Paul Wallbank – Brilliant Communications

Category: business advice

  • Price points

    Price points

    It’s no coincidence Amazon’s media release announcing the new range of Kindle e-book readers was headlined introducing the All-New Kindle Family: Four New Kindles, Four Amazing Price Points.

    The $79 price for the base model has authors excited, and quite rightly too as this will guarantee sales of the e-readers and spur sales of e-books.

    Once a product’s perceived as being affordable by the market, sales take off. The classic is Josiah Wedgwood selling bone china at prices affordable to the 18th Century English working classes. The basic product was similar in all but the decoration to the ornate wares Wedgwood sold to Europe’s royal families and the then new methods of mass production guaranteed a quality product to all customers.

    Just over a century later, Henry Ford did a similar thing with the motor car, meeting the price points that made the horseless carriage accessible to the middle classes in early 20th Century United States.

    In more recent times we’ve seen similar trends happen; the under $2,000 personal computer in the 1990s, the sub $500 netbook in 2008 and the affordable smart phones of recent years.

    We can add broadband Internet and budget airlines as other examples of how demand has exploded when the cost has dropped below a certain price point.

    As technology becomes affordable, we use more of it. A point that’s often lost monopolists and established players in industries.

    This is the real opportunity Amazon are now offering with the cheap Kindles and we’ll see e-books boom as people are prepared to make a small investment in the devices.

    Almost certainly this will open new markets and unforeseen opportunities for entrepreneurs and writers. The resulting pressures on competitors like the Apple iPad and the various Windows or Android tablet devices should increase innovation as well.

    In our own businesses we need to ask what those price points are and what is stopping us from meeting them. As other price busters have shown, if you can meet these price points, the riches are there for the taking.

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  • Do you have customers or just users?

    Do you have customers or just users?

    “I was on your mailing list for general info, for spams and scams etc which were helpful. Suddenly it changed and now the business format is not useful to me” said an lady when unsubscribing from one of my newsletter mailing lists.

    The lady concerned had been on one of the mailing lists for over ten years and, once upon a time, had been a paying customer for my old business, PC Rescue. Although we’d only earned a $100 off her and that was seven years ago.

    While it’s sad to lose a subscriber – you don’t run a service business for twelve years without caring about those who use your services – the question is was the lady really a customer?

    This is an important distinction where many of us are giving away much of our knowledge for free; are our users really customers?

    For the social media and web2.0 sites, this is easy; users are the raw material for their aggregated and segmented data feeds and audience, the customers are the advertisers. This is just a modern twist on the broadcast model that sustained the radio and TV industries for most of the 20th Century.

    Many of those social media platforms aren’t making much money from that data and there’s a good argument those who are have been wildly overvalued by investors.

    The value of user data, whether it’s aggregated or identifiable appears to be nowhere as high as most of us think, unless you intend to rob your users’ bank accounts.

    Overvaluation of your customer, or user, database is a common problem for smaller businesses too. If you’re the local plumber, computer repair guy or coffee shop then the value of any mailing list is probably way overstated – the only metric that ultimately matters to the business is how much money you’re making from the customer.

    If you care about the people that you deal with, this may be a hard reality to face but those who visit your shop, subscribe to your newsletter or download your free e-book aren’t your customers, only those who are prepared to pay are.

    This is something we have to understand in this era of abundant free information and online services. The challenge for most of us is how many users we can convert from being window shoppers and freebie seekers into customers.

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  • Losing sight of what matters

    Losing sight of what matters

    Last Night Google’s chairman Eric Schmidt testified before a US Senate antitrust committee on the search engine company’s market power.

    In opening his testimony, Schmidt alluded to Microsoft, saying “twenty years ago, a large technology firm was setting the world on fire. Its software was

    on nearly every computer. Its name was synonymous with innovation.

    “But that company lost sight of what mattered. Then Washington stepped in.

    It’s an interesting and probably accurate perspective given how Microsoft has effectively lost its way for the last decade – although given Google’s urge to become an identity service and its buying a mobile phone manufacturer doesn’t auger well for their focus on the core search business.

    Losing of focus of what matters is a problem for all business owners. We’re busy, it’s hard winning orders, getting paid and keeping customers happy so we lose track of the reason we went into business.

    For most of us it was because we had a great business idea or a belief we could have a better life being our own bosses.

    That latter objective is often the first one lost, usually we find ourselves working harder, taking fewer holidays and seeing the family less than if we’d stayed in a comparatively safe job with BigCorp.

    Great ideas can also be our undoing – if you’re constantly having brainwaves, you find you have lots of ideas but no time to execute on any of them.

    Similarly, one great idea that turns out to be dog can be bad news as well. Often, we’re loath to admit we’re wrong and hold onto a failing business idea long after it’s shown not to be viable.

