Employee teams are one of the best ways to get things done in any business. When you take a group of independently talented people and create a team in which they can merge their talents, not only will a remarkable amount of energy and creativity be released, but their performance, loyalty and engagement will be greatly improved.
Here are five steps for building an extraordinary team culture:
1. Create a Team-Oriented Organization
Make teamwork one of your core company values, and put a clear emphasis on self-managing teams that are empowered to make their own decisions. Don't just talk about teamwork. Show your employees the seriousness of your commitment by giving teams the authority to get their jobs done on their own terms, while ensuring they accept responsibility for the results.
2. Assign Serious Team Goals
Give your teams really important assignments and projects, not just planning for next summer's annual company picnic. Bring teams in when you're looking at new trends in the market, or need to see things through new eyes. It's important to mix it up and not have the same people making the same decisions all the time. Ask them to challenge the status quo and the conventional wisdom. This will help to keep your company fresh and ahead of the game.
3. Encourage Informal Teams
More work in organizations is accomplished through informal teams than formal ones. It's therefore in your interest to encourage the proliferation of informal teams throughout your company, addressing any and all issues and opportunities that capture their interest. When your employees are able to tackle concerns themselves, without elevating every little decision to top management, you'll have a much more efficient organization.
4. Cross-Train Employees
When employees understand how different areas of the company work, they are more apt to make decisions that benefit the company as a whole, rather than solely their own department or group. Give your employees the opportunity to learn other people's jobs. Some organizations go as far as switching employee roles on a daily, weekly or monthly basis. And don't forget your managers. Have top executives spend a few days working on the front lines with customers or directly with your product. They'll have a new appreciation for what your regular employees go through on the job.
5. Provide Team Resources
No matter how talented a company's individuals might be, teams cannot be successful without the proper resources. Teams need a designated and available place where they can regularly meet. Nothing much can be achieved in an over-crowded lunch room. All employees need to be given adequate time to devote to their team meetings, with no grief from supervisors. And make sure to supply your teams with an appropriate budget if required, and the permission--with guidance--to spend it as they see best for the company.
About the Author
Peter Economy is the bestselling author of Managing For Dummies, The Management Bible, Leading Through Uncertainty, and more than 60 other books. He has also served as Associate Editor for Leader to Leader for more than 10 years.
To learn more about Peter, visit www.petereconomy.com.
© Peter Economy 2013
The Pitfalls (and Upsides) of Partnering with Entrepreneurs
By Daniel Isenberg
Cross-posted from Harvard Business Review Online (original publish date 10.18.2013)
To en·gage ( n-g j ): To pledge or promise, especially to marry; to draw into; to involve; to enter into conflict with
Corporate executives are exhorted daily by well-meaning public leaders that they should support their local entrepreneurs in order to be good corporate citizens and to bolster local economies. But engagement with entrepreneurs is not a question of conscience or moral imperative; it is a question of strategic self-interest. As any experienced corporate leader knows, engaging entrepreneurs has potentially the same spectrum of pleasure and pain reflected in the formal definition, from the prospect of inextricable involvement including conflict, to the promise of partnership, to the happy possibility of union in blissful corporate matrimony and acquisition.
Let’s start with the pitfalls, because these are often ignored or discounted in frothy discussions about the economic benefits of entrepreneurship. Why would companies avoid engaging with entrepreneurs?
Waste of time. One CEO of a NYSE traded company told me recently that he avoids entrepreneurship networking events in his community because he doesn’t want to be overwhelmed by business seekers pushing cards into his hand, to be followed up by annoying calls to sell anything from gadgets to insurance. Instead, his company has a system for screening and studying the 200 or so proposals they receive annually. He is damned if he will pay attention to each persistent business owner, but then damned as a bad community member if he ignores them. His conclusion — disengage from networking events with entrepreneurs.
Legal entanglement. Many corporate executives have been warned by counsel, or have learned the hard way from experience, that listening to the impassioned pitch of a team of startup entrepreneurs may expose them to litigation further down the road in the event that they embark by themselves upon a similar product or service, even if its origins may be totally unrelated to those described by the entrepreneurs.
