Paul Wallbank – Brilliant Communications

Tag: business

  • Group buying sites explained

    Group buying sites explained

    Fancy half price seafood dinners, deeply discounted electrical goods or 80% off personal fitness training? Thousands of people who’ve signed up for group buying websites certainly do and hundreds of businesses are prepared to make big discounts to attract those customers.

    What are these services? Are they worthwhile and how do the businesses make money from them? Should customers be wary of advertised big savings and are merchants cutting their throats when they enter the world of deep discounting?

    What are group buying websites?

    The idea behind group buying sites is that merchants will offer cheap deals to take advantage of bulk sales, clear inventory or as loss leaders to attract new business. The products offered can be anything from a cheap haircut through to discounted whitegoods or a cheap meal.

    Customers subscribe to the group buying websites and receive a daily email detailing the deals in their areas. If they like an offer, they can choose to be part of it and if it goes ahead, their credit will be debited and they’ll receive a voucher for the deal.

    The group buying websites usually approach businesses to take part. For the privilege of having their businesses featured, the website takes between 20 and 100% of the offer price as commission.

    What are the consumer benefits?

    Naturally the main attraction for consumers are the cheap deals on offer. Some businesses are offering 80% off their list prices for products, so there can be substantial savings to be made.

    There’s also the opportunity to try out products or outlets you wouldn’t normally try for instance you might not usually be interested in Zumba classes, canoe hire or replacing your TV at normal prices but an 50% discount could tweak your attention.

    Are there risks for the consumer?

    There’s no such thing as a free lunch so there are a number of risks when using a group buying site.

    Impulse buying is probably the biggest risk, if you’re a sucker for a deal then these sites will love you. It’s an opportunity to sign up for a lot of things you don’t really need, probably will never have used and maybe can’t even afford, but fact you saved 80% makes you feel good.

    There’s also the risk you’re not really getting the full discount. A lot of canny merchants inflate the list price to make the amount off look greater. Many also reduce the size or quality of the discounted product to recover their margins.

    A big risk is that you may never get to use your voucher. Either you’ll forget about the voucher you received or the merchant is so overwhelmed by the offer’s response that they can never get around to catering for all their people who took them up.

    Finally there’s the spam factor. Many merchants see a group buying offer as an opportunity to build their mailing lists, so you may find yourself being spammed for fitness classes and restaurant offers for a long time after you take up a deal.

    Business Benefits

    These sites wouldn’t have taken off if there weren’t businesses to advertise on them and hundreds of merchants have taken up the opportunity. So there are clear benefits for the outlets that use these services.

    The most obvious one is they get to promote their businesses. All of these sites claim to have subscribers numbering in the hundreds of thousands, so it’s an opportunity to get your products in front of a large audience.

    Clearing excess capacity has been one of the main drivers for these sites in the United States where many businesses have found themselves with too much inventory or staff sitting around. These sites are a great way of clearing inventory or smoothing demand cycles.

    Business downsides

    The first problem is that excess stock. A business can’t afford to be carrying stock that requires big discounts to clear, if these offers become a regular feature then your business is in trouble.

    Even if your business isn’t in trouble, these offers risk devaluing your brand. As the major retailers have found, offering frequent discounts trains your customers to expect lower prices.

    Offering these bargains may alienate existing clients. Those customers who are prepared to pay full price aren’t only going to be irritated to find they could have got your products cheaper, but may also be unhappy with your business being overwhelmed by cheaper, price conscious clients.

    Those price sensitive shoppers aren’t really your customers either; they are loyal to the buying platform and cheap deals, so if your competitors have an offer later on another platform, those customers will go there. There’s a lot of work to be done converting these bargain hunters into repeat clients.

    One of the most misunderstood parts of group buying sites is the commission structure, most of the services charge a commission of between 20 and 50% – with some going up to 100% – on the advertised price, so that 50% discount to the customer is actually 60 to 75% off the merchant’s selling price. This can be a massive hit to a business’ profit.

    Is group buying for you?

    For businesses group buying sites can be a good idea if they are used as a part of a well thought out marketing strategy or to clear occasional excess stock. But they shouldn’t be seen as a quick way to attract new customers.

    Customers are the big winners from group buying sites, as it’s the opportunity to pick up some great deals. But users have to use a bit of judgement instead of just jumping for the best looking deals.

