Gennaro Cuofano's Blog, page 245

November 25, 2018

Sales Best Practices To Grow Your Business

Sales and distribution are two primary ingredients for any business success. Thus, starting from the best practices for your sales team is the first step toward building a profitable business. Of course, once you have mastered those the time is right to start experimenting with new sales strategies that none out there is doing. Yet if you’re missing the best practices, this is an excellent place to start.

Action plan

Salespeople have to act and do it as quickly as possible. Procrastination is the first enemy as the more time you spend thinking, the less you’ll have time to act and start for instance sending those emails that can lend you new clients or calling those contacts you have on your desk.

However, to make your action more effective, a plan is needed. An action plan is merely a set of predetermined steps you will take and a workflow you’ll need to make your effort more orgnized.

Customer targeting

One key ingredient to make sales processes successful is the ability of the sales team to target the right leads. Indeed, imagine the case of a salesperson contacting a hundred people and closing none.

In many cases that happens when the salesperson doesn’t know who’s the ideal target that can benefit from the company’s service or product.

Sales canvassing

When a company has mastered lead generation by automating part of the activities from its marketing department it is easy to have salespeople forget about the first and hardest stage, get in touch with people that don’t know your brand.

Instead, have your salespeople spend a part of their time doing sales canvassing or contacting with cold calls or emails people that don’t know your brand. When they master this process, they can also uncover insights about why your business didn’t manage to be recognized among valuable segments of the market as well.

Sales scripts

When a company starts up, you’ll probably have one or two salespeople that have a weird profile. In short, they are not typically just people that mastered the sales process; they are more like renaissance men and quick learners.

They ventured in the business world when none or few people knew your brand and built the company from the ground up. Thus, those people know your company and product better than anyone else.

Therefore, you don’t have to reinvent the wheel each time. Instead, have the new team members of the sales team take advantage of scripts that cover up the main concerns and questions potential customers might have and how to address them. Keep in mind that the script is just a tool to guide the sales force, but it is meant to be improved over time.

Email templates

Just like scripts, email templates can be a great help to salespeople to use what has already worked and rolled it out on a larger scale.

It is essential to keep improving those templates to allow sales emails to gain higher and higher conversion rates. Even though templates do work, it is vital to let for at least a small part of it to be personalized.

Thus, while you can have a template, you still need to do your research and make sure you offer some valuable information to get the lead interested in what you’re saying. Why would anyone listen to you if you’re sending out the same message to anyone?

Personalized message

Before contacting anyone make sure to do your research. People are interested in listening to you when you can deliver to them solutions to their problem.

None cares about your product or service or who you are (unless you’re a rockstar). Thus, before sending our that message, are you providing something valuable to the person on the other side?

Value proposition

One of the less understood aspects of selling is the fact that you only need to pick up the phone as many times as you can and sell your product.

However, while this is a prerequisite, it is not really what makes the difference. When you’re reaching out to someone, you need to understand what motivates them, their value proposition.

Marketing usually can deliver a value proposition and make it seen by as many people as possible. But that value proposition will be not tailored. In short, your product or service doesn’t have a single value proposition, but it will have as many as many potential clients exist out there.

The salesman has to be able to find the value proposition in the product or service that most suits the potential customer on the other side. That is how you get attention.

10x goal setting

Among the most misunderstood things about sales is the goal setting process. Many believe that is fine to set reasonable goals. Thus, they won’t shot to the moon but rather be happy with a discrete objective.

For instance, they might say, “why don’t we increase sales by 50% this year?” And for many, this is a massive increase. Yet if you are not ambitious enough not only you won’t reach the objective but you won’t even take the necessary actions to get there.

In short, to reach massive results, you need to have quite ambitious goals, and targets. Those will ask for the kind of actions that will get you motivated in the long run.

Understand the client business model

If you’re selling to another business, you need to understand its psychology. While indeed when you sell to a consumer, you want to understand their necessities.

When it comes to the business, you want to study their business model indeed. How do they make money? Who are their customers? What do their customers want? What cost structure does the business have?

All those aspects will be critical to understanding what the person, on the other hand, is motivated by and get you closer to deliver the solution that works best for them.

Follow-up

This is the most critical word in sales, yet many neglect it. When you’ve spent hours in prospecting, researching, and meeting a client you’ve done only part of the work.

However, when you don’t follow up, you’ve wasted your time. You could have well not done the work at all. The follow-up is probably the thing that requires the least effort (that is more a matter of organization), yet that is what gets you to close the deal.

Until the potential client gives you an answer which might be positive or negative, you need to follow-up!

Fill your pipeline, always!

In some cases, you might think your pipeline is good enough. That is when you start losing ground. To avoid the risk of being left with an empty pipeline, you need to be prospecting at all time.

Some deals might take way longer than expected to be closed, in that scenario you need a backup plan, which is your pipeline and how full it is.

Keep in touch

When you’ve closed a deal or received a No as the answer, you can’t just leave it up there. You need to keep in touch with that person as what might have prevented to close the deal might have been timing.

On the other hand, if you already closed a deal with that person keeping in touch might allow you to understand when that person has additional needs and whether you can help with your company to fulfill them.

Deliver value before closing

Many think of selling as closing a deal. While closing is part of the process, you’re selling (or serving) at all time. The common mistake is to think you have to deliver value only when the customer has been acquired and he has given you the credit card.

Instead, you need t deliver value as soon as you start interacting with a potential client. Why does she/he need to trust you?

That person doesn’t know you, how she can be sure you’re the person she wants to have business with. There is only one way to prove it, to deliver value before the sales are closed.

Outstanding support

After you’ve closed the sales, it isn’t like your work is over. If you provide a service the most delicate part of it is the first stage of usage of that service by the new customer. Indeed this is still a process in which the person needs to understand whether you can be trusted to deliver the value you promised.

Therefore, you need to be on top of it. The way you support the client once she has acquired your product or service determines how much your business can be trusted. Also, an essential part of any sales funnel is the referral side.

When you’re providing outstanding support not only you’re retaining valuable customers, but you also have those people refer your business to others.

Other tools and resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

Handpicked popular case studies from the site:

The Power of Google Business Model in a Nutshell
How Does Google Make Money? It’s Not Just Advertising!
How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
How Amazon Makes Money: Amazon Business Model in a Nutshell
How Does Netflix Make Money? Netflix Business Model Explained
How Does Spotify Make Money? Spotify Business Model In A Nutshell
The Trillion Dollar Company: Apple Business Model In A Nutshell
DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game

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Published on November 25, 2018 02:17

November 24, 2018

Google’s Hardware Plan: Make No Mistake That Is Primarily About Data

September 21, 2017, Rick Osterloh, Senior Vice President of Hardware at Google announced a historic agreement between Google and HTC with these words:

With this agreement, a team of HTC talent will join Google as part of the hardware organization. These future fellow Googlers are amazing folks we’ve already been working with closely on the Pixel smartphone line, and we’re excited to see what we can do together as one team. The deal also includes a non-exclusive license for HTC intellectual property.

Google has gone all in, and the hardware industry isn’t a simple playground. Yet Google is leveraging on its most important assets to push its hardware as much as possible:
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Although this might pass unnoticed for many, this move is quite bold, and it shows how Google is investing in its hardware. The first question that might come to mind is whether Google might be able to compete against Apple.

