Commerce

“The new alliance brings together Nokia’s hardware capabilities and Windows Phone’s differentiated platform,” said Ramon Llamas in 2011, research manager for IDC. “By 2015, we expect Windows Phone to be the No. 2 operating system.”

Ma is the chairman and CEO of Alibaba Group Holdings Ltd. (NYSE: BABA), the Chinese counterpart to Amazon.com Inc. (Nasdaq: AMZN) that may one day own most of Asia retail.

He started Alibaba in his apartment with 18 other people in 1999. BABA was valued at $230 billion at the time of its 2014 IPO and today has a market cap of $520 billion.

There’s a lot of great stuff in this interview, which was conducted by Abi Ramanan, the CEO of ImpactVision, a software start-up that uses hyperspectral imaging to help food supply chain companies determine the quality and ripeness of their food products.

He was speaking with and to a roomful of young leaders, typified by the 30-year-old Ramanan, so it makes some sense that he’d be bullish on their future:

The next generation of globalization should be inclusive and create opportunities for young people to get involved. The last 30 years of globalization was controlled by 60,000 big companies. In the next 30 years, we will have six or 16 or 60 million companies get involved in globalization.

Ma has a fascinating perspective on the technology-led transformation we’re experiencing.

Essentials of successful commerce require:

A Winning Product

What makes a great product is always a hot debate among commercial experts. We started out this course by discussing how few entrepreneurs have a winning idea. That usually means there are a lot of mediocre products out there. Any product that is created from an idea to fix something, however, has the potential to be a great product. To become that it has to fulfill several imperatives.

1. Clearly Defined, Singular Purpose

If something makes you so mad you want to create a product to fix it, you can almost guarantee that you are focused on a singular purpose. That is essential. Too many products try to be all things to all people. A product that satisfies a singular purpose is easy to understand, and its value is easy to calculate. As we will discuss later in this chapter simplicity is the most important marketing tool when it comes to helping consumers make a purchase decision. Simplicity starts with the product.

When first introduced in 1998, many questioned why Google would even bother with search. Alta Vista had already come to define the genre and for the most part, people thought the search problem was essentially solved. However, through its singular focus using a search box offered on an otherwise blank page, Google quickly became the leader. It was just simple for people to use.

Identifying a singular issue and providing one clear solution makes a great product. With services, doing one thing better than anyone else is the starting point. Being as good as or different in some minor way is not enough. Be the best at one clearly defined thing.

I have used several house cleaning companies in the last few years. There are lots of companies to choose from and it is hard to differentiate them. The first one advertised their use of only eco and pet-friendly products, and that appealed to me. Staff turnover at the company, however, was an issue for them because cleaning houses is harder work than most employees anticipate. When the three-person team kept arriving with all new faces requiring me to explain what they had to do I got fed up.

I went with another company that had rave Internet reviews. It was quickly obvious that their teams cut corners so I ditched them. A third company advertised the lowest rates but when three men showed up with about half a dozen teeth between them I did not even let them in the house.

Finally I found a cleaning service that understood the problem that needed fixing and had a remarkably simple fix. It was a family. Mother, father, sons daughters and cousins all worked for the one company. They understood that I wanted my house to be as carefully taken care of as their house and that I didn’t want strangers turning up at the front door all the time. The only problem was that I had to join a waiting list because they could only take on a certain number of clients. When finally there was a space I hired them.

The family treats our home like their home and seeing the familiar faces turn up every month is comforting. Trust was established and the father also doubles as a handyman when we need things fixing. Their business has a clearly defined, singular purpose… to clean homes like a family cleans their own home.

2. Simple to Use, Simple to Upgrade, Simple to Fix

A few years back I had a customized home-theater installed. The system was relatively simple to use, but a nightmare to fix. Frequent automatic software and firmware updates paralyzed it, and I had no choice but to call a technician to fix it. This happened every few months and the technician spent hours wandering around my home trying to work out the cause of the problem.