    It’s an old saying, but if anything looks to be too good to be true then it probably is. In the Internet age, that saying is probably truer than ever. Group buying sites can be good for both businesses and customers, but watch the wallet.

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  • So you want to be an entrepreneur?

    So you want to be an entrepreneur?

    There’s a school of thought that starting your own business is the passport to independence from the rat race or liberation from the servitude of employment.

    A lot of blogs, books and writers encourage this idea and there’s no shortage of multi level marketers telling you self employment is the pathway to wealth and status.

    On his Planning Business Stories blog, Tim Berry looked at one of the other sides of self-employment, that you’ll become unemployable.

    Tim’s observations are right, but there’s a few other downsides to consider before trashing your cubicle, cashing out your savings and establishing that radical startup or buying a doughnut franchise.

    I don’t want to work for a boss anymore
    If you think your boss is an unreasonable swine wait until you deal with customers, particularly those who don’t pay their bills. Then there’s shareholders, business partners, suppliers and the taxman.

    You’re leaving the rat race
    No you aren’t. As a business owner you’ll find there’s a lot more rats than you thought when you worked for The Man, as the man employs lawyers, debt collectors and HR staff to deal with the rats.

    The sad thing is you’ll probably end up being even more in the rat race, it’s just that you may not realise you’re racing the other rats as you aren’t stuck in traffic with them anymore.

    I want to be the boss
    That’s a noble and fair aspiration. Just be aware that in your own business, you take the risks and responsibilities too.

    The boss at BigCorp can often mess up and move onto bigger and better things as the organisation is usually big enough to hide the mistakes and it’s often in senior management’s interest to hide their subordinates’ mistakes from the shareholders or taxpayers. In your own enterprise, it’s your own assets at stake.

    I’ll get a better share of my rate
    A common gripe with skilled workers, like plumbers and lawyers, is they get ripped off by their employer who pockets 3/4 of their hourly rate.

    When you start your own operation, you’ll learn the existence of overheads and soon realise why you were only paid a quarter of what you were charged out for.

    The only way to get rich is to work for yourself
    Kind of sort of true, except there’s a big survivor bias in that saying. The people who do really well out of building a business receive accolades and boasting rights, those who don’t get quietly on with their lives if they are lucky.

    In a capitalist society we reward risk, and the biggest risk you can take is setting up your own business. If you’re successful you’ll be rewarded, but the risk of comparative failure is high which is why successful entrepreneurs get more money and accolades than successful managers or politicians.

    You’ll work fewer hours
    This is probably the greatest myth of all, usually perpetuated by someone selling a multi level marketing scheme. In truth, you’ll work longer hours and many of those will be unpaid as you chase up debts and fill in government paperwork.

    On the rare occasions you do get to sit down and catch up on the news, you’ll learn to dread reports that the government is going to “simplify” or “reform” something. This will almost certainly mean more paperwork for you.

    Keep in mind that no politician – be they Republican, Democrat, Conservative, Liberal, New Labor or Labor – is “business friendly”. At best they are sympathetic in the way a non-lethal host parasite is to a warm mammal.

    You’ll never work in this town again
    Tim’s article makes this point well, that if you spend any considerable time working in your own business – be it a startup, consultancy or small business – you’ll find it difficult to get a job in the corporate sector.

    I personally found this after 12 years of running a moderately successful business, basically I was told all of that experience was irrelevant to a corporate management position. In big business terms, I’d have made a better career move if I had been driving a bus for those dozen years.

    All of this isn’t to say you shouldn’t strike out and build your own business, for many of us it’s the course in life that suits us and what we work best at. But it isn’t the lifestyle for everyone.

    We certainly shouldn’t be saying those who aren’t suited to this lifestyle are bad or inferior people; most folk simply don’t want to take the risks and demands on family, finances and nerves that running your own business entails and this is fair, sane attitude to take particularly in a time of uncertainty.

    Successful entrepreneurs have certain skill sets and a focus which can be tough on families, friends and children. For many there’s an element timing and luck as well.

    For the success of a capitalist society, we need to celebrate and reward the entrepreneurs and risk takers, but before anyone dives into a start up or small business it’s best to understand the risks and costs involved.

    Good luck.

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  • Other peoples’ platforms

    Other peoples’ platforms

    “We have successfully established an online business, but we have run into problems with Ebay (indefinite suspension – unfairly I might add)” wrote Ralph*, an old client.

