Company of One

by Paul Jarvis

  Eisingerich and Bell surveyed 1,200 clients of an investment firm and found that the more those clients were educated on the pros and cons of the financial products the investment firm offered, the more they trusted that firm, the more loyalty to the firm they developed, and the more appreciative they became of the firm’s customer service for taking the time to educate them.

  The truth is that lots of companies use marketing ploys or disingenuous advertising to trick consumers into making a quick and sometimes impulsive decision. But these days, more and more consumers are demanding honest and straight information about products, so they can make their buying decisions at their own speed. By providing them with that kind of important knowledge, your company will form a strong link with customers, as you were the most helpful in their quest to learn before deciding.

  Let me give you an example of how this works. Casper, a new breed of mattress company that’s focused entirely on direct sales and internet marketing (similar to Need/Want), uses sleep education to indirectly sell its product. In the past, people who wanted to buy a mattress would go to a mattress store and test out several mattresses by lying on them, then choosing the one that felt the most comfortable. Since Casper’s sales happen entirely online, the company decided to take a different, more education-focused approach, one that disrupts the traditional model for purchasing. Casper educates customers on why a solid night’s sleep is important with two publications, “Van Winkles” and “Pillow Talk,” which don’t overtly sell mattresses and aren’t littered with ads or purchase links. Rather, they convey everything Casper has learned about the science of sleep, which leads to greater consumer confidence in their brand. Combined with its superior-to-the-competition trial period — 100 percent full refund if not satisfied — Casper has been gaining market share without growing into retail stores or wholesale operations.

  A company of one would be smart to follow this new trend of educating customers. Sharing vital information on a product or a service provides a new customer with key insights into how to use it and get the most out of it; you may even show people ways to use what you sell that they hadn’t thought of. The lack of this kind of sharing can lead to customer frustration or distrust. They may even opt to buy a replacement product from someone else, all because they just didn’t know how to properly use what they bought from you.

  So, by sharing information about your product, you can help your customers or clients see why your company, based on all the information you’ve shared, will indeed be their best choice — and you’ll be doing that without pushing that choice onto them.

  Clearly, a major driver in all of this is the internet, which has democratized education. Businesses should take notice — customer education is the new form of marketing. Education makes a real difference between a product that people perfunctorily buy for utilitarian reasons and a product they are truly eager to purchase because it adds real purpose to their lives. As a company of one, what you teach people about your product can and will set you apart. So, for example, if you sell mailing list software, be sure to teach your clients about the importance of email marketing. If you sell sport bras, be sure to teach customers about fitness or the science of running. If you sell luggage, teach travel hacks.

  TEACHING BUILDS AUTHORITY

  If you’re a company of one, asserting the authority of your own domain expertise becomes paramount, as there’s nothing to hide behind. It’s just you.

  When it comes to selling and marketing, consumers are easily tempted to go with a larger company, which seems “safer” simply because it has more people and infrastructure to support it. Authority is the countermeasure to this instinct, as you can assuage any concerns from customers by making them feel that you are an authority on what you’re selling. They’ll trust that you have not only the answers but the right answer, one that will help them in a way that the competition, however big, cannot.

  In other words, what we’re talking about is creating an environment where customers respect and value your opinions because you’ve demonstrated consistent competency by educating them.

  By building this type of authority, you can stand out in any industry because both your peers and customers turn to you for expertise, regardless of the size of your company. Word of mouth happens, Google links to you favorably, you’re invited to speaking gigs, and so on — all because your expertise is valued. But how do you build authority? And how does it work?

  If you think of the leaders in your industry, you can see that those people have an image of authority — like Debbie Millman in the field of graphic design, or Elon Musk in the field of electric cars. We look to these people for answers, we learn from them, and if we’re part of the audience they’re teaching, we probably buy from them as well.

  In business these days, it’s not enough to just tell people you’re an authority — you’ve got to demonstrate your actual expertise by sharing what you know and teaching others. You build authority not by propping yourself up, but by teaching your audience and customers — so that they truly learn, understand, and succeed. When you make that happen consistently, you’re building and establishing the right kind of authority.

  Teaching your expertise positions you as an authority simply by virtue of the fact that you’re showing someone else how to do something. People can be guarded if they think they’re being sold to. But more often than not, customers will engage and open up if they feel like they’re learning something useful. The more you teach, the more your audience will see you as an expert. Then, when it comes time to buy something, they’ll find that they want to pay for more of that expertise. A study done in 2009 by neuroscientist Greg Berns at Emory University found that the decision-making centers of our brain slow down or shut off when we are receiving wanted advice from experts. Customers consistently rate experts as the most trusted spokespeople, far above typical CEOs or celebrities.

