Written by Dave Lavinsky on Thursday, December 5, 2013
When you're selling something to anyone, be it a prospective investor or prospective customer, there are two main types of selling techniques to employ: emotional selling and logical selling.
In emotional selling, you appeal to the buyer's emotions. For example, if selling a sports car, emotional selling would have the prospective buyer visualize how they will feel when they press down on the accelerator and surge forward, and how the wind will feel in their hair when they put the sun roof down, etc.
Logical selling would appeal to the buyer's logic. A more logical sales pitch, for example, would include factors such as why this sports car is better than others (perhaps better gas mileage, better warrantee, etc.) and why the prospect should buy from this dealer (perhaps better pricing, better service, etc.).
The most effective form of selling is generally to use both emotional selling and logical selling. This holds true for "selling" to investors, even very sophisticated ones.
For example, even the seasoned venture capitalist has emotions. Painting the picture that your company will be the next Facebook or Google will excite them. Getting them to think about how they will feel (the prestige among friends, colleagues, etc.) from being an early investor in such a huge success can prompt action.
However, while emotional selling is helpful, the primary selling technique to motivate most investors is logical selling. Specifically, you need to prove to them why your venture will succeed and how they will get a solid return on their investment.
To win over such investors, your logical selling argument should be packed with irrefutable market research. When you present investors with third party research (i.e., research published by sources other than yourself), they gain the confidence that your venture is in fact worthy.
So, what market research should you conduct to logically prove your case to investors? Here are the eleven core areas to answer:
1. Industry Sizing
Investors need to understand precisely how big your market is. Because if your market is too small, their opportunity for returns might also be small. So, start by determining your market size.
2. Key Market and Industry Trends
Investors also need to know the key trends in your market. For example, if the market is currently small, but it's growing rapidly, this might excite investors. Or if new government regulations have prompted industry changes that support your success, they need to know.
3. Details on Your Top Competitors
Having competition is generally a good thing; it proves that customers are buying solutions like the ones you offer. Importantly detail the strengths and weaknesses of your competitors so you and your investors know what you're up against.
Importantly, you don't have to be better than your competition in every single area; ideally you're better in the areas customers care about most.
4. Website Performance of Top Competitors
In nearly all industries, the web is a great source of leads. Understanding and detailing your competitors' performance on the web gives great insight into them and online opportunities that exist for you.
5. Link Profiles of Top Competitors
Understanding the other websites that link to your competitors is also helpful. You may want to contact and/or partner with similar companies/websites, or use their link profiles to identify other websites to contact to link to you.
6. Web Traffic to Top Competitors
Among other things, understanding the website traffic of your top competitors will show their traffic trends. For example, is one competitor's traffic rising or decreasing? Do they experience seasonal fluctuations? Etc.
Likewise, understanding which keywords are driving their traffic alerts you to the keywords for which you should focus on ranking.
7. Social Media Profiles of Top Competitors
Social media can tell a lot about a competitor. Do they have a large Facebook following? What about Twitter, or Pinterest, etc.? Understanding their social media profiles alerts you to the types of customers they are serving, and how customers perceive them, among others.
8. Detailed Identification of Key Customer Segments
Customers are the key to any company's success, and investors want to know exactly who your customers are. Importantly, identify the distinct customer segments you are or will target.
9. Demographic Profiles of Customer Segments
Once you detail which customer segment(s) you will target, you must detail their demographic make-up. For example, what gender are they, where do they live, how much money do they make, etc.? If you serve business clients, demographic variables also include the size of their company, what their title is, etc.
10. Ancillary Needs of Key Customer Segments
The final step in assessing your customers is to determine what else they might be buying before, during and/or after purchasing from you. This will help in further understanding their needs, and alert you to potential business partners to contact.
11. Financial Research
Financial Research gives great credibility to your financial model and the potential financial returns to investors. Here you should research and present your industry's average financial metrics, such as average industry costs, profit margins, etc.