Most of the equipment was by the one manufacturer, and my experience meant I don’t recommend that brand to others who are considering installing systems.

One time after an upgrade, the system no longer communicated with my controllers. The manufacturer told me that I would have to buy new controllers. Instead, I went online and downloaded an App. that allowed me to use my smartphone as a controller. Now I am a big fan of the APP. maker who solved my issue with a product that is simple to use, simple to upgrade, and simple to fix. So, I recommend it to everyone who cares to listen.

3. Exceeds Expectations

It almost goes without saying that if we are not satisfied with a product we rarely purchase it again. If I read a book by an author, new to me, and it exceeds my expectations I always look to see what else the writer has produced. The opposite happens when a book disappoints. Product experience, however, is only part of the equation for how we measure expectation. If I go to a restaurant, eat great food, but the waiter is surly, my overall expectation has not been met. I go to a restaurant for the total experience of the atmosphere, service, and quality of food. In business this means that we have to pay as much attention to customer service, packaging, instructions, return policy, easy of payment etc. as we do the product itself. Today it is easy for people to influence others with social media and online reviews. Any product or service has to exceed their expectations across all emotional and sensory dimensions, or the reviews will be modest.

4. Change Peoples’ Lives for the Better

If your product does not do that it is not a winning idea, and no amount of marketing will make a difference. People only recommend your product for free to others when they are emotionally excited about it. To do that it has to improve their quality of life in some way. All this might seem common sense, but we live in a world with so many “me-too,” product and service choices that just trying to decide which to buy can be a source of frustration.

I had a friend who tried to launch her own line of dog-shampoos. No matter how many times I asked her to explain what difference the product made in people’s lives, she answered that the pretty pink label was more eye-catching. The same generic manufacturer that supplied all the other dog-shampoo companies, all with their distinctive labeling and attempts at branding, made hers. He business never took off. Savvy branding is not enough anymore. People can now research beyond the label and beyond the choices on the shelves to make informed decisions. Your product or service must make a difference in the purchaser’s life.

Winning Marketing

The first paid advertisement published in a newspaper was in 1836, and the first recorded mass marketing of unsolicited spam was in 1864 using the telegraph. Since then, every new technology has attracted marketers like bears to honey. Telemarketing, relationship marketing, guerilla marketing, and viral marketing have all been touted as the keys to success at one time or another. One could argue that the history of marketing is nothing greater than a history of communication fads. Every few years a new tool-kit appears that promises to be the key to success.

There is no doubt that when a new communication medium does appear, it attracts the attention of the masses and affords the marketer a small window of opportunity in which to get a message to a wide audience. Unfortunately, saturation occurs quickly and return on investment diminishes with it. Unless the start-up entrepreneur is the first to identify the power of the new medium and has a lot of cash to spend, it will be hard to get noticed amongst all the clamor and noise of the herd that rushes to it.

Unfortunately, I am old enough to recall when fax machines were such a novelty in the office that, the moment the machine started whirring, people ran from all corners as if their desks had caught fire to read whatever was spewed out. Although fax had been around for decades, it was only after Sony flooded the market with cheaper and lighter units in the 1980s when every small business adopted it as a cutting-edge communication tool.

When our office bought its first machine, people crowded around it as first one grey line appeared and then another. Like some office game of charades they tried to guess what the final picture or message would be.

Very quickly marketers saw an opportunity, and fax broadcast programs started bombarding everyone. It was not long, however, before people became fed up with running to the fax machine only to be offered another discounted cruise to Mexico.

When it was novel, the return on investment of fax campaigns for marketers was good. Because the machine printed a piece of paper and someone had to physically remove that paper and either distribute or trash it, the “open” rate was high.

