUSTe (www.truste.com/bus/pub_privacy.html) and the Direct Marketing Association (www.the-dma.org/library/privacy). Specifically ask for permission to send your newsletter or product updates. Then don't abuse the implicit or explicit level of permission you have been granted by your site visitors. Your goal is to build a long-term relationship rather than exploit the relationship for immediate sales while alienating potential customers. Collecting Information
To market effectively to your site visitors, you need their e-mail addresses at a minimum. But more information allows you to tailor your e-mailings to their needs. For newsletter subscriptions I ask for a full name so I can personalize newsletters. Just remember that the more information you ask for, the fewer visitors will submit your sign-up form. Only ask for what you absolutely need. Marketing to Your House List
Finally, e-mail regularly to your growing house list of site visitors and customers -- but not too often, otherwise recipients will feel you're abusing the limited permission they've granted you. But once or perhaps twice a month is necessary to keep your company in the forefront of your recipients' consciousness. Marketing is best done in conjunction with useful information that interests your visitors. That's why sending a brief newsletter not only informs, but also builds your "brand" and customer trust, as well as providing the context for offers of your products and services. For more information, consider my e-book "A Guide to E-Mail Newsletters" (www.wilsonweb.com/ebooks/email-newsletters.htm). See? I just marketed a product to you in the context of valuable information. :-) Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Remember, you'll probably get only a single chance to capture a website visitor's e-mail address. Don't blow it. But if you can obtain an e-mail address and permission, you'll be able to inexpensively market to that visitor again and again for the life of the e-mail address and make sales that eluded you on a customer's first visit. E-mail marketing to your house list is an essential strategy. Marketing Strategy 4: Paid Advertising I know that paid advertising sounds scary to shoestring e-merchants, but I am convinced that some form of paid advertising is important if you wish to grow your business, since paid advertising motivates others to carry your marketing message to their own networks of site visitors and e-mail newsletter recipients. I'll discuss three types of paid advertising that small businesses can afford. 1. Sponsorships and CPM Advertising
Traditional advertising pays a publisher to carry an ad in the publication priced in proportion to how many people are likely to see the ad -- readers, subscribers, etc. The same model has moved over to the Internet. Advertising is often sold on a CPM (cost per thousand "impressions") basis. For example, $10 CPM means that it costs $10 for 1,000 people to see the ad, or 1 cent per impression. While targeted B2B websites like WilsonWeb.com charge higher-than average CPMs, you can sometimes purchase semi-targeted banner advertising at $3 to $10 CPM, and expect a click-through rate (CTR) of 0.2%, more or less. When you do the math, $3 to $10 CPM at a 0.2% CTR calculates to $1.50 to $5.00 per visitor to your site. Another approach to paid advertising is to purchase an ad for a fixed cost per week or per issue, no matter how many visitors or subscribers happen to see it. For example, I sell 2-Line Ads (www.wilsonweb.com/ads/2-linead.htm) in Web Marketing Today (120,000 subscribers monthly) and Doctor Ebiz (63,000 subscribers weekly), for US $250 and $150 per issue, respectively (the equivalent of $2 CPM and $2.40 CPM, respectively), with a substantially higher click-through rate than banner ads. I've priced these advertising opportunities to appeal to small businesses -- and you'll find other publishers offering similar bargains. Look for newsletters related to your site and investigate ad prices for small ads. You may be surprised at what you'll find. Copyright © 2002, Ralph F. Wilson. All rights reserved.
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2. Pay Per Click (PPC) Advertising
One very popular small business approach is to pay for advertising on a Post Per Click basis (PPC). The best-known of PPC sites is Overture.com (www.overture.com) where you can bid on search terms. For example, when I searched on "list hosting," the "advertiser's maximum bids" for the top three positions were $4.01, $3.30, and 55¢. But this charge is assessed only if someone clicks on the listing. "Maximum bid" is only assessed an advertiser if it is needed to keep him ranked above lower-bidding competitors -- top ranked advertisers don't always pay their maximum bids. In addition, the first three positions show up on a number of major search engines as Yahoo! Lower positions also may show up on CNet, AskJeeves, InfoSpace, and others. You can get started with Overture at a relatively low deposit and minimum bid of 5¢ per click-through. There are many similar PPC search engines that require no minimum bid -- but they have little ability to bring much traffic. Another key PPC approach is Google's AdWords Select (https://adwords.google.com/select). These ads appear not only on Google, but also AOL Search, Earthlink, and Sympatico. To really understand the strategies necessary to make money using PPC strategies, read constantly updated e-books such as Andrew Goodman's Unleash Amazing Profits with Google AdWords Select (www.wilsonweb.com/go/to.cgi?l=pagezero). 3. Cost per Action (CPA) Advertising -- Affiliate Program
A third approach that is becoming quite popular is cost per action/acquisition (CPA) advertising, often known as affiliate program advertising. While the set-up fees to begin your own program may vary from $200 to $800 or more, such a program allows you to recruit affiliates whom you pay only when a link on their site results in a sale or sign-up on your website. For example, I've set up an affiliate program (www.wilsonweb.com/affiliate) to help me sell subscriptions to my premier Web Commerce Today e-commerce newsletter (www.wilsonweb.com/wct/) and my e-books (www.wilsonweb.com/ebooks/). I pay a generous 20% commission to my affiliates, but only after the sale is actually consummated, which gives me money to pay the commission. (That's more than the average program, which usually pays a commission of 4% to 15%.) Setting up and running an affiliate program is no trivial venture, but it is a Copyright © 2002, Ralph F. Wilson. All rights reserved.