In summary, when selling to investors, particularly savvy investors, be sure to appeal to their emotions. But remember that logical selling will generally be more effective. So rigorously conduct your market research so you can present facts and logic that convinces them to invest in your company. Not only will the research prove the viability of your business to investors, but it will give you great market and competitive intelligence that allows you to gain more customers and grow faster.
Suggested Resource: Click here to see a super-brief video that explains how Growthink can conduct a comprehensive 11-Point Market Research Assessment for your company.
Written by Dave Lavinsky on Sunday, December 1, 2013
The other day on my drive to work I heard a song on Pandora. The song was called "Just the Girl." And it's by the band 'The Click Five.' I'd never heard of the band nor the song, but one of the lyrics caught my attention:
"She laughs at my dreams. But I dream about her laughter"
This line caught my attention because it reminded me of two extremely important mindset principles for entrepreneurs.
1. You must separate yourself from people who laugh at your dreams
"She laughs at my dreams." Imagine hanging out with someone who laughed at your dreams. Do you think that would help or hurt you? Clearly it would hurt you. And I think it would be near impossible to achieve your dreams when surrounded by such negativity.
In fact, motivational speaker Jim Rohn once said, "You are the average of the 5 people with whom you spend the most time." This is absolutely true. When you hang out with successful people, the conversation is generally optimistic. You hear what the others are achieving, how they are overcoming obstacles, etc. And you adapt their positive thinking and can-do attitude which prompts your success.
Alternatively, when surrounded by negative people, you hear how they primarily talk about their struggles, how they blame others for their problems, and so on. You get brought down, and you start thinking negatively too. The result: you never achieve your goals.
So, the first lesson here is to separate yourself from losers and hang out with winners. There are many ways to achieve this. One of the easiest is to find and attend local business and entrepreneurial events. Another is to find a mentor or assemble a Board of Advisors. In each of these cases, you'll soon be spending time with winners, and their success and mindset will rub off on you.
2. The Law of Attraction
The Law of Attraction is basically defined as this: you get what you think about most. So, if you're constantly thinking about what can go wrong in life and/or your business, things will go wrong. But, if you constantly stay positive and think about success, you'll achieve success.
"But I dream about her laughter." In this line, the singer is thinking positively. He's dreaming about her laughing; so that is what he'll attract/get.
In your business, you do this by setting goals for what you want to achieve. Then, think about achieving your goals and do it often. Visualize yourself achieving the goals too. Doing so is proven to dramatically improve your success.
Looking at the line as a whole -- "She laughs at my dreams. But I dream about her laughter" -- you can see how clever it is. Even though she's a negative influence in general, he turns it into a positive.
Even more clever is for you to surround yourself with successful entrepreneurs. Their mentality and success will rub off on you. And set your goals and dream about achieving them. When you do these things, you'll start achieving a lot more success. You'll achieve your goals and start creating even bigger and bolder ones.
Suggested Resource: As you just learned, the way you think as an entrepreneur is absolutely critical to your success. In fact, it's arguably the most important factor in your success. Check out our Millionaire Mindset program to learn how to improve the way you think so you achieve more entrepreneurial success.
Written by Jay Turo on Monday, November 25, 2013
To read Growthink CEO Jay Turo's article from this week’s Entrepreneur Magazine as to how to make the right bets when making risky business decisions, click
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Written by Dave Lavinsky on Tuesday, November 19, 2013
"The point of marketing is to make selling superfluous."
This is a great quote from management guru Peter Drucker. What it means is that if you do a great job in marketing, sales will be easy. Likewise, there are other things you can do to improve your sales without having to resort to aggressive sales tactics.
This article details such strategies.
1. Create a Stronger USP
Your USP or unique selling proposition is what distinguishes your company from others.
Here are some famous USPs:
- The nighttime, coughing, achy, sniffling, stuffy head, fever, so you can rest medicine. (Nyquil)
- Pizza delivered in 30 minutes or it's free. (Dominos Pizza)
- When it absolutely, positively has to be there overnight. (Federal Express)
- 15 minutes or less can save you 15% (GEICO)
Each of these USPs does a great job in distinguishing these companies and getting customers to choose them over competitors.