Commercial incompetence. Many a corporate executive has braved the skepticism of his or her corporate colleagues and plunged ahead into well-intentioned alliances with startups. Often, they come to find that the majority of new ventures don’t understand corporate decision cycles, purchasing requirements, compliance processes, post sales customer service, and the like. Persuaded initially by the entrepreneur’s whiz bang innovation, corporate executives can then find themselves stuck in a morass of very basic coaching and grooming of their young new partners on the one hand, while fending off the cries of delayed shipments or poor quality from customers further down the line.
Financial fragility. Intrinsic in entrepreneurship is a long period of living in a twilight fluctuating between breakthrough market success and breakdown (i.e. going out of business) when revenues are too few too late, and expenses are too many too soon. Many corporate executives fail to realize just how close to the precipice many startups are. But that is the territory of entrepreneurship — even with deep financial backing from the rare venture capitalist or angel investor (yes, these are the exceptions in entrepreneurship, not the rule), long term viability of any venture is far from guaranteed and can leave the corporate partner in the lurch. (No wonder the experienced executive frequently insists that software code be placed in escrow.)
Then there’s the upside. Of course, engagement with entrepreneurs can lead to innovative new products, lucrative investments, new supply chains, advanced technology, and a more creative corporate culture. No one can say with certainty whether or under what circumstances the potential benefits outweigh the potential pitfalls. But if you do believe, as many corporations are learning, that the balance is potentially positive if handled well, then here are a few suggestions for improving the experience and increasing the value:
Define “engagement” at the most senior management levels as a process that has to be learned over a long time, with lots of experimentation and learning from mistakes, in order to derive the benefits of engaging entrepreneurs, whether through contract, investment, or acquisition.
Allow different functions and divisions autonomy to explore different manifestations of engagements with entrepreneurs, whether through supply chain expansion, joint product development, or technology licensing. These are typically handled by different divisions which may be located, culturally and geographically, far from each other.
Encourage learning across the organization. Although action may be diffuse, the different divisions engaging with entrepreneurs for different strategic purposes have a lot to learn from each other, and can systematically share knowledge and experience by regular meetings and conferences.
Distinguish between global, sector-driven, or division-specific involvement and geographically concentrated ecosystem enrichment. A leading
global IT company I know has innovation centers in each of the major continents with the purpose of fostering a broad entrepreneurship ecosystem whether it is directly related to the company’s products and technologies or not. On the other hand, I interviewed a leader of a global life sciences company that was concerned solely with tapping into the best, most specialized technology in a carefully prioritized set of products, regardless of geography
Develop a triage function. It is often surprising to entrepreneurs sitting at the edge of the corporation, but in many cases corporate executives have difficulty engaging with other divisions in their own company. Efficient internal networking and channeling is an ability developed over time within the context of specific corporate structures and cultures. Having an executive function that knows how to interface well with the entrepreneurial community while maintaining credibility and contact within the corporation helps mitigate some of the pain of the process.
Avoid dichotomizing between small and large. Research and practice both reach a clear conclusion: entrepreneurship ecosystems evolve in the context of a rich dialog across the entire spectrum of sizes, technologies and growth rates. The emergence of pure “startup communities” is a revisionist myth. The entire spectrum of private sector companies is interdependent in many complex ways.
Many corporations have withdrawn from entrepreneurial partnering having been burned by a greatly disappointing, acquisition or partnership. But effective alliance management with entrepreneurs is a competency that needs to be strategically defined and tactically executed over time, if executives are to learn the art of entrepreneurial engagement.
Why Do Most Start Ups Fail?
By Scott Shane
If you start a business, odds are that your company will fail. Data from the U.S. Small Business Administration shows that regardless of the year when they are founded, the majority of start-ups go out of business within five years, and two-thirds are no longer operating ten years after being formed.
I bring up this unfortunate statistic to discuss a topic that all entrepreneurs should consider. Why do most start-ups fail?
A lot has been written on this question, suggesting that maybe I don’t need to write about it too. But a recent article by Jay Goltz, got me thinking that some authors try to put too much of a positive spin on the causes of business failure. In his article, Jay wrote that “out-of-control growth” is one of the top ten reasons for small business failure.