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very cost-efficient way to advertise your products and services. You can find helpful information comparing various affiliate management software programs from a merchant's perspective in my e-book Report on Affiliate Management Software: User Feedback and Editor's Choices (www.wilsonweb.com/ebooks/affilisoft.htm). I encourage you to experiment with paid advertising -don't be afraid of it. Even shoestring e-merchants need to spend some money to make money. Your goal is to find an effective form of advertising for your goods and services that is affordable from a cost-per-sale perspective and therefore sustainable on a month-tomonth basis.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 8: Determine How to Receive Payments Introduction to Internet Money Transfer The ability to transfer money via the Internet is part of my core definition of e-commerce. Back when I designed my first online store in 1995, ecommerce elements were difficult to assemble. Today there are a number of solutions, some of them quite inexpensive. In this e-book I focus on low cost methods. They work reasonably well, but have their downsides. The better -- and more expensive to set up -methods involve two major expenses: (1) a merchant credit card account and (2) a payment gateway. A merchant account enables you to accept credit cards for payment, and a payment gateway connects the transaction on your website in real time with your bank's credit card processor. All this takes place via secure Internet pipelines so that your customer's credit card information is not compromised. The advantage of the best systems is automation. It's possible to program your online store so that the whole process takes place automatically. The less expensive systems all require more intervention from the site owner. With larger volumes of sales, the set-up and monthly fees become much less significant than with a very small site. In Web Commerce Today, Issue 38, September 15, 2000 I explained how to get good prices on merchant credit card accounts (http://www.wilsonweb.com/wct4/issue38.htm) and how to avoid the sharks of that industry that lock naive merchants into 3 to 4 year leases and often sell them e-commerce software they don't need. I also vent a little anger in that issue. :-) I hope you'll subscribe to Web Commerce Today so you can get up-to-speed quickly (www.wilsonweb.com/wct/). In my Merchant's Guide to Payment Gateways (www.wilsonweb.com/ebooks/gateway.htm), I describe some of these Copyright © 2002, Ralph F. Wilson. All rights reserved.
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processes in greater detail. But in this e-book I'll point you to several relatively low-cost ways to get started in e-commerce -- without either a separate payment gateway or a merchant account. Comparisons of Low-Cost Funds Transfer Systems The tremendous popularity of eBay and other consumer auctions in the last few years created the need for low-cost means of transferring money that protects both seller and buyer. This has spawned a number of new solutions -- PayPal, BillPoint, Yahoo! PayDirect, C2it, and BidPay. Of these, only PayPal has really matured to the point where it is of much use to serious online merchants outside the auction arena. (Note: eBay recently acquired PayPal and will probably discontinue their own BillPoint solution.) I've also listed three e-commerce systems -- CCNow, ClickBank, and DigiBuy -- that handle the entire credit card transaction. They require little or no set-up fees, but they charge transaction rates from 7.5% to 13.9%. Because of the these stiff charges, these are useful only for products with a high mark-up. Finally, I've compared these prices to typical fees paid by merchants that have both a merchant account and a payment gateway, and which typically require substantial set-up fees, and minimum monthly fees in addition to a discount rate (percentage of the transaction amount) and a flat transaction fee.
PayPal Premier or Business Account www.paypal.com
Restrictions
Percent of Transaction Monthly Transaction Fee Fees and Set-Up Fees
International US funds are transacted by all these systems
None
2.2% for high-volume "merchant" accounts, 2.9% for newer "standard" accounts.
Yes, buyers and sellers in 38 countries. Of these, sellers in 17 countries can deposit from PayPal to a local bank.
30¢
Copyright © 2002, Ralph F. Wilson. All rights reserved.
None
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Restrictions
Percent of Transaction Monthly Transaction Fee Fees and Set-Up Fees
International US funds are transacted by all these systems
BillPoint www.billpoint.com eBay and Wells Fargo
Standard account limited to $500 transactions, $2000 for merchant account. Currently limited to eBay sellers.
For transactions over $15, 2.5% + 0.5% (1.75% + 0.5% for high volume sellers), 1.5% + 0.5% for electronic checks (0.75% + 0.5% for high volume sellers).
35¢
None
Sellers must be US or Canadian residents. Payments can be received from 50 countries.
c2it CitiBank www.c2it.com
Limited dollar amounts.
No charges within the US.
$10 to transmit money outside the US.
None
US residents only.
BidPay Western Union www.bidpay.com
For auction payments only, limited to $700 per item.
2.25% on funds over $100.
$30 and None under, $2.95. $5 on amounts over $30. Includes first class postage.
Yes, though in some countries cashing money orders is more difficult.
No fees currently.
None
No, US residents only may be sellers or buyers.
Yahoo! PayDirect paydirect.yahoo.com
Copyright © 2002, Ralph F. Wilson. All rights reserved.
None
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Restrictions
Percent of Transaction Monthly Transaction Fee Fees and Set-Up Fees
International US funds are transacted by all these systems
CCNow www.ccnow.com
Tangible goods only.