2. Provide Clear Benefits
In addition to a strong USP, make sure you detail the benefits of your products and/or services to your customers.
For example, do your products:
- Remove their pain
- Save them time
- Improve their success
- Make them feel better
You generally want to provide a list of features associated with your products/services, but lead with the benefits.
3. Use Many Different Marketing Channels
After you create the best USP you can, and identify your key benefits, you want to convey your message to as many of your prospective customers as possible.
But realize this: not all of your customers are in one place or read/view/listen to one media source. So, use multiple means of reaching them.
For example, you can reach customers through each of the following marketing channels among others:
- Direct Mail
- Event Marketing
- Press Releases/PR
- Print Ads
- Radio Ads
- TV Ads
- Search Engine Optimization
- Pay Per Click Advertising
- Social Media Marketing (Facebook, Twitter, etc.)
4. Understand and Improve Your KPIs
Key Performance Indicators or "KPIs" are the metrics that judge your business' performance.
And, as you might know, you can't improve what you can't measure.
So the key is to 1) identify the most important KPIs in your business, and 2) measure/track them over time so you can judge your progress in improving them.
While there are hundreds of potential KPIs to track, here's a small sample of KPIs that most companies must measure:
- Net Profit
- Sales by product/service line
- Cost to acquire new customers
- Lifetime customer value
Importantly, as you understand and improve your KPIs, your revenues and profits will grow. In fact, identifying and managing your KPIs is one of the pillars of an 8-figure business.
5. Make It Simple to Purchase from Your Company
When you make it easy to buy from your company, you'll get more sales.
For example, not accepting credit cards will dramatically hurt the sales of many businesses.
Similarly, making customers complete tedious paperwork (that may not really be necessary) may frighten off some customers.
Conversely, having your product for sale not only on your website, but on Amazon, eBay and others, could make it easier for some customers to purchase from you and prompt more sales.
So, think about ways to make it easier for current and prospective customers to buy from you.
Start using these five strategies today, and watch your sales and profits grow.
Written by Jay Turo on Monday, November 18, 2013
Jeff Bezos is a great hero and role model for all entrepreneurs that dream of doing something really, really big, and…pulling it off.
Like all legendary business leaders, he also has a number of management and creative peculiarities well worth studying and emulating.
One of my favorites is how Jeff manages the meetings of Amazon’s senior executive team, as described last year when Fortune named him Businessman of the Year:
“…the Amazon CEO's fondness for the written word drives one of his primary, and peculiar, tools for managing his company: Meetings of his "S-team" of senior executives begin with participants quietly absorbing the written word. Specifically, before any discussion begins, members of the team -- including Bezos -- consume six-page printed memos in total silence for as long as 30 minutes”
Bezos goes on to note that “Writing a memo is an even more important skill to master." Full sentences are harder to write," he says. "They have verbs. The paragraphs have topic sentences. There is no way to write a six-page, narratively structured memo and not have clear thinking."
Now when I learn of things like this, I understand why the success of a Jeff Bezos is no accident.
Remember, in addition to founding and leading one of the most successful technology companies of all times, Jeff Bezos also made arguably the greatest investment of all time.
The story is well-known but worth re-telling. In 1998 when Larry Page’s and Sergey Brin’s Google offices were a Menlo Park, California garage, Bezos invested $250,000 of personal funds into the fledgling startup.
When Google went public in 2004 that $250,000 investment translated into 3.3 million shares of Google stock. At Google’s IPO that represented a stock share position worth over $280 million.
While he doesn’t disclose how many of those shares he still holds, at the current price of Google stock they would represent an investment position worth over $2 billion.
So, what is it about what makes Jeff Bezos tick that allows him to have such great success when so, so many others - with similar ambition and arguably even greater talent - fall by the wayside?
