Most of us are under the impression that in order to earn a sizable income, we must work HARD. We put in very long hours and follow the same paths of those that came before us because it’s the “right” thing to do.  What if I told you that by slightly changing your mindset and opening yourself up to other ways of thinking about how to sustain your life and prosper, there may be a ton of monthly income that you are clearly missing out on? Now I know this sounds like a sales pitch off an infomercial but I can’t tell you how serious this really is and if you do it correctly, how well off you can actually become.

So I’m sure your very interested in this “secret” money making “scheme”, well the funny thing is that it’s actually not a secret at all and it’s legal and very popular but unfortunately our community hasn’t caught on to it yet.

Affiliate Marketing

Is a revenue sharing arrangement between a person (you) and an online merchant. The affiliate (you) places advertisements around the internet to either help sell the merchant’s products or send potential customers to the merchant’s website, all in exchange for a share of the profits.

There are three ways to earn money through affiliate marketing:

Pay Per Click - Every time a potential customer clicks on the affiliate link leading to the merchant’s website, a certain amount of money is deposited in the affiliate’s account. This amount can be pennies or dollars depending on the product and amount of the commission.

Pay Per Lead - Every time a potential client registers at the merchant’s website as a result of the affiliate’s advertisement, a previously determined amount is deposited into the affiliate’s account.

Pay Per Sale - Every time a sale is made as a result of affiliate’s advertising, a percentage, or commission, is deposited into the affiliate’s account.

This Is Pretty Old

Affiliate marketing is nothing more than a company inspiring people to promote their products for performance based financial compensation. Basically, you’re a salesperson that gets paid on commissions. All of us have either done something like this before or know someone who participates in this type of business model. Some examples of popular offline affiliate programs are below:

Avon - Got its start in 1886 as the California Perfume Company based in New York. Avon sells women’s cosmetic and perfume products and grossed 6.2 Billion in sales last year. Avon’s entire business was built on individual representatives (affiliates) marketing their products and Avon has a little short of 100,000 of these representatives worldwide.

Pre-Paid Legal - Started in 1969 because the founder was involved in a head on collision and didn’t have proper legal coverage to cover the legal bills accumulating from his accident. They provide monthly legal expense plans and have thousands of independent associates (affiliates) nationwide promoting their services.

Amazon - Started their “associate” program back in 1996 to entice website owners to promote their inventory on Amazon’s behalf. Amazon spent next to no money on marketing in this area and it worked out pretty well as they are the internet’s largest seller of books and other goods, thanks in large part to their affiliates.

While there are a ton of extremely successful examples at these offline companies, there are a lot more who are less successful. It is the same way (to a smaller degree) online, so you may be asking “Why is online different than offline?” I have one word for you…

Scale

In affiliate marketing this is the ability to acquire prospects quickly while keeping any and all expenses constant and low. There are billions of people online all over the world and it is much easier than you may imagine, capturing them to market to later.

No Product, No Money, No Problem

Most income producing activities are called businesses and most businesses have expenses. The majority of most businesses expenses (other than personnel) are marketing. The cool thing about the internet is that there is a ton of FREE ways to get to masses of people looking to buy the product or service you may promote. These customers have demonstrated…

Demand

Is the act of displaying a need for something. Online there are tons of places where people are demonstrating a natural demand for some product or service. A great example of this is Craigslist. Take a look at the “Real Estate for Sale” section in any city. You’ll notice that everyone posting under this category has demonstrated demand for wanting to sell their properties. A smart affiliate looks at this and says “What product or service that is already created, can help these people achieve their goal faster?” Maybe it’s an information product, maybe it’s connecting them with a real estate agent in their city. There are tons of ways to provide value as long as you get paid for it!

The Product / Service

There are an abundance of companies online that would be happy to have you promote their product to your market. You can setup agreements with companies ranging from travel agencies to banks! There are even other affiliate marketers online that have created quality information reports that they normally sell. Some will give these to you for free or at a small fee so that you can redistribute them and keep all the profits, this is called buying the Master Resale Rights (MRR).