But that might be the wrong question. Indeed, thinking that Google gets in the hardware business for the sake of competing in it might be the wrong way to look at this scenario.
In January 2018 Google completed the agreement with HTC with the acquisition of the team of engineers and a non-exclusive license of intellectual property from HTC for $1.1 billion in cash.

Once again, that is not a fight between Apple and Google for who’s taking over the smartphone industry. That era is over. This is about something else!
This isn’t a competition against Apple but rather a fight to take over the AI era
At first sight, it might seem like Google is entering the hardware mobile market to compete with Apple. However, if we look at the numbers of Pixel phones by Google, the company sold about 3.9 million pieces in 2017. In the same year, Apple sold over 216 million iPhones:
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Even though Google might be pushing more and more of its Pixel Phones in the coming years and we can expect its market share to grow.
If we were looking at Google’s decision to enter the hardware space as a new competitor in that space we would miss another vital part of this strategy.
Scaling up with a higher pricing strategy

The Pixel 3 isn’t a cheap phone, so Google might be making high margins on it just like Apple makes high margins on its iPhones.

It’s hard to know for now as Google doesn’t report the breakdown of its revenues and costs for the Pixel Phones. However, what’s valuable for Google business model isn’t the device itself. That is instead the data the device captures. That is really what fuels Google business model.

So beware, even though Google seems to be moving in the hardware space, its primary business model still revolves around data, and this is only a bold move in that direction.

Thus, it easy to wonder why Google isn’t just making a cheaper phone, just like it used to be with the Nexus. The answer is simple; Google wants to tap into a larger market share.

And the paradox is that this market share is made of people that are used to spend that much to buy an iPhone or Samsung. Thus as reported by androidcentral.com:

And as much as it seems illogical to the former Nexus fans among us, Google just doesn’t care about making a cheap Pixel phone “for the fans” anymore. There market is small, won’t make Google enough money to justify it, and ultimately doesn’t expand its market of potential customers.

Related: The Power of Google Business Model in a Nutshell
Make no mistake: the Pixel will unleash Google AI, but it first needs quality data

In 2018, Google launched its machine learning mechanism called Duplex. Finally, it seems it is rolling that out in the US for the new Pixel Phone.

Pixel is fully integrated with all the Google AI tools, but most of all can capture as much data about its users.

In a paper put together by Professor Douglas C. Schmidt, Professor of Computer Science at Vanderbilt University, and his team reported by digitalcontentnext.org there are a few interesting things to notice.

For instance, according to the study on devices powered by Android where the user was logged in with a Google account:

Google collected data at numerous activity touchpoints, such as user location, routes taken, items purchased, and music listened to. Surprisingly Google collected or inferred over two-thirds of the information through passive means. At the end of the day, Google identified user interests with remarkable accuracy.

Can you guess what the enabler of Google data collection is?

Android is a key enabler of data collection for Google, with over 2 billion monthly active users worldwide.

What kind of information can it get through the device?

Via the Android device connected with a Google account, the tech giant can get a name, mobile phone number, birthdate, zip code, and in many cases, credit card number, activity on the mobile phone (e.g., apps used, websites visited), and location coordinates.

More specifically Google gathers the data via a few main channels:

Google Accounts
Android Devices
Chrome Browser
And other Google products

I invite you to read the full report here but the main point is just that data is the primary business model of Google, and it will be for the future.

In short, the hardware is a critical access point as people can relate with a brand via hardware and when you can enter the hardware space, you can pretty much control the whole value chain.

Which connects to the last and most important point

The Google Pixel? A vertical distribution strategy for data acquisition

One of the critical ingredients for massive long-term success is vertical integration. This can be summarized as a process where a company controls several stages of the supply chain.

In an industry where you focus on a physical product, controlling the supply chain is a matter of controlling the whole process from manufacturing to retail.

However, this strategy isn’t cheap, and it requires a large number of resources. That is usually why vertical integration happens with a larger scale.

For instance, over the years Google has entered the browser market with its Chrome so that it could directly channel traffic to its search pages. Yet, where is the traffic coming from?

The device is the answer. In short, by trying to scale up the hardware side, Google can finally have access to the data at its source. Thus this isn’t a competition with Apple; this is a competition for the next era of AI.

When Google affirms to be AI-first, this implies that to be successfully ferried to the next phase, it will need all kinds of data that it can fetch to its AI. At the stage, the quality of the data is a critical element.

Indeed, Pixel isn’t just a cool device, which Google is pushing with massive marketing campaigns, that is the avenue that finally connects Google (now Alphabet) with its users.

Finally, the company won’t need any more intermediaries and billion dollars deals to access that data; it will only need the device in the hands of as many people as possible!

Other tools and resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

Handpicked popular case studies from the site:

The post Google’s Hardware Plan: Make No Mistake That Is Primarily About Data appeared first on Four-Week MBA.

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Published on November 24, 2018 10:03

Sales And Marketing Alignment Best Practices

In the digital era, where the tech giants that form the so-called FAANG Stocks (an acronym for the five most popular tech stocks which comprise Facebook, Apple, Amazon, Netflix and Alphabet’s Google) seem to be conquering the globe with a frictionless effort, that is the farest from the truth it can get.

Those companies spend massive amounts of resources which spans from product development, and engineering but also and primarily on distribution, sales, and marketing.

To give you a bit of context in 2017 Alphabet’s Google spent 11.6% of its revenues in sales and marketing activities. This implies almost thirteen billion dollars!

What activities has Google been focusing on in 2017? Some of those activities comprise:

Advertising and promotional expenditures related to its products and services;
Compensation expenses for employees engaged in sales and marketing, sales support, and other customer service functions.

For instance, if we compare 2016 with 2017 Sales and marketing expenses increased by over two billion primarily due to an increase in advertising and promotional costs of over a billion especially resulting from increases in marketing and promotion-related expenses for our hardware products, Cloud offerings, and YouTube.

Thus, if you thought that large tech companies could get along with the power of products and engineering alone, you got it all wrong. See for instance how Google uses its main asset, the search page to sponsor one of its products:

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I pointed out already in this blog how Google spent a massive effort in creating a distribution for its products and how Google spends great resources to acquire qualified traffic toward its search results pages.

Marketing vs. Sales

In Marketing vs. Sales a cleared out the distinction between the two activities and when it makes more sense for an organization to leverage on marketing rather than sales and vice-versa.

While it is essential to understand the difference between marketing and sales, it is also critical to understand how they work together.

Marketing and Sales working together

As Peter Drucker pointed out in his book Drucker Management, “there will be always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”

While marketing can get to the point of understanding the customer and make sales team superfluous – to a certain extent.

The sales team though is a critical link between the marketing department and the customers. Salespeople are involved in the whole process of and customer journey at a personal level.

Indeed, not only the salesperson might speak to the potential customer in the most delicate moment when she/he is deciding whether it makes sense to purchase your product or service. But it assists the customer throughout the entire process.

For instance, a critical moment of the whole customer journey is when she/he needs assistance or support. While this phase might be in part automated, in most cases you’ll need a support team, which is often sales oriented to assist the customers.