I recently read a great book (bought on Amazon, of course) by Mark Helprin called "A Soldier of the Great War."
It is the amazing story of an Italian PhD student in aesthetics who was drafted into the Italian Army in World War I. In addition to being an unbelievable barnburner of a read and a tale of love and heroism and adventure, it is also the story of a young man trained as an "effete" intellectual struggling to come to grips / find wisdom from and peace with the horrors of war.
The story ends with its hero - Alesandro Giuliani - as an old man looking back on his life of books, of art, of family, of adventure, and of war and loss.
In the end it is the intersection of these two - of his great intellectual journeys tempered into character and resolve via the various "mortifications of the flesh" of his life - hard work, self-sacrificing, courageous deeds and words, and the willingness to push himself to the limits of one's endurance.
And from this coupling of intellectualism and ideas with a life of action and a love of the fight does flow the genius, power and magic of a Jeff Bezos.
So at your next meeting, do like Jeff and put down the PowerPoint and pull out the pen!
Written by Dave Lavinsky on Thursday, November 14, 2013
In April 2012 the Jumpstart Our Business Startups Act (called the JOBS Act) was passed and signed by President Obama.
The JOBS Act Opens Up Equity-Based Crowdfunding
The key goal of the JOBS Act was to make it possible to raise funds from investors through certain crowdfunding sites in exchange for equity in your company.
To clarify, there are many sites online where you can raise Crowdfunding today. But on these sites, the money you raise is either in the form of donations or are in expectation of rewards; you were previously unable to raise equity via Crowdfunding.
The JOBS Act Today
While the JOBS was signed in April 2012, it did not allow for equity-based Crowdfunding...until the SEC approved certain regulations.
The first major regulations were approved last month, on September 23, 2013. Specifically, on this date, the JOBS Act removed the ban on general solicitation.
General solicitation is the act of telling people, with whom you do NOT have a pre-existing relationship, about the opportunity to invest in your private company. This had not been allowed for 80 years prior to September 23.
So now you can tell the world that you're raising equity funding. You can shout it from the rooftops, tell people about it who are leaving a library, post it on Facebook and Twitter, and so on.
The JOBS Act Tomorrow
However, there is still one BIG limitation the JOBS Act has not resolved. That issue is that, as of today, you can only raise equity Crowdfunding from accredited investors.
While the full definition of "accredited investor" is slightly more detailed, it generally means that the investor is sophisticated and has a net worth (excluding the value of their primary residence) exceeding $1 million and/or has annual income greater than $200,000 in each of the two most recent years or (or $300,000 if including their spouse).
As you can imagine, the vast amount of people who might want to invest even a small amount in your company are NOT accredited investors. That's where Title III of the JOBS act comes in; we hope that sometime in early 2014 the SEC finalizes Title III and legalizes equity-based Crowdfunding to non-accredited investors.
In the meantime, you CAN raise rewards-based Crowdfunding and equity-based Crowdfunding from accredited investors. And hopefully within a few months, the Crowdfunding opportunity will be even bigger.
Suggested Resource: Do you want Crowdfunding? If so, don't try to raise it from scratch -- the 14-step blueprint already exists. Get the Crowdfunding blueprint here.
Written by Dave Lavinsky on Tuesday, November 12, 2013
Negotiating is one of the most powerful skills you can use regardless of your business type.
Not only are there ample negotiating opportunities when buying, selling, or managing for growth; being able to negotiate well can mean the difference between reaching your desired outcome or not.
Make it a habit to negotiate all important items and it will add up in a major way. For example, think of what it would do to your bottom line to reduce expenses by 10% across the board!
Below are 7 "sneaky" negotiations tips. There not "sneaky" in that they're not deceitful or lying (which I do NOT recommend). Rather, they are techniques that you probably are not familiar with, don't do as much as you should, and which DO work.
Tip #1: Schedule the Negotiation Close to a Deadline
Ideally, you can schedule the negotiation close to the other party's deadline by which they need a completed agreement. This will put you in a more powerful position, because they are more motivated than you.
