As the popularity of the Internet continues to grow, many age-old businesses have started taking the dive into the digital realm. The first step for most of these businesses is to create a website. In fact, this is the first step for a lot of new companies as well. Some businesses create a website before they even have a product to sell. The problem becomes that these businesses are not asking, “Why?” “Why do we need a website?” “What are we trying to accomplish?”
If you don’t know the answers to the above questions, you are not ready to start building your site. Don’t start a website until you have a plan (keep in mind, this is coming from someone who sells websites). Everything you buy in life is purchased for a reason. Don’t get me wrong, I am not saying that you should not build a website for your company. In fact, that is not even close to what I am trying to say. Building a website for your company can be incredibly beneficial. All that I am advocating is that you have a plan before jumping the gun.
Tools are used to help you achieve your goals, but you need to know how to use them properly. A hammer is useless if you don’t have a nail and the skills necessary to use the tools to build something great. Similarly, a website is useless unless you have a plan and the resources necessary to implement it.
Let me resort to my first question: Why are you building a website? Here are some of the answers I hear on a regular basis:
“I want to increase business” – Everyone wants to increase business. This is far too ambiguous of a goal to set for a website. Be specific.
“Everyone else has a website. It just seems like the right thing to do.” – I’m going to stay away from any cliché “Everyone else is doing it” references, but, as you probably guessed, this is not a good enough reason.
“I want my business to look more legitimate.” – Once again, too vague. What is the point of looking more legitimate? Is it too increase business? I refer you to my first point.
Website goals need to be specific and measurable. Often times, you can derive more specific goals from your broad goals. You know what you want to achieve, you just need to be more specific. A broad goal is “I want to increase business.” A more clearly defined goal would be, “I want my restaurant to increase phone reservations by 20% in the next month” or “I want to add an online ordering function to my business in order to gain 50 extra customers a month.” These goals are specific and measurable, which provides for a solid foundation for the website. If your company is trying to increase phone reservations by 20%, the website will be designed with this in mind. A website is most often designed to create “conversions”. A conversion is essentially what you want a visitor to do, or your goal. This can be anything from calling your company to buying a product directly off the site. An effective website will be designed to increase conversions. Designing a site to increase phone calls will be a lot different than designing a site to increase online sales. Knowing what your conversion factors are allows you to measure your success. If you simply say, “I want to increase business,” how are you going to measure that? Of course it can be done, but it is much easier if you have something specific to measure. An increase in business is not specific enough and can often be attributed to random variables such as seasonality, and even luck. Additionally, broad goals make it harder to design a conversion-optimized website. Of course, you will need people to visit your site if you expect to see any conversions. This leads me to my next point.
You might as well spend thousands of dollars to place an advertisement in the middle of the desert where it will never be seen. If you don’t have traffic to your website, you have a problem. Before creating a website, make sure that you have a plan to get traffic. “Traffic” on the Internet is the equivalent of potential “customers” in brick and mortar shops. A website without traffic serves no purpose.
I’m not going to explain too much about driving traffic because that is another topic on its own. I will say that you need to have a plan to send targeted traffic to your website once it is up. The keyword here is “targeted.” The people visiting your site need to have a genuine interest in your product or service. If you are working with a marketing company, such as Upper Division Marketing, they will help you start sending the right traffic to your site. Before sending traffic, it is important to make sure that your site is ready to handle the traffic.
No one wants to visit your site just to hear about your business and why they should buy from you. Your website needs to provide something of value to your visitors. This is the only reason people visit websites. When was the last time you visited a website for any reason other than receiving something of value? Never.
Providing value can be as simple as providing information, as long as you do it properly. You need to make sure that what you are providing aligns with what your visitors are looking for. Take a second and think about why your customers are visiting your website. Are they trying to learn more about your products? Are they trying to find out what times you are open for business? Visitors come to your site because they are looking for something. If you do not give them what they are looking for, they will leave. It is as simple as that.
You can present the same information in many different ways, and your presentation will make a huge difference. Proper presentation encompasses a lot of things. This includes presenting your information in a way that is:
Visitors to your site should not have to work to get what they need. You wouldn’t make your customers work, would you?
Your website says a lot about your business, so you need to make sure you are saying the right things.
