[VIDEO] George Deeb Discusses 'Pain Killer vs. Vitamin' Business Models

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about how to make your business a "need to have" painkiller and not a "nice to have" vitamin.  I thought this video turned out great, and I wanted to share it with all of you, to help with your product strategy needs.  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

The Best Employees Have These '31 Flavors'

Having good employees will make or break a company’s success. I have previously written about how best to read resumes and screen employee candidates, but that is before they are actually working for the company and you get a chance to see their “true colors” when they are not “on show” during the interview process.  This post is designed to help you identify the best traits that most successful employees share, so you can “double down” on those best employees and “weed out” the rest, as nothing can take down a company faster than a bunch of toxic employees that don’t beat to the company’s drum.  The best employees have these “31 Flavors” blended into one.

Read the rest of this post in Entrepreneur, which I guest authored this week.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #314: The Only Winners in Ecommerce? Amazon, Google and Facebook!

I have been a long-time fan of the ecommerce industry.  As offline retailers were struggling to compete with online retailers, many large chains went out of business, and an increasing amount of consumer buying moved online.  For a long time, ecommerce startups were printing money, in what felt like a “can’t lose” industry over the last couple decades.  But, like with any “gold rush”, empowered by ecommerce platforms like Shopify that made it quick and inexpensive to get your online store up and running, ecommerce attracted a bunch of competitors trying to get their products discovered online.

But, what happens when millions of ecommerce stores are fighting to get discovered on only three primary websites (Amazong, Google and Facebook) where consumers are looking for potential shopping solutions?  All hell breaks loose, wreaking havoc on your cost of customer acquisition and your bottom line profits.  Which means the only long term winners in ecommerce are going to be Amazon, Google and Facebook (“The Big Three”), who keep raking in all the highly-profitable advertising dollars, while the ecommerce businesses themselves are starting to struggle to make a profit.  Allow me to explain.

THE GROWING ECOMMERCE INDUSTRY

The ecommerce industry in the U.S. was approximately $500BN in size in 2018, and has been one of the fastest growing areas of the economy.  This big market has been attracting tons of large retail corporations and startup entrepreneurs that have been trying to capture their piece of the pie.  What started off as a handful of ecommerce sites in the infancy of the internet has grown to over one million ecommerce businesses in the U.S. alone (and growing daily), each competing for consumer attention.

THE RISING COSTS OF GETTING DISCOVERED

But, how to do you get consumer attention?  In today’s market, that largely means The Big Three websites.  But, there is a limited supply of positions on the first page of The Big Three’s website search results.  Which means with limited supply and growing demand, the price of getting discovered keeps going up and up.  Which means the cost of acquiring a new ecommerce customer is quickly increasing, eating into the profitability margins of those ecommerce businesses.

To me, it is quickly becoming a race to the bottom for the ecommerce businesses, many of which can no longer drive a profit on their first sale.  They now must cross their fingers that they have a quick and frequent repeat sale cycle, to make their profits from the second and third transactions down the road.  Which may work well for a consumable vitamin business, but doesn’t work so well for a non-consumable mattress business, as an example.

GOOGLE, FACEBOOK AND AMAZON CAPTURING ALL THE PROFITS

As costs keep going up and up for the ecommerce businesses, that means advertising revenues keep going up and up for The Big Three.  Which means the only true long term winners in ecommerce will be The Big Three!!  Said another way, if advertisers are willing to invest up to one third of their revenues into consumer marketing efforts, that is over $150BN of largely free and clear profits for The Big Three to share between themselves.  While at the same time, all the ecommerce businesses will simply struggle to break even as their marketing costs continue to soar to higher and higher levels.  Pretty picture for The Big Three; ugly picture for the ecommerce businesses.

AN IEXPLORE CASE STUDY—COSTS UP 10X

Let me provide an example here.  When I was running iExplore in the year 2000, I could buy a Google “adventure travel” search click for $0.25, competing against a handful of competitors.  Those clicks would net me around a $200 cost of acquisition per new customer, or around 20% of my $1,000 gross profit margin.  Resulting in a very healthy bottom line profit margin.  Fast forward to today, that same click may cost $2.50 (10x more), as hundreds of competitors are now fighting for the top positions on those keywords.  Which means my cost of customer acquisition has grown to $2,000 today.  And, instead of driving an $800 profit on the first sale, I am now losing $1,000 on the first sale.  A pretty grim reality, to say the least.