You would know their deadline by gathering research about them in advance. Scheduling the negotiations later also gives you more time to do further research and prepare for the meeting so you'll be even more effective when the time comes.
If you are the buyer, keep the end of the week, month, or year in mind. They might have internal goals and quotas in their company and will be willing to give away more in order to reach them.
Tip #2: Don't Get Emotionally Attached Inside
There are two main ways to get overly attached. The first is attachment to outcomes. The reality of negotiating is that any time you go into one, you may have to walk away, or only get part of what you wanted.
Be willing to do your best and then accept whatever outcome takes place. Fact: when you play the game you will lose some of the time. But when you cling to outcomes too much, you lose more of the time.
Be willing to walk away. This brings us to the second way to get too attached...by reacting to the other party, their attitude, and what they say (which may be designed to get you to react). Stay calm and patient, no matter what they do. Your calmness will help you think clearly and also make you appear more powerful.
Tip #3: Don't Look Too Attached on the Outside
If you're attached inside, it will probably show through your body language-so work on your inner game first. Then, pay attention to your physiology and what your posture is conveying.
Without even saying a word, you can give the impression that you're willing to walk away from the deal and that doing so wouldn't be a big deal for you. Think about how you would sit, stand, lean, listen, and the tone of your voice while speaking, and try to act the part.
You'll find that just paying attention to your body leads to it correcting itself and conveying the image you want. Try to get in the right state of mind before the negotiation starts, and check in with yourself throughout to make sure you're not slouching or appearing less confident.
In reality, you're sending messages through your body language that many salespeople or experienced negotiators are trained to read. The only question is whether to pay attention it to yourself or not. And the answer is "yes!" Try it and see.
Tip #4: Never Be the First Person to Name a Figure
For example, if someone asks you what your firm's hourly rate is, don't just react and answer it right away! You'll be tempted to blurt out something that is less than you wanted by the time the meeting is over.
You could respond by asking what their budget is for the project with which they need help. A low-anxiety way to turn it back on them is to respond with a clarifying question. Then, ask a second question like the one above to the other party that's aimed to find out what they can pay, or are willing to pay.
Tip #5: Always Ask for More than You Need
If you can't avoid naming the first figure, then make the best of it by asking for more than you need, to start the negotiations with plenty of room to come back down later if you must.
Sometimes the other party will accept this higher offer right away! These are the exceptions, but always do it anyway because you never know.
So if someone asks for your hourly rate, as mentioned above, you could answer with a higher hourly rate than you would typically bill. This also gives the impression that they are getting more value in the deal, as those who "typically" bill a higher rate more are usually seen as more competent professionals. (I would then suggest that if you get the deal, to work extra hard on it to make it worth the higher price.)
Tip #6: Never Take the First Offer
If you CAN get the other person to name the first figure, here's what to do-balk, then ask them to do better. I know a few guys who do this out of habit no matter how low the starting price is.
When they name their figure, try to look shocked or surprised. This does wonders to manage expectations for the same reason that starting with a lowball offer works. Then, even if it's a lot better than you expected, calmly and assertively (but not arrogantly) state "Is that the best you can do?" or "I think you'll have to do better than that."
Tip #7: Don't Get Suckered by the "Rules" Trick
Don't think for a minute that all contracts must be signed as-is. If the other party has a contract to sign, feel free to cross out anything you don't like in it. You can also add items you feel should be in there. Don't just sign away your chance to improve your outcome! It's all negotiable.
Some companies or salespeople will try to tell you that the contract can't be altered. Find out if this is truly the case by asking where it says that. Is it law? Is it company policy? Has an agreement ever been changed before? Who could approve it? Find this out and have them get permission from their manager if needed.
If the boilerplate language of the agreement really can't be altered, take this as a cue to go back and renegotiate one of the previous items by saying something like "Okay, well if I can't change this paragraph, lower the price by $X and you've got a deal."