In those phases, you can unlock many insights about the customers that marketing will never manage to have with automation alone. That is when sales and marketing come together to create a customer-centric journey.

In what other ways than sales and marketing work together?

Lead generation

The usual funnel sees it the marketing department in charge of giving to the sales team a list of leads (people that might be interested in your product or service) they can work on and bring them in as customers. While this is the traditional process, it is important to remark that often the opposite happens.

For instance, if you take the sales canvassing process that allows the company to acquire customers that have never heard about your brand. In that scenario, a sales team can give valuable insights to the marketing team on where to focus their attention and understand the areas where the marketing activities of the company might be improved.

Automation

In the era of AI and machine learning, it’s easy to assume that automation should come before anything else. However, automation, if done with no coordination between the marketing and sales teams, it doesn’t add any value.

If at all it can create irreversible damages to your brand. Therefore, before you set up any automation, you need a deep understanding of your customers, your product, your value proposition, and the whole journey customers take to go from the first touch point with your brand up to the referral stage and on.

Thus, before the marketing department creates any automation you need them to coordinate as much as possible with sales team to make sure the automation process leverages on customer insights that only the sales force, which is in touch with the customer base on a daily basis – has at its disposal.

Viral marketing

Many believe that all you need is a viral marketing campaign to make the lead acquisition process smooth and inexpensive. However, even though viral marketing can do that, you might initially need intense coordination between sales and marketing (and engineering) to understand what part of your product might carry some virality.

For instance, if you run a SaaS business in some cases, it might make sense to create a free version of the product (the so-called freemium model) that becomes an essential part of the lead generation process.

However, what features, or how much volumes can you offer for free to acquire enough customers? A/B testing and big data will help. However, to set it up correctly you need insights from the sales teams.

Those mentioned above are just some of the activities for which sales and marketign working together can really create an effective strategy for the growth of your brand and business.

Therefore, even though it makes sense to understand and keep a clear distinction between sales and marketing, so that each of them can focus on specific aspects of the business with acciuntabiltiy and set results.

On the other hand, it is critical to understand the level of coordination that sales and marketing can achieve.

Other tools and resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
What Is a Lean Startup Canvas? Lean Startup Canvas Explained

Marketing vs. Sales: How to Use Sales Processes to Grow Your Business

Handpicked popular case studies from the site:

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Published on November 24, 2018 03:26

November 23, 2018

Sales Canvassing: How To Succeed In Door-To-Door Sales

Sales canvassing is a sales process where you get in touch with potential customers that have never heard about your brand. Examples of sales canvassing are door-to-door sales and cold calling.

Those are critical strategies as they might be an inexpensive and sustainable way to generate qualified leads without having to rely on sales consultants or expensive lists. However, to be successful, the process of sales canvassing needs to be structured.

Why sales canvassing matter?

As many new startups operate in the digital space, it is easy to assume that old sales techniques are also outdated. Thus, we all like to speak about marketing funnels, automation and multiple touch points.

However, any business to be sustainable needs a continuous stream of leads; and in many cases this implies cold calling or approaching people that never heard of you before. Indeed, unless you have a massive marketing budget that you can use to grow your brand quickly.

In most other cases you need a sales force that can venture in the world and create contacts with customers that don’t have a clue about you.

However, to make the sales efforts effective you’ll need to make sure your sales force has a plan, a strategy and a process to follow.

That is what sales canvassing is about. That is a process through which salespeople can have consistent results nonetheless of the single outcome.

When you make the sales canvassing process yours, that is when your company can become sustainable in the long run as you won’t need to depend on other companies to provide you with a consistent stream of leads, you’ll be able to generate them on your own.

Also, you’ll be able to grow a sales department able to create new opportunities independently from the marketing department.

That doesn’t mean you’ll need only sales canvassing. In many cases, having multiple touch points with a potential customer via proper marketing strategies is a good strategy as it makes it way more comfortable for your salesforce to close a complex deal.

In other cases, though it is also critical to have an independent sales force able to open up new opportunities, primarily when your brand isn’t yet established.

So what steps do you need for your salesforce to take advantage of sales canvassing? Some key ingredients are:

Have sales force once understand the product/service and its strenght and unicity
Make sure your sales force understands what problem your product or service solves
Have them set clear targets and share them with the rest of the team
Make the value proposition clear to your sales force
Prepare scripts and speaking points but let them be flexible enough to handle a complex conversation
Get them ready to be rejected
Rejection as a key to the learning process
Focus on a single channel but leverage on several media

Understanding the strength and unicity of the product/service

When a salesperson ventures to bring in customers that never heard of your brand before, it becomes critical that the sales force is very knowledgeable about the product and service and they can explain it in the simplest terms.

Focus on the problem and payoff

When approaching someone that never heard about your brand, why even focus on explaining who you are. Instead, focus on their issue and what solution you have for them.

They need a short term pay off. Find out what is the payoff and struggle your potential customer has and propose a solution. That is when you’ll listen.

Set a customer target

During sales canvassing it is critical to have a laser focus. You need a list of contacts, but it makes sense to start from a profile that fits best the profile of existing customers your company has.

Indeed, when approaching a customer that never heard about your brand, you’ll need to understand what problem you can solve. But she/he won’t trust you can answer it unless you show case studies that resemble the situation they are in.

When you can tell a business owner you’ve already helped someone in a similar situation it’s easier to trust you even if they never heard of your brand.

When you take the time to understand the problem, propose a solution and show a similar case study that is when sales canvassing becomes way more effective.

Have a script but leave it open

Many salespeople like to use scripts. Scripts are prepackaged dialogues usually drawn by old conversations with existing customers. While scripts are a good starting point, you need to be flexible.

Indeed, with sales canvassing, you’ll deal with people that never heard about your brand and your company. Would it make sense to engage in a dialogue you had with a client that already knew you? Not really.

Rejection is part of the process

During sales canvassing the risk of being rejected is exceptionally high. It is critical to allow your sales force to understand that is not something personal, but rather that is part of the process. Rejection is what makes them more effective.

Focus on a single channel but leverage on several media

During sales canvassing, it is important to focus on a single channel. Therefore, if your preferred way is telemarketing, you’ll use the phone. However, not all customers like to be reached by phone.

In that scenario you’ll need to learn how to use several channels, from social media to emails. The important thing is to be able to generate a conversation for long enough that the person, on the other hand, trusts you can bring an actual value. When you get there, you won.

Examples of sales canvassing

Sales canvassing can be done in several ways, like:

telemarketing
door-to-door
direct mail
networking
events
introductory sales letters

Whatever medium you choose it is critical to have a process, with clear objectives, which is repeatable and where rejection is part of the learning process.

Other tools and resources for your business:

Handpicked popular case studies from the site:

The post Sales Canvassing: How To Succeed In Door-To-Door Sales appeared first on Four-Week MBA.

View more on Gennaro Cuofano's website »

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Published on November 23, 2018 17:00

How to Write a One-Page Business Plan

A one-page business plan is a quick framework which aim is to answer a few of the critical questions if you want to get started with your business model. In short, that is the fastest and most effective ways to get your business started with the least amount of time invested.

But is the one-page business plan a one-size-fits-all?

Why use a one-page business plan?