US residents $9.95/mo plus 9% on monthly amounts greater than $100. International $11.95/mo plus 11%.
None
None
Yes, all countries. Payments may be mailed by regular check or cashier's check, or wired. Direct deposit for US sellers.
ClickBank www.clickbank.com
Digital goods, ebooks, or services.
7.5%
$1.00
$49.95 Yes, payments set-up fee. mailed by check.
DigiBuy www.digibuy.com
Digital goods or ebooks, with download service.
13.9% or $3, whichever is greater.
None
$29.99 Yes, payments set-up fee. mailed by check.
Merchant Account
No restrictions.
2.5% discount rate.
10¢ to 30¢
$5 to $25 per month plus often a payment gateway fee of $30 to $60 per month. Application fees vary from $100 to $200+.
A merchant must have a merchant account in his or her own country, or corporate presence in the US. Exception is Planet Payment and World Pay.
Shopping Cart or Ordering System For the most part, the payment transfer systems function as a kind of ordering system -- often inadequate. For most e-commerce sales you need the following functions.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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• Shopping Cart (to allow purchase of more than one product at a time) or ordering system. (CCNow and PayPal have shopping cart applications.) • Shipping Calculation. (There is a primitive calculation system on PayPal and CCNow.) • Tax Calculation (currently only on PayPal.) • Payment System and real-time credit card authorization (all the lowcost systems provide this) For all of these low cost systems except DigiBuy you'll need a website where your products and services are described and pictured. Next to the product information you'll copy and paste the HTML code for an order button than links to your ordering system. It is possible to run a more sophisticated system. StoreFront BizPlaces (www.bizplaces.com) provides a multitude of high-end features beginning at $14.95 per month. You can use PayPal as your low-cost payment system, if you like. To learn about the wide options available in shopping cart programs, see my comprehensive e-book The Shopping Cart Report (www.wilsonweb.com/ebooks/carts.htm).
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 9. Deliver Products and Services Efficiently Select a Low-Cost Way to Store Your Product If you are selling a tangible product, you'll have to decide upon a storage method. Storage sounds a bit stodgy in this fast-moving age of electronic commerce, but it is essential to having your product available and ready to ship as soon as you get an order. There is no single one-answer-fits-all -each has advantages and disadvantages -- but here are the various models. 1. Warehouse Products Yourself
This brings visions of boxes of CDs lining the hallways of your home or running over in your garage. Some small companies lease light industrial space to store inventory. For the smallest e-businesses that want to make maximum dollar profit on sales, probably warehousing your own inventory will make the most profit. This is appropriate, too, for brick-and-mortar retail stores, which are small enough to ship products for online sales out of existing inventory. From a customer service standpoint, handling inventory and shipping yourself means that you have the records at hand to provide quick, efficient customer service for telephone calls and returns. You control the inventory, ordering ahead what you think you'll need. You'll be able to easily determine the amount of product in stock and know whether orders can be shipped or must be backordered. You are in control. But there is a price. First, you must pay for the inventory that the manufacturer or distributor ships to you. Only individual artisans will be willing to negotiate payment for sales on consignment. Second, you must pay for inventory space. If you have extra space already, there's no extra cost. But if you need to lease space to warehouse inventory, you'll be paying for the square footage it takes to store the products. When you carry your own inventory and run your own shipping department, you are betting that Copyright © 2002, Ralph F. Wilson. All rights reserved.
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your own shipping system will be more cost-efficient than that of a dropshipper or fulfillment house. A modification of this model is to carry inventory for your best selling products only and handle the occasional orders for other products using another model. 2. Buy from a Local Distributor
If you don't want to warehouse inventory yourself, one option is to find a local distributor who carries a considerable inventory of your most popular products. You get your orders from the night before, drive over to the distributor's warehouse, pick up the products, and ship them out. This was Amazon.com's first fulfillment method using an Ingram book distributor in Seattle. It worked well for the first phase of their company -- until a big bookseller competitor threatened to acquire Ingram. The advantage here is that you don't have capital tied up in inventory or monthly leases for warehouse space -- the distributor takes care of that. You might get caught, however, if the distributor runs out of one of your important products. There's no easy way to determine what is in stock and can be shipped immediately. 3. Drop-Ship from a Distributor or Manufacturer
One of the most popular models for Internet start-ups is to set up relationships with distributors or manufacturers who will receive the order from you (faxed or e-mailed) and ship it to your customer with your supplied label and your packing slip. The customer probably won't be aware that it didn't come directly from you. You'll need to find which companies will drop-ship the brands you desire to carry in your online store. Fortunately, there are directories of such companies, brands, and products. The best I've found is Chris Malta's online Drop Ship Source Directory (www.wilsonweb.com/go/to.cgi?l=dropship), which is constantly updated. Drop-shipping is wildly popular among start-ups because it requires no capital investment for inventory. You only have to pay when you have an order (and money) in hand to fund it. The downside is that many drop-shippers don't give you much information about what's in-stock or out-of-stock, so your customer may be left
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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hanging. In case of customer service inquiries, you may not have much information at your fingertips about the status of any particular order. Since building a happy clientele that makes repeat purchases is dependent upon excellent customer service, drop-shipping can affect your long-term viability. In addition, your discount from the manufacturer or distributor isn't as great when you drop-ship; you're paying them to carry inventory and fulfill your orders, so your profit margin may be lower. However, dropshipping may be your best way to begin on a shoestring. 4. Have a Fulfillment House Warehouse and Ship for You
The final model is to contract with a fulfillment house to warehouse your products on their shelves and then pick, pull, pack, and ship to your customers when you get an order. You can send them orders from your own shopping cart, or use their shopping cart system to take your orders. In addition to shipping charges and the cost of the inventory items, you'll pay a per order fee and perhaps a monthly fee or minimum. Many will also assemble your product, handle customer service inquiries, and reorder for you -- all for a fee. A fulfillment house is best for products that have a sufficient mark-up to cover the costs of outsourcing. Assessing What's Right for You
Which of these four models is best? A lot depends upon your goals and how mature your online business is. Here's one scenario that many Internet companies follow: 1. Drop-ship or buy from a local distributor initially to get started with minimal up-front fees. 2. Purchase inventory of their best-selling products. 3. As the business grows, either develop your own in-house warehouse and shipping system or outsource to a fulfillment house.