There are dozens more negotiating and persuasion tips I discuss in "Getting What You Want." The key is for you to not only know these tips and tactics, but to use them in the daily course of running your business.
Written by Jay Turo on Monday, November 11, 2013
To read my article from this week’s Entrepreneur Magazine as to whether it is or not and if so why, click here.
Written by Dave Lavinsky on Sunday, November 10, 2013
This article presents 14 times and ways when you can negotiate to get a better deal for your business.
After reading this, I want you to choose the ONE most significant thing in your business that you must negotiate in the near future.
I'm not talking about buying a used swivel chair on Craigslist. I'm referring to one of the various opportunities that you have as an entrepreneur to determine your own end results-possibly saving thousands or tens of thousands of dollars-on some significant expense or transaction coming up.
Since so many things in business are negotiable, keep negotiations top of mind. Generally you should always try to negotiate as you often have nothing to lose.
Here we go...
Negotiating with Suppliers
1. Cost of high-end purchases - Typically, items you buy in the hundreds or thousands of dollars have a more involved sales process, so the vendors offering them are more likely to adapt and negotiate in order to secure your business. They also have more leeway between their cost and what they charge than if they were selling commodities.
2. Payment terms - Oftentimes you might rely on customer payments to cover your purchases. IF so, you'll ideally want to pay your vendors after your customers pay you. So negotiate this preference
3. Quality/Scope of Offering - Maybe your budget is limited and you just can't pay more for something than you have. Don't stop negotiating! Just change what you ask for. Suppliers might be able to offer you better service, some freebies, or an upgraded package just by asking for it.
4. Volume discounts - If you're a startup and don't have volume yet, then share your vision with suppliers of how you will grow and what your company will become. Use this vision to negotiate a volume discount over time that starts immediately.
5. Office Space - It's funny how many people walk over dollars to get to the dimes. The same people who drive 2 extra miles to pump gas at a station that's $.02/gallon cheaper will not bother negotiating on major purchases and save thousands. Your working space is one of your highest expenses-so fight for the best price!
Negotiating with Employees
1. Salary - Obviously, when hiring a full-time employee there will be salary negotiations. This is the final part of the hiring process and it pays to prepare as it might save you thousands of dollars per year. And, with freelance service providers, they will often offer discounts off their regular hourly rate in order to get a first project started with you, or in exchange for consistent work.
2. Equity or Partnership - in the beginning, you might not have the cash to offer real players a full-time job, but you can attract them by offering a piece of the pie, if you can show that the opportunity is great enough. You can avoid paying market-level wages.
Negotiating with Investors and Lenders
1. Basically, everything you agree on with an investor or lender is negotiable, including:
- Loan amount
- Interest rate
- Length of time for repayment or exit
- Personal guarantee
- Payment amount and frequency
Negotiating with Buyers
1. Price - Your customers generally want the lowest price, and you probably want the highest. So try to offer other concessions besides price to close sales when customers won't pay as is. For example, you can include an additional product or service to influence the customer to buy.
2. Special Discounts - These are made on a case-by-case basis, and should be used sparingly. These are different from sales, which is a pre-emptive concession to get people in the door. Only agree to lower your price in exchange for something else, or if they commit to buying now.
3. Offering bonuses - These are the extra add-on items you can offer the customer that add value but don't affect your cash flow as much. You might upgrade or further personalize the product or service you offer-anything to sweeten the deal.
4. Extending financing or payment plans - This is another way to keep your price high and still make more in the long run, if you don't mind waiting a little longer and also not being able to collect a certain percentage of the remaining payments (hopefully a small number).
5. Collecting accounts payable - If someone falls behind in making payments to you, the best thing to ask them is how much they are able to pay, and when. Let them tell you...and this will start the negotiation and give you a better idea of what's possible.
Which of these negotiating scenarios do you see coming up soon on your radar? Which could you make happen now? What would you stand to gain by having the courage to ask for more?