One of the issues of traditional business planning is about its complexity, which makes it hard to recognize its value. Indeed, a business plan should be a way to allow you to take action.

The main issue with traditional business planning though is that rather than make it easier to take actions, it makes it harder. Indeed, often too much planning can induce the so-called analysis paralysis.

A scenario in which drawing a massive plan becomes an excuse not to act. Instead, a one-page business plan is just the opposite.

That is an exercise which aim is to draw in a page all the necessary elements your business model needs to get going — nothing more, nothing less.

It is vital to understand when it makes sense to use a traditional business plan instead.

Is the one-page business plan better than a conventional business plan?

It is important to remark that there isn’t the best way to draw a business plan. Between a traditional and one-page business plan, we can’t say that one is better than the other in all the situations.

They have different aims. The traditional business plan is extremely well suited for someone that is starting up a business that needs financing. The one-page business plan instead is tailored for someone that needs the necessary input to get the business started.

Therefore, if you will need other investors to chip into your business, a one-page business plan won’t do. Especially if you go through a more traditional way to get the financing, you will need a structured business plan.

On the other hand, if you need to understand whether your idea is actionable, you’re good with a one-page business plan!

Thus, we need to draw a line between venture capital vs. bootstrapped.

Venture capital vs. bootstrapped

In the business world, there are different school of thoughts about what’s the best way to launch, run and grow a startup. It all depends on how you see the business world but also how the market is looking like in a particular historic context.

For instance, in a situation where venture capital firms have massive resources and the economy, in general, is in good health, it might be easier for startups to raise capital.

In that context, as an entrepreneur, it might make sense to ask for financing for your ventures. Therefore, a traditional business plan will help you go through that process.

Take the opposite scenario, where funding is scarce, and resources are not easy to find on the market. In that scenario, the so-called bootstrapped mode, or you grow your business it might make more sense. Thus, a one-page business model will do!

Once again, there isn’t the best way to do something. But instead, the way that suits you best, based on the context and how you believe business should work.

For instance, if you don’t want the interference of other people telling you how to run, and grow your business, venture capital is not for you and a one-page business plan is the best tool you can use for clarity of mind.

In the scenario, where you instead want to have a group of people supporting the growth of your business, and you’re also ready to take those interferences then a tradition business plan is the tool for you.

None will back you up without a proper business plan with a three to five years projections.

Many assumptions vs. a few assumptions

Another critical distinction between traditional business planning vs. the one-page business planning is the role of assumptions.

When you draw a traditional business plan, there are many assumptions on which the business plan is based on. However, one of the premises of the lean startup is just the opposite.

You need to get outside and test those assumptions quickly. Indeed, with the one-page business plan, you do just the opposite. Get to act as promptly as possible to check the assumptions you have about your business.

The one-page business plan will be changed over and over again in the course of bootstrapping your business until you’ll have found the market fit and get to the 10x phase of growth.

Key elements of the one-page business plan

What parts should you take into account for the one-page business plan?

There are a few questions you’ll need to address to understand the viability of your plan:

Did I identify a problem that other people are experiencing?
Is this problem experienced by enough people to justify a business?
What solution can I bring to those people?
Would people be willing to pay to get that problem solved?
Would I make enough margin to have a viable business?
Why would those people pick my solution?
Do I need a team to deliver this solution?
Do I need money or can I bootstrap it?

Start with the end in mind until you get to the action plan

One of the primary pitfalls of a business plan is usually too much planning and fancy numbers and no vision at all. Indeed, one of the key ingredients to be able to achieve massive results is a bold vision.

The bold vision doesn’t mean you have to start a business to leave a legacy behind. Instead, that can also be a vision to dominate the market in a specific niche.

The vision is about what you want your business to become when it grows up; how it will need to be.

Once you have that you need to set a mission statement, the mission statement is actionable, and it starts from the vision, but it sets it in motion in the here and now.

Within your mission, you’ll need to set a few key objectives you want to achieve. You don’t need a list of dozens of items. A list of the first few objectives and steps would do.

What do you need to achieve those objectives? How much financial resources? Do you need a team? Do you need tools? List them up to understand what resources they require.

With a vision, a mission statement and the objectives in place, that is when you need an action plan. A set of things to do in the short-term to achieve those objectives you prefigured.

That’s it!

Other tools and resources for your business:

Handpicked popular case studies from the site:

The post How to Write a One-Page Business Plan appeared first on Four-Week MBA.

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Published on November 23, 2018 15:49

November 22, 2018

Growth Hacking Canvas: A Glance At The Tools To Generate Growth Ideas

The growth hacking canvas is a tool and framework to have a set of processes that allow you to ask the right questions to generate growth ideas, consistently.

Growth hacking is a process of rapid experimentation, that is meant to unlock growth ideas to allow startups and less structured organizations to gain traction, as quickly as possible.

This process goes through four main phases that as in a loop comprise data analysis and insight gathering, idea generation, experiment prioritization, and running tests.

The process is ongoing, and it needs to happen over and over before being able to determine whether it works:

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One key ingredient of growth hacking is the team. Indeed, the growth hacker isn’t a magician that makes companies grow magically. Instead, it is a member of a team that coordinates it to analyze the data and prioritizes the activities. Usually, this is a so-called T-shaped profile:

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A T-shaped profile is a person that has broad competencies in several areas, together with a deep competence in one or two areas of expertise.

Growth hacking is first of all also a way to acquire clients and grow a business. This means being able to track the activities of the growth marketer and assess in which stage of a sales funnel an activity falls into.

Usually, growth hackers refer to the pirates’ funnel, also called AARRR funnel:

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The AARRR funnel has the following stages:

Acquisition
Activation
Retention
Revenue
Referral

This, of course, is an abstract framework and just one way to assess the path to acquire customers, users and gain traction.

The 10 building blocks of the growth hacking canvas

The growth hacking canvas has ten building blocks. We’ll specifically look at two growth hacking canvas, from alexandercowan.com and growthhackingcanvas.com.
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According to the growth hacking canvas from alexandercowan.com, those are the following building blocks and questions to ask:

Segments & Personas: Who are the customers? What do they think? See? Feel? Do?
Value Propositions: What’s compelling about the product to these personas? Why do they buy it, use it?
Brand Experiences: What are the key experiences customers have with the product? How do they find it? Buy it? Use it? How does this differ across actors? If a CIO or parent buys it and then a support person or child uses it, how does that work?
Branding: What is the personality of the brand? Its positioning? How does it talk about itself? How do is that executed?
Lexicon: What words and phrases do customers use to talk about the area? What do they type into Google?
Assets: What are the product’s most important brand assets?
Activities: What are the most important growth activities?
Organic Channels: What organic (unpaid) channels are most important to the product’s branding and growth?
Paid Channels: What paid channels are most important to the product’s branding and growth?
Promotional Infrastructure: What promotional infrastructure (email lists, in-store displays, social media accounts) is working for the brand?

You can go more in-depth here.

The growth hacking canvas from growthhackingcanvas.com comprise ten building blocks that can be summarized in:

S.M.A.R.T GOALS: Goals that are specific, measurable, attainable, relevant and timely
TARGET AUDIENCE: Who are you targeting with your specific marketing actions? Why are these segments so important?
ACQUISITION: How do users find you?
ACTIVATION: How can people refer to their friends?
RETENTION: Why would users come back?
REFERRAL: How can people refer to their friends?
REVENUE: How will you get paying customers?
BUDGET: What budget will you allocate to which actions?
GROWTH AREAS: Which areas will you focus on?
TOOLS: Which tools do you use for each area?