Select a Low-Cost Way to Ship Your Product Internet companies are right to assume that their customers want immediate delivery of the products they order online. But high shipping costs are one of the chief reasons that customers desert their shopping carts without checking out.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Offer as an option one of the major couriers -- UPS, FedEx, Airborne Express, or whatever courier services are available in your country. But also offer the US Postal Service (www.usps.com) or your own country's postal service. USPS Priority Mail claims an average 2- to 3-day delivery time, though I think that delivery times have degraded some in recent years. The current price of $3.85 for the first pound, or $3.85 for the flat-rate envelope, is a fraction of rates charged by courier services, and often you can use the free boxes and envelopes provided by the Post Office. The biggest drawback to using the Postal Service has been verifying delivery, but with Delivery Confirmation costing only 45 cents, that should no longer be a barrier. Overnight Express Mail is even faster. Global Priority Mail and Global Express Mail may well be a better alternative to using a courier service to ship outside the US. Offering your customers a high cost but fast option for shipping should be balanced by also offering a low cost but slower alternative. Do this, and you're likely to increase sales over offering just a single shipping choice. Digital Delivery System Options Product fulfillment on the Web is a dream if you have a digital product -software, information, e-books, member-only subscriptions, and entertainment. Delivery takes place by download -- and it's completely hands-free for the merchant. Yes, there may be some web hosting fees for storage and additional traffic charges, but the cost is low. The chief difficulty with digitally delivered products is that they are subject to fraud. A private download URL can be given to a friend (who may post it on an online bulletin board). And fraudulent credit card transactions using stolen credit information leave the merchant to susceptible to damaging chargeback fees. Here are some systems you can use to sell and deliver digital products. (I am excluding ClickBank from this list because it only handles the sale, not the digital delivery.) Kagi (www.kagi.com). This Berkeley, California company handles transaction, download, and product registration. No sign-up or monthly fee. Fee is a percent of the sales price. The sliding scale assesses 12.5% of a Copyright © 2002, Ralph F. Wilson. All rights reserved.
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$20 product, 10% of a $100 product, and 5.8% of a $600 product. Compatible with several affiliate programs. DigiBuy (www.digibuy.com). Set-up fee of $29.95, plus $9.95 for each additional product. Handles transaction, download, and registration. Charges 13.9% of the sale or $3, whichever is greater. Compatible with several affiliate programs. More expensive options are Yahoo! Store (store.yahoo.com) and ShopSite Pro (www.shopsite.com). I link to others in the Digital Download Software section of my E-Commerce Research Room (www.wilsonweb.com/cat/cat.cfm?page=1&subcat=cs_Soft-Digital). Or you can use Download Protector to deliver digital products from short-term URLs on your own site (http://wilsonweb.com/go/to.cgi?l=download). How to Select a Fulfillment House As an alternative to warehousing and shipping your own products, you can outsource the warehousing and product fulfillment function to a fulfillment house. You'll find many listed in the Yahoo! Directory "Fulfillment Services" category. Most, however, won't look twice at the small merchant just starting out. The vast majority are targeting merchants with 2,000 orders or more each month. Fortunately, however, there are some companies that serve the needs of beginning Internet merchants. Fees and Policies to Ask About
When you begin to research fulfillment services, you rapidly find that they price in enough different ways that they can be hard to compare to each other -- and it can be difficult to figure out what kind of bill you'll be paying at the end of the month. Here are some fees and policies to watch for as you research: Set-Up Fees. Fulfillment houses charge set-up fees to help cover their costs of acquiring your business and preparing their system to take your products. Make sure these are reasonable and within your budget. Order Processing Fees. This may include a flat amount for each order, plus a charge for each additional item in the package. Rates vary with the number of orders processed each month. Ask if boxes and packing materials are included in the order processing fees or if they are in addition.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Order Processing Minimums. If you're a small merchant, you may have trouble making the minimums. Minimums are good for the fulfillment house but not for you when you're getting started. Make sure your average number of orders is likely to easily exceed their order processing minimums, or else you'll be paying fulfillment fees even if you aren't getting orders. Return Processing Fees. Find out what you are charged when a customer returns the merchandise and how this process will be handled. Storage Fee. This is a monthly fee that reflects the amount of storage space your products take in their warehouse. You may be charged per pallet, or per cubic foot, or in some other manner. Your goal is to keep on hand no more than a two- or three-month's supply of your product or you'll be paying excessive storage charges. Credit Card Transaction Fees. A few fulfillment houses will handle credit card transactions for merchants who don't have merchant accounts. They typically charge a percentage of the total transaction amount. How does this compare to what you'd pay on your own? Fees to receive merchandise. Look for charges to check in shipments, verify the box count, and look for visible damage. Shopping Cart Services. You can run your own shopping cart and transmit orders to the fulfillment house via their preferred methods: FTP, secure download, e-mail, EDI, XML, etc. But it may be cost-effective to use the fulfillment house's own shopping cart program order buttons in conjunction with your own website. That way they get your orders directly and painlessly. Some fulfillment houses also offer accounting and banking for foreign clients. Ask what services they offer. You may be surprised at what they can do for you. Order Transmission Method. Make sure that the method by which you are required to transmit orders is technically within your company's grasp. Is it simple or sophisticated enough to meet your needs? Product Assembly. A fulfillment house can often assemble your product or kit for you, charging you on an hourly basis or a time-costed per-piece basis. They can also order products or components for you so that you're never out of stock. Ask the hourly rate on which these services are based. Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Growth Capacity. Can the fulfillment house that serves your 100 to 500 orders per month ramp up to 100,000 orders per month if you get a tremendous response? Inquire about their growth capacity. Minimum Contract Period. Be careful of companies that lock you into a six-month or one-year contract. What will you do if they don't meet your needs, or you don't meet their minimums? You need an escape hatch if your product line doesn't take off. Profiles of Two Small Business Fulfillment Houses
We're seeing a small but growing number of fulfillment houses designed to serve merchants with 0 to 2,000 orders per month. I spoke with two of them. iFulfill.com (www.ifulfill.com) of Maumee, Ohio, has been around for several years. Owner Paul Purdue sees his company's role as enabling the beginning merchant. "We reduce the entry barriers for the typical small merchant," he says. "If they can sell it, so be it. If not, they're not losing a lot." iFulfill's pricing is a bit higher in order processing fees, but it charges no set-up fees. Purdue's company outgrew his barn and is now housed in a warehouse. iFulfill offers a wide range of services to merchants in the US and abroad. eFulfillment Service, Inc. (www.efulfillmentservice.com) of Grawn, Michigan, not too far from the Canadian border, is newer. I was impressed by President Amy Caughell's enthusiasm to help her clients by being flexible enough to meet their special needs. Prices and minimums tend to be quite competitive.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Step 10. Provide Excellent Service to Your Customers The myth of the automatic online sales machine is alive and well on the Internet. But it is a lie. Unless an online business provides excellent customer service, it will bomb. Guaranteed. I've heard a lot of bragging about site automation. But the fact is, there's just so much you can do to automate customer service. In the end, you need to allocate time to deal with real live customers who have problems. I have a pretty automated system, but I constantly receive e-mails from customers who can't quite figure out how to do something or have a special case that my system isn't programmed to handle. Then I must fix it for them -immediately -- or risk a dissatisfied customer. The Importance of Happy Customers Recently, I received an e-mail from a friend who moderates an influential discussion list. He was concerned because a vendor I had recommended didn't answer either telephone calls or e-mail messages. This had gone on for two weeks and my friend was at his wits' end. I e-mailed the vendor, with whom I had some good dealings previously, and told him the importance of taking care of my friend immediately. "I've been swamped," was the reply, "but I've already taken care of it." I passed the word on to my friend. Whatever the vendor had taken care of, he didn't communicate it to my friend, who finally sacked the vendor and selected another solution costing hundreds of dollars more. He told his readers to be patient, that this feature he had promised would be delayed another week. He was gracious in his discussion list not to trash the first vendor publicly. But when people ask him personally what vendor he'd recommend for this service, I expect he'll not only tell them about the vendor he finally ended up with, but probably Copyright © 2002, Ralph F. Wilson. All rights reserved.
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also pass along the horror story of inexcusable customer service from the original vendor. I, too, will be more hesitant to recommend this vendor again. I've heard that a happy customer tells one person about his good experience while a disgruntled one will spout off to eight people. With the ease of email, it doesn't take long for your reputation to be destroyed if you don't take care of your customers. Every company has some problems, and all of us have had to fix something that went wrong for a customer. Of course, customers would like products or services to be problem-free. But they're realists. They understand occasional problems. But customers really find out about your company when something goes wrong. When you respond quickly to a customer complaint and fix it generously and fully, you've made a friend for life. But if you leave a customer to twist in the wind or just reply with an irrelevant boilerplate e-mail, they'll go out of their way not to do business with you a second or third time. That's what kills you. The Importance of the Second and Third Sale It's a fact that with many online retail sales, you make little money on the first sale to a customer. The marketing costs to get that customer to your site in the first place may be considerable. But if new customers are happy with your service, they'll come back again and again. And as your customers, they have a relationship with you that implies permission to email them at very low cost about future products and sales. You've heard the old joke, "I lose money on every sale, but make it up in volume." :-) Retailers often lose money on the first sale, but make it up on the second and third sale. If you have excellent customer service, you'll be able to retain and sell again to these first-time customers. If not, your customer base will dribble away and online business will become unprofitable for you. An Example of Excellent Customer Service In 1998 I ordered two books from Amazon.com -- a commentary on Genesis for a Bible study I was teaching and a pocket German-English dictionary. Soon I received a package from Amazon, and there was my Genesis commentary. But instead of the German-English dictionary I Copyright © 2002, Ralph F. Wilson. All rights reserved.