It is easy to get carried away with all of the fancy features and opportunities in the world of web design. Trust me when I say that there is a lot of cool stuff to mess around with. That being said, you need to focus on your brand. A website is a huge part of the branding process and should be an accurate reflection of your company. There are many things to keep in mind, but here are a few:
A big part of understanding your audience and what they want from your site is understanding how your audience accesses your site. You can obtain a lot of good information from Google Analytics, but by that point it may be too late. A responsive site is designed to accommodate users on all different platforms and devices. Websites render differently in different browsers and on different devices. You need to be ready to accommodate any user, whether they are accessing your site from Mozilla Firefox on a Tablet or from Google Chrome on their PC. You will often hear people talking about making sites that are “mobile-friendly.” This is just the tip of the iceberg. Responsive sites are ready to display on any device, so let’s just call them “friendly.” Creating a responsive site is usually the role of the web developer, so if you are not designing your own site, you don’t need to know too much about it. You should, however, know that a responsive website is very important.
So, now you know the thought process for planning a website. A website can be an amazing tool for businesses. A website can help your company grow, reach new customers, and serve as the basis for future digital marketing efforts. Ponder the points I discussed above and try to relate them to your own business.
Of course, if you want to save yourself some effort, you can always hire a professional to walk you through the process. Feel free to contact us if you would like to work with Upper Division Marketing on your website development process. Our team can walk you through the planning process all the way to the design and optimization.
The Groupon site was officially launched in November of 2008, and has since grown to be a multi-billion dollar company. The popular site features discounted gift certificates to local businesses as well as lower prices on physical products (Groupon Goods). There is no doubt that this site is popular amongst consumers due to the hefty discounts provided on great products and services.
The impressive consumer response to the Groupon business model has left many businesses trying to incorporate the usage of Groupon into their marketing plans. So, the real question becomes, “Is Groupon good for business?”
The short answer is that it is relative to your business model and what your marketing goals are, but let’s have a look at some of the important details.
1. Groupon expects businesses to provide a discount between 50%-90% off normal prices.
2. Businesses split all proceeds from Groupon Sales with the Groupon.
On average, businesses usually receive between 20-25 cents on the dollar for each purchase made. Let’s say you generally sell your product or service for $100, but create a Groupon with a 60% discount, making your new price $40. Groupon takes half of that, so you now end up with $20 from your $100 product/service. While this can be seen as a terrible return, there are some other important factors to look at before making any marketing decisions.
Customer Lifetime Value – What is the lifetime value of each one of your customers? If you use Groupon to promote your business, you may lose money on customer’s initial transactions, but profit from them in the long run. That being said, you also need to think of how many Groupon customers will actually return. Groupon’s research team estimated a return rate of 22%, however, companies have seen both higher and lower return rates.
Profit Margins – Analyzing your profit margins can help you decide if Groupon is right for your company. Since most companies make an average of 25 cents on the dollar for every Groupon purchase, you would need a profit margin of over 75% to make each Groupon redemption profitable.
Unfilled Capacity - Your company’s unfilled capacity also plays a role in deciding whether or not Groupon is right for you. For example, if a movie theater finds that 75% of their theaters are empty on a regular basis, they may consider selling the extra seats at a discount rate. This works best for companies that have high fixed costs, and low variable costs.
New vs. Existing Customers and Market Share – It is important to understand who will be purchasing your Groupon. Chances are, it is your goal to get new customers. An interesting study done by Lightspeed Research showed that 63% of Groupons are purchased by existing customers. If your existing customers are the ones purchasing the Groupons, then Groupon does not have the same marketing power it would if you are reaching new customers. This is where your company’s market share becomes important. If you have an 30% market share in your industry, you will not be reaching as many new customers as you would if you had a 3-5% market share.
Average Sale Price – How much do people normally spend on one order at your business? This is important to analyze because it allows you to understand how profitable Groupon will be for your business. For example, if a restaurant sells a Groupon for $10 that offers consumers $20 towards their meal, but has an average sale price of $40, the Groupon may be more profitable. Accounting for Groupon’s commission, the restaurant now made $25 from a $40 sale instead of $5 from a $20 sale. It is important to keep in mind that many consumers are only looking to spend the amount of the Groupon and not a dollar more.
Average Cost to Acquire a Customer – Many businesses have begun to look at Groupon as a marketing opportunity instead of a way to increase profitability. By knowing your average cost to acquire a customer (based on your marketing efforts), it is easier to understand the value of Groupon from a marketing standpoint. For example, you may find that your company loses $5 in profits from every Groupon you sell, however, if you are used to paying $10 for each customer acquisition, this may actually be a good deal. That being said, it is important to understand how many of the Groupon purchasers will turn into return customers.
Groupon-Specific Details (Amount bought per customer, redemption percentage) - There are a lot of Groupon-specific details that factor into the profitability of your promotion. Two of the main ones are the redemption percentage and the amount of Groupons purchased per customer. The redemption percentage is simply how many people redeem the Groupon compared to how many purchased it. The average redemption percentage is 85%, but it will differ for each individual Groupon. Another important factor is the amount bought per customer. Since the point of Groupon is to reach as many new customers as possible, the more Groupons bought by a single customer, the less marketing value you receive as a business.
