“If only … ”
If only. As far as I’m concerned, those two words represent the single most painful realization in all of personal finance and business.
It’s something that came to me when I first started to assemble this Wealth Foundations Series, and it’s something I wanted to touch on in great detail before we really got too far along.
At first, it will seem like a slight detour from the strictly entrepreneurial-sword-sharpening topics we’ve covered so far in the series, but I think succession planning, and instilling the right wealth foundations in our children is just as important, as fixing our own finances.
It starts with learning the value of deferred gratification, of making time work for you, not against you, and not being the guy stuck saying “If only.”
Because the worst thing about this lesson is that it’s so often only learned in hindsight, meaning that your single most valuable asset—time—has already been mostly depleted.
That’s the real cost of “If only,” the price in wasted years.
Well, today’s article is about how I’m attempting to prevent “if only”.
It’s about how you can start your own succession planning by following along, and how doing so can prevent key members in your business and family from having to endure some of life’s most painful lessons.
Basically, we’re talking about imparting the perfect amount of financial wisdom at the perfect time.
How you can start your succession planning by playing along, and prevent loved ones from having to endure those same painful lessons by imparting the right amount of financial wisdom at the right time …
In my case, I’ve chosen to start building my “Family Succession Plan” with our part time Blog Editor, my son Elijah—or Eli for short—and I’ve decided to do it by setting him on course to become a millionaire …
An exciting challenge for Dad—and a crucial life lesson for Son
Now of course I still plan to have Eli inherit a good portion of my estate when Fleur and I shuffle off this mortal coil.
But this is not about giving him some random lump sum in a will. He’s going to be a part of this project—an apprentice, a steward, and eventually a director.
In sharing all this with my son, I’m hoping to engage him in and demonstrate to him how much his time is really worth, financially speaking.
Think about it …
For the first few decades of their lives, most people might receive a few savings bonds from their grandparents. The really lucky ones will receive some sort of inheritance from their grandparents, aunts or uncles, often without the education or instruction on how to best handle it. (I blew mine on my stint in the USA prior to the MCG project.)
These gifts; however fun and tangible they might be at times, still pale in comparison to the idea of growing up alongside your own personal fortune … of always having the capital you need to truly do what you want to do and abstain from the rat race at large.
The power of this idea; the energy, momentum and confidence it could infuse into anyone’s young life—not just my son’s, but anyone’s—it’s almost too much to overlook …
Here’s How To Get Started Today …
First of all, let’s acknowledge the fact that I’m not a financial professional, nor do I play one on television. I’m not trying to dole out personal financial or investing advice here, I’m just trying to share some of the creative solutions I’ve adopted into my own personal life for my family.
I realize now that readers from different parts of the world will likely face different obstacles; from tax rates and investment prospects to currency inflation and monetary stability issues. And I’ll be addressing them at the end of the essay (along with giving you the tools you’ll need to custom-fit this plan to your own needs). But for today’s purposes, I’m going to talk about my plan in its simplest and most straightforward terms.
And before you start applying this plan to your own life, I’ll urge you to consider all the obstacles.
After all, there are plenty of people out there who think this whole idea would be laughable, that getting enough of a cumulative return to hit our goals “in today’s markets” would simply be impossible. Of course, these are likely the same people who thought that housing prices couldn’t fall back in 2007, or that leasing a Mercedes was a sound financial decision, so—as always—it’s worth taking everyone’s advice with a grain of salt.
In short, this plan will not work if I can’t commit to it long-term. And by long-term I mean the long-term. The indefinite term. Personally, I’m expecting these habits to become so ingrained that Eli & I will continue with them on a daily basis—regardless of goals or own personal situations—and that’s the commitment I’m looking to make.
Which leads me to the most important obstacle. Sticking to your commitment.
Yes, it’s essentially the same obstacle. Only this is what it looks like after a decade or two has passed. Remember, we’re not talking get-rich-quick here—we’re talking about working the clock. About investing over a multi-decade horizon for a specific target. You’ll need to be the type that can remain patient when things start moving at a glacial pace.
Which leads us to our final obstacle—keeping things from moving at a glacial pace.
It takes a special kind of person to balance your goals and risk tolerance over such a long horizon of investment. It’s a marathon of marathons, and most amateur financial minds like to think of themselves as sprinters. So after setting the money aside in the first place, it’s going to be crucial for to learn how to invest the money well.
Still interested in how it works? Well, let’s break it down …
Starting Out: Year Zero—$0 in the Bank
Okay, so let’s get down to brass tacks. Here’s how the plan works;
From the day Eli was born, I’ve been and plan to keep investing a dollar a day and an hour a month in his financial future. That’s it, that’s all it takes. Less than ten bucks and less than 1% of your time each month.
With these simple (but constant) resources, I along with Ely himself will slowly and steadily maneuver his growing fund until it reaches a million—ideally around the age of fifty, so he can possibly enjoy an early retirement for a job well done.
Over the long-term, that means we’re shooting for an average annual return of about 12%. Yes, that does sound a bit high in today’s economy, but it’s quite a common target for long-term growth-oriented portfolios.
As Dave Ramsey has pointed out, the annual average return of the S&P 500 from 1926 through 2012 was 11.96%. Likewise; during the last 30 years—despite America’s “Lost Decade”—Australian stocks have soared an average of 11.1% each year. Especially once inflation is factored in, 12% becomes a very reasonable target.
Anyway, by investing a dollar a day with an annual return of about 12%, this plan will ultimately give Eli a million dollars by age fifty. And by the time he turns eighteen, we’re hoping he’ll have learned enough about long-term savings and investment to be taking over the portfolio and eventually buying his old man out.
Now before we go too much further, I want to quickly address a possibly glaring issue you might have with this idea – A million dollars in 50 years will be worth squat.
Do you know what – you are absolutely right! A million dollar home in 50 years won’t be much, you certainly won’t be able to retire on a million dollar superannuation or 401k, and yes there will also be taxes to pay. But remember what these Wealth Foundations are – Foundations!
All we are trying to do here, and in all the essays, is get those financial foundations right. Building the mind and muscle, that’s all. It’s not the one single plan for Eli’s financial future, just the foundation.
Now, in order to get there, we start with square one. Remember, it’s a marathon, not a sprint. So we just put a dollar away each day, and spend about an hour a month learning and managing our new child’s fund. We likely won’t save more than $500 in the first year, but by getting the building blocks in place—like acquiring the child’s tax file number or setting up cash & brokerage accounts—we can still make critical progress from the very first day.
As the fund starts to exceed $500, we’ll start having new opportunities; such as the chance to invest in Exchange-Traded Funds and Listed Investment Companies. By using just these simple, straightforward and cost-efficient kinds of vehicles and nothing else, one can still do a great job with the portfolio for at least its first decade.
But it’s not until around age seven that the fund reaches its first—and arguably—most critical milestone. In that it starts contributing more to itself than you do. Let me explain …
By about seven years in, you should be looking at $3,000-4,000 in total account value. With our projected rate of return, that means the fund is earning about $400 a year in interest … or more than the dollar a day we’re investing!
This is a tremendous achievement, and one of the clearest ways to demonstrate the massive power of reinvestment. Plus, it’s coming right around Eli’s seventh and eight birthdays, meaning he’ll be starting to reach that age where he can take not only an interest in his financial affairs, but start to grasp some of those key concepts.