Unfortunately, this argument doesn’t jive with the data. Not enough start-ups grow for too-rapid-growth to account for the failure of more than a handful of them. A study by Brian Headd and Bruce Kirchhoff found that only 28 percent of businesses with employees have any employment growth from one year to the next. And a paper written for the Small Business Administration (SBA) by ZoltanAcs and colleagues shows that only about 6 percent of U.S. companies have sales that at least double within four years – a minimum threshold for what might be called “rapid growth.”
Academic research suggests some more basic – and less flattering – reasons why so many start-ups fail. Failure rates are high because a large number of inexperienced entrepreneurs start businesses that shouldn’t be founded in industries that are unfavorable to new companies.
While my statement is harsh, the data supports it. Most entrepreneurs pick unfavorable industries because they are attracted by low entry barriers. Census data show that the rate at which entrepreneurs start businesses in different industries correlates 0.77 with the rate at which businesses fail in those industries. That is, entrepreneurs favor the very industries in which businesses are most likely to go under.
Many entrepreneurs start companies that stand little chance of out-competing other businesses. Data from the Panel Study of Entrepreneurial Dynamics reveals that nearly 40 percent of the founders of new companies don’t think that their businesses have a competitive advantage. (Because entrepreneurs are an optimistic lot, if a business’s founders don’t think the company has a competitive advantage, what are the odds that it does?)
Not enough entrepreneurs have experience in the industries in which they are starting their businesses. Academic research shows that working in an industry for several years before starting a business enhances the survival prospects of a start-up, but a sizable fraction of entrepreneurs start businesses in industries in which they have no work experience.
Many entrepreneurs fail to take the actions that research shows help businesses to survive. Academic evidence shows that putting in place careful financial controls, emphasizing marketing plans and writing a business plan increase the odds that a new business will survive, yet many founders fail to write plans, have inadequate financial controls and don’t focus on their marketing plans.
True, some start-ups fail because of factors beyond their founders’ control. But responsibility for much of the high failure rate of new businesses lies with the entrepreneurs themselves.
About the Author
Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.
This article was first published on Small Business Trends, and republished with permission.
Change Happens to You and Because of You
By Brian Solis
I’ve come to learn that having opinions, insights, and standing for something is as taxing as it is rewarding. Like you, I am inspired by what surrounds me, by history and by the possibilities that open up as a result of my experiences. But, it is not easy. And, I suppose it’s not supposed to be.
I too feel challenged by what I should say versus what has already been said, yet also shaped by what should not be vocalized. I’ve come to learn however, that the relationship between self expression and inner monologue defines one’s character. It is what’s is said and what is not said that defines impressions and ultimately the perceptions of who we are and for what it is we stand or hope to achieve.
Satisfaction or dissatisfaction with oneself is trumped by our ability to learn and teach together.
My personal and professional struggles are often tied to emotional rigors that spin me through cycles of vision, validation, vindication, vulnerability and vanity. These 5 V’s either pull me to learn, participate and teach or push me into a realm of either complacency or uncertainty, both of which result into creative stillness. These 5 V’s however coalesce and produce different results based on the measure we apply to our own actions, reactions and inactions.
Impressions are linked to expressions and ultimately they are ours to define.
If you’re not provocative in some way, how can you possibly stand out to inspire someone else? This is a time for you to choose what it is you do with the inevitable reactions of encouragement, criticism, or resentment you will receive as you discover, share and grow. Take from each experience and move in a direction where you invest and receive value that inspires you and those around you. This is a time to be your own hero…to both inspire and be inspired.
“The impact of your work is the result of the balance you place on reacting to, learning from, and transcending teachers, critics and supporters.”
Change happens to you and because of you. It is what perpetually happens next that defines your character and ultimately your legacy.
This is your time.
About the Author
Brian Solis is principal at Altimeter Group, a research firm focused on disruptive technology. A digital analyst, anthropologist, and futurist, Solis has studied and influenced the effects of emerging technology on business, marketing, and culture. Solis is also globally recognized as one of the most prominent thought leaders and published authors in new media. His new book, What's the Future of Business (WTF), explores the landscape of connected consumerism and how business and customer relationships unfold and
flourish in four distinct moments of truth. His previous book, The End of Business as Usual, explores the emergence of Generation-C, a new generation of customers and employees and how businesses must adapt to reach them. Prior to End of Business, Solis released Engage, which is regarded as the industry reference guide for businesses to market, sell and service in the social web.