    Probably worst of all is when we violate our own values; many of us went into business because we didn’t like the values of the corporation we worked for.

    Then one day we find we’re screwing subcontractors, that we’re leasing an expensive car the business can’t afford while cutting staff benefits and we’re tying up customers in legalistic contracts in attempt not to deliver the services we promised.

    Just like the big company we swore we’d never become.

    If you’re a big company with a lucrative business niche – like Google or Microsoft – you can get along quite nicely with the rivers of gold flowing subsidising your indulgences and distractions, most of though we don’t have that revenue buffer protecting our assets.

    The cost of losing focus is a killer; even if it doesn’t kill our businesses, it will destroy our souls.

    Are you keeping focus on why you went into business?

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  • Cloud computing and Small Business September Digital Day

    Cloud computing and Small Business September Digital Day

    As part of the NSW state government’s Small Business September Digital Day for Startups and Growth Businesses, we’ll be looking at exactly what cloud computing is and how it can help businesses.

    Some of the services we discuss in the presentation are listed in the Netsmart’s web post on the 5 essential cloud computing tools for business. Although there’s many more we’ll mention that can help organisations of all sizes.

    Given the time constraints and the event’s focus is on the specific social media and cloud computing tools available to small business, much of the background information to the Online Tools to Turbocharge Your Business session is available in the previous series of posts about cloud computing previously done for the 2011 City of Sydney Let’s Talk Business series.

    Detailed information from that presentation can be found on the following pages;

    The networked business Part 1: What is cloud computing?
    The networked business Part 2: The benefits of cloud computing
    The networked business Part 3: Managing risk in the cloud
    The networked business Part 4: The business case for cloud computing

    All of the tools discussed in the Small Business September presentations are available in our ebook, Online Business Essentials which is available for all subscribers to our newsletter.

    If you’d like to see the presentations themselves, both The Networked Business and Online Tools to Turbocharge your Business are available through the Slideshare service.

    Seats are still available for both of the Digital Day presentations at the Telstra Experience Centre, Level 4, 300 George Street, Sydney. The Start Up session begins at 8.00am and the presentations for growth businesses begins at 1.00pm.

    Come along if you’d like to learn how social media and cloud computing can help your business improve productivity while building an online brand.

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  • The quiet revolution

    The quiet revolution

    Earlier this weekPricewaterhouseCoopers released their Productivity Scorecard, which showed Australia’s business efficiency isn’t improving as fast at it once was and the country’s relative performance is steadily slipping down international tables.

    One of the notable things in the PwC report is the massive growth of productivity in the 1990s, a point emphasised by the accompanying paper on business productivity in a presentation by economist Saul Eslake last month to the Reserve Bank of Australia.

    Economists attribute most of this late 20th Century growth to deregulation and privatisation by governments in the 1980s and 90s but the driving force was really computerisation that allowed most businesses to do much more with less.

    Immediately noticeable for an Australian walking into a British, European or Japanese office during the early 1990s was the lack of desktop computers.

    Australian businesses adopted technology a lot quicker than their counterparts outside of North America and this alone was probably responsible for the country’s relatively good productivity growth in that decade.

    The arrival of computers – followed by desktop printers and Internet access – suddenly gave small businesses access the means to do jobs that even the biggest corporations had struggled to do previously and drove a rapid reorganisation of most offices.

    Everybody from secretaries to architects and graphic designers to lawyers – even economists – suddenly found they had the tools at their fingertips to do work they could have only dreamed of prior to 1990. This drove massive productivity gains in businesses of all sizes.

    From 2000 onwards, things became tougher as the easy gains had been made and the incremental improvements in technology, such as smartphones, cloud computing and web publishing didn’t have the same substantive effect the early PCs delivered with spreadsheets, word processing and desktop publishing.

    The real challenge we now face in business – and government – is to start harnessing cloud computing driven online services that promise to deliver similar productivity gains to what we saw twenty years ago.

    We have the tools; online office apps, Customer Relation Management services (CRM) and sharing platforms all deliver major improvements in the way we work within our businesses and with external partners like contractors, suppliers and event clients.

    One of the most powerful aspects of cloud computing services is reduced capital cost meaning reduced barriers to entry into markets we previously may have thought were safe.

    This easy access into established sectors is one of reasons the retail industry’s giants are now struggling as online competitors can setup cheaply and quickly while offering better prices and service.

    Retail is only one of the more obvious sectors being changed by these technologies and as the decade continues we’re going to close to every industry be radically changed by low cost computers accessing the Internet.

    As business owners and managers we need to look at our own processes and systems with an eye on how we can improve workflows and customer service within our organisations.

    Those of us who manage to get these new technologies are going to reap the benefit of the next productivity wave, those who don’t are going to go the way that many uncompetitive and slow to respond industries did in the 1980s.

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