    
From the Response Control PR
E-business Program
20 Essential Steps To Online Profitability
By John Bremner
Many people who start online businesses have misconceptions
about the length of time it will take them to go into profit They
think that everything will happen quickly… all they have to
do is register with a few search engines and they will have more
business than they can cope with.
The truth is somewhat different. Over optimism
of this kind was the cause of many of the failures that occurred
during the famous dot-com crash period. At Response Control PR,
we try to be realistic about this, and we make sure that our new
clients have their feet firmly on the ground. Obviously, since we
are in the business of supplying PR Services to online companies,
we don’t want to discourage people from going ahead, but we
do train them to understand the realities of life and plan for the
success of their e-business. That way, they are more likely to achieve
it. It is also true now that it is more difficult to gain funding
for business plans that are unrealistic. The venture capitalists
who are involved in e-business today are those who understand the
marketplace, and what can be expected of a new start-up company.
Thus there are many ways to make money online,
but as with every business, success involves making the right decisions
from a basis of knowledge about what works and what doesn’t.
For most people, this means getting expert training and technical
assistance. You need to know the advantages and disadvantages of
having your own dedicated server; the difference between an Applications
Service Provider and an Internet Service Provider; the advantages
and disadvantages of boxed software; the pros and cons of scalability,
and why ignoring it is a big mistake… Knowledge is one of
the keys to success in business, whether online or traditional.
Here are some top tips from the Response Control
training program:
1. Know exactly where you want to go and plan for
success. It’s like planning a journey without a destination
otherwise. Build a business plan that takes everything into account,
and base it on a genuine market for the service or products you
have to offer. You need to show the demand for what you are planning.
You also need to show enthusiasm, knowledge, research and cunning,
realism about when you will go into profit, and how you will grow
the business.
2. Choose your Service Provider carefully. Look
at their existing customers and find out if they are happy. Do they
have any big customers? How can they cope with surges of bandwidth
demand? Do they make backups of your customer data? Can they offer
a fully integrated approach to your business? Can they provide you
with training? How big are they? Have they been around long enough
to achieve stability?
3. Continually re-evaluate your business goals,
your product lines, and your customer data. Understand why customers
buy from you, or why they use your service. Do what makes most profit,
cut out dead wood continuously, and concentrate on what, from the
results you are achieving, you obviously do best. By continually
reviewing and modifying your plans, try to make sales forecasts
as accurate as possible. Knowledge is power. Get to know your business
inside out, and you increase your power to influence your results.
What are the snags and obstacles to your success, and how can you
surmount them?
4. How much turnover do you want to have this time
next year, and how can you achieve that? Most people already know
what they have to do to achieve success, they just don’t do
it. Work hard and get the best people to help you. Response Control
is a successful PR company because we employ people who are dedicated
to constantly improving our service and products. Nobody said this
was going to be easy. Benjamin Franklin had a simple formula for
success. He believed that successful people worked just a little
harder than other people. Commit to the hours, the discipline, and
the continuous learning involved in owning and running your business,
and make sure that those you employ do the same.
5. Build capital and understand that you are in
business to make profit. Offer a better, more reliable service than
others, and you make headway towards profit. Fail to do that, and
you might as well give up. Don’t try undercutting others to
make sales, because that can start a spiral of loss-making sales
that are as bad for you as for your competitors. Know your own profit
margins, and cater for your best customers.
6. Sell the benefits your business brings rather
than the technology, the brand names, or the products. Whether you
are aiming at the business to business market, or the business to
consumer market, it is the benefits that get the customers to understand
why they should deal with you. It’s easy to get this wrong.
For example, a recent full page advert in an Internet business magazine
has “State of the Art Data Centre”, as a major selling
point. But they’ve forgotten that customers only care about
the benefits. Many others have a “State of the Art Data Centre”,
but they know that customers are more interested in the fact that
it gives them 99.5% uptime, and no loss of data. Those are benefits
worth pushing. So if you are selling socks, don’t sell the
wool, sell the warm feet. If you are selling fire extinguishers,
sell their ability to put out fires rather than their sturdy case
and snazzy look. If you are selling a delivery service, sell your
speed of delivery rather than your fleet of delivery vehicles. Think
about 'Orange'. Their advertising campaigns have made them a household
name, but they are selling a rosy future (The future is Orange...)
rather than mobile phones.