MAKING A DEAL WITH THE DEVIL (AMAZON)

Google and Facebook clearly present their marketing challenges, but Amazon is even worse.  Over half of all shopping searches start at Amazon.  But, there is a price to pay for that distribution.  Amazon charges around a 15% revenue share to get promoted on their website, assuming you do your own fulfillment (the fee rises to around 25% if you need Amazon to do the fulfillment).  And, that is before Amazon has fully exploited their ambition of building a Google-like advertising marketplace to ensure your products get discovered on their platform.  When you layer marketing costs on top of the distribution and fulfillment fees, there is going to be no profits left for anyone except Amazon.  And, if you were hoping for repeat sales to drive your long term profits, good luck, as Amazon does not allow you to share in any of the customer records created.  They are Amazon’s customers, not yours, and you are not allowed to repeat market to them anywhere except on Amazon.  All in all, a great win for Amazon, and a strong kick in the gut for the ecommerce businesses.

CONCLUDING THOUGHTS

Even if you are one of the lucky ecommerce businesses that are driving a healthy profit today.  Enjoy it while it lasts.  It is only a matter of time before new competitors learn of your success on The Big Three websites, and try to enter your market.  We’ll see what your profits look like in a couple years, after the flock of competitors start fighting for position around your keywords.  And, this will be the case in nearly every category of ecommerce, so it doesn’t really matter what products you sell.

So, for all you ecommerce lovers out there (myself included), I have these cautionary words of wisdom for you:  think twice before getting into the ecommerce business.  If you want to win long term in ecommerce, stop thinking about what products you are trying to sell, and think more about how you can profitability grow your business without relying on The Big Three websites (e.g., viral word of mouth, direct mail, smaller websites) with proprietary or patented products only found on your website.  Or, better yet, think about how you are going to build a new fourth competitor to The Big Three, as that is where the real profits are long term, without having to deal with all the merchandising, warehousing, markdowns and other headaches that come with running an ecommerce business.

For future posts, please follow me on Twitter at: @georgedeeb.

[VIDEO] George Deeb Discusses Recruitment Strategies on ASBN

I was recently interviewed by the Atlanta Small Business Network (ASBN), an online "television network" serving the small business community, about recruitment strategies for startups.  I thought this video turned out great, and I wanted to share it with all of you, to help with your recruitment needs.  I hope you like!!

The embedded video player didn't give me the option to change the size of this video.  But, if you want to see a bigger version, simply click the expand size button in the player above, or feel free to watch it on the ASBN website.

Thanks again to Jim Fitzpatrick and the ASBN team for having me on the show.  I look forward to our next interview together.

For future posts, please follow me on Twitter at: @georgedeeb.

Lesson #313: The Top 5 Benefits of Marketing Personalization

Marketing has evolved from one-size fits all mass marketing to your entire target list, to laser-focused personalized messaging customized to that exact individual.  Personalized digital marketing is now the rule rather than the exception. From email campaigns to pay-per-click, personalized targeting is the accepted standard across most of the digital marketing world.  And, it’s not just ubiquitous—it’s increasingly close to the strategic core of how good marketers do business. To help me dig deeper on this topic, I solicited the wisdom of my colleague, Ronald Dod, the CMO and Co-Founder at Visiture, a leading ecommerce marketing agency with expertise on this topic.

Here are the top five reasons why increasing the level of personalization in your digital marketing is one of the most impactful marketing investments you can make. 

1.  Improved Knowledge of Customer Base

One key aspect of marketing personalization is gathering the data you need to effectively segment and target your customers. In an omnichannel world, you need omnichannel data collection. A savvy 21st century marketing team will always be on the lookout for opportunities to get more customer data, whether it’s through opt-ins like surveys or tracking and analytics tools. Thus, as your marketing personalization works toward its other goals, it can simultaneously work to provide you with better information on your customers and what they respond to.

A customer data platform, or CDP, is one of the most popular ways to collect and organize customer data into an easily usable format. These software packages integrate all of the customer data you collect through email, sites or apps and create customer profiles. You can then examine these profiles, find insights, create segments and create data sets for other tools like email marketing and PPC platforms.

A side benefit is that these customer profiles are useful for much more than just marketing. Examining your customers, their demographics and their interests will yield insights that you can use to drive decisions in distribution, product development and other areas. It’s a perfect example of how taking the plunge into personalization can have positive ripple effects across your business. 

2.  More Sales and Conversions

The numbers are clear: when it comes to driving sales and conversions, personalization works, and it works well. In one study, 88% of businesses said that personalized marketing gave them a measurable sales lift, and 53% reported the boost as 10% or more. Another study found that businesses using various personalized marketing techniques reported revenue gains between 8% and 21%. 

