Lesson #144: Remove All Friction From Your Sales Process

In physics, friction between two items creates resistance, impeding maximum velocity.  The same holds true in business; any friction created between you and your customers, will limit your full sales potential.  So, this lesson will help you identify what types of things create sales friction for businesses, and how best to "lubricate" those issues for maximum sales performance.

To me, sales friction is typically bundled into the following categories:

RESISTANCE TO COMPANY OR BRAND

If a customer does not trust a company, it will not do business with that company.  So, you want to do everything you can to increase trust around your brand.  This includes: (i) having a professional looking website; (ii) visible customer reviews from happy past customers; (iii) featured mentions in brand name media outlets; and (iv) icons and high scores from reputable credibility checkers (e.g., Better Business Bureau, TRUSTe privacy), to name a few.  Put on the hat of your customers, and ask if you would make a first purchase from your company, if you knew nothing about it.  Startups have the biggest hurdles here, so do whatever you can to alleviate any fears customers may have about buying from your business. And, keep religious focus on your company reputation, especially in social conversations, to learn what people are saying about your business, and to address such items.

RESISTANCE TO PRODUCT OR SERVICE

If a customer does not like the product or service being offered, compared to other competitive products or services in the market, it will not do business with that company.  So, take a critical look at all the competitive products or services that are available in your market, and compare your own business, to see how you stack up.  Does your product or service have better functionality and features?  Do you have better customer service?  If not, go back to the drawing board, to figure out how you can gain a competitive advantage.  And, clearly communicate such competitive advantage in your marketing materials.

RESISTANCE TO PRICING

If your prices are too high, or do not bring a high enough value to your customers, they will never buy from you.  My rule of thumb is to price your product or service, at a discount to your competitors, on things that are largely similar.  Or, price your product at the same level as your competitors, but add in additional features and functionalities, that makes the consumer feel they are getting a "bigger bang for their buck" and more value when buying from you.  In Lesson #143, we talked about "freemium" pricing techniques, which I think work great for removing any price related friction from the sales process, as who isn't going to be willing to try out a product for free?  And, when comparing prices, be sure to fully load your prices for things like taxes, fees and shipping, as your customers will be doing the same.

RESISTANCE TO POLICIES

If there are any surprises in the purchase process, or the consumer has any sense of fear related to the purchase or the company's policies, they will abandon their cart and not purchase from you.   This includes things like: (i) do you offer free shipping; (ii) can customers return products to you with free shipping; (iii) can customers return the products to your stores, as well as your online fulfillment center; (iv) do you offer an unconditional customer satisfaction guarantee; (v) do you provide cash refunds, or only store credit; (vi) did you include any unexpected service charges, on top of the product price; (vii) did you give customers the option to locate inventory in your closest store, in case they are nervous about buying online; and (viii) did you give the customer the option to book over the phone, in addition to the web.  Make sure you are 100% customer-friendly in all of your policy making. 

RESISTANCE IN USER EXPERIENCE

If buying from you is not easy, customers will shop elsewhere.  So, it is critical you optimize your user experience.  This includes things like: (i) keeping your site speed fast; (ii) making it easy to find items with site search and navigation; (iii) having a clean site page design that is not cluttered or confusing; (iv) using nice photos or videos to help sell the products or services; (v) offering a live chat option for answering questions while people are shopping the site; (vi) showing sample reports or screenshots of what customers can expect from your service; (vii) making sure inventory is in stock; (viii) making sure it is clear what date the product will be shipped and received by the customer; and (ix) keeping any order forms as short and sweet as possible, without too many fields to fill in.

So, as you can see, there are lots of potential friction points between you and your customers.  Make sure you are doing your best to have a few friction points as possible, and optimize your business for maximum sales performance of each over time.

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Red Rocket Blog Readers Save 15% on Techweek Chicago Passes

Techweek is one of the premier technology focused conferences and expos in Chicago each year.  Thousands of people attend to hear presentations from big-name industry executives, learn about hundreds of startups in the exhibition hall and for general networking purposes.  I have been involved as a panelist or judge in each of the last two years, and will be involved again this year.  So, for these reasons, Red Rocket agreed to become a media partner for this year's event, helping to get the word out there to my readers.

This year's event is only a few weeks away and will be held from June 27-29, 2013 on the 8th floor of the Merchandise Mart in Chicago.  You are recommended to purchase tickets early, as the prices rise the closer you get to the event date.  For tickets purchased this week, the general admission prices are $30 for the expo only or $475 for the conference and the expo (compared to $45 and $650 at the door).