Then, of course, saturation happened and ROI for the small business marketer declined. Entrepreneurs realized they had little or no return on their investment in fax campaigns, and probably most vowed never to follow the herd mentality again… until the next fad came along… CD mailings, email blasts, online video, social media tactics, smartphone APPs to name but a few. By the time this book gets in your hands there will be another leading fad on the block, and I’ll seem more like Warren Buffet for ignoring it.

Some marketers might argue that because fax technology is old fashioned now, the ROI on fax campaigns today is higher again as it stands out from the crowd of email and social media. Certainly some cultures like Japan still rely heavily on fax machines and fax communication, and some highly regulated industries have procedures that legally require fax copies. The herd, however, has moved on.

Joining a fad does not make effective marketing, although it might be unavoidable for some types of business. Today I get inundated with offers from companies to build my social media campaign. At least twenty social media platforms, such as MySpace, Ping, and Yahoo Buzz, have been touted as the marketer’s ideal toolkit, but they failed within a few years. So many start-up entrepreneurs wasted money and time building platforms on those sites. Like Warren Buffet I find it impossible to predict which social media company will survive long enough to get me a return on a campaign.

Communication technologies come and go, and large companies spend huge experimental budgets to test the return on investment. The small business entrepreneur cannot usually compete and should keep to the basics of commerce, which never change over time.

Great marketing is not about joining all the noise, but standing out from it. To do that we have to get the right message, to the right people, the right number of times, and then make it easy and cool for them to pass the message to others like them.

The Right Message

A feature is a fact about a product or service that on its own offers no one a solution or satisfaction. It may be interesting, but usually not compelling to make us do something… like buy it. Even the biggest and most famous companies that spend billions on TV commercials make the basic selling error of speaking about features rather than benefits.

Car commercials can be the worst offenders as they reel off a list of features about speed or technical capabilities without helping you grasp the benefits of them. Getting the right message across means that the commercial doesn’t talk about the features of horsepower a car possesses, and it doesn’t talk about the variety of safety features that are offered. Instead the commercial focuses on the main benefit of driving the car, which is that driving a particular one may save your life during the most vital moment – a car crash. The right message confers a potential life-changing benefit to the consumer.

A classic example used to explain the difference between features and benefits is to consider an advertisement for a self-setting alarm clock. The facts that it is self-setting and also an alarm clock are features. The benefit is what the features mean to the customer in satisfying a need they have. Some marketers would extrapolate the benefit as convenience for the fast-paced traveling, jet-lagged businessperson. Plug it in and never miss a meeting again.

The Right Person

Although convenience of the self-setting alarm clock is a benefit, however, it may not be relevant to all customer segments. You have to put yourself in the shoes of the particular customer targeted and ask, “So what does it really mean for him?” It might mean he doesn’t have to struggle with the instruction manual, his reading glasses, and then look a complete fool in front of his twelve year-old daughter, who could set it up without even taking her eyes off the TV.

That would be the true benefit to the father. “No instructions necessary. Open the box and plug it in.” To the daughter, however, the true benefit might be that she can buy it and gift it to her father knowing that he will be delighted because he doesn’t even need to read the instructions and get all stressed out. To her the benefit is a delighted dad.

The smart marketer would combine these benefits to target both customer segments with the right message to the right person: “Never fumble with a dial or miss an appointment again wherever you are. The simply-smart alarm clock. Open the box. Plug it in. The smart alarm does the rest. It sets and resets itself. That is one smart alarm clock.”

The secret to understanding the difference between a feature and a benefit is to constantly ask, “What does the feature mean to the customer?” Write out a list of features for your product or service, add the words, “Which means that,” next to each statement, and then complete the sentence looking through the customer’s eyes. “It is a self-setting alarm clock which means that all you have to do is plug it in… which means that it sets the time for you. Which means that there is no manual to read which also means no time wasting with fiddly knobs and dials, which means I don’t need to find my reading glasses.”

If you have been through a business plan process, as outlined earlier in this book, you should have a pretty clear idea on the demographics and profile of your target potential customers. Today’s online marketing tools like Google, Facebook, and others provide plenty of analytical products that can segment their site visitors so you can more accurately target a defined demographic with the right message. That helps to make your budget go further.