    “We are pretty desperate, as this is now our sole business and we are now without an income.”

    The Privately Owned Web

    Ralph’s problem is typical of thousands of businesses that rely on one Internet service. Some months back we looked at “Nipplegate”, the story of a Sydney jeweller who had her Facebook page closed down because of her anatomically correct dolls.

    All of these services are privately owned with their own terms and conditions along with their own corporate objectives. If you choose to use their product, you have to follow their rules – just like a shopping mall management can order you off their premises because they don’t like the colour of your socks.

    The most glaring example of this is Wikileaks where Amazon, Paypal, Mastercard and Visa all threw the whistleblower site off their services for allegedly breaching their terms of services in various obscure ways.

    The Terms of Service Trap

    A business’ Terms of Service usually feature clauses wide enough to catch even the most honest and diligent business, this is by design as it gives management the excuse to throw anyone who makes their lives difficult, which is exactly what has happened with Wikileaks.

    While Ralph’s problem is nothing like the scale of Julian Assange’s, all of these stories illustrate the dangers of relying on one service for your livelihood. Should that service change the way it operates, then any business that relies on that could be broke in hours, as many businesses that rely on Google search results have found.

    Most of the Internet is not a public space, almost all of it is privately run along similar lines to that shopping mall or a walled estate.

    Ralph and Julian Assange have shown us the limitations and risks of the privately operated web. As citizens and business owners we have to understand these corporations’ objectives are not always the same as ours and make judgements on how we live with the risk of finding ourselves in breach of a Term of Service in our business or personal lives.

    We’re still in relatively early days of the net and all of us are still learning. One lesson is clear though, we can’t allow our livelihoods to be held hostage by a small number of big technology companies. Make sure you have alternatives to your online channels.

    *Ralph is not his real name

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  • Dealing with a telco dispute

    Dealing with a telco dispute

    Once again, Australian telcos find themselves being criticised by regulators and consumer groups for their poor performance. This time over poor service, complexity of bills and overcharging on “freecall” numbers.

    The frustrating thing with all of these complaint is they are nothing new, as shown by an earlier version of this article in 2007.

    So the problems with phone and Internet companies remain and many customers, both consumers and businesses, are forced to go through the time wasting dance of dealing with call centres, complex contracts and often finishing with consumer protection organisations like the Telecommunications Industry Ombudsman or other state and Federal authorities.

    However there are ways of reducing the problems and improving your chances of resolving issues quickly and on your terms;

    Call them

    The first step when you realise you have a problem is to call them. This is the quickest and easiest way to resolve things. If you can solve the problem at this point, you will save a lot of time, money and frustration.

    When dealing with any call centre, there are a few important things to remember. You must remain polite, you must never make threats and you should note everything. A lot of this can be easier said than done.

    Take notes

    From the first call, you must take notes. Every time you speak to the call centre you must note the date and time you have made the call, the time they answered, the name of the person you spoke to, what you discussed, what was agreed (if anything) and the time the call ended. Any important discussions should be confirmed in writing.

    Be Calm and Polite

    At every stage of the process you must stay cool and polite. Do not lose your temper and do not abuse people. If you find the person you are dealing with is rude or provocative, or if find your blood pressure rising, then politely finish the conversation and call back later later.

    Don’t Make Threats

    Making threats will hurt your argument and draw the process out. Threatening people only makes their attitude harder or locks them into a position where they cannot negotiate with you.

    Suing the ISP, complaining to the TIO, going to the media or calling consumer affairs are all options you have available should everything else fail but the aim is to settle the matter quickly and amicably without going to the time and expense of complaining to other authorities.

    Do it in writing

    It is important to confirm everything in writing. All too often people believe a matter has been settled only to find it is still a problem months or years later. Follow up any important conversations with a letter confirming the details including the time, date and person you discussed the issue with.

    This is very important if you have reached an agreement settling a billing dispute. Confirm the details and the agreement in a letter sent by registered post to the organisation, any faxes or emails should be followed up by a letter.

    Any emails about the matter should be printed out. Despite the claims of a paperless world, the only thing that really matters in disputes is what is written on paper.

    Make sure you keep the full story in writing and this includes printing out emails and web pages.