Personalized ads can even serve as a second line of defense to catch conversions that might slip away, thanks to the practice of retargeting. Retargeting, which involves serving targeted ads to people who have already visited a company's website, has been associated with a 70% higher conversion rate in visitors who see a retargeted ad. With figures like that, it’s not hard to see why personalization has planted itself firmly in the marketing mainstream, and why marketers are scrambling to realign their sales strategies with these new realities.

3.  Better Customer Engagement

Loyal customers who engage with a brand through multiple channels are incredibly valuable to the brand’s health and longevity. But with more choices and competition than ever—and brand loyalty possibly on the wane among millennials—it’s become critically important to foster that engagement through personalized service and content.

Loyalty programs, to name one example, have always been a popular way to increase customer engagement, but they’re undergoing a strategic shift. Now, it’s more common to find businesses concentrating on personalization and relationships in their loyalty programs. It’s a re-imagining from the somewhat impersonal traditional loyalty program, where a customer spends money and receives points, to one in which the retailer acts more like a trusted guide and partner. 

This is a good time to make another point: there’s definitely such a thing as going too far with personalized marketing. Although many customers enjoy being courted by businesses, it can be deceptively easy to cross the line into a situation in which a customer feels uncomfortable or creeped-out, so businesses need to tread carefully. Be especially wary of pushing into a customer’s family life or personal relationships and, of course, take steps to ensure that customers’ data is safeguarded. 

4.  More Efficient Marketing Spending

When applied correctly, personalization makes your marketing dollars go farther and do more. By creating the perfect match of content and customer, personalized marketing can materially improve ROI by making it possible to precisely target and fine-tune messaging. 

This is an especially important part of PPC advertising, where segmentation and personalization are both easy and necessary. Most PPC platforms include robust audience targeting tools, allowing you to serve ads to people whose data indicates they’re interested in your product using keyword bids and audience customization. If you’re thoughtful about your bid strategies and put in the work to learn the tools, the ROI can be impressive (as much as 5-8x greater than without personalization).

Email marketing is another channel where personalization can drive great ROI. The personal nature of the email inbox makes it the perfect place to deliver targeted pitches and personalized copy. Marketers in one study found an eye-popping 760 percent increase in email-based revenue after introducing segmented campaigns. 

5.  Shorter Sales Cycles

Personalized marketing can be helpful for shortening the time it takes a customer to move down the sales funnel. Using smart segmentation and audience metrics, marketers can identify and target customers who are further along their path to purchase, helping to create conversions more quickly and prioritize the most promising leads. 

This can be especially important for B2B companies and other businesses that struggle with their longer sales cycles. A long sales cycle usually indicates that a customer has numerous decisions to make that may have to go through multiple levels, so it’s critically important that a business establish itself as a helpful and interested partner who’s invested in creating a relationship. Personal attention to the customer’s needs is key to moving a customer confidently through the path to purchase—and that’s something that personalized digital marketing excels at providing. 

Concluding Thoughts

Personalized digital marketing may have once been a leg-up strategy to break out of the pack, but it’s now integral to the whole playbook. If your business has yet to fully dive into this field, now is the time. It has mature and well-developed tools, in addition to an exciting cutting-edge frontier. By learning about and speaking directly to your customers, you’ll set your business up for continued success. 

Thanks again to Ronald and Visiture for helping me write this post.  Your insights on this topic will be of terrific benefit to the Red Rocket blog readers.

For future posts, please follow me on Twitter at: @georgedeeb.  And, you can also follow Ronald Dod at @Visiture_Search and Visiture at @Visiture.

Lesson #312: Don’t Let Short-Term Thinking Hurt Long-Term Success

I recently met a business where the owner made 100% of her decisions based on how it impacts the immediate cash flow of the business.  And I mean every decision!  Whether it was hiring business professionals like accountants or lawyers that were advising the business.  Or, making marketing decisions based on what drove revenues this minute.  All the way down to minute things like figuring out which credit card to use, to drive immediate cash back rewards on expenses.  Some of this is admirable.  But, most of this was completely short-sighted and hurting the business long term. 

I get it.  Most entrepreneurs are cash starved and looking to save every penny they can.  But, in this case study post, you are going to learn that cutting pennies today, could be costing you millions of dollars tomorrow.  Allow me to explain.

