Category: marketing

The auctioneer’s dream

“One day I’m going to buy a whole pile of junk PCs from a company that’s gone bust and sell them at an auction like this,” said Mark, an old business partner, as I lost a bet that a group of almost valueless laptops wouldn’t be sold for more than $10 each.

The media release behind yesterday’s article on protecting USB data found on attracted criticism about Cityrail’s attitude towards privacy – which is fair enough as good manners, if not privacy laws, dictate you’d wipe someone else’s data before giving a drive away.

More notable in the IT News article is the comment that Paul Ducklin, chief technology officer at Sophos, “was shocked when the auction price was nearly twice the average retail value of the USBs.”

Paying over the odds for second hand technology is a trap many fall for, the average consumer doesn’t comprehend just how much technology depreciates or the risks, such as malware or defective hardware, that could be found when you finally take that computer bought at auction home.

The main attraction of auctions is that people believe they are getting a deal, the idea things were dirt cheap on eBay drove the service’s growth for much of its first ten years.

Of course that hasn’t been the case for some time and many people paid a lot of money for junk they didn’t need even when things were “cheap”.

The only way to really get a deal at auction is to know the retail price, then factor in realistic depreciation and the risk of buying a dud.

My rule of thumb at those IT auctions I used to attend with Mark was that when the bids passed more than a third of the retail price, people were overpaying. I rarely bought anything except office chairs and the odd filing cabinet.

I haven’t heard from Mark for a while, I suspect his business plan didn’t work out when he overpaid for some surplus equipment from a liquidator.

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What business can learn from Groupon

How can businesses use the web to grow like the group buying companies?

Groupon, pioneer of group buying and one the fastest growing companies in history, will have its launch on the stock markets today with an initial public offering (IPO) that’s values the business at thirteen billion dollars, more double the $6bn that Google offered for the three year old company last year.

A recent Business Insider profile of Groupon had some fascinating insights on this unique company and its growth, there’s a number of lessons that most business owners, entrepreneurs and managers can take from this company’s dramatic growth and market leadership regardless of the sector they operate in.

Apply tech to your business

Many people make the mistake that Groupon is tech startup when it’s actually a sales operation.

Groupon’s business model isn’t really new, what they have done is applied various web technologies to the directory and voucher shopping industries and come up with a 21st Century way of doing things.

Bringing together different modern tools like social media, cloud computing, local search and the mobile web makes businesses more flexible and quick to develop new market opportunities.

Prepare for quick changes

Groupon was born out of another business – The Point. As The Point steadily died, Andrew Mason and his mentor Eric Lefkofsky decided to try something different and Groupon was born.

This ability to change focus quickly – often called “pivoting” – is essential in changing markets. In volatile times like today where today’s business conditions can’t be taken for granted we have to be prepared for rapid changes.

Fortunately the cost and time to changes your business focus has dropped dramatically with digital and online tools, which is another reason to embrace tech.

Get a good business mentor

Eric Lefkofsky bought maturity and a perspective to Groupon’s young leadership, having a different and more experienced view of the business helped it develop and grab the opportunity.

An experienced business mentor can be worth their weight in gold.

Back a good idea

In Nicholas Carson’s Business Insider profile he describes Andrew Mason role at Eric Lefkofski’s business before The Point as “an intern, ‘kind of squatting in their offices'”. Lefkofski was prepared to back the geeky kid camping on his premises.

Putting your prejudices and judgements on the shelf to back good ideas, particularly those that don’t cost much to execute, is one way to find where the opportunities lie.

Tell your business story

Regardless of what you think of Groupon’s claims, they tell a very good story which has lead to their amazing growth and the development of the group buying industry.

Being able to tell your story, in your terms, is one of the great advantages the web, local search and social media deliver. There’s no reason why your business shouldn’t be dominating the local market in whatever field you work in.

Regardless of what your business does, it can benefit from applying the online tools that are available to all of us.

We may not be the next Groupon but the web gives us the opportunity to build our business to take advantage of the 21st Century. It’s worthwhile understanding the new tools at our fingertips.

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The reverse ambush

Ambush marketing isn’t always a good idea

As the Apple faithful starting queuing outside stores to buy the latest version of the iPhone, in Sydney electronics manufacturer Samsung set up an outlet a few doors up the street and offering $2 Samsung Galaxy phones.

Some in the press portrayed this as “ambush marketing” by Samsung, claiming that the Korean company has stolen coverage from Apple.

In reality, all the stunt has done is emphasise the different market positions of the companies; Samsung have people camping out for $2 phones while a few doors up the street there’s a bigger line for an $800 Apple product.

The message is clear; Apple’s products are more desirable than Samsung’s at even 400 times the price.

Whatever Steve Jobs was reincarnated as – a Bogong Moth or the next Dalai Lama – he’s laughing right now.

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The online review challenge

Customers’ web reviews matter for your business. How do you handle bad online comments?

Last Christmas a group of office workers gathered at a city hotel to celebrate the year’s end. The meal was a disaster as slow, surly staff made mistakes and delivered poorly cooked food.