You can get started from here.

Other tools and resources for your business:

Handpicked popular case studies from the site:

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Published on November 22, 2018 15:00

Community Canvas: How To Build Thriving Communities

A community canvas is a framework and tool for community managers to build thriving communities based on three key elements and sections:

Identity
Experience
Structure

This is a tool and framework put together by Fabian Pfortmüller, Nico Luchsinger and Sascha Mombartz at community-canvas.org.

Community canvas explained

More and more successful companies are about creating thriving communities of people around their brands. That is why the figure of the community manager has become a critical role for any organization, digital and not.

What tools can the community manager leverage on to build thriving communities? One framework that might be very useful for that is the community canvas a framework which aim is to help you develop and run a new community.

But also to improve existing communities or understand your competitors’ communities and why they’re successful. Keep in mind that a framework is a tool and a set of processes.

It is one of the tools you can leverage on as a community manager or inspiring community manager which identifies what the right questions to ask to build up a thriving community are.

Indeed, what matters is to ask the right questions. Let’s start from the most basic, yet fundamental question.

What is a community?

A community is a group of people which has something in common, be it religion, values, norms or place.

As Fabian Pfortmüller, one of the authors of the community canvas pointed out, the traditional definition of a community might be outdated. He instead proposes a new definition:

A group of people that care about each other and feel they belong together.

It has three critical elements, as a group of people (human) that care about each other (relationships) and feel they belong together (shared identity).

Let’s give a glance at the tool you can use to build this kind of community.

The community canvas

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Source: CommunityCanvas.org

A community canvas has three main sections:

Identity
Experience
Structure

In turn, those three sections are divided into 17 themes, each of which is intended at asking the proper question for each part, to be able to build a thriving community.

Identity

Who are we and what do we believe in?

Clearly, any community starts from a shared belief, and according to the community canvas framework this has to be explicit, and it has to clarify:

who they are
why they exist
and what they stand for

The identify part is the core, the heart of the whole framework. Indeed, from this foundation, all the other building blocks can be built on. Within the community canvas the identity section is formed over a few critical themes:

purpose
identity
values
success definition
brand

Purpose and identity are the essential layers and elements. That’s because they answer two primary questions, why (purpose) and who (identity) we are.

Once you know why and who the community is comprised of that’s when the other key elements can be drawn. Thys, values, success definition and brand can be finally defined.

What kind of questions do you need to ask in this section?

Why does the community exist? (Purpose)
Who is the community for? (Member Identity)
What is important to us as a community? (Values)
How does the community define success? (Success Definition)
How does the community express itself? (Brand)

Experience

What happens in the community and how does it create value for the members?

Communities are also about shared experiences and rituals that add practical value to the members. Those shared experiences and rituals are critical to forming a shared sense of purpose.

Through shared experiences, meant to bring members together and create a bond among them; and rituals and traditions that allow them to have a common symbolic toolset.

Part of bringing a community together is achieved via a set of stories, thus a content strategy that is meant to strengthen the bond among the members.

As each member will have a different role within the community, it is critical to preserve and define each role, so that each member gains meaning through the community itself.

This section comprises:

selection
transition
shared experiences
rituals
content
rules
roles

What kind of questions do you need to ask in this section?

How do people join the community? (Selection)
How do members leave the community? (Transition)
What experiences do members share? (Shared Experiences)
What rituals happen regularly? (Rituals)
What content creates value for members? (Content)
What are the community’s rules? (Rules)
What roles can members play? (Roles)

Structure

What gives us stability in the long-term?

Let’s get to the more practical, and operational section, that about structure. A thriving community to be successful in the long-run has to be able to survive in challenging situations, when they come up.

Therefore, as challenges and problems come up, it becomes critical to have set processes to manage critical situations. When those members survive to those situations the more robust they become in the long-run.

Thus, the brand that the community carries also survives. In short, to make a community successful, you need to plan and set processes for when difficult situations come up.

A community isn’t just made of abstract things but it’s made possible, and it survives, in the long run, thanks to processes, which comprise leadership, decision-making, but also incentives that make those communities financially viable.

In short, often the financial part of a community is underestimated, this doesn’t allow for a community to survive in the long-run.

The critical elements of any community’s structure are:

organization
governance
financing
channels and platforms
data management

What kind of questions do you need to ask?

Who runs the community? (Organization)
How are decisions made in the community? (Governance)
What is the community’s plan to be financially sustainable? (Financing)
What channels does the community use to communicate and gather? (Channels & Platforms)
How does the community manage the data of its members? (Data Management)

Other tools and resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained
What is a value proposition?

Handpicked popular case studies from the site:

The post Community Canvas: How To Build Thriving Communities appeared first on Four-Week MBA.

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Published on November 22, 2018 14:07

November 19, 2018

Business Strategy Lessons From Costco Business Model

Costco business model strategy can be summarized as a selection of high-quality items that get sold in bulk sized in warehouses around US and Canada primarily. With a substantial part of its business focused on selling merchandise at the low profit-margin, Costco also has about fifty million members that each year guarantee to the company over $2.8 billion in steady income at high-profit margins. Costco also uses a single-step distribution strategy that allows it to sell its inventory even before it gets paid to suppliers.

Just like ALDI tries to keep its prices as low as possible, so Costco managed to do so, by lowering its profit margin deliberately to pass those savings to consumers.

Indeed, Costco wants to be recognized in the minds’ of its consumer as high quality, low priced stuff that you can purchase in bulk.

There are also a few other interesting aspects of the Costco business model that we make it unique and make its value proposition compelling.

A glimpse at Costo business model few key ingredients

The value proposition of the Costco business model is quite strong. The company offers low prices to its members with a limited selection of nationally-branded and private-label products in a wide range of merchandise categories.

While those items will produce high sales volumes, they will also be driven by fast inventory turnover.

Costco offers to merchandise in a few key categories:

Foods which comprise dry foods, packaged foods, and groceries
Sundries which comprise snackfoods, candy, alcoholic and non-alcoholic beverages, and cleaning supplies
Hardlines which comprise major appliances, electronics, health and beauty aids, hardware, and garden and patio
Fresh Foods comprising meat, produce, deli, and bakery
Softlines comprising apparel and small appliances
Ancillary which comprises gas stations and pharmacy

While Foods represented the largest category in 2018; each of those categories plays a crucial role in Whole Foods success.

Let’s see what are the critical ingredients of Costco business model success, starting from how the company manages its inventory.

High inventory turnover: the key is cross-docking and single-step distribution channels

Costco generally sells inventory even before they’ve paid it. As pointed out in its annual report:

We buy most of our merchandise directly from manufacturers and route it to cross-docking consolidation points (depots) or directly to our warehouses. Our depots receive large shipments from manufacturers and quickly ship these goods to individual warehouses. This process creates freight volume and handling efficiencies, eliminating many costs associated with traditional multiple-step distribution channels.