The List

Arguably the most important component to raking in the cash is building lists of people who have already demonstrated demand or have previously purchased something similar. Once you have the list, you can recommend products or solutions to these people and as long as it solves their problem. They will BUY from YOU.

Your Marketing Mix

A couple years ago I was a new business owner filled with optimism and excitement about selling my services. I went for 18 months without securing any type of purchase agreement or contract with customers. I started to become worried and depressed that I could not succeed at business at all. I contemplated quitting and closing the business up to rejoin corporate America. Fortunately, I convinced myself (and partners) to give it a little more time but  quickly found that regardless of how good my companies services were, I was going to have to have a much better understanding of marketing.

One day I was talking with a friend (a successful serial entrepreneur) about some of the problems I was having in my business and he introduced a valuable concept to me. He asked if I knew the difference between Push vs. Pull Marketing. He went on to explain the differences between these and my outlook on marketing was changed forever.

Push Marketing

The most traditional marketing practice which involves “pushing” out a marketing message onto a group of prospects. A common example is a television ad on a major station. The companies using this method know that a certain portion of the group they are “pushing” this ad out too may be interested in the products or services they have to offer. This method is substantially less targeted in most cases and the ROI is lower for smaller companies. Push marketing can be good for larger companies with bigger budgets but not as good for small business owners who need to sell products now.

Pull Marketing

This method is becoming more popular as small and large businesses alike are experiencing amazing results. Pull marketing involves identifying demand for a product or service then placing a marketing message in front of the group. The marketing message is written in a way that “pulls” customers in the door a lot easier to buy your products or services. A great example of this offline are newspaper classifieds and wanted ads. Online, Google and Craigslist have made a ton of money connecting people to businesses that they demanded to seek. For small businesses, this is ultimately what you want to find, while it can be a bit more costly upfront (because of targeting) you will experience a much higher ROI.

Understand Your Marketing Mix

It is important you understand your marketing mix so that you can be sure that all of your efforts are correct and aligned with you making more sales. The marketing mix is made up of the 4 P’s below:

Product

All successful businesses solve problems through their products and services. You must look at your offer and truly define the problem you are solving for your market. The problem could be as simple as developing a better way to remember things you are supposed to do (Post-It Notes) or as complex as developing a new undetectable airplane that can be used in warfare (Stealth Bomber). Whatever it is, solve a problem that your market understands and identifies with.

Price

Pricing can be tricky but I have learned a couple of tips from past experiences and other successful entrepreneurs that may be helpful to you:

• Compete on quality, not price
• People will either pay or they won’t and price normally isn’t an issue if someone wants something (Thanks Wil Schroter)
• Connecting price to a valuable benefit will make it easier to price your products higher

At the end of the day, if you can provide a unique value and strive to build a brand of quality around your products and services, you’ll be fine. I mean hey, who would have ever thought millions of people would pay $4 for a cup of coffee? Thanks to Starbucks and their branding, people are motivated to do it everyday.

Place

A popular area of focus over the last 10-15 years for businesses has been finding the right place for customers to purchase their products. As consumers are becoming busier and more inundated  with marketing messages from your competition, they are looking for companies that can deliver the products they want without infringing on their lifestyle. I came to this realization the other day when I was looking to order a pizza. I wanted Pizza Hut but for some reason they didn’t deliver in my zipcode. I admit that I was too lazy to go pick it up so I called Domino’s and received my order in 30 minutes. While this may sound like a funny example, let’s look at some numbers that show us why this example is not funny to a business owner.

Order Price: $14.85
X
100 other lazy people in my zipcode

= $1,485 worth of revenue that went to Domino’s vs. Pizza Hut (in one day)

Look for ways that your customers can interact with your brand on their own time in the environment they are most comfortable and you will be able to maximize profits.

Promotion

You could have the greatest product in the entire world but without promotion, no one will know about it and no one will buy. When promoting, you have to be an evangelist of your product, always talk about the benefits and problem you solve. You have to “infect” people with your enthusiasm and story so that they will do the same on your behalf. One important note to understand about your marketing tactics is the difference between Public Relations (PR) and Daily Marketing Processes. Public Relations is any non-recurring public event that highlights your company in a positive or negative way. The most important thing to understand is that you cannot rely on it to drive consistent leads to your business. Nonetheless, PR can be a great way to get your company’s name out there for branding purposes. On the other hand, Daily Marketing Processes can drive you targeted leads daily. This process may involve sending out letters to prospects daily, calling leads or posting ads. Whatever process you choose, be consistent and constantly monitor performance to increase your company’s ROI.