The Right Number of Times

In order to plan efficient TV media buys, 1960s advertising expert Herbert Krugman researched how many times consumers needed to see a commercial for the same product or brand, before taking an action. His conclusion is studied in many marketing classes as the “Theory of Effective Frequency for Advertising.”

Repetition is the basis of any learning process, and it’s no different for consumers learning about a product. Krugman initially concluded that the magic number was three. In other words, after seeing or hearing about a product or brand three times, consumers would take an action. As he explained it,

“The first time someone is exposed to your message, you attract their attention, but nothing is really taken in, thus “What is it?”

The second time is when the consumer begins to engage with the relevance of the message, and asks “So what?”

And the third exposure to the message is when the viewer decides whether “This is for me”, or whether they will choose to forget it.”

Later research suggested the number was more than three. Nielsen media guru Erwin Ephron’s work lead him to conclude it was five times. More recently, a Nielsen study claims ten social media touches are needed to effect a behavior change. The point is that you’ve got to get your product in front of your customers multiple times in order for them to take the action you want.

The great thing about digital marketing is that there are many cost-effective ways to achieve your multiple marketing touches: email, social media, display advertising, websites, microsites, sponsorships, content marketing, etc.

Testing the effectiveness of any one medium, however, is tricky. For instance, two customers might buy after five impressions, but for one customer the fifth impression was email, and for the other it was an advertisement in a journal.

Make it Easy and Cool to Recommend

Think of products like Dropbox, Hotmail or Snapchat, and how quickly those products went viral with very little marketing effort. They were great products, each with a simple, singular purpose, and easily recommended via a strong message of benefit for the user. People enjoyed their experience, and the companies made it easy and exciting for them to share their enthusiasm with friends and family.

A 2012 study on what makes consumers buy a product repeatedly, and recommend it to others concluded that the single biggest driver by far, was “decision simplicity”—the ease with which consumers can gather trustworthy information about a product and confidently and efficiently weigh their purchase options.

In the context of decision simplicity, trustworthiness isn’t about trusting the brand; it’s about trusting the information gathered and its source. The study points out that the marketers often miss this point and put their efforts into activating brand recommenders who simply focus on product features and benefits. Consumers also need information about the adviser in order to trust the information.

They found that most marketers misjudged what consumers want from them online. In particular, marketers often believe that consumers interact with them on social media to join a community and feel connected to the brand. But consumers have little interest in having a relationship beyond the transactional. 61% of consumers said they interacted on social media for discounts, or reviews and rankings. 73% of marketers, however, assumed that interaction was because customers want to learn more about a product. They have it wrong.

The survey found that brands lead consumers down unnecessarily confusing purchase paths with too many options. “Often what a consumer needs is not a flashy interactive experience on a branded microsite, but a detailed exchange with product users about the pros and cons of the product and how it would fit into the consumer’s life.”

Too much choice can be paralyzing. One of the most common consumer responses to too much choice is to forgo a purchase altogether. In a classic experiment, Sheena Iyengar, then a doctoral student and now a professor at Columbia Business School, set out pots of jam on supermarket tables in groups of either six or 24. About 30% of those who were given six choices bought some jam; only 3% of those confronted with 24 choices did. Too much choice or too much information can be paralyzing.

The survey concludes that marketers who focus on simplifying consumers’ decision making will rise above the din, and their customers will stick by them and recommend them as a result.

Selling

The process of selling intimidates a lot of start-up entrepreneurs. Cultural and society belief systems can create negative attitudes of the sales process as being aggressive or pushy. Most people like to be loved and approved of and take rejection personally. Many of us have also experienced the hard sell of a telesales person or vendor on a street corner and may wrongly assume that is what selling is all about.