I’m thinking young Eli and myself might don our suits and go out for a fancy “business” lunch at this point …
Stage Two: Year 10—$7,000 in the Bank
By now, if we’re doing it right, Eli likely has a palpable sense of excitement when it comes to savings and investment. Having witnessed the power of consistent contributions and simple reinvestment, he’ll be developing an understanding of some of the most consistently profitable fundamentals of finance—the kind of thing he’ll simply never get from schools – even montesorri.
By this beginning of this phase I’ll hopefully have him as an active participants in the fund’s management. I believe the kids should be allowed to make suggestions and express their thoughts, then seriously be taken into consideration. It’s easy even for younger kids to become jaded or cynical about something this unique and important, so I’m going to make sure to share it with him on his own terms.
I can’t wait play stock market games with him (Payday was my favourite as a young kid)… share things like Robert Kiyosaki’s Cash Flow 101 board game, and express the importance of financial literacy and good priorities.
Just as important is the fact that his growing base of knowledge will be backed by practical experience. A level of experience well beyond his current age, along with years of positive reinforcement behind some of the most prudent and productive habits he could possibly have. The fact that you’ve cultivated a hobby with your now teenage-child is just a fringe benefit …
Keeping them engaged at such a turbulent age might be less complicated than you’d think. After all, if you’ve been investing your time and money as diligently as planned, then this is the age where their fund finally starts to break free and go “exponential.” In other words, they’ve earned and reinvested so much at this point that the charts start getting really exciting …
Perhaps best of all, the loftiness of their goal … the amazing level of commitment you’ve displayed; these kinds of ideas will keep things from getting boring for them. They’re making a deliberate effort to become a millionaire—with their parents’ help—and they’re quite likely to succeed. What kid wouldn’t find that message to be energizing?
Stage Three: Year Twenty—Going Independent with $28,000 in the Bank
Twenty years old may be seeming younger and younger these days, but if you’ve done your job so far then you can rest assured that your child is ready to take the reins.
Because week in and week out over the last twenty years, Eli will have watched and participated and learned from the careful management of his finances. Maybe it’s only an hour each month; but that’s an hour a month for years upon years upon years.
Perhaps most importantly, he will have witnessed the already small size of my own contributions. Because at a dollar a day, as their parent, you’ve only contributed about $7,400—that’s just a quarter of the fund’s already ballooning size!
Empowered with this knowledge—and what is by now a decade of experience in managing his own finances—the plan is that Eli will be better-suited than most retirement-aged adults to maintain a long-term investment portfolio. Which is good, because in another ten years he’s going to be repaying his loan!
That’s right. You thought the dollar a day was a gift? Oh hell no, that’s my hard earned, and was just a loan. That was seed money, and we’re going to be asking for it back—interest-free, of course—once he reaches age 30. If everything is on track as planned, then paying me back will cost them less than 10% of his total account at this point. As planned … a drop in the bucket.
See at age thirty, by investing $1 per day, compounded monthly at a 12% per annum return, his portfolio will be worth $108,344 …
So if he repays the $11,160 I’ve contributed, dropping his portfolio back to $97,184, but starts to contribute the $1 himself now, he’s on track for a portfolio (pre-tax) of $1,089,249.00 by the age of 50.
Goal Achieved – and it hasn’t cost me a cent!
But why ask for it back at age thirty specifically? Well, I’m going to ask for it back at some point, and because that’s when studies show that most people start having children of their own. Which means I’ll have a whole new account to start for the grandchildren, right?
The Possibilities are Endless—
and putting them to work can be deceptively simple …
Succession—be it in business or in family, or anywhere in life for that matter—is only ever about the future. It’s about knowing the future … not because you predicted it, but because you made it that way. Because you had vision and determination, and when they desired someone to follow, you were there to lead.
As such, I feel like succession is also about simplicity. About making a simple plan and a simple pledge, and then sticking to it through whatever may come your way. With such a simple plan and such a minor commitment as the one we’ve covered today; just loaning a dollar a day and an hour a week, people can feel almost liberated by it. And then their gears start turning … they start thinking about putting it to use …
Well, what happens if I invest 2 (two) dollars a week instead of one? He’ll reach the magic million dollar mark 7 years earlier at 43, or have a portfolio of $2,421,617 at age Fifty.
What happens if you get all the grandparents involved and it’s $6 per day invested? They have $1,059,436 at age 34, and $7,264,851 at 50 if they continue the contributions.
- We invested a $1 per day, but $150 was also contributed per year in birthday and Chirstmas gifts from family etc
- The $1 per day from us, was added to by 10% of his pocket money from 5yrs old
- We made him contribute 10% of pocket money from 5yrs old, and 10% of any dollar he earns from a teenage job.
When that happens, you’ve successfully shared your vision.
So—with that in mind—I’ve had the team whip up this simple calculator to help you boil it all down and get an immediate snapshot of what your results may be. Trust me, even if you think you understand long-term investing, it’s still an eye-opening experience that’s definitely worth a moment or two …
As long as you follow all the specifications for this plan—making regular contributions of a dollar a day, focusing your investments on growth assets, and never letting up on renivestment—then you’re setting yourself and your family up for massive long-term success.
Sure, there’s going to be a degree of luck involved, as there is with all investments and almost everything in life. But as Albert Einstein once said, “chance favors the prepared mind,” and this kind of strategy could give yourself and your children a massive leg-up in preparing for an increasingly competitive world.
Like everyone else who decides to act out this plan on their own, Eli and I are certain to face our own unique set of obstacles …
What’s inflation going to look like over the next thirty years … and what’s it going to do to the savings? How much of the million do we stand to lose to taxes, and should I be doubling down on my “dollar-a-day” commitment to guarantee my child sees his full million after taxes?
Our calcualtor can give you some broad answers, but these are complicated questions that don’t always have simple answers. More resources are available online (like this helpful calculator from bankrate) to help you predict the effect of taxes and inflation on your savings over the long-term, but you shouldn’t be afraid to consult your Financial Adviser for any specific help you might need.
But the most common answer to these daunting questions is simply to save something. And to do so diligently over the long-term, then paying enough attention to be sure that your money is working for you and not the other way around.
Because this isn’t just about you or me … it’s about the ones we love. That makes it more tolerable and more bearable, but it also makes for a satisfying way to affirm your own love and vigilance. It’s a uniquely satisfying feeling.
The post How I Plan To Give My Son, Eli, A Million Dollars. appeared first on Preneur Marketing Blog.
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Sorry for the glacial pace of updates recently, there have been some problems on the site that are proving difficult to sort out and are, annoyingly, still ongoing.
Incidentally, if you’ve ever been IP blocked temporarily by the server while browsing through RMR’s archive, please leave a comment or send me an email about it, I’m trying to troubleshoot this as best I can, and it would help to know how many people have been affected.
On a lighter note, in case you missed it, RMR’s April Fools page.
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It’s amazing how much your perceptions change as you grow older.
Back during those late night shifts at Athlete’s Foot, prior to Spotify and listening to the homemade mixed CDs, the mystery shopper was the one thing we all wanted to avoid each month. “What a waste,” we thought. “How does this help?” we groaned.
The funny thing was that we always seemed to be able to remember who the mystery shopper was, after the fact… when the report came back with our “review”.