Within an hour of the workers returning from lunch, negative reviews of the hotel started appearing on the Eatability and Urbanspoon websites. By the time Christmas Day rolled around, the reputation of the establishment was throughly trashed.

The rise of online review sites along with social media services like Facebook challenges many businesses, particularly those in the hospitality industry as café owners, restaurateurs and hotel managers struggle with unfavourable comments about their establishments.

Customers now research on the web before deciding to dine out or make a purchase, so online reviews can make or break an establishment. How does a business make sure their online reputation is safe.

Pay attention

The most important part is to pay attention to what people are saying about your business.

Big corporations will have their own social media staff and community managers to handle much of this, Telstra last week announced their online team will now be on the web 24/7.

Larger organisations will also subscribe to online monitoring services like BuzzNumbers and PeopleBrowsr to report what’s being said about them.

For smaller businesses it falls on the owner and staff to keep an eye on the popular review sites and to monitor the business’ Facebook page for negative comments.

Engage the critics

No matter how good your business is, you will get the odd unhappy customer. When that happens you need to contact them, preferably through the same public forum they have complained about you.

Once you’ve established contact, take the discussion offline onto email, phone or even face to face meetings. If the resolution is positive, try to publicise the result in the original channel the complaint was made.

Fix the problem

Despite many in the hotel industry believing that most online complaints are deliberate campaigns against them, regular complaints are usually legitimate and indicate an underlying systemic problem in the business.

If customers are complaining about service, you need to let your staff know customers are talking about them. Should there be regular criticisms of your food, then you need to talk to your kitchen staff or suppliers.

Don’t get defensive

Complaints happen. Even the best business in the world has a bad day or encounters a customer who woke up on the wrong side of bed.

If you think the criticism is unfair or even defamatory, don’t get angry and certainly do not make threats as you’ll only inflame the situation more.

Should the customer turn out to be unreasonable, at least by having publicly engaged them you’ll have shown the public you’re calm, professional and trustworthy.

Don’t Lie

The web is as great at exposing falsehoods as it is at spreading them. If you’re clearly not telling the truth, you’ll make your critics angrier and more determined to damage your reputation.

A common way many businesses cheat online is with false reviews. Despite industry claims that organised damaging comments are widespread, the reality is the opposite as many hoteliers and restaurateurs frequently post clumsy and obviously fake glowing reviews of their establishments. It’s a bad look and the establishment often ends up looking foolish.

Get your website right

Many businesses, particularly in hospitality, have lousy websites or a site that has no Search Engine Optimisation (SEO) so when someone searches for a hotel or restaurant their page comes up way below those for review sites or critical blog posts.

Regularly review how your site is doing and talk to your web designer or SEO consultant on making sure it’s coming up well when customers search for your type of business.

It’s important not to overlook local search services so ensure your business has been listed on Google Places and has a Facebook Local Business Page otherwise local searches will go to the online review sites or your competitors.

Ultimately, the best way to deal with negative online reviews is to minimise them by running a good business. The biggest effect the web is having on business is that it is making us accountable to our customers.

As big corporations are finding, the days of covering up poor goods and indifferent customer service with marketing is over – if your product doesn’t match the promise you make to your customers they will tell the world.

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The quest for virility

Chasing big numbers on the Internet is the most basic online mistake of all.

One of the common Internet traps is a mindless quest for numbers; when we first go online we’re obsessed with gathering Facebook friends, Twitter followers and LinkedIn connections.

For businesses, we get seduced by the prospect of big markets to sell to; which isn’t surprising when there’s nearly 700 million people on Facebook, over 50 million tweets sent every day and the group buying market is growing almost as quickly as the number of new entrants into the industry.

The current holy grail for many businesses is the viral video; a troupe of dancers extolling your business to surprised commuters, a cool ex-football player giving advice from a shower or a tasteful video of your staff doing their jobs naked is seen as the way to get millions of ‘likes’ or ‘follows’ from eager web consumers.

For the successful ones, creating an online clip seen by your mother and a million of her friends is an easy way to get a campaign to worldwide markets without spending massive marketing budgets. Not to mention the trip to Cannes and the accolades for any advertising agency associated with it.

Sadly creating a video that goes viral is harder than it looks as we discussed at the Media 140 Conference in Perth last week; it has to be quirky, entertaining and attention catching which is pretty well the antithesis of the typical corporate video.

To compound the budding viral videographer’s problems, there’s the corporate desire to control the message. Almost every high profile blogger or online editor has stories of struggling to get permission to use an organisation’s clip because of the managerial urge to control distribution.

No doubt those managers have good reasons for controlling the use of their videos but we can be sure those same control obsessed administrators are constantly bugging their agencies to create something viral.

Losing control is a great risk for managers and bureaucrats. Last year prolific wine blogger Gary Vaynerchuk visited Australia and gave the local wine industry some great publicity.

Sadly, in reviewing the some wines from his visit he described a Yarra Valley wine as having “a taste of burned vomit” (at 4.25) probably put the Australian wine market in the US back a decade.