A Gallup poll on the honesty of business professionals found that insurance salespeople and car salespeople ranked worst. Perhaps that does not surprise us. The poll also showed that more than 85 % of customers have a negative view of all salespeople.

I know I did. My father was the stereotypical salesman we read about or see on TV. Cigarette dangling from his lips, he was never short of false confidence and charm when he manned his market stall or the store we lived over. He could persuade people of just about anything. “He could sell sand in a desert,” was how others described him. It was obvious that he cared little about the customer and everything about getting their money. That is what I though the sales process was all about. It seemed that the sales process was all about the salesman making a sale at the expense of the “dumb” customer.

It was, therefore, with a great deal of trepidation when, a decade later, I decided to quit my secure job at a hospital to start a new career as a sales representative for a pharmaceutical company. My decision was purely for financial reasons when I found I could barely cover the mortgage on our mid-terrace house. The entry-level trainee position paid twice as much salary. I recall being shy and intimidated when I arrived at the company headquarters for a five-week training course.

To my complete surprise the other trainees were more like me than my father. They were not pushy or extrovert. They seemed honest and considerate of the customer. To my greater surprise the trainers were just as down to earth.

The content of the course taught us the rudiments of successful sales. Whereas I expected to be taught what to say and how to say it, they taught me instead to listen to what the customer had to say. When I thought I needed to push the benefits of the product, they trained me to know its limitations and to assist the customer only with what they need.

Not only was I relieved, but also I thrived at the sales process. I found I was a good listener and also it was natural for me to want to help a customer solve a problem. I had worked in a cancer hospital, and all my work was about caring for people. I found sales was more like that than about being in something for oneself as my father seemed to think. I took to selling like a duck takes to water, and I never looked back. In all my own companies my mantra has been, “The customer comes first, the rest is just detail.” That is what that first course taught me, and I have never wavered.

Before I started as a sales trainee I would never have imagined that one day I would consider myself something of an expert in the sales process, or that I would have had such fun and fulfillment in that role. I did, however, because I realized straightaway that the best sales people are those who listen more than they speak. In sales the introverts actually rule over the extroverts. Lucky for me.

I have never forgotten, however, the initial fear of sales, and I meet many entrepreneurs who have difficulty with this aspect of running a business. An army of self-styled experts makes the process overly complicated, which adds to the fear. They add jargon like “opening benefit statement,” “active listening,” and “trial closing,” and it all starts to feel like you are learning to be a used car salesman with corny, stomach churning questions such as “what would it take for me to get you into this vehicle?”

Take my advice. Ignore it all. I can easily take that fear away. I can tell you that everyone can succeed at selling with just a simple understanding of what the process entails.

The first thing you must accept is that regardless of how intimidated you may feel now, the biggest mistake you can make is to hire someone to do this function for you. One day you may need to hire a sales force, but if you have not performed the role yourself for at least a year or more, you will never be able to direct the sales force effectively. So, regardless of how you feel get used to the idea that you need to leave your office and go to meet some customers… and sell to them.

There is a secret to selling. Of course, this is a book about secrets, so here is another. The moment you try to sell something to someone you have stopped selling. The moment you stop trying to sell something to someone is the moment you start selling.

Contrary to what most experts teach, selling is simply the process of meeting another human being, and then listening to what they have to say. It really is that simple. Imagine walking into a room and then meeting a family member walking toward you. You know intuitively when that person has something on their mind that is troubling them. Your senses perceive their glum expression and something “off,” about their energy.

Because you care about their welfare more than your own, you will probably ask them if everything is okay. Typically they will brush off your concern. So, what do you typically do in return? You stay quiet. You know that eventually the simple act of silence will cause them to spill the beans.

The sales process is exactly like that. Potential customers have needs. They have problems that need fixing. Your job is to meet them to find out what needs they have. If you can fix them you will both be happy. If you can’t, you will try to find someone else who can help even if that person is your biggest competitor.