They always seemed to behave in the same strange way, asking the same silly and annoying questions — yet no one ever was able to be present during that moment, realise who they were, and subsequently up their level of customer service.
I guess at that age, hindsight was still far overshadowing foresight. (In fact, I think it still is.)
Either way, as I progressed through my journey I began to realise what you don’t measure you can’t manage, and began to see the immense value in mystery-shopping your staff. A small tweak in the way they approach a casual shopper can easily increase the number of shoes people try on (opt-ins) or the number of upsells sold at the point-of-sale (items per transaction).
No wonder the industry in 1999 had $750 million annual revenues in the USA alone!
So I thought we should all get a lesson in retail mystery shopping… and invited Kristian Mahony, TheRetailGuy, to contribute a review of a major brand’s retail presence.
Today I went to my local Westfield and visited surf and street wear retailer ‘City Beach’.
This privately owned fashion retail chain has over 60 stores, and a very dominant online site that houses over 200 brands. I have shopped City Beach a few times, being a surfer and outdoors person. I’ve frequented their outlets time and time again looking for inspiration, BUT I have always struggled to make a purchase, even if I’ve liked what I’ve seen. I have found myself becoming more and more disenchanted with the shopping experience they deliver.
Have they improved or slid further down the rung in standards? Well, here’s what I found:
Shop front entrances are so vitally important. It’s the retailers ‘gateway’ to their customers. If it’s closed up, cluttered with stock, tarnished with smeared, dirty windows and old signage, then that’s like Buckingham Palace having an overgrown garden and rusty gates. I measure ‘Shop Entrance’ based on how it makes me feel as I approach. I look for it to be open, clean, inviting and above all, it needs to deliver an emotional message to me with what this retailer is about, and what’s going on inside. I look for a sense of ‘curiosity’ or ‘value’-driven messages compelling me to come in.
I didn’t get a photo of the City Beach front entrance, as there were to many people walking past and I couldn’t align myself back far enough to get a shot of the entire shop front. But to further illustrate what I’m looking for, here’s an example of what I (and so many) believe an unbelievable shop entrance looks like:
For - This has improved dramatically from the last time I visited this store. It’s a lot cleaner, more open and there’s some really strong elements which are front and centre such as the Oakley Sunglass stand. This was a real statement and was ‘King’ of the stores front aesthetics.
Against - The front windows of this store are HUGE! Top to bottom glass. Now although they were clean and consistent, what surprised me no end was, here’s a retailer that stocks some of the most sought-after brands in the world, brands such as Quiksilver, Rip Curl, Billabong and Rusty, yet the windows had no ‘brand theme’ or ‘call out’ at all. They were uninspiring!
City Beach Shop Entrance = 7/10
Store ambience is my measure of the aesthetics, mood, accessibility and shop-ability. I’m looking for spacious environments that enhance one’s ability to make purchase decisions. I literally measure my heart rate and see if it’s risen. For me, I know if I’m frustrated, my heart rate rises, therefore I become impatient and disillusioned with why I’m in the store. I look at the lighting and see if it’s showing off what needs to be displayed, which is always stock and signage/promotion.
For – Sorry, but I’ve really got to scratch to find something that’s encouraging with the way this shop makes you feel, and compels or inspires you to purchase.
Against - Once again (now I’m not old, and I love rock/alternative music, but this was beyond a joke) the in-store music was like walking into a Big Day Out mosh pit. Can someone please show me the studies which prove that extremely loud music helps shopping experience? I understand that this retailer is targeting a specific consumer bracket, but as I stood in the footwear section, and lip-read a person ask the shop assistant “Sorry, what did you say?” then that’s more than enough evidence for me to know that the decibels were just cranked too much. I can’t help but think that this level of in-store music is to entertain the staff versus inspire the customer.
Additionally, there’s some really dark ‘nooks’ within City Beach stores. Stock is then hidden and not well-presented, it’s hard for people to see the stock and it gives you a sense of claustrophobia.
City Beach Store Ambience = 3/10
Stock Range & Offer
What I’m looking for is: A) is there an offer or range of stock that supports the overall brand message if there is one, or target customer needs and market trends, and B) how is the range architecture and blueprint? Is it clean, with clear examples of good, better, best range offers? Does it have clearly defined categories that increase a customers ability to look, find, and buy?
For - They have plenty of it! I noticed that the stock levels appear to be consolidated and tightened, which was encouraging. It’s a far cry from my last visit in what appeared to be a surf outlet discount store paying big rents in Westfield.
Against - There’s just too much stock, too many brands which aren’t in distinct categories and/or merchandised for ultimate shop-ability. I really want to encourage all retailers who take an approach to ‘hedge their bets’ and ‘dabble’ in lots of different ranges and brands, to stand up and figure out what your retail brand stands for. Because presenting a range proposition that has everything but the kitchen sink in it, to me, means you stand for nothing. Again, something that’s fast becoming a common trend, I sense that there’s some extreme focus on ‘house’ brands in this retailer? I could be wrong, but brands such as Dexter and Jacks I’m quite confident are exclusive City Beach in house brands.
Now I’m not against having an in-house range, it’s actually really important to have a strong and established in-house or exclusive portfolio. It’s a proven strategy to better trading margins, and it’s also vital for any retailer looking to go public or on sell. Just take a look at what’s on the Woolworths, Coles and Bunnings shelves. That said, when your customer is emotive and driven by influential brands, it’s vital that in-house brands don’t dilute what the customer is coming in to get, brands like Quiksilver, Roxy, Rip Curl, etcetera, then it’s too much and needs to be pegged back. I would recommend starting with basics such as socks, caps, wallets and other accessories, and really work back the iconic items like denims and tops. Leave that for the big brands.
City Beach Stock Range & Offer = 6/10
POS & Front Counter
Having a clean, accessible, identifiable yet non-dominant sale counter is a corner piece of any great retailing layout. It should be a large enough area that customer can feel at ease when parting with cash, but not so big as to create an immovable barrier that staff get behind and hide.
For - There’s heaps of cash transaction terminals, so I couldn’t see there ever being a queue to purchase.
Against - OK, here it goes. Positioning within the store, I couldn’t find it. The actual area is supposed to represent a surf shack with a roof, but this makes it dark and hard to find. It’s a great ‘hidey hole’ for staff to congregate away from customers (see Customer Service). There’s stock hanging from every possible component of the point of sale area. I’ll ask this again, why do retailers try and sell key rings from their register terminal dashboards (the screens which show the customer the price)? Last time I checked, this wasn’t a retail merchandising or display fixture?
There’s just too many baskets, and too much stock presented all around the front counter, it feels like City Beach is saying, “Hey, we need you to buy more!” The problem I’m seeing with this is more and more people have their BS radars on high alert. It’s really to do with how it’s executed. No question, it’s a good move to have ‘impulse’ items nearby the POS, but not all over it. Lots of retailers have good intentions with this, but fail the execution. I can only recommend that retailers take a look at how Target are doing it now.
City Beach POS & Front Counter = 5/10
Sales & Customer Service
This is where the deals are done. I always try and engage a customer service representative to greet me, start up some general conversation, and then move me into an ‘interview’ process where they’re trying to identify my needs and wants. I also look for the sales person’s ability to package up a sale, close the sale, and or offer to come back ensuring the future of our relationship (between retailer and customer).