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received a book entitled How to Make Love All Night (and Drive a Woman Wild) -- not exactly what I had ordered. I thought it was hilarious, and so did my wife. I telephoned Amazon's customer service number to see what they would do. The customer service rep was apologetic, polite, and didn't even laugh when I told him the books that got mixed up. He offered to send me the dictionary by an upgraded delivery method and to send a post-paid label with which to return the wrong book. Very professional, very well done. I was impressed. And this time all I received was a boring GermanEnglish dictionary! Will I shop at Amazon.com again? You bet. Not because they never make a mistake, but because I know that if they do, they will fix it promptly. On the other hand, I could name some companies with which I have resolved never to do business again because of their horrendous customer service. Finding Ways to Automate Customer Service I'm not against automating customer service. I strongly encourage you as part of your customer service strategy to automate customer service as much as is feasible. Here are some methods that will inspire confidence in your customers and save you a great deal of time answering e-mail and the telephone. Some cost only your time or employ lower cost services or software. Others are suited to better established small- and medium-sized businesses. • •
•
•
•
State your guarantee and shipping policies clearly. E-mail customers when their orders ship. If there is any hold-up in shipping, e-mail immediately and ask whether your customer wishes to cancel the order or wait for a backorder. You may lose an order, but you'll gain a loyal customer who knows you are looking out for his or her interests. Prepare a detailed FAQ (Frequently Asked Questions) webpage. See my article "The FAQ Answer to 80% of E-Mail Overload" (www.wilsonweb.com/articles/faq.htm). If your online FAQ answers 80% of the questions your customers commonly ask, you'll save lots of time and customers will be happy to find answers quickly. Prepare an online trouble-shooting guide that provides step-by-step instructions to diagnose and fix the most common problems with your product or service. Prepare a series of boilerplate e-mail messages that answer clearly and concisely most of the questions that your customers ask. Outlook 98/2000/2002 refers to these as "signatures." Eudora calls them Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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"stationery." Whatever they're called, prepare them carefully and you'll save lots of time. See my article, "Sample Boilerplate Responses to Common E-Mail Requests" (www.wilsonweb.com/wmt6/email_sigs.htm) Set up a facility that allows instant chat with your customers, or allows you to telephone them back immediately. Web-based services include LivePerson.com (www.LivePerson.com), InstantService.com (www.InstantService.com) and LiveAssistance (www.liveassistance.com). Or for a lower cost you can put the chat software on your own web server with a program such as RealTimeAide (www.realtimeaide.com). See more in Yahoo! Directory's "Customer Service Software" category and the CGI Resource Index under "Customer Support" (cgi.resourceindex.com). Provide full contact information so customers can contact you by phone, fax, e-mail, postal service, etc. Subscribe to an online customer service system such as SalesForce.com (www.salesforce.com) that enables your virtual customer service reps to access information about previous calls or contacts with a customer. You can outsource part or all of your customer service to a call center. See the Yahoo! Directory "Call Centers" category. Set up a "contact us" forms-to-email function that uses a drop-down menu of subjects to route inquiries to the correct person in your company. See tips in my article "How I Keep Up with the Deluge of EMail" (www.wilsonweb.com/wmt6/email_deluge.htm) Set a maximum acceptable time in which to answer customer service e-mail inquiries and then require those doing your customer service to adhere to it.
Investing in Customer Service Sometimes you need to spend more money to provide better customer service and, at the same time, provide customer service more costeffectively. The original system I built to manage subscribers, passwords, and access to subscriber-only sections of my website cost me very little out-of-pocket at a time when I couldn't afford much. It worked reasonably well for four years. But it had several shortcomings that required lots of e-mailing, as well as manual address changes. Recently, I invested several thousand dollars in ColdFusion programming and found that this investment saved me perhaps Copyright © 2002, Ralph F. Wilson. All rights reserved.