The key ingredient to Costco ability to move merchandise efficiently from manufactures to its warehouses allows the company to sell its inventory quickly.

Indeed, thanks to its memberships Costco knows for sure it will sell most of its inventory pretty quickly. Thus, inventory losses (shrinkage) are well below typical retail operations.

Indeed, where on a typical retail operation there is a multiple-step distribution channel where the retailer has to move the merchandise from the manufacturer to a warehouse and then again to a retail store where it gets sold.

Costo warehouses are stores themselves. Thus, when moved the merchandising there it gets sold quickly.

Another critical aspect is that when the merchandise arrives in bulk to Costco warehouses, they don’t need much repackaging or complex and expansive operations but rather those merchandises get sold directly in bulk.

Ancillary businesses: leverage on tight margin merchandise and goods to sell primary merchandising

Ancillary businesses within or next to our warehouses provide expanded products and services, encouraging members to shop more frequently. These businesses include our gas stations, pharmacy, optical dispensing centers, food courts, and hearing-aid centers. We sell gasoline in all countries except Korea and France, with the number of warehouses with gas stations varying significantly by country. We operated 536, 508, and 472 gas stations at the end of 2017, 2016, and 2015, respectively.

One might wonder why to sell an item that has a minimal profit margin like gasoline. And the answer is simple. Gas allows Costco to attract people to its warehouses.

Going to Costco is an “experience” all its way down. From purchasing the gas to stocking the car of merchandise.

The two primary ancillary businesses Costco leverages on to bring as many customers back to its warehouses are gasoline and pharmacy.

Limit merchandising selection: better vendors’ agreements and payments with low prices and high quality

Our strategy is to provide our members with a broad range of high-quality merchandise at prices we believe are consistently lower than elsewhere. We seek to limit items to fast-selling models, sizes, and colors. We carry an average of approximately 3,800 active stock keeping units (SKUs) per warehouse in our core warehouse business, significantly less than other broadline retailers. Many consumable products are offered for sale in case, carton, or multiple-pack quantities only.

It’s quite counterintuitive to think of as a strength the limitation in merchandising; Where other large players like Walmart and Amazon praise themselves on making available any merchandise.

Costco, like ALDI, does the opposite, praises itself for limited stock selection.

This allows Costco to get better vendors’ agreements, Costco customers might be happier to have less, but higher quality merchandise and it becomes way easier for Costco to manage that merchandising, which in comparison lowers its operational burden.

Online commerce to offer what’s not available in the warehouses

Online businesses provide our members additional products and services, many not found in our warehouses. Net sales for our online business were approximately 4% of our total net sales in 2017 and 2016, respectively, and 3% in 2015.

Even though Costco doesn’t focus on online sales, it uses it as a way to provide products and services that might not be available in its warehouses. This is a privilege that members enjoy.

Comparable sales growth as a primary business metric

Costco focuses relentlessly on sales growth, by looking at a simple yet effective metric: comparable sales growth.

This is defined as sales from warehouses open for more than one year, including remodels, relocations and expansions, as well as online sales related to e-commerce websites operating for more than one year.

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Source: Costco annual report 2017

The power of the membership model to create a stable revenue stream that enhances profitability

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If you want to want to enjoy the Costco experience, there is no way out than to become a member. Indeed, the member renewal rate was 90% in the U.S. and Canada and 87% on a worldwide basis in 2017.

Usually, those renew happen within six months following their renewal date. Memberships comprise four main categories

Goldstar and Goldstar executive
business, and business executive including add-ons

Memberships have been growing at a steady rate over the years:

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Source: Costco annual report 2017

With almost fifty million paid members in 2017, most of them representing a good chunk of US households, membership fees have increased to over $2.8 billion in 2017:

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Source: Costco annual report 2017

Why is this revenue model so interesting? For a few reasons:

with a membership model, Cosco can pass part of the saving on the merchandise to its members
at the same time, those members will spend more, and they will get more savings
Costco will enjoy higher revenue growth, and a stable revenue stream represented by its members
that revenue stream can get invested to grow Costo even further
while it will allow Costco to lower its prices further while keeping a high quality for its members

The membership revenue stream – also though it represents only about 2.26% of Costco net sales yet it carries high-profit margins.

Thus, on the one hand, Costco runs its primary business on tight margins, while it relies on fifty million members (and growing) that represent a stable revenue stream for Costco business in the long run.

Bulk sizes make it easier to cross-dock while Costco sells more and members save more

Another key ingredient that it is essential to remark about Costco business model is hot it sells merchandise in bulk and larger quantity compared to other retail stores. This has a simple yet powerful logic:

Costco gets better prices from manufacturers as it buys larger quantities
it also sells more of that merchandise compared to traditional retailers
at the same time members get lower prices at higher convenience

Summarizing Costco main business drivers

A few key drivers that Cosco leverages on for its future success are:

increasing shopping frequency from new and existing members and the amount they spend on each visit (so-called average ticket)
growing comparable sales by making available to Costco members the right merchandise at the right prices
provide quality goods and services at competitive prices
being perceived as a “pricing authority” (low price and high-quality merchandise)
leverage on ancillary businesses to grow the sales of primary merchandise that carries higher profit margins (take the gasoline business which draws members to Costco warehouses)
keep growing Costco warehouses
membership format as an integral part Cosco business model with high profitability and a constant revenue stream

Business lessons you can apply to your company
Costco is a giant, and for a small business, it is hard to relate to it. However, with a better look, you realize that the business strategies that Costco uses can also be copied and applied to your small or medium sized business. Below some business pills that you might want to test to your business, where it makes sense to do so:

On top of your primary revenue stream build a membership base: You can offer members exclusive advantages and offers in exchange for a small annual fee. This overtime will also enhance the sales in other areas of your business as members will be willing to buy more at a more convenient price
Sell larger quantity at a lower price: either if you sell a physical good or an intangible service, you can sell them at higher volumes for a more convenient price. This will deliver more value to your customers while allowing you to get more sales
Provide ancillary goods or services to sustain the sales of primary goods or services: we all like to talk about optimizing our business operations. However, at times to make money, you need to lose money on something else. In a way, this is a variation of the razor and blade business strategy. On the one hand, you sell a service where you don’t make money, while on the other side you sell a complementary good or service where you have high margins. This strategy can be applied pretty much to any business. For instance, imagine the case of a digital agency that sells a website design at a meager price by making it no profit on that. It will sell complementary digital marketing services that instead have a high-profit margin
Use a single-step distribution strategy: distribution is a crucial ingredient to any business success. Rather than make it complicated try to simplify it to reduce the number of steps a service or product takes before it gets to the final consumers

Resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

Handpicked popular case studies from the site:

The post Business Strategy Lessons From Costco Business Model appeared first on Four-Week MBA.

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Published on November 19, 2018 14:42

November 18, 2018

The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet

As Facebook and Google had taken over the digital advertising space, it has become harder to build a media company on an advertising-based business model. Indeed, where it made sense a few years back to offer a product for free and sell advertising on top of it, the consolidation of the advertising industry on the hands of the duopoly Facebook–Google has made it too hard nowadays.

While Amazon might become the third to enter the digital advertising oligopoly, that also means opportunities to build an advertising-based business model have become scarce if not negligible.