    Follow the ISPs complaint procedure

    You may need to start a formal complaint within the organisation’s internal complaints or appeals procedures, the ISP or telco support line should be able to tell you how to do this. For smaller ISPs there may not be any formal procedures. A letter to the senior management may be necessary to get the right person to respond.

    Contact the ISPs management

    If the ISP doesn’t have a formal dispute procedure, or if it doesn’t respond, forward your complaints with copies of all the supporting documentation to the directors and Managing Director or CEO of the company concerned.

    Generally directors and senior managers hate this and will make their displeasure known to the people responsible within their organisation. Again, be polite and respectful, make no threats and express your desire to settle the matter quickly and amicably.

    Pay the bill

    Some ISPs have a habit of calling in the debt collectors at an early stage. This complicates the matter and can also affect your credit record. Generally, it’s a good idea to pay any disputed amounts and then continue arguing about the facts of the dispute.

    If you have direct debits with the ISP it may be necessary to stop these to avoid further disputed debits to your account. Do this in writing to the both the ISP and your bank with a cover letter informing them the direct debit has stopped. If you do this, make sure you are within your contract and you have a backup Internet service as the ISP will almost certainly stop your service immediately.

    Complain to the TIO

    If you are still unhappy, complain to the Telecommunications Industry Ombudsman. They like you fill in their web complaint form but they will accept phone calls and written complaints.

    Keep in mind they will not help you unless you’ve already tried to resolve the problem with the provider, they also won’t assist if you’ve complained to other organisations which is another reason not to make threats earlier in the process.

    Further complaints

    Despite all of the above, it’s still possible not to have resolved the problem with an ISP. The next step is to complain to your state consumer affairs department or the ACCC. You can also seek advice from your solicitor or local community legal centre.

    The aim with any dispute is to settle it quickly and amicably. The important thing is to contact your provider quickly if you have a problem. Internet providers can be difficult to deal with but with a combination of patience, persistence, good record keeping and a cool temper, you can resolve most problems on your terms.

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  • Why cloud computing isn’t just about savings

    Why cloud computing isn’t just about savings

    “Billions of IT savings in the Clouds” trumpeted the Australian Financial Review last week in a front page article on cloud computing that claimed moving services online could “slash technology costs by up to 80 percent”.

    If nothing else, those lines lead any IT industry veteran to rise a wry eyebrow; a business that adopts a new platform, technology or vendor solely on the claim of massive cost savings is in for a world of pain, disappointment and heartbreak.

    There’s no doubt that cloud computing and software as a service are the IT industry’s growth areas and there are many benefits for the businesses that adopt these technologies. Reduced costs is one of the attractions, but it isn’t the only factor a businesses should consider.

    Other aspects are the flexibility of not locking yourself into specific hardware and technology platforms, reduced capital and labour commitments along with improved security, reliability and data protection.

    This last point is probably the killer reason why you shouldn’t be looking for 80 percent cost savings with any product. As we discussed a while back, to go onto the cloud you have to trust your supplier has the utmost competence and integrity. A provider who offers nothing but slashed costs will struggle to provide peace of mind.

    It’s likely in a few years time only the biggest of the biggest companies will have inhouse IT staff and servers as most business IT operations will run over the internet and through web browsers. Most businesses will think having IT staff on the payroll is as unusual as employing a full time plumber or electrician in the office.

    Although we probably won’t get to bank those savings — as we’ve found with the roll out of IT services in the last 20 years, new industries will develop that will soak up the labour and create new cost centres. While today’s services may be 80% percent cheaper, just as today’s computers and mobile phone are 80% cheaper than those of 20 years ago, we’ll be using other services and the price of those will soak up a lot of those savings.

    A bigger concern is for the cloud and software as a service industries themselves. If online services are identified as merely a cost cutting product, then these markets are going to be rapidly commoditised with a race to the bottom not dissimilar to what we’ve seen in the PC industry. Which will perversely mean security and reliability conscious businesses will keep their IT in house rather than risk it to a cheap charlie data service.

    History’s shown that selling and buying cheap in technology is a mug’s game. So don’t get seduced by claims of ridiculous savings with any technology; be it cloud computing, telecoms services or any other line item. All too often that cheap price or massive saving hides some nasty traps.

    Because of the compelling benefits cloud computing is the way businesses will go over the next few years but those who choose a platform simply because it appears 80% cheaper probably won’t be around to tell us about it.

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