Improve Small Business Cash Flow With These 4 Tips
By Andrew Cravenho
You don’t need me to tell you that if a business runs out of cash, it is out of business. Understanding the cash flow of your business is paramount to its success — old news right? However, this is where many small businesses begin to fail. If your cash flow is dwindling, you can’t stick your head in the sand. You have to react, and react, quickly. Here are four things you can do right away that may alleviate the problem.
1. Renegotiate terms
Debt can suck more than its fair share of cash from your business. Review your business debts with a critical eye. Are the monthly payments too high to manage? Reach out to your creditors. Explain what problems the debt structure is creating for your business.
Are the interest rates you negotiated in the past, equitable today? Offer alternative payment plans by way of a refinance. Your creditors understand that cash flow is the life’s blood of any business and chances are very good that they will listen carefully to a fact-based argument to lower payments and/or rates.
2. Review obligations
Any review should include other recurring and non-recurring obligations, from staffing requirements to what you pay for paper clips. You aren’t the first entrepreneur or startup to overestimate the potential of your enterprise and spend what you think you will earn instead of what you actually earn.
While optimism regarding a business’ prospects is a generally healthy attitude, over-optimism can result in extravagant spending, or committing to contractual obligations that genuinely exceed the needs of your business. This is not the time to lease a BMW as your company car or indulge clients with three martini lunches. Look at everything! If it isn’t necessary, lose it!
3. Grow your customer base.
I understand that this seems like a no-brainer, but it is very easy to become complacent when things are going well. If you are guilty of this, you need to get to work. Have you lost any customers? If so, you need to find out why and fix it.
Take a good look at your product or service offerings. Are they still relevant in today’s market? Has your business introduced anything innovative to attract additional customers? Use existing clients to leverage these new products or services. At the same time, you need to make a critical examination of your marketing strategies. Are they stale? Non-existent? Poorly targeted? Do you see evidence of seasonal trends? Consider all these factors and any others relevant to your business. Maybe you can smooth out the seasonal dips by offering a discount during slack times.
4. Check receivables and inventory
Are you and your staff on top your accounts receivable. If your business is having a rough patch, maybe your customers are feeling the pinch too! It is always a difficult balancing act to pressure customers for payment. No one wants to lose a customer, but if you don’t take a reasonable and firm stand, you won’t be there to offer them a product or service. Isn’t that bad for both you and your customer? If you are in a particular sensitive situation, due to the nature of your business or you haven’t the personality to take a convincing hard-line on past due receivables, or you just need the cash immediately, you might consider factoring.
By engaging the expertise of a factoring firm, you put the collection of these receivables in the hands of a third party. In exchange, you get your money up front. There’s a great little online tool which can provide some concrete numbers for your business. You don’t have to contact them. The tool is simple, free and available online. If you like what you see, then you can take it to the next level.
If you are selling widgets, how many do you have in inventory and how much is storing them costing your business? Surplus inventories can be a drain on your business. If you are “overstocked” remember the old adage, “Your first loss is your best loss.” If you can’t grow your customer base rapidly enough to shrink inventory levels, bite the proverbial bullet and discount the inventory to get cashing the door and inventory off the books.
I hope these tips will motivate you to take positive and immediate action to reverse any negative cash flow trend in your business. If you are doing well, great! However, keep these tips in mind in the day-to-day conduct of your business. Cash flow problems happen to the best of us. [email protected]
About the Author
Andrew Cravenho is the CEO of CBAC LLC and Factor Auction. As a serial entrepreneur, Andrew focuses on helping both small and medium sized businesses take control of their cash flow. Prior to CBAC, Andrew founded an annuity financing company relieving tort victims of financial hardship.
How to Sell Anything to Anybody
By Steve Tobak
You may not realize it, but the most critical junctures in your career involve selling. Whether you're selling a product or service to a customer, an idea or a plan to your management or investors, or yourself to an employer, your ability to sell will play a huge role in your success.
Unfortunately, most people aren't born with the sales gene. Not only that, selling has sort of a bad rep. I remember telling my parents that I was planning to transition into sales after a decade in engineering management. Initially, there was dead silence on the phone. Then my dad said, "You mean like a car salesman?"