  Basecamp has no internal goals or quotas around conversions or customer growth — its only mandate is to outshare and out-teach everyone else by writing books, speaking at conferences, and even hosting workshops at the Chicago office. These events, called “The Basecamp Way to Work,” share everything Basecamp has done to become a successful company, from internal communications to management organization. Nothing is held back or kept off the table. These $1,000 workshops sell out typically within minutes. Because of teaching what they know, and by showing others how they successfully run their company, they are the go-to experts for a tech company that isn’t hell-bent on growth.

  The reason these kinds of experts stand out, regardless of which industry they’re in, is because they teach what they know. They share and give away their ideas freely. They don’t worry about whether someone will steal their innovation for a product, a service, or a book — they just work at executing and sharing ideas faster and better than anyone else, in their own unique style and with their own unique personality. And this approach leads to business success.

  Teaching builds trust and expertise like nothing else for a company of one. When someone’s receptive to what you’re teaching, they inherently trust the information you’re sharing. If you can consistently give your audience useful, relevant, and timely knowledge (through your mailing list, speaking events, website, and so on), they’ll begin to lean on you for more information (which you can then charge for). Teaching also doesn’t require lots of time, resources, or even money — it can be as simple as sharing what you know with the people who are listening.

  In sum, teach everything you know and don’t be afraid to give away your best ideas.

  BEGIN TO THINK ABOUT:

  ■ What you could begin to share with or teach your customers or audience

  ■ How you could focus more on executing ideas than on protecting them

  ■ What investments you could make in consumer education as a marketing channel

  ■ What you could share that would position you or your company as an authority in a niche

  Part III


  * * *

  MAINTAIN

  10

  Properly Utilizing Trust and Scale

  Glen Urban has been studying trust as it applies to consumers and businesses online for twenty years. The rise of the internet, making possible not only digital purchases but consumer reviews of those digital purchases, has given consumers a great deal of power.

  Urban’s research has consistently found that trust highly correlates to a person’s propensity to consider, try, or buy a product. This finding predates the internet and goes back to family-run stores where one-to-one relationships were built; since these stores could be trusted to keep their promise to provide a good product at a fair price, purchases became multigenerational business transactions built on personal relationships. The internet has amplified these relationships and scaled them through the use of tools like social media, software, and newsletters. Trust, transparency, and communication are still absolutely required, but your relationships with customers can be scaled in a way that doesn’t require scaling your business scale at the same time.

  Urban found that the verified-purchase reviews that Amazon and eBay allow consumers to post help build trust when people want to learn more about products they might want to buy. While this review system can sometimes be “gamed” and companies can hire people to fill the hopper with good reviews, Amazon and eBay are constantly working to make sure that doesn’t happen.

  In some industries, like airlines and cell phone providers, trust either doesn’t exist or is routinely broken. Cost pressure and consumer preference for the lowest price have forced these industries to cut costs to the bone, even to the detriment of how they treat their customers, which has created a huge lack of consumer trust.

  Even wealth management services have been changed by the internet. As opinions and information are shared online, the model of high-pressure sales that prioritizes commissions over fund performance is being challenged by new robo-adviser services like WealthSimple. Traditional banks give 50 percent of their fee to a salesperson as a commission, but WealthSimple and similar robo-management services give bonuses to their advisers based solely on client feedback and happiness. Their fees are published on their websites for anyone to compare to other wealth management services they might wish to use.

  Ellevest, a wealth management company that has built a new approach to women-focused investing (based on risk preferences, gender pay gaps, and women’s longer life expectancy), has a fiduciary duty to act in their clients’ best interests at all times and to not use their clients’ assets for their own gain. Consumer trust increases when the ulterior motive of selling a product just to make a commission is removed from the transaction. This is why transparent companies like WealthSimple and Ellevest are rapidly acquiring new customers, without much churn.

  Urban has found that trust is a strategy that starts before a product is even developed. A trust-based company of one begins with creating something that genuinely solves a problem; then the company rigorously tests the product’s validity before honestly communicating its benefits and outcomes to customers. In this strategy, holding on to customers becomes more important than churning out old ones and constantly acquiring new ones.

  Car dealers have a villainous reputation for pulling the wool over customers’ eyes by doing everything from selling known “lemons” to altering odometers. In looking at the impact of the internet on car sales, Urban found that the internet has removed dealers’ ability to scam customers by allowing them to share information like dealer invoices for car prices, safety ratings, VIN-based car reports, and even dealer reviews. You can now walk into a dealership knowing as much as, or more than, the person trying to sell you a new or used car.