Gary Vaynerchuk is probably the best case of someone who has grown a business through viral video, through adding interesting valuable content with a real character. An equivalent Australian success has been Natalie Tran’s Community Channel.

One of the other points with these is many of the early successes have been because they were early entrants into a new market. Today, the marketplace is a lot more crowded and videos, like any other online content, are struggling to get heard.

That’s not such a bad thing as it takes away the obsession with numbers and makes us focus on the quality of our online audience. Rather than obsessing about raw hits, we start considering where our customers are.

Group buying is a good example of where well targeted campaigns work well. The successful group buying advertisers are thinking about where the offer, product and audience fit in their business plan rather than just fixating on the tens of thousands of potential customers for a quick sales boost.

While a Charlie Sheen tweet might drive page views, the real business objective of the web is about establishing our brand and attracting the customers we want, not just achieving big numbers.

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Running your own coupon campaign

Do-it-yourself coupons may be the better tool for your business

The group buying goldrush continues as now even Facebook are considering starting up their own service, but do businesses need to be using these platforms at all?

Behind the group buying mania is the idea retailers can use these services’ large mailing lists to promote their business while clearing excess stock to bargain conscious shoppers.

Those reasons are valid, but for the privilege of accessing their databases the group selling services charge substantial merchant commissions, representing a 20 to 50% cut from the seller’s income. If the discount is really deep, say 80%, then the site often takes the remainder of the sale leaving the retailer giving the product away.

For access to a mailing list, that’s a pretty big outlay to the merchant who may be operating on thin margins to start with. The cost can even be greater given most of the group buying subscribers are shopping on price and converting them into loyal customers can be a struggle.

It is possible to run your own coupon campaign. Both Google Places and News Limited’s True Local have features in their free local services where you can set up coupon campaigns and publicise offers.

The advantage with these is you capture shoppers in your neighbourhood, the coupon lasts longer than one mail shot and doesn’t require a fat discount to grab the attention of shoppers already jaded by 60% off waxing services and half price exercise classes.

Running your own coupon campaign puts you in control, saves the often fat commissions and when done cleverly can break you out of the damaging deep discounting mentality the group buying sites promote.

You can also put links to these offers on your website, Facebook page and other social media channels, further building those channels and giving you more opportunities to convert one off buyers into loyal customers.

There’s also the advantage that the search engines, particularly Google, love these offers – it’s part of their US roots where clipping coupons is a fundamental part of retail marketing.

You don’t even need to come up with a new offer. If you currently run ‘cheap Tuesdays’, happy hour or other promotions, you can build a coupon campaign around them.

All of this is another reason why you should be taking the local search tools seriously even if you do already have a website.

Group buying sites do have benefits for a retailer such as exposure to a wider, new audience and it’s worth considering them in the right circumstances. Trying a do it yourself local coupon campaign may turn out to be the better option for most businesses.

Paul will be holding a masterclass that looks at local search, adding coupons and how to get a small business fully online in two hours on March 24 at Mosman, NSW. Spaces are still available.

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When all publicity isn’t good publicity

A reputation is more than just a high search engine ranking

Last weekend’s New York Times ran a remarkable expose of US based online entrepreneur Tony Russo’s business methods and how he’s built a business on bad online reviews.

Mr Russo’s model is basically to upset customers, they then complain in online forums which creates more links to his website, something we’re careful not to do here, those links in turn give his sites higher Google rankings.

Crazy stuff, particularly when you read the allegations of his  behaviour in the NY Times article which claims he stalks unhappy customers, calls their mobile phones and even masquerades as the complaining client to reverse credit card disputes.

This is an interesting side effect of gaming search engine rankings and how consumers use sites like Google and Bing. In recent times being in the first dozen listings on these sites has been the holy grail of online marketing with the reasonable assumption that a first page result will win customers.

Up until recently that assumption has been correct as most consumers have grabbed the first sites they have found when searching for a service or product, but now that’s changing as customers are increasingly checking comments, reviews and social media sites like Facebook before deciding to buy a product.

So this news isn’t as good as it looks for the shonky merchant as the market gets savvier. Today’s customers are finding ways to dig a little deeper than just the superficial initial search, and when the purchase is going to cost a few hundred dollars most cost conscious buyers are going to spend the extra ten minutes checking out the seller’s reputation.

As online markets develop, we’re moving away from the high visibility marketing methods of the mass media era to something similar to the word of mouth driven marketplaces of the 18th Century village or town square.

This is particularly true in the hospitality industries where the review sites like Eatability and location based services like Foursquare and Facebook Places are become venues for happy, and unhappy, customers to share their experiences.

Our names as reputable businesspeople are mattering more than ever and not just with customers, but suppliers, staff and creditors as well. We’re returning to the days were a businesses person is only as good as their word and our words will bite us if we can’t be trusted.

We have to get over the idea that all news is good news and that a thousand online friends or mentions are a measure of success, we and our business are now being judged on our quality and value that we deliver. It’s something we need to keep in mind every time a customer contacts us.

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