Get Your Angel!

At some point, most businesses need additional capital to build more products, increase personnel or as we’ve seen on Wall Street lately, get out of trouble. Hopefully your business will never experience the latter, nonetheless capital is needed. I’ve seen a ton of ways not to raise capital and finally myself have figured out the magic formula to actually raising it and I thought i’d pass it on to you.

Before we get into the specifics of approaching an angel investor, it’s always good to know a little history about what you are doing. The term “Angel Investor” was first used back in the early 1900’s to describe wealthy businessmen that invested in unpopular Broadway productions. Oftentimes these productions had no where to turn and when the investors stepped in they were looked at as “Angels”. In modern day, Angel Investors are wealthy businessmen (or women) who have at least $1 million dollars in net worth and an active income of over $200,000. Not only do “Angels” invest but they also advise and leverage contacts from other business partnerships that were successful in the past. So now that you know what “Angels” do, let’s talk about getting them to write you a check.

Build Relationships Now

Angels tend to be wealthier people who are or were active in business. Think about everyone you know and make a list of everyone who is a potential investor in your idea or product. Start with people who are closest to you like family and friends and then work your way out to mentors and then friends of friends and so on. In the initial stages, Angels tend to be people who are within 3 degrees of separation or less from you. If you cannot think of anyone who is a potential candidate or don’t want to do business with anyone that close to you, checkout the Angel Capital Association website. This is a great resource to find Angel groups across the entire country.

Building relationships isn’t really that hard but there is one thing to avoid. Never ask for money on the first meeting. This is an easy way to turn off an “Angel” or anyone else for that matter. Instead, talk about who you are and why you’d like to get to know this Angel (other than the fact they have a lot of dough) it’s really good to know about some of the Angel’s business accomplishments. Always put yourself in the position to learn from the Angel. Ask for feedback about yourself and slowly introduce the product, when the time is right (you’ll know) make the pitch.

Unfortunately, this thing doesn’t happen overnight. Someone really has to trust you to write you a check, nonetheless you can do it.

Demonstrate Domain Knowledge

Trust is very important when engaging an “Angel” so you have to demonstrate that you know every angle of the industry. The best way to do this is to become the industry. What I mean by this is that you need to read every market research report, acquisiton announcement, news occurence and even publish information yourself. In doing this, you show the Angel that you are highly passionate and invested in the industry that you want to build a business in. Spark conversations with the Angel about your industry while discreetly (and humbly) showing the Angel that you are very knowledgeable in all aspects of the industry. If there are questions that you or your Angel can’t answer make sure to research and submit the answers to the Angel. This will show your resilience and ability to find less common information. All of this activity quietly builds confidence in the Angel’s eyes that you are a good bet.

Publicize Small Wins

I’ve noticed that most people don’t like to “toot” their own horn but when persuading Angels this is a must. It’s not that you are cocky, arrogant or even conceited but seeing that your relationship is still new with the Angel, you have to give them every reason to feel like you are positively different. If you are a new entrepreneur, demonstrate what you were able to do with your company previously. Maybe this was generating $5K in sales per month with an initial marketing budget of $100. If your in the corporate world, maybe it’s being named “Salesman of The Year” in your office. If you haven’t won any awards, get recommendations from your employer about your industry knowledge and work ethic. Whatever it is, show that you are different and better than other startup owners your “Angel” knows.

Remember This: Investors Bet On The Jockey, Not The Horse.

Prove Scalability In Your Model

There are a ton of good business ideas out there but one thing that stops them are their inability to scale. So what does it truly mean to scale? Scalability occurs when a system (your startup) is built and as there are more “transactions” (sales, users, etc…) costs remain relatively constant. It is extremely important for Angels to see a scalable business model because that means that their is big profit potential in the future. Technology companies (especially software) do this really well because the product for the most part is intangible and doesn’t require many additional costs. I’m not frowning upon companies that don’t scale well because they can generate a ton of revenue just not a ton of profits.