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ten to twenty hours each month. Subscribers are happier, too, since they are now empowered to make immediate changes themselves. But I stay close to a computer or have my editorial assistant check when I'm away so that customer service questions can be answered within a few hours at most. Customers are my company's lifeblood and keeping them happy is very important to me. Do I please them all? No. That's impossible. But I try hard to find a way to keep them happy. When Not to Automate Customer Service How do you like the telephone menu systems? Rather than a real person who answers, "How may I direct your call," too often you get a recording that says, "Please listen to the following menu of eight complex functions. And make sure you listen carefully since we change the menu every few weeks just to confuse you." More and more smart desktop e-mail mailing programs such as Gammadyne Mailer (http://wilsonweb.com/go/to.cgi?l=gam) and PostMaster Express (www.post-master.net/rs/wis) are now available. These have the capability of scanning an e-mail for keywords, and then taking an action based on the keywords they find, such as sending an e-mail reply or unsubscribing a bounced e-mail address. I recommend that you only use these for routine and highly predictable email interactions. I can remember a series of customer service e-mails I had with a large domain name vendor who shall remain nameless. Every time I wrote an e-mail describing my problem, I received a reply that showed no one had read my message at all. I was talking to a machine. While these smart e-mail systems are much better than they used to be, test, test, and test again before using one for customer service. You cannot afford to lose customers just to save some time. Some Customer Service Resources Customer Service on the Internet: Building Relationships, Increasing Loyalty, and Staying Competitive, by Jim Sterne (Second Edition; John Wiley & Sons, 2000). Great overview of customer service techniques
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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on the Web by the acknowledged leading voice on customer service on the Internet. "Full Sterne Ahead," a monthly e-zine on customer service by Jim Sterne. Humorous examples of how not to provide customer service (www.targeting.com). e-Service: 24 Ways to Keep Your Customers -- When the Competition Is Just a Click Away, by Ron Zemke and Tom Connellan (Amacom, 2001). Explains how to differentiate one's website with fantastic service. How to develop a retention strategy, etc. Published by the American Management Association. Articles and Resources on Customer Service in our searchable online database of the Web Marketing Info Center and E-Commerce Research Room: •
Customer Service Online. A more general category giving tips on providing excellent online customer service. http://www.wilsonweb.com/cat/cat.cfm?page=1&subcat=ms_Cust-Servicee
•
Customer Service in Online Sales. Focuses on both before and after support for online sales. Article titles are given, but full access to URLs is provided only for subscribers to Web Commerce Today. http://www.wilsonweb.com/cat/cat.cfm?page=1&subcat=cd_Cust-Service
Customer Service Is a Management Decision One summer, one of my tires blew-out on the freeway 100 miles from home. I took it to a department store Auto Service Center, arriving about 12:30 pm, planning to wait until the job was done. My need was simple: (1) replace the tire, (2) stow the spare in its correct location, and (3) realign the front wheels. How long will this take? I asked. About an hour and a half, I was told. The person I talked to went home shortly thereafter. I waited patiently (mostly) for an hour and a half, but my car was still sitting where I had left it. I asked the new clerk when it would be taken care of. Soon, I was told. I sat down again. I got up and asked again. Oh, we'll get to it soon, I was told. By now I wasn't so patient. I insisted in no uncertain terms that they get it done. We have to wait until that person gets back from his break, I was told. It went on and on, with me having to push at each step of the process, until at 5:30 pm they finally handed me the keys. However, the
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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spare tire wasn't stowed where it was supposed to go. At my insistence, a disgruntled mechanic angrily threw it into its slot, but didn't secure it or replace the cover. By this time I was fuming. Where's the manager? I demand. He's out of town, I am told. I want to talk to the assistant manager, I say. Oh, he had to leave early and won't be back until tomorrow. The more I thought about it, I realized that complaining to the manager would not solve the problem -- because the problem was with the manager, not the employees. If the manager had insisted on a "customer comes first" policy, enforced it, and rewarded excellent service, the Auto Service Center would have an entirely different attitude. Customer service reflects management priorities. The Golden Customer Service Policy My dear Internet businessperson: What is your policy towards customers? Customer service will determine the success or failure of your online business. I recommend a simple, practical policy: "Treat your customer the same way you would like to be treated in a similar situation." Sound familiar? Of course! It's an adaptation of Jesus' Golden Rule (Luke 6:31). Last week a customer requested a refund on one of my e-books. Why? "I didn't learn anything from your e-book that I couldn't find on the Internet for free. Please refund my $12." His request came two months after his order. What should I do? I had made no promises or guarantees that the book would include information he couldn't find anywhere else. The Table of Contents is clearly displayed before ordering. There are no tricks or gimmicks. But here is a customer, a dissatisfied customer, perhaps a customer who had an unreasonable request. What should I do? Insist upon the rightness of keeping his money? Tell him that he is an idiot to make a request like that? No. I made a $12 investment in customer happiness. Will I ever sell something to that customer again? Perhaps not. But I have done what I could to leave a good taste in his mouth. I hope to keep a friend even though I lost a sale. Providing excellent service to your customers is the tenth, final, and crucial step to E-Business on a Shoestring. None of the ten steps can be bypassed, Copyright © 2002, Ralph F. Wilson. All rights reserved.
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especially step 10 . Of course, one of the benefits of having a "customer delight" policy for your online business is that it enables your customers to develop into your into lifelong friends -- people who find that your business cares about them and their interests. They will reciprocate and care about you, year after year and sale after sale. Ain't e-commerce great?