For - I was greeted in about 2 minutes of entering the store… That’s it, I’m afraid. It was a fleeting, “Hey, how’s it going,” which I didn’t even have time to reply due to the team member’s pace at which she flew by me. Greeting is so important. It’s one of those things that if it happens too quick (first 5 seconds of entering) it can annoy people, but if they don’t get greeted at all, then as per National Net Promoter Score data, this is one of the key factors in detracting a customer.
I understand that staff may have other tasks to complete. Cool, not a problem. But if a customer is standing around, looking and browsing, call me old-fashioned, but that’s your cue to get in there and bring that sale home. If nothing else, just try and get some jeans on, a hat in hand or shoe on foot. Getting customers to try something is absolutely vital to closing sales and increasing conversions (refer to this post on the endowment effect).
Against - I counted around 6 team members in the shop. A few were selling, which was fine and great to see, but there were too many who weren’t. I literally brushed past a lady and stood within a meter of her looking at caps and got donuts. I just didn’t get the feeling at all that the team members in this City Beach store were there to engage in customer connection. My advice to the City Beach team is, what’s the most important measure within your retail chain? Is it how much stock we can fit into a space and how many staff can merchandise? I’m trying to be constructive but not trying to lose the disappointment of my visit today. There’s no point in sugar coating you-know-what. I would love to know if Net Promoter Score lives in City Beach.
I understand that some customers just want to look, but that’s all they will do if you let them ‘just look’. It’s the retailers responsibility to engage and inspire customers to purchase.
Sales & Customer Service = 2/10
A few other notable mentions
● Why would a retail store have a QR code and a message to ‘shop online’ displayed on their front window? Hang on, I’m about to walk in and buy something. Oh no, better go online… Wouldn’t this be better served on the bottom of receipts with a $5 or $10 off your next purchase (limited time) to get them back and reward a customer’s loyalty?
● City Beach are renowned for this — stuffing socks and shoe care products into the display shoes on their ‘ footwear bulk stacks’. This looks terrible, takes away from the primary thing you’re trying to merchandise (which is the shoe), and stinks of ‘money grab’ not ‘customer benefit’.
● Sale area at the back of the shop. City Beach has one, and it’s a pretty good one, but here’s a few thoughts on what I saw. It was just 5-6 meters of ‘side hung’ racks with hundreds of tees, shorts, hoodies, etcetera. If I were to browse for a deal, I wouldn’t know where to start. Generally, if a customer is in the sale area, price is paramount. So there needs to be clearly marked ‘categories’, which are price-branded. Make this as easy to shop as possible. Pick 3 price points: $10, $20 and $30. Then hang your stock, in size order, into these ‘priced’ areas. If someone is shopping in the ‘clearance area’ — it’s about price first, size second, style third.
TOTAL EXPERIENCE = 23/50 – Below average to substandard
Here’s my TOP 3 tips as a result from this visit
- Align your corporate and or business objectives to be targeted towards ‘customer experience’. If any retailer comes to me and says “Kristian, we need to lift our Net Promoter Score, the first thing I would want to know is, what are the ‘core values’ in this retailer and what are the ‘key objectives’?
Just look at Apple — their mission is “to challenge the status quo in technology, through simple, easy-to-use and brilliant design for any customer to own.”
Now, they start their pitch with ‘the why’ (to challenge the status quo in technology), then they deliver ‘the how’ (through simple, easy to use and brilliant design) and finally, ‘the what’ (for any customer to own).
This clearly flows through, not just in amazing brand advocacy, but directly to their bottom line. In late 2009, Apple boasted that its stores brought in $4,300 per square foot, which was five times the $ 72 per square foot that Best Buy did at the time.The reason I point this out is because based on my experience, I believe that what’s being delivered on shop floors is a true reflection of what seeds are planted all the way back in Head Office, and the direction that company is driving towards. If your direction and destination isn’t clear, then it shows up on the shop floor.
- Know that the more brands you have, the more stock you have, the more confused your customers will be. Sheena Iyengar’s Dreagar Jam Study is compelling proof that less is more. Less equals more conversions, higher-priced sales and more profit. Sheena’s TED talk delivers two key messages: 1) that purchase decisions must involve ‘some’ level of choice, and 2) the amounts of choice we get customers, directly effects conversions and average sell prices. City Beach buying team, please watch this TED talk from Sheena.
- Clean and quiet makes shopping easier! I’m assuming that most of City Beach shoppers go to Woolworths or Coles to purchase their groceries each week. Now, does this consumer purchase less because there’s quiet music being played, clean aisle ways to walk through, and clearly signed and categorised stock presented? I know food purchasing is different from fashion apparel, but I challenge what would happen if City Beach just turned the music and stock a notch down a smidge?
Stay tuned, I’ll be sure to find another retailing giant to put under the scope soon.
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A recent New York Magazine story estimated the astonishing amount of swag a B or even C-list celebrity takes home each year:
On average, a regular red-carpet walker will receive about $100,000 in free goods and services annually, some in all-gratis pop-up shops and some unasked-for in the mail.
…and, if you take a look at the U.S. median household income figures, you’ll see that the value of these celeb hauls is nearly double what the typical household earns annually. Insane.
Now, I’m not saying we’re anywhere near that league. But as the size of our Preneur Community continues to grow, we are constantly sent more and more free nerd swag in the from of books, as people try and pitch us for guest spots on the PreneurCast podcast.
This is just a sample of some of the recent books we’ve been sent in the mail:
… and here’s a shot of my iPad Kindle with the most recent batch of e-galleys.
As I am sure you’ve guessed by now, little old me just can’t keep up with all this demand by himself…
So I Need Your Help!
We’re going to start a new series here on the blog, featuring excerpts from many of the great books we are sent that we just can’t squeeze onto the podcast.
We published the first one in the earlier today - from Mark Middo’s 5 Minute Business.
So we’re looking for an intern to join the team for a few months, to help test this out with regular posts.
PreneurMarketing.com Internship Opportunity
The project is pretty simple. Each week, we get sent a bunch of prerelease e-galley Kindle books which we need someone to read, and to find a chapter, section or excerpt that will have some direct benefit to our audience.
Then we will reach back out to the publisher and get confirmation we can publish that section on the blog, with a little intro from you (and me), setting the context, relevance and importance.
Once we get all the assets set, you’ll then create the draft post directly into WordPress for our team to approve and publish.
- You can live anywhere in the world.
- Your English and spelling must be better than mine (not hard).
- You must have constant and reliable computer and internet access.
- You must have basic HTML skills and be familiar with publishing on WordPress.
- Must be very intelligent, hardworking, organised, and industrious.
- You must be able to invest 3-4 hours per week during this unpaid internship opportunity.
- You must have a Kindle email address (for a Kindle, Kindle App for your Tablet/iPad, etc.).
Don’t know what a Kindle email address is? Find out! You need it!
Why This Opportunity Rocks:
- You get to join the team and see how we run PreneurMarketing.com and support our community.
- You’ll be added to our Preneur Group Asana, so you get an unrestricted look at all the projects we’re running.
- You’ll get our weekly team updates, so again you can see exactly how we operate.
- You’ll have direct access to me (and yes, I will offer advice and support with your own projects).
- It is something you can add to your portfolio and use to get other jobs.