Selling can be one of the most rewarding tasks you’ll undertake as a business owner if you follow these rules:

As you approach a potential customer imagine he or she is your favorite relative. Don’t run up and jump in her arms or plant a kiss on his cheeks. Stand straight. Look the person between the eyes at the point where the nose meets the brow. This is clinically proven to make you both comfortable and secure. Direct eye contact, especially in certain cultures can be off-putting for either party. Offer a firm but brisk handshake. Smile and be nice.

Have a standard introduction that you have practiced a hundred times in front of a mirror or on an IPhone video recording. “Hello Mrs. Jones, I am Trevor, the owner of the successful startup, and I am happy to answer any questions you have about how I can help your company grow faster.” The purpose of this is simply to help you overcome your nerves with a positive, affirmative introduction. Nerves can freeze our brains and leave us tongue-tied.

Use open-ended questions: After making introductions, don’t launch into a sales pitch. Ask an open-ended question. An open-ended question is one that causes the customer to start talking. It is exactly what you would have done with your favorite relative. “Hi Melissa, how are you? What was your vacation like? Tell me all! I can’t wait to hear about it.” The most frequently used open-ended question would start with the word, “what,” as in, “What was your vacation like?” Most sales people used closed questions that result in a single word answer: “Can I help you?” “Are you interested in?” Asking closed questions gives the customer the option of shutting down with a “no” answer. Open questions cause the customer to engage in dialogue, and such questions start with “what?” “Why?” or “How?” For instance, a shop assistant in a clothes store who understood this process might ask “What color tops do you prefer wearing?,” rather than “Can I help you?” It is harder to answer “no, thanks,” to an open question without appearing rude, so most people will continue a conversation. You are not trying to trick this person. Instead you are like a counselor trying to help her open up about her issue.

Listen twice as much as you speak. Listening skills are the number one selling skill. Everything your customer says gives you an opportunity to respond with another open question. You can’t do that if you are the one talking all the time. For instance: "Business owner: “What sort of tops are you looking for today?" Customer: “Oh, I am just browsing, thanks. I’m not sure.” Business owner: “Well, we just got a whole new line in store. What is the occasion you are thinking of?” Customer: “Oh just a cocktail party my husband wants me to go to with him.” Business owner: “That sounds like fun. Tell me a bit more about the occasion. Now you understand her need, and you are there to help. You have struck up a natural conversation, and as she describes the event you will probably get inspired ideas of what to show her to wear. You would ask for more specifics, and then give her several options and honest feedback on her choices. What is so hard or intimidating about that? Yet, whenever I am in a clothing store with my wife, I hear the same useless closed questions like, “Can I help you?”

When we are nervous in front of a potential customer, there is a tendency to be thinking of our next question or statement rather than listening to what the customer just said. One trick is to repeat back to the customer what you think you just heard her say. This gives your brain time to digest the information and create a follow up question. Another example may help: Business owner: “Thank you for your patience waiting. What brings you to our store today?” Customer expresses source of frustration. Business owner: “You bought the phone here last week, but the battery is not working you say? I’m sorry you are having trouble. My name is John and I’ll be happy to assist you. May I ask your name?”

Courage to close a sale: You don’t need to be a master sales person to succeed. You just need the confidence to believe that you do the best work, or have the best product, and therefore, have a right to ask the customer for his business and payment. All the marketing you do is useless unless you ask for the sale. Sales-technique gurus make “closing” seem mystical and difficult. It is, however, remarkably straightforward. You take a deep breath, open your mouth, and speak. Closing is an easy technique if you use what I call an “action close.” That is simply a request for another step in the sales process: "It is a self-setting alarm clock which means that all you have to do is plug it in and it sets the time for you. Then when it asks what time you want to wake up, just tell it. Simple. Done. No manual to read, no time wasting with fiddly knobs and dials. They are very popular, and we don’t normally have a lot of color choices in stock, but we just got a new shipment so right now you can have any color you want. Which color would you prefer? ”

Outsourcing Direct Sales

Your product or service may eventually be best promoted with face-to-face sales activity, otherwise known as direct sales. There are many companies that offer syndicated/shared sales forces or lease options with a variety of configurations to fit your budget. Rather than pay for the cost of a dedicated sales person for your one product, it might make more sense to join a contract sales force that already promotes a couple of products to your target audience.