But, Red Rocket has negotiated a 15% discount for all its blog readers.  Which means, if you purchase your ticket this week, using the graphic link below, your price will be $25.50 for the expo only or $403.75 for the conference and the expo. 



Hope to see you all there.  The event is well worth it!!

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Lessons in Entrepreneurship: Skylanders (Upselling on Steroids)

Following my last Lesson #143 on upselling techniques, I wanted to share this case study on Skylanders, the popular video game franchise from Activision launched two years ago.  Any of you with six to nine year old boys, like me, have most likely learned about Skylanders from your kids.

First of all, what is Skylanders?  It is much more than a simple video game disc you play on your gaming counsel.  You can't use the video game, until you have the matching action figures, which you place on a docking station, to bring that character to life in the video game.  So, think video games meets collectable action figures, with around 48 characters you can buy for this this game, each with unique powers.

So, here is the lesson on upselling.  The Skylanders starter set is priced around $69.99, which includes the video game, docking station and three action figures.  But, once your kids start playing, they become hooked, and want all the additional characters.  And, the additional characters range from $9.99 to $14.99 each . . . yes, I said EACH.  So, if your addicted kid ends up collecting the entire set of 45 additional characters, that would end up costing you around $632 plus tax!!  Compare this to a more typical top-of-the-line video game that may cost you $49.99.

And, believe me, the kids get hooked.  My son is up to around 10 of the action figures, after about two weeks of owning the game.  And, it is a feeding frenzy in the stores for these characters.  I was at Target yesterday, and there were four boys with their dads all jockeying for space within this five foot shelf of action figures.  And, apparently, some of these characters are in such short supply, it has created a "scalper-like" after market, with certain characters fetching up to $49.99 by themself.

So, what has Skylanders done for Activision's business and the video game industry?  It has entirely revolutionized the way video game manufacturers are thinking about designing their video games, as Skylanders has become the #1 selling video game on the planet.  Skylanders have sold in excess of $500MM in revenues in the last two years around this franchise, including the game, the action figures and all the other related merchandising.  A typical top-of-the-line video game would be lucky to sell 1MM units at $50 each for around $50MM in sales.  Skylanders has sold around 10x this average!!  To put this in perspective, the #1 toy brand, Lego, does around $4BN in annual sales. 

So, when you are designing your business plans, try to tap into large upselling opportunities like this.  Anything you can do to leverage your fixed investment with additional revenues will simply flow thru additional cash flow to your bottom line.  What a great financial success Skylanders has become with this model, at the unique intersection between the video game and collectible toys markets.

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Lesson #143: Upselling, Cross-Selling and Freemium Techniques

I was recently working with a startup that was having trouble growing its sales.  Part of the problem was the quality of its sales team (the people), part of the problem was what they were selling (the products) and part of it was how they were selling (the techniques).  We are going to tackle this third piece: the importance of upselling and cross-selling techniques within your sales efforts.

First of all, what's the difference between upselling and cross-selling?  Upselling is selling the same individual more things to increase their average order size.  Think of McDonald's who tries to upsell you fries or a soda to go with your burger.  Or, Best Buy trying to upsell you the extended warranty plan to go with that new digital camera.  You are trying to get more dollars out of that one customer at that point of sale. 

If you are a software company, an upsell could be something like: instead of our Silver Edition with basic features for $1,000, have you considered our Gold Edition with additional desired features for $2,000.  Or, instead of buying 10 licenses at $1,000 each ($10,000 total), I can get you 20 licenses at $750 each ($15,000).  Or, instead of running reports once a year for $1,000, you can run reports four times a year for $2,000.  All designed to get the fish on the hook, to eat even more in an economically advantageous way to the customer.  Firstly, to help drive additional sales dollars.  But, most typically, to also help drive materially more gross margin dollars, with limited incremental costs associated with that higher sales spend.

Cross-selling is more  about the concept of "landing and expanding" within a particular company.  Oracle may first break into a company selling them their database products to the IT department.  But, they are quick to spread like a "virus" within the organization to also sell the finance department their financial software package and the marketing department their CRM package.  Cross-selling is typically selling to different people or different departments, within the same organization.  And, is much more longer term in nature, than upselling more items into an immediate transaction at hand.

Any good sales organization needs to have effective upselling and cross-selling techniques built into their go-to-market strategies and tactical "bag of tricks".  So, when you are building out your sales kits and training your sales teams, you can't be satified by only selling them one version of something, only once.  Build multiple versions of increasing quality, to upsell them up the product curve.  Get them addicted to the product, buying it for more people in a higher frequency.  And, use this first sale, as step one of a longer term plan to "land and expand" internally from there.