- You will learn a bunch of important skills you can leverage into other projects, and make connections you can use to advance your life and your own businesses.
- It just might lead to a permanent paid position on the team in another role.
- AND, you get to read a bunch of business, marketing and personal development books for free — before everyone else!
Why This Opportunity Sucks:
- You won’t get paid cash for you time. Sure you’ll get a bunch of free Kindle books. But while we test this blog series out, it is not a paid position (and may not be long-term either).
- If you expect to see inside and learn how we run any of my other businesses (telco, e-com, etc.), then that ain’t going to happen. This is solely a project for PreneurMarketing.com.
- It requires consistency. We want to publish one excerpt per week. So, you need to be on your A game, be committed, consistent, and work really hard to get 3 or 4 “in the can” before we go live.
How to Apply:
I will mostly likely choose two or three people to start this project, and go all survival of the fittest on you. Seriously, if you are interested in this opportunity, please complete the form below. If you make the first cut, we’ll email you, send a couple of books your way to read, and go from there!
Looking forward to working with you!
The post PreneurMarketing.com Internship Opportunity [Lots of Free Books] appeared first on Preneur Marketing Blog.
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Content marketing. It’s the buzzword of now. Content marketing this, content marketing that.
But here’s the problem: If you’re doing content marketing in hope that it goes viral, you are not going about marketing to “reach people when they are actively trying to solve a problem, with their wallets.”
As we discussed during PreneurCast037, and I wrote in my first book:
The key to effective marketing is not large headlines, bright colours or an eye-catching image. Sure these things will help attract attention to your ad, but the aim of a marketing campaign is not simply to have people notice the ad, the aim is for them to notice the ad and then purchase from you. The first step means nothing without the second. The key to successful marketing is reaching the right people with the right message using the right advertising at the right time for your business.
I’ve since refined this to be:
All you need to do in business is find a group of people with a problem, figure out where they proactively go to search for a solution (with their wallet), and do everything you can to position yourself there.
Simple as that. Nothing more, nothing less.
The people you want to reach are searching on Google, and yes some people are still looking in the Yellow Pages.
The so-called content marketing strategy that most people use is the modern version of billboard advertising… Plastering your message everywhere, in hope that one person, one day, after seeing your content 7 times, decides that the stars are aligned, opens their purse.
However, as I was reading one of the chapters of Mark Middo’s new book, 5 Minute Business, he indirectly gave another take on it.
It’s not explicit, but
Can you find the one take on Content Marketing, that made me open my mind?
Here’s the excerpt from Marks book…
The 5 Minute Business Book Excerpt:
Up until about the past 10 years or so, content has only come to you filtered through traditional media like TV, radio and newspapers. The problem with this was that you would only receive information that either had some kind of hidden agenda behind it, or was negative in some way. As I mentioned at the beginning of the book, nothing on mainstream news is put up there to benefit you at all. It is only there for either of two reasons: to make money or to drive fear. This lines up perfectly with the theory that greed and fear are the two things that make the world go round.
Try and think of the last time you heard something positive on mainstream news. I bet I can guess exactly what it was. It would have been a 20-second clip about a fireman saving a cat from a tree, and it would have been right at the end of the news, just before the weather. These little feel-good stories are just injected in there at the end so they are the last things you remember to give you a reason to watch the next night. As I said earlier, I am not a conspiracy theorist, but I am a huge advocate for not consuming any information from mainstream media whatsoever.
Here is a simple scientific explanation of why you should avoid it. As humans we have a neuron in our brain called the ‘mirror neuron’, which mimics exactly what we can see another person doing but within our brain. So, for example, if I see someone crying, the same neurons that are firing in their brain (negative emotions) would also be firing in my brain as if I were crying myself (even though I wasn’t). As a lot of spiritualists would suggest, this is our empathy.
Empathy is a very important human characteristic. If I saw a friend crying, I would feel for them and comfort them in some way. I could positively influence their feelings because I show my empathy towards their issues and help them get over their troubles.
However, by watching the news I am firing off these negative mirror neurons with no way that I can have an impact on people whom I am mirroring emotions for. If I see bad things happening in Kenya, the people affected aren’t in my sphere of influence for me to be able to make a positive emotional impact on. This then creates an emotional weight in my brain that I do not release and I keep just adding to through more and more negative news. This keeps you using the lower part of the brain because it activates your emotions.
If you are sceptical about this, I urge you to try it for one month. No reading newspapers, watching the news on TV or listening to commercial radio. I can absolutely guarantee you that after one month your head will be clearer, you will be more driven, focused and you will be able to learn 10 times faster than you have ever imagined. The best part is, because you won’t be wasting time filling your mind with junk, you will have much more time to dedicate to what it is you are trying to achieve with your 5MB. Instead of spending an hour watching and reading mainstream news each day, invest that time in reading news about your topic of your 5MB or researching how you can market it better. This is an investment in yourself and is something you have control over, rather than an investment in negative world issues that you have absolutely no control of.
There is something so liberating about hearing a conversation about a terrible story that is going around mainstream media and knowing absolutely nothing about it. It happens to me all the time and the first time it happens to you, I hope you will think about this exact moment as you raise a cheeky smile.
By now you can probably see where I am headed with this.
Yes, with the explosion of the Internet and social media, the power has shifted from the mainstream media outlets, right back into your hands. I explained earlier how Google has given the power back to the people by giving preference to bloggers in its search rankings and this is no coincidence. Perhaps Google knows that a huge part of the fall of the Industrial Revolution is the fall of mainstream media. It won’t be long until you have complete control over what you watch on TV or which articles you read. It will just be a choice of what information you choose to consume over the Internet.
What does this mean for your 5MB?
It means that you now have more power than ever before. Through the advent of platforms such as YouTube, WordPress, Podomatic, iTunes and the hundreds of other content platforms out there, you now hold as much power as every TV presenter, network boss or CEO. By leveraging these platforms to create valuable content for your 5MB, you will begin to position yourself as a key person of influence in your chosen niche. People will start asking for your advice, they will want to start paying you for your time and advertisers will want to pay you to have ads on your site, you will start getting invited to speak at events and attend industry parties, along with heaps of other amazing things. If you’re selling a service with your 5MB, I would highly recommend reading Daniel Priestley’s book Become a Key Person of Influence.
Creating content for your business has replaced sales calls, newspaper ads and direct marketing. Many of the more traditional business type people will argue that cold calling and cold marketing still have a place in the world, but trust me, that crap is dead. Look at it this way: a few years ago, John, the shoemaker, would have bought the BBQ that Greg, the salesman from Barbeques Galore, was trying to sell him. This is because Greg would have had superior knowledge of all the features that the BBQ had and he would have known which words to use and how to close the deal. But now, John, the shoemaker, has already done his research on Google. He has found an article from a local home handyman site that tells him that Greg’s BBQ isn’t the best value for money. He can get nearly exactly the same BBQ for half the price from another store. It is a common occurrence these days that the buyer has more information on the product than the salesman.
So what you need to do is take a step back in the process and become the person who provides the buyer with the information.
If you ask anyone who has ever ran any business where most of their leads come from, they will tell you that 80 per cent of the time they come from word of mouth. Well, word of mouth is now on steroids. Yes, word of mouth is now hanging out with Lance Armstrong. Through creating content you have the opportunity to create a word-of-mouth machine that generates more qualified leads than you can handle. Does that sound game changing enough for you?