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Conclusion -- Wise Person or Buffoon These are the 10 essential steps to E-Business on a Shoestring. I've tried to explain the concepts in enough detail so you can get the lay of the land. Of course, many of these steps you'll need to explore in greater detail, but this will get you started. In the Appendix that follows, you'll see a number of resources I've written that will help you flesh out some of the crucial ecommerce areas. But if you just have a shoestring (I understand that, my friend), but desperately need more information, I encourage you to explore several free resources I make available for you -- free of charge: Web Marketing Today (www.wilsonweb.com/wmt), published monthly, provides a wealth of free information on all aspects of Web marketing (though most topics about selling online are in my paid publication, Web Commerce Today). You can look at the topics in the library of back issues, or search my website by keyword (www.wilsonweb.com/search). Doctor Ebiz (www.doctorebiz.com), published each Wednesday, is a brief, 700-word column that takes real questions from small businesses and answers them in brief scope. If you read Doctor Ebiz each week, you'll get a pretty good grasp of the pertinent issues within a few months. Web Marketing Info Center (www.wilsonweb.com/cat) enables you to search through my database of abstracts and links to thousands of articles and resources on all aspects of Web marketing. While the online sales topics are for paid subscribers only, everything about promoting your website, search engine marketing, PPC, advertising and much more is free of charge. Jay Conrad Levinson, author of the Guerrilla Marketing books, tells his seminar audiences: "There are two kinds of people at this seminar -- wise people and buffoons. The wise people will immediately begin to apply what
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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they have learned. Buffoons imagine that they have learned a lot, but never put any of it into action. Which are you? A wise person or a buffoon?" I hope that you'll jot down some action steps right now -- before you put this e-book away -- that are necessary to jumpstart your E-business on a Shoestring. Put a date next to each action step write them into your calendar for the next few months. Finally -- tomorrow or next week -- begin to turn those action steps into reality, one by one, step by step. You'll get there. Begin now! I wish you every success. God bless you, Dr. Ralph F. Wilson P.S. When you get a chance, drop me a line and let me know how you're doing.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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Appendix: Other Resources by Dr. Wilson Best-Selling E-Books The Shopping Cart Report (213 pages) is a comprehensive purchasing guide to e-commerce software. It provides a basic overview, as well as special information on B2B, digital, and members-only e-commerce software. The top eight small-tomedium business shopping cart programs are compared and contrasted, and many of them reviewed in detail. In addition, you'll find links to online reviews of over 500 e-commerce programs. $34.95. (www.wilsonweb.com/ebooks/carts.htm) A Merchant's Guide to E-Commerce Payment Gateways (119 pages) is a must if you are trying to figure out what payment gateway to get and how this piece fits with the other pieces of your online venture. In this report I recommend several gateways, and tell you about a total of 90. You also get candid user feedback from 70 readers. $29.95. (www.wilsonweb.com/ebooks/gateway.htm) Report on Affiliate Management Software: User Feedback and Editor's Choices (108 pages) gives candid feedback from 90+ people whose companies manage affiliate programs. Some of what they say is damning, some offers deserved praise. If you're planning to set up an affiliate program, this e-book will guide you -- and perhaps keep you from losing your job by making a wrong decision. $22.95. (www.wilsonweb.com/ebooks/affilisoft.htm) How to Develop a Landing Page that Closes the Sale (24 pages) explains how to maximize the effect of your advertising by pointing to a specific "landing page" that leads the shopper to decide to complete the transaction. This short 24-page book will help you increase your conversion rate
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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substantially. $17.50. (www.wilsonweb.com/ebooks/landing.htm) Special Limited Time Offer: If you subscribe (or renew your subscription) to Web Commerce Today (www.wilsonweb.com/wct), I'll give you a copy of all four e-books absolutely free. Together they're worth $105.35 -- and if you add in the subscription price of $49.95, the total value is $155.30. But you'll receive the e-books absolutely free when you pay only the subscription price of $49.95 . Don't miss out. Subscribe now!
Other great e-books include: 12 Ways to Give Your Webstore a Sales Boost: Proven Techniques to Increase the Conversion Rate in Your Online Store. (71 pages). Contains all the tricks I've learned in building 18 online stores for my clients to increase their sales rate to the maximum. I explain twelve different approaches to increasing the conversion rate. $34.95. (www.wilsonweb.com/ebooks/sales-boost.htm) Guide to E-Mail Newsletters (41 pages). Provides a comprehensive guide to planning and publishing e-mail newsletters for your business. $12.00. (www.wilsonweb.com/ebooks/email-newsletters.htm)
Vital Resource for "NetAssisting" Your "Local" Business NetAssistedTM Biz and NetAssistedTM Church are designed to help strictly local businesses and organizations that can't use the Internet to sell products and services nationally. Instead, NetAssistedTM teaches you how to combine traditional local advertising techniques with Internet marketing strategies to increase the power, value, and longevity of your advertising investment. Membership is $25 annually, but the newsletter is free. Take a look. (www.netassisted.com)
Copyright © 2002, Ralph F. Wilson. All rights reserved.
10 Steps to E-Business on a Shoestring, by Dr. Ralph F. Wilson
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Dr. Wilson's "Real Book" on Strategy Development Planning Your Internet Marketing Strategy (John Wiley & Sons, 2002), 256 pages, softcover, ISBN 0471441090. Shows you, step by step, how to construct an e-business marketing plan that will focus your efforts, energize your staff, and generate sales. Explains how to identify e-business opportunities, brand your Web site, and define your e-business niche. You'll also discover how to develop a unique sales proposition, analyze your industry and your competition, and attract the best customers to your site. This powerful resource provides the know-how you need to: • • • • •
Set goals for your e-business Differentiate your company's products and services Position your company in the consumer's mind Master product strategy, placement, promotion, and pricing Budget and implement your plan
Complete with hands-on exercises that let you perfect each step before applying it, Planning Your Internet Marketing Strategy is the road map you need to follow your route to e-business success. List US $19.95. Amazon USA typically sells this for $13.96. Parts of several chapters in the e-book you are reading -- 10 Steps to EBusiness on a Shoestring -- are extracted from this book. Order your copy today.
Copyright © 2002, Ralph F. Wilson. All rights reserved.
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