Can you handle the extra volume? - One of the best things about Groupon is its ability to drive large amounts of traffic to your business in a short time. While this can obviously be a great thing, it can also be a bad thing if your company is not ready to handle the extra volume. If your company struggles to handle the higher volumes, it can have a negative effect on your company’s reputation. If quality and service are sacrificed, customers will have a negative opinion about your company.
Are you reaching the right people? - You will hear me mention time and time again that your company needs to reach the “right” customers. The “right” customers are customers that are a good fit for your business. These are the loyal customers that will continue to use your business and help you grow. Think about if your Groupon will be reaching the right demographic. A lot of Groupon users are deal seekers and may not have a genuine interest in your company.
Here is a look at the Groupon demographics as provided on their official site:
You may be asking yourself what the overall takeaway is from this article. There are plenty of articles that have biases for or against Groupon, but that is not the point of this particular one. Let me make it clear: I am not saying you should or should not use Groupon. I am saying that you need to evaluate the data you have available and think about whether or not Groupon is a good fit for your business. The best way to do this is to think about your business goals. What are you trying to achieve by using Groupon? Are you trying to spread awareness about your business? Are you investing in new customers with the hopes that they will return? Are you trying to make a profit on each Groupon you sell? There are so many different things you can try to achieve by using Groupon. Like any marketing channel, Groupon is just a tool, and its power relies on how you use it. I’ve gone over some important things to think about before using Groupon. These points should be used to comprise a solid marketing plan that will align with your business goals.
Psychology plays a huge role in marketing. Understanding how people think is the foundation for any effective marketing campaign. This is the reason why marketing professionals spend hours and hours compiling data about different market segments. We spend time doing research on market demographics, psychographics, and behavioral trends so that we can better understand our audience. Unfortunately, there is only so much that one can do by analyzing numbers and statistics. This is where psychology comes in. Understanding how your audience thinks is more valuable than any demographic statistic such as age, gender, and income. Psychology is the art of studying the mind, and the mind controls every single thing we do. Any serious marketer should study psychology to enhance their marketing abilities. This is the first of many articles to be posted on “Psychology in Marketing.”
A few days ago, I was reading a book titled “Influence: The Psychology of Persuasion” by Robert Cialdini. The book discusses the psychological phenomenons surrounding the art of influence, and how these principles can be used to increase your persuasion skills. This book is a “must read” for any serious marketer. After all, isn’t the general idea behind marketing to persuade your audience to purchase your product or service? This book highlights many valuable persuasion tactics, but, for the sake of brevity, I will focus on only one: the concept of reciprocity.
The concept of reciprocity is very simple. In short, the concept states that people feel obligated to give back when they receive. If you give someone something or do something for them, they will feel obligated to return the favor. This rule does not just apply to one market segment: it applies to everyone. Think back to the last time someone did a selfless favor for you. If you are like the rest of society, you probably felt an urge to do something in return for that person. The response is like a trigger, and most people are not consciously aware that it is happening. Understanding how reciprocity works and how it can be used to influence others will take your marketing efforts to a whole new level. Robert Cialdini writes that “The rule possesses awesome strength, often producing a yes response to a request that, except for an existing feeling of indebtedness, would have surely been refused.” Take a second and think about how truly powerful this is. Understanding this rule can help you receive a yes response in cases where you would have otherwise been refused. Imagine what that could do for your business.
This is great news for you. What this means is that you can use the reciprocation rule any time you want. All you need to do is give. The reasoning behind this is that most people will accept a “gift” when it is presented to them. In most cases, it would be rude not to accept. When a person accepts the gift, you have instilled a subconscious sense of indebtedness in them. Now, imagine if you started giving something away to a large number of people. You now have a large group of people who feel indebted to you or your company. If that is not a great marketing tool, I don’t know what is.
Robert Cialdini gives many great examples of this in his book. Long story short, exchanges do not need to be equal for the reciprocation rule to work. This concept is fairly easy to understand. Think about a time when someone was kind enough to give you something that may be considered insignificant. This can be something as simple as a drink or a piece of gum. The fact remains that you probably felt some desire to return the favor, and you were not focusing on the monetary value of the exchange. You probably didn’t think “I received a soft drink, so I owe someone a soft drink,” but instead, “This person did something nice for me. I would like to do something nice for them.”