Google Scales Well (World Leader In Search)

2007 Revenue: $16.6 Billion See Here

2007 Profits: $3 Billion

2007 Profit Margin: 29%

Adecco Staffing Doesn’t (Leader In U.S. Staffing Industry)

2007 Revenue: $30 Billion See Here

2007 Profits: $1 Billion

2007 Profit Margin: 3%

Show Where The Money Will Be Spent

Since your Angel is going to be writing you a FAT check, they kinda wanna know where the money is going. Prepare a spreadsheet that shows how the money will be spent by month over twelve months then by semi-annual intervals to 18 and 24 months. No need to show expenses any further out because you probably won’t have it and if you do, that means you’ve raised Venture Capital funding and you’ve been reading the wrong article. If you can create a 10%-15% cushion in your ask to account for any unforeseeable bumps in the future.

Outline these main areas in your projections.

• Sales
• Personnel
• Marketing
• Infrastructure
• Legal

Cash The Check!

Now to the fun part, you’ve asked, you were approved and it’s time to cash the check. Your investment will probably be more than a couple thousand dollars so note that it will take at least 3-10 business days for your bank to actually transfer the funds to your business account. Remember that this money is for business purposes only and that it really isn’t your money. At all costs, try not to blow it on personal items like a new car, home improvements or buying that new phone. It’s hard to resist spending a lot of cash when you get a lump sum, if you’re worried about spending it talk to your bank about putting a portion of the funds into a short term Cash Deposit (CD). This way you can save your investment and earn interest.

Now get to work!

P.S. If you have a story or comment about raising Angel Funding, i’d love to hear about it!

Dont get wrapped up in being the BOSS.

As entrepreneurs we often get overwhelmed with the power (or potential power) that comes along with being in charge. We have so many titles that describe us including Boss, CEO, Founder and President. While there is a time and place for all these titles are applicable, oftentimes its not really needed and frankly can cause more harm than good.

Acting Like An Employee

On countless occasions whether it be at a networking event, conference or dinner party, everyone wants to know a couple of things: Your name, what you do and your title. For the longest time, I always gave the honest answer: Dezmon Landers, Internet Entrepreneur, CEO of Simplifyed.com. I would either get two responses: “Wow, that sounds cool! I wanna know more” or “Aren’t you to young to be taking risks and running your own company? Shouldn’t you be working for a REAL company getting some REAL experience? I’m sure your HOBBY probably doesn’t even make any money.”

If you’re anything like me you tend to focus on the negative things and how to make them better (or avoid them) as opposed to putting much thought into things you already do well. So after many negative responses like that over the years I started to wonder why people were so negative when I was honest about what I did.

People are pessimistic and competitive by nature

Unfortunately, this is very true. Have you ever run an idea by someone to see what they thought and they immediately say “That probably won’t work” or “That idea is not realistic” without really knowing anything about the problem your idea solves? We all have at some point and this is the same reaction entrepreneurs receive similar to what I described above. I made a couple of mistakes in my introduction above:

Mistake # 1: I called myself an entrepreneur

This is a mistake because most people are risk averse by nature but entrepreneurs are risk takers by nature. Before the conversation goes any further, there is already a subconscious disagreement about views on life and business. Secondly, the term entrepreneur is kind of vague and could apply to a lot of different businesses. People negatively dismiss what they don’t understand or comprehend, so guide them along to alleviate any confusion. I should have been more specific about what I do and said “Business Developer”.

Mistake # 2: I called myself a CEO

Most terms like Boss, CEO and Founder have an elitist connotation to them and can turn some people off. In my experience, people have tried to poke more holes in my business acumen to really see if I was what I said that I was. The problem here is that those conversations aren’t really that productive and can be offensive on both sides. Rule of thumb: Avoid it at all costs!

So when someone asks me those three important questions of “what is your name, what you do and what’s your title” I simply answer: Dezmon Landers,  Business Developer for Simplifyed.com.

Get Your Customers Waiting In Line For Your Products!

After being involved with many companies which have succeeded and failed, I have found that there are four distinct areas of creating a business that really make a difference.