Looking back on it, that turned out to be the best move of my entire career. Sales taught me about connecting with others, getting them on board with an idea, negotiating, and closing. I put all that to good use throughout my career as a senior executive and in management consulting. So can you.
There are four fundamental concepts you need to understand to sell anything to anybody. Learn them, practice them, and above all, make them uniquely your own by determining how to best integrate them into your DNA, your own situation, and the goals you'd like to achieve. Are you hooked? Good. That was the idea.
Do your homework.
Know your customer, stakeholder, audience, whoever you're selling to. Know their roles, responsibilities, and objectives. Understand as much as you can about what's in it for them. Know your competition and all the possible objections and hurdles you might face.
Just as importantly: know whatever it is you're trying to sell. Know it cold. Whether it's an idea, a product, a plan, whatever, know it inside and out. And, without a doubt, know it better than anyone else, especially those you're selling to.
There's nothing worse than getting beat up by a customer, your boss, or a VC because you didn't do your homework and wasted his time. I've been there. Take it from me; it really sucks. And you can kiss that prospect goodbye, sometimes for good.
Ask and listen.
Yes, I know you did your homework and now you know all this stuff. You're so prepared and passionate that you're chomping at the bit to get it out. Don't. Here's why. If you do that, you risk coming across badly. Pushy.Like it's all about you. It isn't about you. It's about the people across from you at the table. It's about their needs and goals.
So ask. Ask how you can help them. Ask what their goals are. Ask what their concerns are. Then listen. Ask leading questions and listen some more. Keep listening until you have a pretty clear understanding of the whole picture.
No, don't badger them. Sometimes you listen a little, give a little, and go back and forth for a few meetings. That's fine. You do want to be flexible and you don't want to be pushy. Just see if you can find a way to get them to speak first. Information is power.
Also listen for what really and truly matters to them. They might say a lot, but if you really listen, you'll discern what's really in it for them, what motivates them, and what obstacles you have to overcome. It's like cracking a nut. Brute force and all you
've got is tiny pieces of nutmeat and shells. But if you find the right spot and do it just the right way, it opens cleanly. It's a beautiful thing. It's the same thing in sales.
Make a genuine connection.
If you have the world's greatest product or idea, that's great, I'm sure you'll kill it out there. If not, then know this: Every business transaction involves a genuine connection between individuals. It's not always a deep relationship, but it's a relationship, nevertheless.
To connect with people, you have to explain things in a way that resonates with them. If you've done your homework, asked the right questions, and listened carefully, you should know what they're looking for and how to overcome their concerns and meet their needs.
The best way to do that is to do two things: genuinely connect with the person and communicate using anecdotes and analogies that will cut through and resonate with them. That's because people aren't just motivated by logic and information, they're also motivated by emotional and primal needs.
People like to hear about ideas, features, and performance. They need to hear about benefits and what's in it for them even more. But when it's all said and done and they're on their own making a decision, it's an emotional connection to stories and people they'll remember. And that's what will motivate them to go for it.
Know whose side you're on.
This is a tough concept for people to grasp but it is key so listen up. You may be sitting across from someone, physically opposite them, but in reality, you're on the same side. The sooner you get into that mindset, the sooner you'll get deals done.
You see, most people have sales all wrong. In a certain sense, you're actually working for the customer or whoever you're selling to. That's because your job is to understand and serve their needs. To help them achieve their goals. That's your job. That means you work for them.
And you know what? Your customers need to know that. That you're there to help them achieve their goals.That you're partners.That you're willing to move mountains for them. And oftentimes, that's what you have to do to get a deal done.
It's true even in big corporations. The sales organization is the customer advocate. In executive meetings, the head of sales represents the customer base. Yes, of course a sales VP works for her company, but if she isn't the internal champion for meeting customer needs, I guarantee those needs will not be met.
And guess what? When people pick up on your genuine desire and ability to jump through any hoop to help make them successful, that, more than anything, will help you get deals done. That's how you become successful. By convincing others that you can and will make them successful--and then doing it.
About the Author
Steve Tobak is a Silicon Valley-based strategy consultant, columnist, and former senior executive of the technology industry. Contact Tobak; follow him on Facebook, Twitter, or LinkedIn. This column originally appeared on Inc.com and Fox Business.