Content adds value to your castle in so many ways. Here are my top five:
• The more updated content you have on your website, the higher your site will rank overall on Google. This is a no brainer and obviously means free exposure for your business.
• The more blog posts you create on your site, the more bait you have out to hook people back into your castle.
• Content is a huge factor in the psychology of influence. By providing content you are building trust and therefore showing that you are an authority in the field. Authority is one of the key laws of influence. The longer you go on creating content and putting your thoughts and opinions out there, the more of an authoritative figure you will become.
• You are also activating the law of reciprocity through providing value to people. Because you have provided them with something through the form of valuable content, there is a subconscious seed planted deep in their mind to some day repay you for that gesture.
• Content also adds remarkability to your 5MB. People love to tell their friends about things to not only to help them out, but it also makes the person feel good because they have a position of power by holding the information over their friend.
For example, I love telling people to read The 4-Hour Workweek by Tim Ferriss. Why? I have absolutely nothing to do with the book, but it subconsciously gives me a position of power because I am telling them something that they didn’t already know. As soon as you create valuable content, you are giving yourself the opportunity to be remarkable. This is true word of mouth on steroids.
I will give you a very simple, personal example of how creating content has worked for me before. I did some research using the Google Keyword Planner to find some keywords around restaurants. I saw that Facebook marketing for restaurants was getting a lot of searches, so I wrote a blog article called ‘Five Hot Tips on Facebook Marketing for Restaurants’. I gave away as much value as possible in this blog article and it took me nearly half a day to put together. Ten years ago this would have been called ‘giving away my intellectual property’.
But this value came back to me tenfold because I had many restaurants sign up to my online course after opting in to my email list after they landed on the blog post from Google. I created several leads from people who were not only from the industry that I was targeting, but who were actually asking Google for help. And Google kindly pointed them in my direction. How is your cold call list looking now?
This is just one example of the hundreds of different ways that you can provide value to people through content. You could start your own weekly TV show on YouTube where you review products or give practical demonstrations or you could launch a monthly radio show on iTunes where you interview guests from your chosen industry. It doesn’t matter how you start, it only matters when you start.
At the beginning of this chapter you will discover how to pick the best type of content for you to start with, you will then learn about the content trifecta and the best practices around creating all three. Then, in true 5MB style, you will pick up the tools to hack your productivity and content creating abilities, allowing you to create content in quick time and on a very strict budget. You will discover some of my favourite game changers and how to use them to turn yourself into a key person of influence in your niche.
Inside 5 Minute Business you will discover growth hacking secrets like:
- Hacks to create and profit from world class brand for $297
- Hacks to get you a $50,000 website for $13
- Hacks that get Google to instantly send you “buyers with cash”
- Hacks to network yourself into the inner circle of any industry
- Hacks to convert website visitors into consistent cash
MARK MIDDO is a Growth Hacker and renowned Freedom & Lifestyle Advocate. Over the past 10 years, Mark has helped boost online revenues for some of the largest companies in the world, including Formula 1, MotoGP and McDonald’s.
Mark’s secret? Growth Hacking.
Growth Hacking is the practise of taking an unconventional and innovative approach to lighting a fire under the sale of any product online or offline. Find out how Mark growth hacked his way from the 9-5 slog to developing and selling his own online product for a 6-figure sum in under 3 months.
The post Content Marketing, The Preneur Hierarchy & A 5 Minute Business appeared first on Preneur Marketing Blog.
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Well, we got past April 1 without too much shenanigans… however, it does mean the first quarter of 2014 is over, gone, never to return!
So, how was the first 1/4 of the year for you? Are you 25% of the way to your goals?
If not, you have a choice to make… you can either change your goals to align with where you are today, or you can change your actions for the remainder of the year.
Which is it going to be?
Now while you decide, make sure you check out this week’s Noise Reduction recommendations.
Inside the World of Robert Kiyosaki: The Full Rich Dad Poor Dad Story
This is an epic essay our team has worked on for months. It seriously is the most in-depth biography available on Robert Kiyosaki. If you’ve read any of the Rich Dad book series and got intrigued by the mystery of Kiyosaki’s life story, this post is for you.
The Business of App Development with Mark McDonald of Appster [PreneurCast Ep132]
http://ift.tt/1kpv49u [or on iTunes Direclty]
In this episode, I talk with Mark McDonald of Appster, an Australian company that specializes in Mobile App Development (with a very impressive client list). We talk about the business models behind apps, and Mark gives some tips for creating successful apps. So if you are at all interested in app development, this is a must-listen!
Stock Photos That Don’t Suck
Man, making your blog posts pop with good images can be tough, especially when you try and do the right thing and use royalty-free images. This blog post lists a number of awesome places with stunning stock photos that you can use.
4 Tips for Using Contests and Sweepstakes to Grow Opt-Ins and Drive Conversions
In this recent essay on the site, we dig deep into running contests and sweepstakes as creative tools for increasing your opt-ins and conversions.
How to Find Mentors for Your Startup
This is a cool write-up by Mitch Harper, one of the founders of BigCommerce, who are doing some amazing things with their platform (and expansion into the US). If you want to get mentors to help you grow, there’s even a sample email you can swipe and deploy.
4 Powerful Strategies That Dramatically Reduce Website Visitor Abandonment
Visitor abandonment is one of the most frustrating obstacles online marketers face today. 70 to 90% of visitors will abandon your website — never to return again. In this essay, we cover 4 proven methods to help your ’7 Levers,’ and reduce your website’s visitor abandonment rate and increase your conversions and revenue.
Why Wu-Tang Will Release Just One Copy of Its Secret Album
This is an awesome marketing stunt about to be launched by the rap crew Wu-Tang Clan. If you want to spark some creativity around the ‘power of context,’ this is it.
[Ethically] Manufacturing Credibility and Social Proof to Increase Opt-ins and Conversions
Since social proof connects to two of the 7 Levers — opt-ins and conversion, we’ve created this essay to help you get more of both by adding credibility via social proof. In this essay, we cover not only why social proof matters, but go deep on how to manufacture social proof and how to avoid negative social proof.
So What’s Noise Reduction? Well, we all know there is so much crap out there on the web, especially in the business /marketing space — and it’s hard to remove all the noise to find the stuff that’s actually valuable. So we started a really small (almost) weekly e-mail with just a handful of the cool, noteworthy, and important stuff we stumble across each week. This post is one of those editions.
Want to Get These Noise Reductions Direct to Your Inbox? Easy! Just register to download Pete’s book below, and you’ll automatically be added to the newsletter list.
The post Rich Dads, Sweepstakes, Bounce Rates + Finding a Mentor [Noise Reduction .71] appeared first on Preneur Marketing Blog.
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Social proof is hugely important to marketers. Social proof speaks to your audience in terms that are valuable to them. After scarcity, Influence, by way of social proof, is the most powerful marketing tool of all.
In the 1950s, researcher Solomon Asch proved that people ultimately just want to fit in, to be part of the crowd. His experiments proved that 75% of participants would go along with the group in a variety of scenarios – even if they had reason to believe the group consensus to be wrong.