Indeed, for almost two decades, publishers have managed to keep an essential chunk of advertising revenues, as there was an implicit agreement between Facebook, Google, and those publishers. Where the two tech giants kept sending qualified traffic to those publishers.

Publishers consolidated their business model primarily on advertising, and it worked pretty well for a while. Until something broke, especially in 2017-18, when Facebook and Google stopped sending massive amounts of traffic altogether:

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Publishers, like Slate Magazine, which had relied on Facebook for a good chunk of their qualified traffic had a slap in the face. Slate which in 2017 had an average of 25 million unique visitors per month might have struggled since then to keep its traffic at those levels.

If this scenario seems threatening, there has also been another epochal change, where Google, once providing as many clicks on its search results pages to publishers by making content available via its search algorithms. It also steadily reduced the amount of traffic toward those publishers.

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As reported on an analysis from SparkToro and Jumpshot, if we look at the number of visits on Google search results pages which don’t result in a user leaving Google pages to go on a publisher site, the numbers have been growing consistently. While on Desktop the effect is still limited, on mobile the impact is massive.

Indeed, if in 2016, 31.4% of searches on the desktop didn’t convert into clicks toward other sites. In 2018 that number grew to 34.4%. Instead, on mobile in 2016, the so-called no-click searches represented about 55.6% of the traffic, wherein 2018 those represented the 61.5%. In short, on a hundred people landing on Google, only nearly forty would leave its results pages to visit publishers’ web properties.

A glance at Facebook and Google advertising machines

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Besides all the scandals of 2018 and the polemic around the Facebook business model, in reality as of the time of this writing its business still is quite solid with incredibly high-profit margins;

Facebook users might have slowed down in Europe its revenue per user has increased. However, Facebook advertising is getting traction thanks to mobile advertising.

Besides the fact that Facebook is finally pushing on the monetization on Instagram and it is introducing business ads on WhatsApp.

Google advertising network also seems to be quite robust and profitable.

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With over 86% of revenues coming from advertising in 2017, Google still is the largest digital advertising platform (with its Google Ads, former Google AdWords) on earth.

With this landscape, there is no other choice for those launching a media business than to opt for a subscription-based business model.

A glance at the media landscape in the era of paywalls
[image error]The New York Times made over $1.6 billion in revenues in 2017. Its monetization strategies based on both subscription (both print and digital) and advertising (both print and digital). NY Times has successfully managed to shift its business model over subscription over the years. As of 2017, subscriptions contribute more than advertising to its revenue generation. The subscription revenues primarily based on print have also been slowing down, while digital subscriptions have increased substantially. The NY Times is shifting toward a digital subscription business model.

Traditionally the media industry has used a mixture of a paid and free to gain traction. While the paid the price for a newspaper would need to be very low, while revenues primarily came from advertising.

A significant shift is happening also for large publishers like The New York Times, where between 2011-15 subscription revenues surpassed advertising revenues.

While most of those revenues still come from print, it is not too far fetched to assume the landscape might completely change in the coming decade in favor of digital subscriptions.

As other media companies and tech giants are pushing to convince billions of people to switch to subscription plans, the time seems to be mature for the Paywall Economy.

Tech giants like Netflix, Amazon Prime, YouTube Prime, Spotify, and many others have used us to pay a basic fee to enjoy an ad-free service. And it might not be far from reality to imagine that a base of subscribers might also be willing to pay higher prices for additional services. Thus, new opportunities seem to be on the way.

New technologies give more space to publishers to monetize their content (the Financial Times case study)

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The Financial Times isn’t new to subscriptions. Instead, it has been using paywalls for quite some time. One interesting aspect to notice is that nowadays technology also allows publishers to describe their content without making it necessarily accessible for free to users.

In short, in the example above, you can see how the Financial Times uses a vocabulary called Schema.org (developed by Google and other leading search engines in 2011) to describe the content of the page.

This makes the page more easy to understand for Google and other search engines. Yet when the user lands on it, if she/he wants to read the content it will need to subscribe to the publication.

While in the past it might have been all or nothing. It means there wasn’t too much of an alternative for a publisher to make its content accessible for free to both the search engine and users.

Nowadays instead a publisher can explain the meaning of the page to the search engine while blocking access to users. This aligns to an ecosystem where publishers want to build a subscription-based to their content.

Media players experimenting with bundle offerings (the Business insider case study)

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Business Insider has launched a segment of its media business called Business Insider Intelligence. In that section, you can get reports put together by the research team at Business Insider, which comes at a relatively high price.

Thus, those kinds of reports might be more suited for a business clientele, the so-called B2B. However, Business Insider also leverages on bundle offers:

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Let’s see now how you can benefit from this scenario to build a media business which doesn’t rely on advertising.

How can you monetize your business with a paywall? A glimpse into a few paywall options

In a scenario where digital advertising is in the hands of a few large tech giants, the opportunity to build a business model based on advertising alone have diminished exponentially.

In addition, while a few years back investors liked the idea of an advertising-based business model, things have changed. Thus, on the one hand, the time is right to start building up a membership base.

On the other hand, if you’ll be asking for funding, an investor might like more the idea of a subscription-based business model.

However, it isn’t simple to implement paywalls. It isn’t just like you tell people to pay and they do it. You need to know the options you have available based on what the others in the media industry are doing.

Hard paywalls

This is the most aggressive type of paywall, where you simply get a small part of the article, like an introductory paragraph, or nothing at all, before you’re asked to subscribe and become a paid member.

This kind of approach is aggressive and it might work for publishers that have a strong print presence, a strong and recognized brand, and a core advertising revenue base. Implementing a hard paywall might also mean a loss of most of the free traffic to the site.

Soft paywalls or metered access

Soft paywalls, also called metered access are among the most popular paywalls. In this scenario, publishers make available a certain number of articles to their readers until a paywall pops up.

Thus, if you want to continue to read you need to become paid members. Financial Times The New York Times are among the most successful examples of metered access or soft paywalls.

In this scenario, it is critical to determine after how many articles it makes sense for your free users to become members. You’ll need to experiment with pricing and the number of free pages before the access is paid.

Freemium model

A freemium model is instead a mixed approach where you divide the site in free vs paid. While certain contents on the site will be free, other parts (think of insights, longer editorials or analyses) will be available just to paying members.

In this scenario, it is critical to asses what part of the site is well suited to be free and what part to be paid. At the same time, the free section of the site can be monetized with advertising.

What paywall does it make sense to your business? The paywall decision-tree

The options above are the ones most used in the media industry. At the same time, business model innovation is the key ingredient for your venture success. Thus if you come up with new and creative ways to apply paywalls that might be your opportunity to build a profitable media business.

Yet before getting started with paywalls, it is critical to evaluate whether it makes sense to your business. I’ve tried to put together a decision-tree that might help to make such a decision.

According to Statista in the US in February 2016, of the newspapers with a digital subscription, 62% had a metered paywall, 12% used a freemium, and 3% have hard paywalls.

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paywall decision-tree

This, of course, is a simplification, but it is important to really think it through whether or not it makes sense to apply a paywall to your media business.

As larger publishers are all converging to a paywall strategy we might assume that it will be easier to convince part of your user base to switch to paid. However, you’ll need to make your offering compelling as they will have more options available.