DON’T MAKE SHORT TERM DECISIONS THAT HURT LONG TERM GROWTH

One of the actions this entrepreneur made was only investing in marketing tactics that would drive an immediate sale and immediate return on marketing investment.  The problem with that focus was that she was running a B2B business, where the highest ROI spend this minute, may not be the best tactic for maximizing long term sales, given the long sales cycle lead time of B2B.  For example, if you focus on driving sales, profits and returns today, you would most likely select Google as your primary marketing channel.  And that will most likely result in lower ticket transactions, where the client budget is already in place and can be spent today.  If she was focused on the long term, perhaps she should have invested in big trade shows in her industry, where very large ticket orders could be secured, albeit on a slower and more patient timeline.  So, yes, trying to drive an immediate return is nice.  But, not if you are sacrificing 10x that amount of sales and profits down the road.  It would be more ideal, to better capitalize the business to better focus on the biggest long term ROI opportunities, even if it requires needing some short term working capital to bridge the gap.

DON’T BE CHEAP ON STRATEGIC ISSUES, YOU GET WHAT YOU PAY FOR

When I presented this client with around 10 accountants and 10 lawyers to consider to help her business, I gave her a complete picture of the strengths and weaknesses of each of these professionals, and gave recommendations on which ones I thought were the best to help her business and her specific needs.  For example, I knew she was going to need advisors with a lot of M&A experience to help her accomplish her desired roll up strategy.  But, the only metric she focused on was price.  She ended up picking the cheapest lawyer and the cheapest accountant on this list, neither of which had the required M&A experience she was going to need, which came at a slightly higher hourly rate.  That is like cutting off your nose to spite your face!  You need advisors that know your business needs or industry.  Engaging human talent should not be the same mindset as buying a commodity, like loaf of bread.  With human talent, you really do get what you pay for, based on their expertise.

DON’T PICK THE CHEAPEST SOLUTION, PICK THE BEST SOLUTION

Then I was helping this client with setting up various off-the-shelf technologies, service providers or other point solutions for her business.  This included things like her advertising agency, her CRM software, her SEO firm, etc.  And, again, like with the lawyers and the accountants, it was more of the same.  She would see five options for every need, would ignore the strengths or weaknesses of those solutions, and focus only on price.  She didn’t care that there may be better options out there, to help propel her business to new heights.  All she cared about was how the investment would impact today’s cash flow.  Stop the madness!  Price should be one of the major considerations when picking solutions, but not the only driver.  It is much more important you find solutions that present the best value—offering the most advantages and least disadvantages at the most acceptable price (which is not necessarily the cheapest price).

DON’T LET SHORT TERM DECISIONS, HURT YOUR CUSTOMER EXPERIENCE

One of the short term decisions she made was in picking her shipping provider, moving goods from her warehouse to her customers.  She considered around five solutions, and again picked the cheapest, trying to maximize gross margin.  The problem was, she didn’t investigate other important data points, like the percentage of successful online deliveries of each vendor.  It turned out, that the cheapest shipping vendor, was also the one with the highest instances of late deliveries to customers.  And, guess what happened next; customers started complaining about missing shipments, which put the company in a negative light, and they started to lose repeat sales.  Again, vendor decisions should be much more than simply a price-based decision, to avoid customer facing situations like the above.

DON’T BE SO FOCUSED ON THE WEEDS, THAT YOU LOSE FOCUS ON THE GOAL

This entrepreneur was so focused on short term cash flow, that is was like an obsession.  It just entirely consumed her and drove all of her attention.  She would pull out her monthly income statement, run through every expense item, line by line, and figure out how to drive down the cost of each item.  She put hours and hours of work into that sole goal.  Congrats, you saved a few bucks.  But, shame on you for not putting those same hours into figuring out how to propel your revenues to newer heights, which to me, should have been an even more important area of the business that required her attention.  You may have saved $10K in monthly expenses, but you probably hurt your revenues by $100K per month had you focused your energies there.  The point here: you need to prioritize your time and invest it in the best ways possible.

CONCLUDING THOUGHTS

So, the moral of this story here:  don’t be a cheap ass!!  Yes, you want to keep your expenses as low as possible.  But, you don’t want to make cash flow driven decisions that end up slicing your own throat.  Each business decision needs to do what is right for the business, overall for the long term.  Not, simply what is best for the bottom line in the immediate term, for the reasons summarized above.  Instead, make sure your business is properly capitalized to allow it to afford the “right” solution for the business, that will help give the business the highest odds of long term success.  And, remember, it is impossible to maximize long term growth and short term profitability at the same time, you have to pick one or the other.

For future posts, please follow me on Twitter at: @georgedeeb.