Chances are, you already know where I am going with this. You can utilize the rule of reciprocation in many aspects of your business. Here are just two examples:
“What!?!? This is madness!! I can’t just give my product away for free!” If you are thinking like that, you have failed to understand the rule. Giving something away for free is your way of “investing” in a new customer. If you are already engaging in marketing of any sorts, you are spending good amounts of money to acquire new customers. This means that you are already “investing” in new customers. Why not try a new tactic? Giving something to your customers can serve many purposes. It can be a sign of goodwill, it can allow customers to try out your product when they otherwise may not have been inclined to, and, of course, it initiates the reciprocation rule. Now, I am not saying to just give your product away because that wouldn’t be realistic. I am just saying that you should give something away. This can be as simple as a smaller sized sample of your product, a free coupon, or even a valuable piece of information. Remember, the reciprocation rule states that exchanges do not have to be equal. What you choose to give away should be relative to your business. Keep in mind that you should not be giving something away just for the sake of receiving something in return. People are not stupid and they know when they are being manipulated. You also do not want to give the freebie to as many people as possible just for the sake of it. Focus on customers that are good for your business, as some people just enjoy the excitement of free stuff. Make sure that you give something that a) is cost effective for your business b) actually provides utility to your customers, and c) seems like a genuine gift. If you can balance the three, you should see great results.
Many businesses are troubled with the issue of keeping their employees motivated and working hard. The issue is not all that trivial if you know how to handle it. If you need something from your employees, what is a great way to get it? You guessed it: the reciprocation rule. Of course, you are not going to be giving your products away to employees as that would not serve the same purpose. Instead, give your employees what they want or need. I can give you a personal example to support the power of this tactic. When I have employees that are performing well, I will often reward them with a paid day off or a similar reward. While you can wait for your employee to ask for it, you can also initiate it, which is exactly what I do. Some people may argue that it is inefficient to give an employee a paid day off when they haven’t asked for it. That could not be more wrong! When I have used this tactic in the past, employees have been extremely grateful and it showed in their work. I have seen productivity increase by as high as 50% for a single worker after I rewarded them with a surprise paid day off. Of course, I was not using this tactic to manipulate my employees. I was using it as a reward for good work, but the effects remain the same. If you’re all about the numbers and want to talk about ROI, I would trade one day’s salary for a 50% productivity increase any day.
Hopefully, by now you understand the sheer power of the reciprocation rule. If you know how to use it properly, it can be a great tool for your business. In most cases, taking advantage of the reciprocation rule will have multiple benefits, such as getting customers to try your product. It can also be used to gain a competitive edge in industries where your competitors are not utilizing this tactic. Think of the different ways your business can use this tool to grow. I have given two examples, but there are many more. Get creative, be genuine, and use the proven power of psychology to enhance your success.
Like any marketing tactic, this will not work 100% of the time, and tweaking and optimization are vital to the success of this tactic. Make sure to utilize this tactic in a way that is right for you and your company. Know what your goals are and use this tool as a way to achieve them when when possible. Think about how your audience will react to your efforts and make sure this aligns with your brand objectives.
Free Reports/Analyses – Some companies will offer free reports or consultations to potential customers. Of course, this serves the purpose of getting new clients interested in your company, but the reciprocation rule is still present. Which company are you more likely to work with: one who has provided you with valuable information or one who is simply selling their services?
Free Accounts for Paid Services and Product Demos – A lot of service based companies with multi-level packages will offer free accounts to attract new clients. This serves the purpose of allowing customers to test your product before they buy it, but it is also a favor to the customer. Which company are you more likely to work with: a company who has allowed you to try their product for free or a company who insists you pay to be able to use their product?
Free Samples – Giving away free samples is not a new concept. Companies give out free product samples to allow consumers to try their product before they buy it. Giving away free samples can also leave customers feeling indebted to a business. This works especially well when the free sample is given in person. Which company are you more likely to work with: a company that has given you a sample of their product for free or a company that merely advertises the benefits of using their product?
Coupons – Distributing the right coupons can trigger the reciprocation rule. I received a coupon for a free pizza one time. When I went to use the coupon, I ordered other food as well because I didn’t feel right just taking the free pizza. Giving away useless or low value coupons will not have the same effect. Which company are you more likely to work with: one who has given you something for free or one that keeps asking for your money?
Friendly Gestures – Many companies send out holiday and birthday cards to their clients. They get absolutely no monetary gain from this….or do they? Taking the time to give someone a well-written note can be considered a favor by many people. The recipient is usually left with a positive feeling, meaning they are ready to reciprocate. Which company are you more likely to work with: one who has given you personal attention or one that seems like a faceless money machine?