7. Look at industry trends and the trends within
your own company, and be prepared for the slumps and surges in business
when they happen. If your business always drops off in the spring,
try to pre-empt this with a pre-slump marketing drive and special
offers. If you know that August is always busy for you, don’t
have everyone on holiday just when you need them.
8. Stay out of the ‘comfort zone’.
This is the syndrome that affects many business owners – being
happy the way things are. Always strive for improvement and continuously
adapt. Update your website regularly, and never consider it finished.
There should be something new for customers on every visit. Try
to provide visitors with information, tips and contacts that they
couldn’t get elsewhere. The most successful online businesses
have the biggest, deepest, portals, vortals, or websites. They offer
highly secure shopping, and good site site linking, and they retain
visitors by providing interesting content, fast loading of new pages,
and easy navigation. Use uniform navigation buttons located in the
same place on every page, so that visitors can visit other content
pages without having to return to the home page. But keep it interesting
by allowing visitors to discover things for themselves, for example,
when they scroll down a page.
9. Don’t waste money on unresearched methods
of marketing. At Response Control, one of the most common things
people would like to change about the way they started is the money
they pushed into unsuccessful advertising before they found us.
The key, again, is to know your market and pitch to potential customers
instead of to the wrong market. There is also this: marketing is
an ongoing activity rather than something you do only occasionally.
It needs a bit of planning. Be like Orange, and have an easily identifiable
trademark. Develop appropriate sales promotion tools such as flyers,
brochures and signs. Carefully review each item for its effectiveness
and evaluate what these tools say about your business. Most importantly,
use Response Control PR to its full potential !
10. Keep costs down. Don’t buy unnecessary
equipment. Good Service Providers will host everything connected
with your online business on their own servers, so that you need
only simple workstations for your staff instead of expensive, state
of the art supercomputers. Consider JIT (just in time) stock supply.
You may even be able to have stock delivered directly from suppliers
to customers, cutting down your requirements for storage space,
and your outlay on stock.
11. Keep your investors happy. Bring them regularly
up to date with what you are doing, and seek out their opinions
before making major decisions. When they are mentally involved in
the business, they will offer you more support, and they can make
valuable contributions to your success, which usually includes giving
you sound business advice, good ideas for development, and introductions
to industry contacts.
12. Understand your competitors, what they are
doing, and how you can do it better. Try to stay one step ahead
of them. Have more products, a faster service, a better, bigger,
deeper e-business site, and more payment options. Practise the concept
of continuous quality improvement. Take the initiative and do something
different. Stephen Covey (Seven Habits of Highly Effective People)
says that, "Taking initiative does not mean being pushy, obnoxious,
or aggressive. It does mean recognizing our responsibility to make
things happen."
13. Allow some time every week for thinking up
ways to improve your business, and for planning ahead. Note down
your ideas and take action to implement them. It is sad but true
that most of the best ideas are swept away in the river of lost
thoughts.
14. Know the legal requirements of your business.
Pay your taxes on time, and keep meticulous books. Keep track of
costs and don’t take too much out of the business until it
is on track for success. You can probably wait another year for
that new luxury car… Most business failures are caused by
letting the financial situation get out of control. You should try
to always have enough cash aside to pay the wages for a year, even
if you were to get no more orders in. That way, you won’t
have to do a juggling act every month for payday. If you don’t
currently have the funding to support that, think about getting
some.