Acquiring

Customers use products because it solves a problem that they recognize and identify with. After they have determined that your product solves their problem, they automatically start thinking of others they know who are having the same problems and attempt to spread the word. Depending on the level of excitement your product conjures up in your customers will determine what lengths they go to spread the word. It is very important to make spreading the word easy.

After making your product naturally viral, you then need to focus on how to acquire customers cheaply through more traditional avenues like Pay Per Click, Social Networks, Classified Advertising and offline presentations/product meetings. Try all of these areas to see which brings you the most qualified customers at a price per customer that you can afford.

After all of this, it is time to scale. The most important area of scaling your customer acquisition process is building the proper systems and processes to service all of the customers properly. These systems may include a multi-lined phone system, more employees, purchasing more software or creating a handbook that lists all steps to onboard a customer to your business. Processes and systems are paramount to scaling your business.

A business using processes to easily on board customers and beat the competition:

Engaging

All the time I see businesses make the mistake of forgetting about their customers after they convert them. This is a cardinal mistake as statistics show that it costs 3x more to acquire a customer then to re-sell to one you have already converted. So how do you engage your already converted customer?  The answer is different for each business but it comes down to knowing what your customer wants to know more about.

If your selling pez dispensers (as eBay initially did) to candy shops, candy shops probably want to know how they can sell more of these or fit more candy into each dispenser to increase their prices and overall bottom line. If your a web design company, your customers want to know more about the new features you can build to increase the usability/like-ability of their websites. As you can see, the pattern is what you can do for the customer.

A company who engages their customers well:

Retaining

Retention is an area that is comprised of customer service, marketing and continuing innovation. Customer service is paramount in retaining customers because they want to know that you are able to efficiently help them with their problems and that you are happy to do so. Customers believe that their issues are most important and you have to build systems that accommodate every customer issue in a manner they are happy with.

Marketing is very important because having customers that are not within your target demographic increase the likelihood of attrition. Track your retention rate against your marketing objectives and see it should display that your “target” customers suffer much less attrition than those that are a bit outside of your “target” demographic.

Innovation of your product is becoming increasingly important especially in the United States. There is so much competition in each industry that it easy to lose customers to competitors who are adding features, lowering prices or doing what you do better.

A company who has a record 95% retention rate:

Monetizing

A revenue model that can be applied to the online and real world is the “freemium” model. It’s quite simple actually, create two versions of your product - free and paid. The free customers will be monetized by advertising or lead generation for other related companies to yours. The paying customers will enjoy your product free of solicitation.

When thinking about monetizing customers dont think too literally about who your paying customer is, just make sure someone is paying. Google does a great job of providing a ton of great products for free and monetizing on the backend through targeted advertising and lead generation.

A $12 Billion Dollar powerhouse whose products are free:

]]> http://www.startuphustle.com/2008/09/01/acquiring-engaging-retaining-and-monetizing-your-customers/feed/ http://www.startuphustle.com/2008/09/01/startup-hustle-is-being-acquired/ http://www.startuphustle.com/2008/09/01/startup-hustle-is-being-acquired/#comments Mon, 01 Sep 2008 19:39:55 +0000 Dezmon Landers http://www.startuphustle.com/?p=191

My name is Dezmon Landers, CEO of Simplifyed.com and I am proud to announce the acquisition of Startup Hustle! Over the years Tyler has provided great insight for all of us into the areas of internet marketing, SEO and entrepreneurship. I will personally continue this legacy of informative thought provoking content that is interesting and fun. I also plan on delving into the broader areas of startup entrepreneurship including raising capital, product innovation, legal tips and of course internet marketing.

So who is Dezmon Landers?

Well, I am a financial services internet entrepreneur and have had the pleasure of working with Tyler at some of the same startups he has written about in this blog.