  When dealers found out that people were sharing this information, their first thought was to stop it by any means necessary — but the internet being what it is, they couldn’t. Fast-forward to now, when car dealerships and salespeople mostly have embraced the new transparency and now work to get customers the right car for the right price. If they don’t approach a sale in this way, customers will know (since they know what others have paid for similar cars) and they’ll talk (by leaving poor reviews on rating websites). This is why some car manufacturers, like Mazda, now have fixed prices instead of negotiated prices, because if customers know what everyone else has paid for a car, they’ll feel taken advantage of if they don’t also get the lowest price. Everyone pays the same amount, and everyone is happy.

  With the rise of consumer power from increased sharing and forced transparency, businesses have had to adapt to create win-win scenarios where they make a sale and keep the customer happy. But how do businesses balance trust and cost? Airlines, for one, won’t be able to find this balance and grow trust until they become open about checked bags costing money, get rid of hidden fees, and never kick passengers off flights due to overbooking.

  In studying how trust is built between companies and consumers, Urban has found that there are three aspects of trust: confidence (“I believe what you say”), competence (“I believe you have the skills to do what you say”), and benevolence (“I believe you’re acting on my behalf”). He’s found countless instances of companies that advocate for their customers. This is a long-term investment in honesty and transparency, and every company of one needs to employ it from the start.

  TRUST BY PROXY

  Why is this important to you and your company of one? Because the power of recommendation — or word of mouth — lies in its ability to create trust by proxy. If your good friend tells you that a product is worth buying, you’ll listen because you trust your friend; some of that trust is then passed on to the product they’re recommending. This works online to some degree as well: the people you follow have earned a bit of your trust, so you tend to trust their recommendations.

  According to Nielsen, 92 percent of consumers trust recommendations from family or friends over any other form of advertising. The Word of Mouth Marketing Association found that a word-of-mouth conversation drives sales five times more than paid online media and is responsible for $6 trillion in annual customer spending. A study done by Verizon and Small Business Trends found that small business owners rated referrals and recommendations as their number-one way to acquire new customers, and that they greatly surpassed acquisition of new subscribers through search engines, social media, or paid ads.

  So why isn’t word-of-mouth marketing, or referral marketing, leaned on very often in businesses of any size? There are several reasons. Some businesses expect word of mouth to just happen organically, without any effort on their part. Another reason is the difficulty of measuring recommendations, which can happen via any medium from a coffee shop conversation to a private (untrackable) message on social media. Another reason businesses don’t rely on referrals is that they’re hard to quickly scale. That may be bad for a large business focused on exponential growth, but it’s fine for a company of one. You don’t need massive growth or scale to realize profits; since you can see benefits with much less mass, you can capitalize on products and consumer relationships that build referrals.

  Companies of one can truly benefit from word of mouth because it’s easier for a company of one to create these kinds of personal relationships and stay more closely connected with customers. Urban found that smaller businesses thrive on recommendations because they can focus solely on their specific audience and build relationships with them (even if they do that digitally). Small companies can take complaints and personally resolve them.

  So how do you turn your customers into brand advocates and fuel conversations in which they share your business with the people they know? A study at Texas Tech found that while 83 percent of customers are willing to provide referrals, only 29 percent actually do so. For most businesses, this represents a huge missed opportunity to push happy customers to actively promote what you sell. Obviously, you need to have a good product with good customer service in place first; otherwise, no amount of incentives will cr
eate advocates for your product. In my own business, I doubled the amount of sharing for one of my products by automatically sending an email a week after purchase asking customers, if pleased with what they purchased, to share their satisfaction with others — using links with prewritten content provided.

  A Harris Poll study conducted on behalf of Ambassador Software found that 88 percent of American consumers would like some kind of incentive to share products they like, and that number increases to 95 percent among eighteen- to thirty-five-year-olds. Incentives are another way to evangelize users, but they can be tricky. Sometimes offering cash incentives reduces trust if people find out that profit was the sole reason for promoting a product. Consumers are happy with incentives like small discounts, exclusive “swag,” special offers, and access to premium features. They also like double-sided incentives: this is when both the referrer and the purchaser get a bit of a deal, such as, if I refer you to buy a rainbow widget, we both get $30 off our next order of rainbow widgets. Double-sided incentives have the bonus of increasing the likelihood of not one but two repeat sales.

  Rewarding loyalty in your best customers is also a great way to incentivize recommendations. MailChimp is fairly well known for sending its loyal customers exclusive swag, like well-designed T-shirts (most don’t even have the MailChimp logo on them) or “Freddie” action figures (Freddie is the name of the chimpanzee in the logo). People then post photos on social media — tagging MailChimp — that show them wearing their new shirt or the action figure on their desk, for all their followers to see.