This column originally appeared on www.Inc.com .
7 Must-Have Tools for Networking Online
By John Corcoran
Social media is a game-changer in many ways. It’s hard to imagine how we ever kept in touch with distant friends and family before Facebook, LinkedIn and all the other social networks came along.
Today, you can update your entire network on how you’re doing with the click of a button or the upload of a photo.
That’s good news – as long as you aren’t one of those types prone to drinking and posting. Drunk dialing looks pretty tame by comparison to pissing off your entire social network all at once.
With social media, it’s easy to be able to maintain a relationship with distant friends and family.
But it also can be quite useful, because a large personal network can be incredibly valuable when it comes to looking for a job, getting clients or customers, or even getting feedback from the crowd.
Personally, I know I keep in touch via social media with a large network of old friends, family, colleagues from past jobs, old neighbors and college roommates who I wouldn’t be able to keep in touch with otherwise.
Many of these members of my extended network have been helpful in various ways, and have even become clients.
But the truth is, whether Mark Zuckerberg likes it or not, social media is not the “silver bullet” solution to keeping and maintaining a large personal network. In fact, there are numerous other free and inexpensive tools that can be just as valuable as Facebook or LinkedIn.
Here are five indispensible tools you can use for keeping and nurturing a large personal network online, and how you can use them:
1. Skype – free long-distance calls and interview recording
Skype is a great way to communicate with existing family and friends without spending a fortune on long-distance calls. But you can also use it to grow your network.
I use this free service to do a virtual “cup of coffee” with people who I’ve met but who don’t live close to me.
You can also use Ecamm Call Recorder for Mac ($20) or Pamela for PC ($20) – to record Skype videos or audio calls. I use this to record my interviews for my podcast. As I’ve written before, podcast interviews can function as a form of “informational interviews” and is a great way to meet people who you admire.
2. BufferApp – social media posting at ideal times
Buffer allows you to share posts on your social media accounts at optimal times when people you are connected with are most active. For example, if you’re active late at night, you can have your tweets or Facebook messages go out during the day when people will actually see them.
I have the buffer Google Chrome extension installed so I can quickly add something I want to share on Twitter or Facebook to my bufferapp queue to be sent out at some point later, when more people are likely to see it.
3. FreeConferenceCall.com – free phone call recording
FreeConferenceCall.com is a free service for easily recording phone conversations. You can use this service to record interviews over the phone and then publish them to your blog, website, or podcast.
Long before I started a podcast, I used this service to quickly and easily record interviews and then post them to my blog. If that is too technically complex for you, then you can simply use the service to record the interview, and then use snippets for a newsletter article or transcribe the interview and post the transcription to your blog.
4. Contactually – manage follow-ups with your network
I discovered this relatively new service a few months ago, and I love it. Contactually is a service that allows you to manage relationships and follow-up communications. It syncs with your existing email accounts and social media sites and creates unified profiles for each person. Then you can specify how frequently you want to “follow up” with each – i.e. every 30 days, every 60 days, etc.
You can check out this video review I created where I show how I use Contactually. They have both free and paid plans.
5. Google Hangout – web-based video call software, similar to Skype.
I have used Google Hangout to meet with small groups of people and I have used it for interviews. One nice feature is you can also record Google Hangouts and easily upload them to Youtube.
I’m not a huge Google Plus user, but Google Hangout is a reason for anyone to get more active there.
6. Screencast-o-matic.com – simple screencast recording
I love this simple screencasting software, which allows you to record simple screencasts and works directly in your browser. I have used this service to record a variety of screencasts. One cool idea is to record a book review for a new book coming out from an author you want to meet, then to email them a link to the video embedded on your blog. For $15/year, you can upgrade to their Pro version which eliminates the watermark and gives you additional editing tools.
7. Fiverr.com – small services for $5
On Fiverr, people provide small services for $5. You can get someone to design a special
gift, create a graphic, sing a song, dance a dance, or even hand-draw a message in a short video recording. You can come up with some creative ideas for doing something memorable for anyone in your network.