In these cases you pay a reduced price for being one of several to be detailed, but if the first two products have been around a while, you often find the sales person speaks about the latest product first, so as to get more time and interest from his or her prospect. You will also get lots of valuable market feedback, which can be worth the investment in itself.

All of the administration and people management is done by the company that owns the sales force, but it will still be hard for you to direct them if you have limited sales experience. You still need to get out and sell to some people so that you can gather sufficient feedback about resistance and objections that the sales people might face. Sales people hate surprises when they are interacting with your customers. The main advantages for outsourcing sales people are:

Cash-flow management. Add contracted sales people as demand dictates, and treat marketing as a variable cost. If demand is so great that you have to scramble to get more sales people out there it is a high quality problem to have and far better than having to cut back which always hurts morale.

HR management and administration are handled by the vendor, which frees you up to run your business rather than ‘man-manage.’

Sales people usually have established customer relationships so your product “hits the ground running,” without you having to create leads.

Outsource companies have the latest technology to offer real-time analysis of effectiveness of your marketing messages.

Most contract sales organizations also offer a menu of support services that can include dedicated or shared field sales teams, specialist sales services, marketing campaigns and telesales. Contracts are customized to fit product needs and client budgets, and the contracting process will include decisions about representative profile, training program, management direction, IT platform, and incentive plans.

Another use for contracted sales support is when you can’t be in two places at once. For instance, if you have two overlapping trade shows at which you could exhibit your product. Virtual sales teams can offer short-term contracts to help you out.

Outsourced telesales offers a full range of outbound and inbound telesales options to promote products and services to decision makers over the phone, including product detailing, remote territory coverage, and vacant territory management. There are lots of companies that offer telesales services, and they can be expensive.

Choose one that offers:

Simple ROI measurement tools and real-time reporting

Pay on performance option so you only pay for results

Free trial period to prove their value

History of low staff turnover

References from clients in the same sector as your company

Comprehensive staff training

With all of the options available I would caution you to carefully consider the return on investment. We all have a tendency to hype our own ideas, and expectations for orders can be unrealistically high. Where possible, negotiate trial periods with the contract sales company, or hire only a few people to concentrate on a single area and then test the results and return on the investment before expanding.

Affiliate Marketing

Affiliate marketing uses a network of established retailers (mostly an online practice) and their products to sell to a customer base in exchange for rewards or commissions. Behind the curtain of the website, software at each of the companies that offers the respective product determines that the customer has purchased through a certain website, and commissions get paid appropriately for the referral.

There is a good and bad side to affiliate marketing. Many companies, entrepreneurs, and groups don’t know or care about the quality of the product they are advertising through their website banners. Authenticity is essential in every aspect of a business, and you should only include banners for companies that you have worked with, and for products that have satisfied your needs over time.

The advantage of affiliate marketing is that it helps the start-up company with managing cash-flow, and your company only has to pay when a product or service is sold. Affiliate marketing takes the expense of marketing and turns it into a cost of sale or cost of goods sold.

There are three primary ways to locate affiliate programs for a target website:

Affiliate program directories which you can find by placing that phrase in any search engine

Large affiliate networks

The target website itself. (Websites that offer an affiliate program often have a link in the footer or “About” section of the website).

Contacting your favorite company and asking them to start an affiliate program.

Affiliate programs are one of the most powerful online marketing tools available. Rather than paying out a lot of money and hoping that it works, you’re only paying out money when you know that it has worked.