My biography is below:

“Dezmon Landers is a graduate of The Ohio State University with a Bachelor’s of Science in Family Financial Management. In one of the worst economies ever recorded Dezmon received fifteen career offers from esteemed Fortune 500 corporations including Goldman Sachs, Nationwide Insurance, Limited Brands and Johnson & Johnson. He has graduated from prestigious national programs such as The Harvard Business School Summer Venture in Management Program in Boston and the Monster.com Diversity Leadership Program in Los Angeles. In 2007, Dezmon was one of only two candidates in the United States chosen to work for Goldman Sachs International in London, England and has worked on Wall Street and Silicon Valley. He has worked with four financially successful internet startups including GotCast.com in the areas of technology, marketing and business development. Today, he is the founder and Chief Executive Officer of Simplifyed.com which is the nation’s largest website for simple financial planning. Dezmon is the youngest person to be nominated and serve on The Ohio Department of Education’s Entrepreneurial Advisory Board and The Ohio State University’s Upward Bound Program executive board. Dezmon speaks throughout the country in the areas of entrepreneurship, success, financial literacy, and was one of the youngest people in history to address members of Congress on issues of national financial literacy in 2008.”

I look forward to exploring the areas of creating a startup with you so that you can beat the competition and realize your dreams!

While attending business school at Ohio State, networking with entrepreneurs and groups didn’t involve many outside of campus. Resources were limited and there were not any great online options. I have recently came across a site that I think has a great opportunity to help bridge that gap.

StudentBusinesses.com is a selective resource that helps student entrepreneurs:

1. Publicize their businesses and ideas to potential advisors, investors, and professional service-providers.
2. Network with other promising student entrepreneurs.
3. Participate in discussions on a wide range of promising startup ideas.
4. Access valuable educational content about entrepreneurship. The site is by-invitation and by-application only in order to ensure a high standard of membership.

StudentBusinesses.com is the brainchild of Vivek Ramaswamy and Travis May. While on a trip in Beijing, the two Harvard undergrads realized they (and all students) needed better resources outside of their university campus. Not only do students need resources, but advisors and investors often miss opportunities from student created businesses.

Success has already been achieved through the organization with one company receiving funding through an incubator. I recommend that any serious student venture look into joining StudentBusinesses.com and make use of their valuable knowlege and resources.

SEO Expert Inc. is run by Sean O’Brien. I have had a chance to work with Sean one-on-one for months now and am impressed with his knowlege and attention to detail. If you are looking to outsource your SEO jump over to their site and see if it would be a good fit.

I prefer to use multiple data points when calculating both traffic for my sites and competitor sites. There are not many options that provide realistic data when comparing site traffic. Alexa.com and Compete.com are the two “best” options for traffic rankings currently. Compete also gives you an estimated number of visitors, as does Quantcast. You will notice large deviations in the data for some sites, but that is expected as traffic estimation is difficult.

One advantage Quantcast provides over other traffic sites is the addition of demographic data. Gender, age, education, income and race are shown to provide a rough make-up of your visitors. You can compare these numbers to your Google Analytics data to gauge the accuracy.

Quantcast also provides other sites your audience has visited and keywords that are likely to find that site (you can never have too many competitor keyword tools).

One last piece of information that is interesting is the Traffic Frequency graphs. This displays three levels of visitor activity (addicts, regulars and passers-by) and the amount of your traffic they generate. Again, this data could be checked against Google Analytics.

All of these online tools have their issues and will provide different results, sometimes dramatically different. The best way to get a level playing field is to average data from all available sources. I have added Quantcast to the list of sources I use when researching site traffic.

Thank you Dezmon (founder of Simplifyed.com), for turning me on to Quantcast.

That is often found to be the wrong reaction, as cutting your advertising budget wont lead to more sales. Since cutting the ad budget is still practiced by many, your competitors might join that crowd. Or, you can go crazy and expand your marketing spend during a down turn.

I have noticed a reduction in the number of AdWords advertisers. This decreases spend per click and reduces the options searchers have, which could lead to more sales for you. Even if the general populace is buying less, they still research products which could lead to sales down the road.

Any web startup that sells a product should give pay per click a try for two reasons:

1. It could be a great sales channel
2. The keyword exercise is essential to SEO

What better time to do keyword and marketing (ppc) testing than when prices and competition are low.

Here are a few articles I wrote over the past year regarding pay per click advertising:

Adwords Quality Score

Keyword Cost for PPC

Adwords GeoTargeting