And what do you stand to lose by asking? The odds are, nothing. The worst they can say is "No." Don't worry...few deals have been lost because someone got offended by an attempt to negotiate. They may even respect you even more for having tried!
Now, since the first step of negotiating is to begin with the end in mind, and picturing a clear outcome in your mind, take the negotiating opportunity you choose and break it down in to specific objectives, like "Save 25% on our office's new security system" or "Work a deal with our new CFO to work for $2500/month in addition to 10% ownership" or something equally specific. The time to negotiate starts now.
Written by Dave Lavinsky on Thursday, November 7, 2013
Last month, author Brad Stone released an interesting book called, "The Everything Store: Jeff Bezos and the Age of Amazon."
The book chronicles the story behind Jeff Bezos and Amazon, but there's really only one paragraph from it that I'd like to focus on herein. That paragraph reads as follows:
"They [Amazon] would let other more experienced retailers sell everything on the site via Amazon's Marketplace, and Amazon would take a commission. Meanwhile the company [Amazon] could watch and learn. That was something we did quite well, says Randy Miller. If you don't know anything about the business, launch it through the Marketplace, bring retailers in, watch what they do and what they sell, understand it, and then get into it."
So, let me break this down for you if it's not apparent. Rather than selling items like apparel and kitchen items itself, Amazon launched these categories through the Amazon Marketplace where other vendors sold them.
In doing so, Amazon was able to see what products sold well and how they were sold. And then, when a product sold well, what did Amazon do? Well, they started selling the item themselves in the main Amazon.com site.
So, what is this strategy called?
Market Research. That's right, Amazon.com went from an online bookseller to the WalMart of the internet by doing market research. Because with the right market research you can avoid the missteps that most companies and entrepreneurs make.
So, what kind of market research will help you grow your company? Below are the key research areas you need:
In assessing your industry or market, start by defining how big it is. Why? Because if it's too small, it's probably not worth entering. Define your market as clearly as possible. For example, if you manufacture prosthetics, look at the size of that market, not the entire healthcare market.
Next look at market trends. For example if the market is shrinking or consolidating, it's probably not a great market to enter; unless you have a revolutionary new product that could shake things up.
Understanding your target customers is absolutely critical to your business' success. In fact, one of Jeff Bezos' hallmark strategies is "We start with the customer and work backward."
In your research, you need to precisely identify and define who your customer is. Define their demographics such as what gender they are, how old they are, where they live, etc. If a business customer, also define their role in their company and the type of company for which they work.
Then move to the psychographic questions. What do your customers like to do in their free time? Who do the like on Facebook? Etc.
The more you know your customers and what make them tick, the better job you will do in creating the products and services they want, and effectively marketing to them.
Identify who you are top competitors are. Importantly, like Amazon did, determine what has worked well for them and what their customers are buying.
The old investor saying is very important here, which is as follows: "if you have no competitors; maybe you have no market." What this means is that if customers aren't currently buying a product or service that serves the need your company fulfills, then maybe that need and thus market doesn't exist.
The more you understand your competition, the better you will do in creating a winning strategy. Fortunately, with online tools, you can learn a lot about your competition. You can find out the demographics of their website visitors, what other sites those visitors frequent, what other companies they like on Facebook, and so on. Clearly this information will help improve your marketing and overall strategy.
The final category or research to conduct is financial research. Here the goal is to develop benchmarks. For example, what is the average Cost of Goods Sold in your industry? What percentage of your revenues should staffing costs comprise?
By understanding these benchmarks, you can do a better job in determining financing needs and also measuring and improving your performance over time.
We all know that knowledge is power. And when running a business, the knowledge you need is market research. With it you'll have a better strategy and your likelihood of success skyrockets. Without it, you're shooting in the dark. I prefer the former.
Suggested Resource: If your business plan and/or strategy is missing critical market research, you will fail. Or worse yet, if your plan or strategy is based on faulty research, you're doomed. Click here to learn how my team can quickly and affordably conduct your market research for you.
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