If you liked this list, I’ve created a handy PDF with an additional 10+ tools for networking online which I think you will love. There’s actually many more than 10 tools listed. But I called it “Top 10 Tools” anyways because I like to exceed your expectations. : )
About the Author
John Corcoran is an attorney, former Clinton White House Writer, and creator of SmartBusinessRevolution.com, where he writes about how entrepreneurs and business owners can leverage relationships in the world of business. You can download his free report, Top 10 Tools for Networking Online.
Startups Need To Embrace Zero Paid Media Marketing
By Martin Zwilling
The power and influence of paid media advertising, including print ads, TV commercials, radio, and even online digital campaigns is waning, in favor of unpaid earned and owned messaging from your website, social media, key market influencers, and existing customer word-of-mouth. But startups need to remember that even zero paid media doesn’t mean that marketing is free.
The case for zero paid media as the new marketing model was highlighted in a new book, “Z.E.R.O.” by Joseph Jaffe and Maarten Albarda, both experienced marketers working with new companies, as well as larger firms. They advocate investing in their new framework, where the Z.E.R.O. initials take on meaning as follows:
Zealots, disciples, and influencers. New products and startups often require a culture shift to drive acceptance, which can best be accelerated by zealots or a visible chief disciple, like Steve Jobs. Other sources stronger than paid media today include key social media influencers, such as “mommy bloggers” and popular YouTube events.
Earned media. This is media exposure from a neutral third-party, such as an unpaid news story on your product or service to highlight innovations or social value. This exposure is highly credible, since you don’t control the message, and extremely valuable since it is not viewed as part of any advertising context.
Real customers. Marketing media content from real customers in real time is now commonplace via sites like Yelp, Foursquare, and online reviews. This word-of-mouth media source is also highly credible and valuable, since it comes from “peer” customers, rather than you as the source, or any paid source.
Owned media. This includes your website, blog, and presence on social media platforms, including Facebook, Twitter, Pinterest, Tumblr, Instagram, and many more. These usually provide a customer’s first impression of your offering, and should not be blatantly self-promotional, but instead informative, educational, and even entertaining.
As I mentioned, this framework is powerful, but none of these elements are free. A while back in a blog article, I pointed out that none of these justify a startup business plan with little or no budget for marketing. All require planning, deliberate actions, and quality content and event creation which will likely absorb all the savings from reduced paid media campaigns.
In any case, reframing the conversation from paid media marketing to the new framework requires a balance, and measurements along the way to better manage return on investment. In the book, Jaffe introduces three new sets of metrics for gauging progress:
Medium-term metrics. This is essentially a series of interim forecasts not dissimilar from mile-markers in a marathon race that advise whether it’s time to pick up the pace or slow down to smell the roses. Examples include counting members of an advocacy program, app downloads, tenured customers, or subscribers to an e-mail list.
Long-term sales. We often talk about short-term sales and long-term relationships in mutually exclusive terms. They are polar opposites in terms of their time frames, but how about building a bridge of compromise between them? Whereas every short-term initiative is akin to a traditional campaign, the long-term sales effort is the commitment.
Short-term wins. Accountability is not optional, as it’s still important to have something to show for your efforts quickly. Only this time, consider the large “W” (big win), the small “w” (small win) or in some cases even the small “l” (small loss), which represents failing fast or failing smart, insights, lessons, learnings, or pleasing initial results.
I’m not suggesting that paid media channels should be seen as dead to young companies, since even the revolutionaries, like Google, Facebook, and Apple, still rely on paid media to optimize their own efforts. And paid media are hardly standing still, continually figuring out ways to be more effective, using big data and other innovations to get more customer attention.
Thus while I see startups quick to jump on the zero paid media bandwagon (for budget reasons), I recommend a balance. First, go for that earned and owned media channel, using the same budget parameters you might have previously allocated for paid media. Later, you can lower the budget as the metrics show results, or apply the remainder to paid media as a follow-on step.
In all cases the tone and resources must be focused on capturing today’s customers, who are looking for engagement and connection, rather than the traditional loudest noise. Z.E.R.O. marketing is not zero marketing.