In addition, if you do apply a paywall you’ll need to make sure to implement a few strategies:

A/B testing will be your compass to find your paywall strategy
You’ll need to focus on a clear editorial strategy and quality content
You’ll need to invest in your brand awareness and make sure you draw a compelling value proposition to avoid a paywall to have an irreversible impact on your business
Don’t take your paywall strategy for given. You’ll need to test and test again after you start gathering the data on how the paywall is affecting your revenue streams
Make sure to create a compelling offering for paying members to avoid high churns rate

Resources for your business:

What Is a Business Model? 30 Successful Types of Business Models You Need to Know
What Is a Business Model Canvas? Business Model Canvas Explained

Handpicked popular case studies from the site:

The post The Era Of Paywalls: How To Build A Subscription Business For Your Media Outlet appeared first on Four-Week MBA.

View more on Gennaro Cuofano's website »

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Published on November 18, 2018 13:32

A Quick Glance At Business Insider Digital Strategy

Business Insider is among the most popular business information websites in the world. According to Alexa Business Insider is among the top 100 most popular sites in the US, and according to Similar Web that is the most popular business news site in the US. Its mission is to inform and inspire the audience, help its clients, and get better every day.

Let’s dive inside Business Insider business model.

How much is Business Insider worth?

In 2015 a German publishing powerhouse, named Axel Springer bought Business Insider at a whopping $442 million valuation, finally taking almost full control of the business news publication. Indeed, a remaining 3% remained in the hands of Jeff Bezos’ investment venture. As pointed out in Alex Springer annual report for 2015:

In September, Axel Springer concluded an agreement for the purchase of around 87.8% of the shares in Business Insider. New York based Business Insider, operates the leading digital offering for business and financial news in the U.S. (businessinsider.com).

The report made clear:

The acquisition is a vital part of Axel Springer strategy to broaden its global digital reach and expand its journalistic portfolio in the English-speaking world. Business Insider is thus present in nine countries.

In terms of the financials of the deal:

The purchase price for the acquired shares in Business Insider totaled € 320.4 million. Axel Springer previously held an equity stake of around 8.7% of the company and after the purchase holds around 96.5% of the Business Insider shares.

Axel Springer had already acquired a stake of almost 10% of the company until it took over 96.5% of the company. Instead of cutting with the past, Axel Springer allowed its founder, Henry Blodget to keep a critical role within the company:

Henry Blodget, founder, Chief Executive Officer and Editor-in-Chief, and Julie Hansen, Chief Operating Officer and President, will also manage Business Insider in the future in the respective functions. The transaction was completed at the end of October 2015.

How does Business Insider (BI) make money?

Business Insider has three primary revenue streams:

advertising
subscriptions
and licensing

BI advertising revenue stream

The advertising monetization happens primarily via premium programmatic advertising and strategic content partnerships.

While programmatic advertising consists of automating the process of matching advertising demand and offer within BI. Indeed, the main aim of programmatic advertising is to deliver performance and efficiency to offer advertising solution at scale. That might sound trivial yet on a platform like BI where over a hundred million visits happen each month it is critical to match advertising opportunities with the best engineering technologies out there otherwise opportunities in terms of revenues generation might be lost.

Instead, strategic partnerships include major custom programs with Dell, Microsoft, Fidelity, Bacardi, Chase, Del Monte, Netflix, and many others.

BI subscription revenue stream

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Another critical revenue stream for the most popular business news site in the US is subscription-based. Indeed, if advertising still represents the significant revenue stream, BI is investing in growing massively its subscription base in the next years. It is doing so by focusing on both B2B and B2C subscription offers.

For instance, Business Insider also launched another digital subscription offering called Business Insider Prime. It was launched in 2017 and is expanding its B2C offering to include the paid business customer product BI Intelligence:

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This comprises a high priced range of info products and insight which can be bought in a bundle for a subscription price. That is Business Insider’s premium research service which might become another critical revenue stream over the years.

BI digital strategy

Business Insider has been able to build over the years a massive presence across several channels, and it has been able to adapt quickly to the changing digital landscape. With an editorial team of more than 300 journalists, BI managed to build a following of over 100 million people in 2017.

If we look at the marketing mix of the traffic landing on the BI site (according to rough estimates from Similar Web:

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It is important to remark that those are just rough estimates. Yet they give us a good glimpse at the marketing mix of BI digital strategy. To notice that the BI site is still the place where monetization happens and where the company can have control of its users and subscribers experience. Therefore, the monetization ability of BI can be judged by whether they’re able to drive qualified traffic back to their web properties.

A significant source of qualified traffic is represented by search engines and Google in primis.

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With almost 30 million visits coming from organic traffic from Google alone, BI has a traffic cost of about $40 million (this is a metric to assess how much is worth BI organic traffic based on the value of its ranking keywords).

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This makes of BI among the top players in the organic reach race (the ability to get qualified traffic from Google).

This also means that were BI losing its ability to rank organically via Google it would be lost a good chunk of its business. However, it is important to notice that even so BI might still survive, given its strong brand, and the fact that direct traffic still accounts for about 20% of total traffic.

Also, if we look whether there is too much overlapping between BI and its competitors it is clear that those large sites are competing for a similar organic reach. Therefore BI ability to dominate the space will be also critical for its revenue generation:

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Business lessons learned from Business Insider

Launched in 2007, Business Insider has been able to gain massive traction in less than a decade and become the most popular business news publication in the US and among the top publications worldwide. How did it do that?

By looking at its business model and digital strategy, it is clear that Business Insider can teach us a few critical lessons:

Combine old media with new digital channels: just like BI has been able to build a sizeable organic reach with his site it also established a strong social media presence and it can dominate new digital channels
Diversify revenue streams: advertising has been the traditional revenue stream for publishers in the last century and a half. Yet BI has invested massively to create alternative revenue streams, based on sponsorship agreements, licensing and high priced subscription plans
Use news to generate buzz for editorial content: BI uses what might be defined as an editorial barbell strategy. On the one hand, it covers stories that have a short lifespan but create short-term buzz also for the editorial side of the business which will have a broader spectrum and timeframe spectrum and timeframe
Target multiple customer segments: in the business jargon, it is highlighted often the importance of identifying a customer persona. While this might work initially often, you might leave up significant opportunities on the table. Indeed, if we look at the organic traffic of BI, it is clear that it spans across several segments. Not only business professionals read BI, but also a broader base comprised of consumers. That is also why BI is expanding from B2B to B2C, which allows it to expand monetization, diversify its business in the long run and opens up new opportunities
Leverage on bundle offerings: when you look into BI subscription plans it is interesting to notice how single reports cost way more than a subscription plan which comprises a bundle of the reports available on the platform. There isn’t anything new with this repackaging approach. Yet it is important to notice that BI might be leaving up revenues on the table today, to build a more solid subscription-based business model in the future:

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Indeed, even though in the short term the company might have to swallow the fish, which means experience a marketing expense in acquiring new members to its platform, in the long run, it this strategy proves successful it will become a significant part of the revenue generation for BI. Thus, BI is leveraging on its primary driver of revenues, advertising, to sustaining a new part of the business primarily based on subscriptions.

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Published on November 18, 2018 06:54