15. Boost your credibility by joining trade associations,
displaying the symbols, and providing secure e-commerce facilities
on your website. Today’s online consumer is sophisticated
enough to know the difference between a secure payment site and
a non-secure site. It is not enough merely to have a Verisign symbol
or similar on the page, because they may not notice it or understand
the implications. The site needs to be seen to be secure. You should
have an area devoted to explaining the security measures you have
put in place, and a link to that page from every other page. It’s
worth noting at this point that if you don’t have a secure
e-commerce site, or if you don't link to one, you are wasting your
time, because your credibility will be judged to be low, and most
customers won’t give you their credit card details. Emphasise
the security aspects of the site on the checkout page. You may find
it useful to have a paragraph that explains about Secure Sockets
Layer, credit card encryption and data invisibility, and the security
of your payment service providers. It could make the difference
between dropped orders, and orders implemented.
16. Establish your physical credibility. Be sure
that every way to reach you is prominently displayed. Details of
your physical mailing address, phone and even your mobile contact
number should be provided, as well as your email address. You are
real, so let customers know that. A good ‘Contact Us’
page goes a long way to help. If you look at a typical Response
Control page, there is always somewhere for site visitors to get
back to the Contact Us page, and we have found that this is important
in the decision to use our services. Our web statistics show that
customers visit the 'Contact Us' page four times on average before
they actualy make contact. It's a reassurance thing. It's part of
checking that we are genuine.
17. Customers have a cost of acquisition, and they
have a lifetime value (where lifetime means the time they remain
customers). If your business is to succeed, the lifetime value of
your average customer must be greater than the cost of acquiring
them. The more years you work this out over, the more accurate your
results, but for simplicity, take a hundred customers acquired in
the last year, and work out how much it cost to get them. That’s
probably the same as your marketing, advertising, and customer support
expenditure over the same period, divided by your total number of
customers, times 100 (call this customer costs). The customer value
over that same period is the profit you make from their total sales
in the year, minus the customer costs. Divide the result by 100
to see the value of each individual customer over their first year.
Now it becomes more interesting – if you look at how many
of those customers bought again over that year, you will see that
the customers who made only one purchase probably cost you money,
but those who made repeat purchases probably made you money. Or
it may be that what you are providing has cheaper and more expensive
options, and only those customers who chose the higher range options
made you a profit. In either case, you will know where to focus
your attention.
18. It is clear from the point above that repeat
custom is, in most cases, essential for online profitability. Keep
in touch with your customers – it’s worth the effort
to turn impulse buyers into regulars. Get customers to register
with you for a newsletter. Improve your customer database, and use
e-Customer Relations Management (eCRM) software to find out more
about your typical customers, and their habits. Or have a feedback
form on your website to gather such information.
19. Make special offers to existing customers to
bring them back. Build on what you have and understand the value
of viral marketing. Create a good reputation for your business and
your sales will grow exponentially as a result. Jupiter Media Metrix
recently reported that companies who take viral marketing and customer
satisfaction into account when identifying repeat customers can
cut their customer acquisition costs by 27 percent and boost average
order sizes by up to 60 percent. Mike Speiser, a co-founder of Epinions.com,
says "Word of mouth is still the way most people make buying
decisions. I love Consumer Reports... but 90 percent of the time,
it doesn't really have anything to do with why I buy something.
That's based on what people I trust are telling me."
20. Once customers enter your shopping pages, (and
this may be after having some fun at your site), you need to help
them get to what they want immediately. After all the trouble it
has taken you to get them in there, the last thing you want them
to do is click on a link that takes them out of your site or breaks
their shopping basket. Similarly, if they drop off line because
of a failed Internet connection, the shopping basket should persist
with their orders when they log back on. Too many websites still
have non-intelligent shopping baskets that get confused when customers
hop from page to page. For instance, if the customer clicks the
back button, then the forward button, it is not a good idea for
the shopping basket software to add the order at the time of page
exit, giving the customer duplicated orders. The usual outcome of
this is that they quit the transaction.
If you take all of the above steps, you will have
made a good start towards heading to profitability. If you miss
any of them out, you are choosing to give up control over your own
potential and your possibilities for online success. You may succeed
despite that, but you may not. Response Control PR Services aim
to put our clients in control of their success rather than leaving
it to chance.
Contact John Bremner for
more information on 01904-340916, or 077438-96302.
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