In all likelihood, you have seen social proof at work before. If you are visiting a new city and drive past a restaurant at 8 o’clock on a Friday night and the parking lot is nearly empty, you are likely to opt to eat at the packed restaurant across the street – even if there is a queue stretching far outside the doors!
The implication here is that the restaurant with the empty parking lot must serve lousy food, because everyone in town (apparently) is at the place across the street. You can assume that those in the know (the locals) have an idea of just how bad the food is at the empty restaurant. For dining establishments, an empty parking lot is damagingly bad social proof. (It’s also why they seat the first dinners of the evening towards the front, near the windows)
So how does social proof work in a Web-based context? Are you more likely to watch a video on YouTube that has 67,523 views or one that has 52 views? Looking at video thumbnails in YouTube search results offers no other indicator aside from social proof (view count). Yet, videos with high numbers of views tend to draw even more views in a kind of snowball effect. This is basic social behavior that goes back to Asch’s studies of the 1950s.
Since social proof connects to two of The 7 Levers of Business, opt-ins and conversion, we’ve created this essay to help you get more of both, by adding credibility via social proof.
In this essay we cover the following:
- Why social proof matters to you
- Highlighting positive social proof
- How to manufacture social proof.
- Avoiding negative social proof
- Social proof superstars [Examples for opt-ins and conversions]
Social proof has a lengthy psychological meaning, but it also has a simpler explanation that matters to marketers.
James Chartrand of The Micolancer Blog sums up this second meaning of social proof in the following way:
“Social proof can also mean that someone bought a product and found it useful. Or they read a blog and learned something new. Or they’ve tried a service and got results. They’ve experienced something before you, and they survived – they even liked the experience!”
“Your perception is one of increased safety and less risk.”
In other words, social proof shows your customer that your offer is something they can accept without worry.
Let’s look at how you can harness the credibility of social proof to increase opt-ins and conversions.
1. Why social proof matters to you
“From a marketing standpoint, social proof is the basis of both buzz and large sales figures. Without it, there’d be no ‘grapevine’ in the first place.” – Brian Clark, CopyBlogger
You have probably seen one of the most high-profile displays of social proof ever devised. For years, every McDonalds had a sign out front that stated the number of customers the chain had served, first in millions (for those of us old enough to remember!) and later in billions.
That was an early usage of social proof in marketing thought up by Ray Kroc, long-time CEO of McDonalds. Kroc understood that people would see the large number of people served and think, “Well, all those people can’t be wrong.”
On the Web, social proof works in much the same way it did for Kroc and McDonalds. But the Web is more complex, and consumers expect more of their social proof than a simple sign on the side of the road. Social media is the new norm, the new conduit through which social proof travels and credibility is earned.
A report from Moto Message tells us that 34% of online consumers surveyed have used social media to voice their opinions about a company.
The same report tells us that, of those who use social media to discuss businesses, 26% have done so to air dissatisfaction; 23% have done so to share information about companies they actually like.
The Moto Message article also tells us a couple other closely related statistics: 70% of consumers trust “unknown users,” while just 14% trust advertising.
As marketers this is a HUGE factor to be aware of:
“70% of consumers trust “unknown users”
Think about it for a moment… it doesn’t matter WHO the recommendation, approval or validation comes from, it’s just that social proof is there that matters. The wanting buyer is looking for confirmation that their urge (or impulse) to buy is founded. Social proof gives them that validation.
The increasing importance of social proof has to do with the way people interact and exchange ideas. As the infographic from Desk shows, just a few decades ago, the average person had a social reach of about 10 people. Twelve years ago, an individual could reach 100 people. Now, social media allows reaching 1,375 or more people with a single post.
The continuing amplification of social media exponentially multiplies the famous quote from Jeff Bezos, “When you have a bad experience offline, you tell six people. Online, you tell 100.” Obviously, Bezos was essentially correct, though he was shortsighted in estimating the Internet’s ability to amplify the reach of the individual, with the help of social media.
While Bezos was focusing on the negative side of social proof (which we’ll discuss later), for our purposes here it’s better to focus on the positive aspects, first.
2. Highlighting positive social proof
In a Search Engine Journal article, Garret Pierson reports that Petco Vice President of Ecommerce, John Lazarchic once stated, “Adding customer ratings increased our sales and decreased our costs.” In the article, Pierson tells us that Petco surveyed buying customers asking “What online tool most influenced your purchase decision?” The number one answer: product ratings and reviews – both of which are forms of social proof
We’ve recently written about one the most important forms of social proof, testimonials, which is also one of the most common forms of social proof, alongside offsite reviews, likes, and followers.
“Featuring social proof prominently in your marketing is essential, but it’s equally as important to make it easy for your customers who already love you to share their comments with others.”
That statement speaks to the many channels social proof travels through. Posting a testimonial on a landing page is one highly controlled way of using social proof, but other channels are less malleable (though they can all be leveraged to your advantage, if you know what to do).
According to Marvin Russell of the SEO Group Blog, social proof can take on any of the following forms:
- Case studies
We’ll cover each of these in the next section, but remember that social proof can exist in other contexts, too. Anywhere social interaction is publicly on display effectively becomes social proof.
Also note that it pays to think outside the box to come by social proof. In a great example of using social proof, U.S. Waterproofing is allowing visitors to see a Google Map dotted by existing customers located in the visitor’s city. Talk about driving the point home!
Kogan employs another location-specific original idea to show off social proof.
In the lower left corner of results pages, the Kogan site shows a popup spotlighting products others have JUST purchased.
The message the popup sends is, “here’s what people just like you have been shopping for,” which can urge a purchasing decision – even an impulse buy.
Positive social proof, in whatever form, is something you will want to emphasize as often as you can. This can be your “Over 99 billion served” McDonalds-like statement (“Over 331,862 monthly subscribers”), or a testimonial placed near a checkout button on a product page. It can be a prominently displayed review count for an eBook, a view count for a YouTube video, or even a Google Map.
As long as social proof shows that people (just like your customers) have already opted-in or converted, it’s worth highlighting.
3. How to manufacture social proof
So now we get a little controversial. The term “manufacture social proof” doesn’t scream ethical marketing.
When we were researching this article, we came across some negative sentiment around the search term “manufacturing social proof.” Here is an example of the sometimes controversial nature of manufacturing social proof.
You’ve heard of Reddit, right? Well, do you know how that weighty social snowball started rolling? Here’s the true story, from Reddit cofounder Steve Huffman.
How Reddit Manufactured Social Proof
Wow, if you are taken aback by how Reddit got off the ground (yet somehow still impressed that it actually worked) don’t worry, we had the same reaction.
We could debate the ethics of the Reddit approach all day, but let’s put the unethical side of things away for the moment, because as a marketer it’s your responsibility to do everything in your power to create and promote all the social proof you possibly can.
Are we saying go out and “manufacture social proof” by purchasing a bunch of fake app store reviews, paying for 10,000 (or 156 million, in the case of Lady Gaga) YouTube views or ordering 25,000 Twitter followers?
Are we even so much as saying that you should create multiple bogus profiles on your own site and start posting comments just to get started, like they did at Reddit?
Absolutely not.. but we’re only your marketing advisors, not your moral conscious.
You simply need to be putting systems in place that grow your social proof – with the occasional nudge from you along the way. Here are some ways you can do that – ethically.
Implementing testimonials is a great way to create social proof.