Based on the above, I am a big fan of the freemium models that many software-as-a-service startups are employing these days.  Freemium models start off with a basic product that a company gives away for free to rapidly get new users into the family.  Then, they add additional desired services into a deluxe product for a monthly fee, and even more highly desired features and functionality into a premium product, for an even higher monthly fee.  Hence the word "freemium", at the intersection of "free" and "premium" versions of your product.  At the end of the day, freemium models are just an elegantly pre-packaged upselling technique for software companies.  LinkedIn is one of many examples using this model, letting anyone sign up and use the product for free, but charging for access to premium reports.

What I love about the freemium model is that is removes any "friction" from the selling process.  Who isn't going to be willing to try something out for free??  But, if correctly implemented, companies will give their new customers a chance to taste the "Kool-Aid" version of the product, to hopefully get them addicted and wanting even more from the "Dom Perignon" version of the product.  A very clever sales and marketing tactic you should consider in your own businessess.

So, think through your own upselling and cross-selling opportunities, and watch your own sales and margin dollars start to accelerate.  It all starts at getting more muscle out of a single transaction from a single salesperson to a single customer, and then scaling up your success across additional salespeople, corporate clients and individual departmental contacts from there.

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Lesson #142: The Power of Content Marketing--A Red Rocket Case Study

For a lesson on content marketing, we are going to study the Red Rocket Blog, as a case study. 

Back on February 28, 2011, I wrote Lesson #1, my first blog post.  I didn't really know what to expect, as I had never been a blogger before, and had never even heard the term "content marketing".  All I knew was a wanted to prove to visitors of the brand new Red Rocket website, that I was smart on launching and funding startups and well versed on digital strategy and marketing.  Writing a few "how to" lessons seemed like a good idea to do that.

Over the last two years, I have written a total of 188 blog posts, including this Lesson #142.  It takes me between 30-60 minutes to write a post, depending on its complexity, and I write around one post per week.  So, about 140 hours of time has been invested to date, spread over two years.  And, each blog post is between five to 10 paragraphs in length.  I try to limit each post to around a 5 minute read with clear, easy-to-understand action items with real life datapoints for the readers to action upon in their own businesses.

In addition to writing content, I do my best to get the content discovered.  I try to select popular topics and use engaging titles, that are already getting a lot of monthly search traffic at Google, based on data from their keyword suggestion tool.  And, I distribute the content to my social network of followers (e.g., Twitter, LinkedIn, Google+), including posting each lesson to the relevant group discussions that I am a member of on LinkedIn (after joining 38 relevant groups on startups, digital marketing and venture capital).  I only post the tweets once, not multiple times, which would get me even more exposure for the content throughout the day.  In addition, I look for various third party content sites (e.g., Crains, Founder Institute, Alltop, Alley Watch, Technori) to help me get exposure for the content, by republishing portions of the articles from their sites, including links back to my site, which helps with promotion and backlinks for search engine support. 

The result of the above effort is a Red Rocket Blog that gets around 8,000 reads from around 3,000 unique visitors per month.  Starting with zero reads in February 2011, the blog has grown exponentially in each year, from 2,000 monthly reads one year later to 8,000 monthly reads today, just over two years later.  So, it took some time for the blog to attract an initial readership, and for search engine optimization benefits to kick in.  But, today, traffic is starting to accelerate, with the 8,000 monthly reads this month, up from 5,000 monthly reads in January!!

So, why does this all matter??  Here is what has happened to me and the Red Rocket consulting business during the same time: (i) it has help me build my personal brand; (ii) I get a lot of PR requests for interviews and free exposure in major media outlets (e.g., Entrepreneur, Wall Street Journal, Crains, Forbes); (iii) it has dramatically increased my social media following and Klout score; (iv) I received a few unexpected honors and awards (e.g., Crains Tech 50, Mentor of the Year finalist); (v) I was invited to speak or participate at several industry events (e.g., Techweek, VentureShot, eFactor, Lean Startup Circle, IRCE) and guest lecture to entrepreneurs at the local universities (e.g., Northwestern, U-Chicago, U-Illinois Chicago, Columbia College); (vi) Red Rocket has become the #1 or #2 link in Google for "startup consultant"; (vii) I get about 200 inbound consulting leads a year, with which to drive Red Rocket revenues; and (viii) Red Rocket's reach has expanded far beyond Chicago, with leads coming in nationwide, and even from overseas.

And, what did this cost me, other than a little bit of my time?  Nothing!  So, take lessons from here for your businesses, scaling up or down your traffic estimates based on your content type, quantity, frequency and distribution.  Embrace content marketing around your industry or business, and watch the new found leads roll in.  But, as you read, be patient; it does take a bit of time before it takes off.

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