An affiliate marketing program involves such tasks as contracting with affiliates, tracking performance, paying commissions and even dealing with online fraud. As a small business, you may not have the resources to run a strong campaign that also focuses on good customer service to affiliates. Outsourcing your program can be a better option.

Putting it Together

If we continue with the example of the second asset I purchased for my first company, which was a treatment for a very rare disease, we can see how a business plan process leads to a great product being marketed well. I can’t claim that I did everything right, but overall I got the right message to the right people the right number of times.

My product cured a rare disease so I knew I had a great product. The question was who was the target customer. Was it the patient with the disease or the physician who could treat it? There were strict regulations about marketing to both audiences, and to market directly to patients back then was not allowed at all. The vast majority of physicians in the world, however, would say they had never heard of this disease, and they would be unlikely ever to encounter it.

Mass marketing was a non-starter due to the cost of trying to get the right message, the right number of times to every physician in the hopes the right ones would see it. The “great marketing” challenges I faced were many: how to find those patients who would use the product, how to get them to a doctor who knew about the disease and would prescribe the product, how to find and educate those doctors, and how to get their healthcare system to permit and then pay for the product. My marketing budget was less than $50,000.

The business plan process caused me to visit and interview a variety of specialist physicians about their opinions on the disease and our product. After months of conversations, it became clearer that sub-specialist groups of pediatric endocrinology and pediatric gastroenterologyhad the most interest in finding and treating these patients. From a database of millions of physicians, my early adopter list shrank to a manageable 1200. Now I had a niche market that a smaller budget could reach.

From the research I also learned that this sub-specialist group loved nothing better than standing on a podium to teach other less specialized pediatricians how to treat better. There was some ego involved, but mostly they really cared about directing appropriate diagnosis and treatment.

It would have been pointless to hire a sales force or use standard push marketing tactics to try to influence such opinion leaders. What they wanted was cold, hard data and a way to teach that data to others.

The tactic I chose initially was to invite groups of eight to ten “key opinion leaders” in all the major cities in America and Canada to an educational meeting. That allowed me to get the right message to the right people. The inventor of the product gave a presentation, which was followed by discussion.

Once they understood the data and disease they were able to identify problem patients they had been unable to help for years who could be suffering from this disease. We agreed a plan of action to help them find, diagnose and treat these patients.

I followed up with each physician by mail, email, and by providing samples of product to their practices. A few patients were diagnosed, and I made the treatment decision simple by shipping free finished product to the doctor’s office so that they could immediately experience the benefit through the patient’s response.

The results were immediate, and the treating physicians so delighted, they couldn’t wait to tell others. I made it easy for them to recommend the product by providing speaker packages they could use at their regional specialty educational meetings. The speaker packages were approved by their national association, which added the same credibility as one would get today from trustworthy online reviews.

I also committed to all that we would ship free product to any newly diagnosed patient’s physician for as long as it took us to work out payment with their healthcare system and providers. Eventually, about 25% of patients got their product for free for life.

When about thirty patients had been identified, diagnosed, and treated, with startling life-changing results for them and their families, I encouraged them to form a private online support group. That way they could help each other, but also find ways to echo their message online. Within a year this group had attracted a hundred patients who had previously thought they were alone.

From a “great marketing” perspective the tactics worked because the product was curative with very few side effects. Soon physicians started to use it as a sort or “suck it and see” diagnostic test, meaning that if a suspected patient responded well to taking the medicine it was likely they had the disease. Then they were sent for a confirmatory diagnosis.

Although I had plenty of missteps along the way, this campaign was a success because it held to the fundamentals of a great product and great marketing.

March 5-9, 2018 Yahoo Finance ran a series of talks about the changing face of retail and what the future might hold. https://finance.yahoo.com/live/retailweek Hopefully the link stays live for a while.

At the end of the day we are only as good as our ability to sell what we offer. Please share any and all start-up marketing tips.At the end of the day we are only as good as our ability to sell what we offer. Please share any and all start-up marketing tips.

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