About the Author
I am the Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world. My background includes a 30-year track record as an executive in general management, computer software development, product management, and marketing. I'm now in "give-back mode" as a mentor to startup founders, and an Angel investor. My experience with investors includes roles on the selection committee of two local Angel groups, and working from the other side of the table with several VCs in Silicon Valley. In addition to blogging, I recently released my first book titled “Do You Have What It Takes To Be An Entrepreneur?” You can contact me directly at [email protected] . Feel free to follow me on Twitter StartupPro or Circle me on Google+.
It’s Time to Focus on Retaining Customers
By Monique de Maio of On Demand CMO
Traditional marketing is all about building awareness for products and brands. In traditional marketing, the emphasis is on getting new customers and very little attention is paid to retaining existing customers. According to best-selling author and marketer, Stan Phelps, traditional marketing is dead. Instead, it’s time to focus on retaining customers.
The data backs Phelps’ claim up: according Gartner research, decreasing customer churn by just 5% can increase profits by 25%-125%. The reason is that it is expensive to get new customers—it’s much easier and more sustainable to keep your current customer and sell them more products.
Phelps discussed how to do this at the last meeting of the NJ Chapter of MENG (Marketing Executives Networking Group). It all boils down to doing that little extra for your customers—like what one Panera store did this summer when it went out of its way to make a bowl of clam chowder for a young man to take to his grandmother in the hospital. The story wound up on Facebook and it has almost a million likes now!
Panera got great exposure and lots of good will from its simple act of kindness. Going the extra mile for your customers sounds like common sense, but it is far from common practice.
Panera is obviously B2C, but their model has applications for B2B as well. For example, when you send shipments out, pack the boxes in the same order that the manifest is written. Also, take good care of your channel distributors and they will pass the love on to their customers—a.k.a. your end users!
Here are some things Phelps suggests to give customers that little extra:
Follow up with your customers. This is a really easy way to get started. Call your customers up after they buy from you and ask them if they are happy with the product/service and see if there are any issues you can clear up for them.
Write thank you letters to your customers (hand write them for extreme bonus points!). Writing thank you letter is becoming a lost art today—which
makes them very powerful tools when used. Want to retain customers? Thank them for doing business with you!
Handle mistakes well. It is inevitable that you will make a mistake at some point. How you handle that mistake is very important though: don’t just make it right for the customer, go above and beyond. If you do above and beyond to rectify a wrong, you can actually form a stronger bond with the customer than if you had never made the mistake.
What might this look like in action? Well, for home health service provider Nurse Next Door that means they hand deliver fresh baked apple pies to customers when something goes wrong. Nurse Next Door spends about $1,500 a year eating humble pie (literally!), but they estimate that they save about $100,000 in business from going elsewhere. That’s some pretty good ROI!
Value add. Is there a small extra you can add to your service or product for your customers? For example, when SafeliteAutoGlass replaces windshields in cars, they also clean the customers’ cars for them. See, it takes time for the windshield glue to dry, so rather than just sit around and do nothing while the glue dries, Safelite technicians put away their tools and take out vacuums and clean the car. Safelite has time since it has to wait for the glue to dry and the put it to use.
Waiting… In business, waiting is often as inevitable as it is annoying. But, it doesn’t have to be annoying. If you can provide some extra service or product while your customers are waiting, then they will be very happy. For example, burger chain Five Guys has boxes and boxes of free (and delicious!) peanuts for customers to nosh on while they wait for their burgers.
Make a good first impression. If you’ve been around long enough, chances are you have heard the cheesy pick up line, “do you believe in love at first sight—or should I walk by again?” That may or not work in romance, but it certainly does not work in business. Customers form lasting impressions right away, which is why it is so important to make a good first impression.
If you have ever stayed at a DoubleTree Hotel, you have enjoyed a delicious first impression: starting in the early 1980s, DoubleTree began a tradition of serving warm chocolate chip cookies to customers when the check-in. At the time, it was common for hotels to give cookies to VIPs, but DoubleTree said “all our customers are VIPs,” and today, they have sold 250 million of these cookies. These cookies are quite popular –a fact noted by the New York Times and by the 4.2 million hits a Google search for “DoubleTree cookie” brings up.
Take care of your customers and look for ways to give them just a little extra. You might be surprised at how well your customers respond!
Monique’s Note: For more great tips on customer care, read here
Successful Startup 101 Magazine - Issue 5 Page 3