We’ve recently talked in-depth about the art and science of using testimonials to increase opt-ins and conversions.
As we mentioned in that essay, Michael Aagaard increased sales of his eBook by 64.53%, simply by distributing testimonials in specific positions on a sales page.
The reason for that spike is because testimonials create authenticity and ease potential customer doubts about taking a desired action.
We’ve also highlighted testimonials in our podcast with Dale Beaumont, during which he shares his proven testimonial template, which is definitely worth checking out for full details on implementing this valuable type of social proof.
According to BusinessWeek, More than 70% of consumers say they read product reviews before buying. What’s more, according to Econsultancy, more than 55% or customers say that positive reviews will increase their likelihood of purchasing.
That means you should be thinking about product reviews (and using them in your marketing, more importantly!).
Do you have a way to reward customers for leaving a product review?
Do you have an email in your post sales sequence asking people for their feedback/review?
EBay has been using an automated feedback system for many years, which you are probably highly familiar with. EBay has made it a part of its culture to collect and display feedback, obviously to improve community standards and build trust with customers.
After a transaction is completed on eBay, its feedback automation system kicks in and emails you to ask you to fill out the feedback form for the seller you have purchased from. This totally automated system is one of the most streamlined feedback systems ever – it works beautifully, for the most part.
But, as news.au.com’s Victoria Craw reports, eBay won’t allow sellers to leave buyers negative feedback, which appears to be more of an effort to preserve eBay’s own social proof, rather than allow authentic feedback from sellers – which is interesting to note, and is likely a side effect of a particularly robust review system.
In an ideal scenario, you won’t run into the kinds of issues that eBay does. Thankfully, though, there are some tools that can help you automate customer feedback on your site, like eBay.
- Customer Thermometer – an excellent tool to help you automate email customer satisfaction surveys
- Feefo – another good customer feedback survey system for products and services
Customer feedback can be constantly collected and reviewed, for possible inclusion in your marketing as social proof, with the help of automated tools like the two we’ve listed.
The media has recently reported that Google is cracking down on fake YouTube views like the ones the company stripped from Lady Gaga.
Here’s a more believable example of the power of views.
Within two days of its publication on YouTube, “Superman with a GoPro” had 6,739,093 views – impressive, particularly in light of the short time all those views came in. But all those views themselves helped take the video to new heights, elevating the upload to YouTube’s front page list of popular videos.
As a recent article from SEO Group points out, no one wants to waste time watching a boring video, and showing off your views (or plays on SoundCloud, or any other platform for that matter) can be great social proof – especially if the number of views/plays is high.
As we told you in our recent essay on testimonials, if your view/play count is low (at first) it’s best to keep it hidden, because small numbers can be negative social proof. Wait until the numbers ramp up enough organically before you switch the count to public display.
Then make sure you show it off. Can you go the way of Lady Gaga and buy views? We are not ones to judge, but definitely don’t get carried away (come on, 156 million bogus views is a bit much, even for a pop music superstar!).
Do you show how many times an offer has been accepted by listing the number of subscribers or downloads on the opt-in page itself?
Have you signed up for a newsletter and seen something similar to what MarketingProfs is doing, showcasing “624,000 marketing professionals” who have already signed up? Sounds like a group of people you should be a part of, doesn’t it? That’s because of “herd behavior,” a term that describes the natural tendency of people to want to be part of a group of like-minded individuals.
Prominently displaying the number of downloads or subscribers helps your customers feel like they belong, which in turn encourages opt-ins.
So how can you kick start downloads/subscribers? Well you, your best friend, and your mom can only hit the “download” or “subscribe” button so many times. You can buy subscribers/downloads, too – at your own risk, of course.
But to really ramp up your initial count, you need to turn to your all-powerful customer list.
Regardless of how many customers you have in your list, they are always your starting point. Even if you’ve never had a newsletter before and you launch one, your existing customers need to know about.
Having an opt-in capture page on your site is good, but to reach those existing customers who might not have visited lately, you will need to notify them any time you have something new to offer.
And if you find a way to incentivize your existing customers to share their subscriber status, you can bring in new subscribers. (See the section on Shares below for more on how to do that.)
Remember McDonald’s “Over 99 Billion Served?” This same tactic can increase conversions on the Web.
And this is a metric that can be manufactured. Case in point:
In 2012, author Soren Kaplan’s debut book, Leapfrogging, entered The Wall Street Journal’s bestselling business titles list in its first week on sale. The following week, it plummeted 99% and disappeared from the list.
Because, as The Wall Street Journal exposed last year, Kaplan’s marketing firm, ResultSource, purchased copies of the book in advance of the publication date to manufacture social proof.
Surely Kaplan isn’t the only one, as stunts like that are common. There is a downside to ResultSource approach, as WSJ also points out. Amazon, a major bookseller, ditched ResultSource. That’s not a good end to a campaign.
The way this worked, Kaplan had to pay ResultSource upfront for the books, which they in turn bought to inflate the book to bestseller status. But the same article from WSJ gives us a much more sustainable (and ethical) tip, courtesy of author Melissa G Wilson.
Wilson says that she presold 3,000 copies of her book, Networking is Dead, by discounting her public speaking fees to companies that invited her to speak in exchange for buying up copies of her book. She ultimately turned the orders in to ResultSource, which fulfilled the deliveries.
We’re not blown away by ResultSource’s role in either of these scenarios (according WSJ, Networking is Dead has only sold 8,800 which is not a mindboggling number, especially considering it sounds like Wilson did most of the work herself).
But there is a good takeaway to be found here about thinking outside the box to boost social proof. Wilson was thinking right when she turned manufacturing social proof into an offer. That’s how it’s done – ethically.
Social media followers/likes
The number of people following you on social media works a lot like your subscriber list social proof.
Like your subscriber count, finding ways to showcase your social media follower count (like around your social sharing buttons) is the way to turn this count into social proof.
Andrew Hutchison of Social Media Today warns against the temptation to employ “like farms” or use bots to manufacture followers/likes.
“…while it might seem like a good strategy to kick off your business profile with a few thousand fake followers, invest a small amount to boost your industry status, you have to keep in mind that that decision will very likely come back to bite you,” he writes.
And he’s right. The glaring problem with buying followers and likes is that it will become apparent that you have done so, even if only to that one real follower who clicks on one (or more) of the hollow profiles of your fake followers.
To increase social media follows and likes, we urge you to keep it totally organic, because there is no sign that social sites like Facebook will soften up on this practice anytime soon.
Simply put, having no comments is no good.
A blog post without comments is like a digital ghost town with tumbleweed blowing down the street. It’s just not inviting.
As Inbounce.com points out, “a lack of reaction is a reaction.” To that, we’d add that it’s a negative one.
To dodge that, the best advice is to make it really easy to comment.
One of the better call outs in the Reddit video we showed you earlier was that it should be easy to comment. There’s no need for long-in-the-tooth signup pages just to comment on some random blog or site (which is what your blog or site is the first few times anyone visits it).
Tools like Disqus make the process of implementing easy discussion tools to blogs, landing pages, and other webpages easy as pie.
We have recently posted an essay in which we talk about how we How We Got an 8.5+% Opt-in Rate, A 25.14% Social Share Ratio + Increased Our List By 66.4% With One Simple Bribe. As that essay explains,in a recent test, we saw some impressive results through social sharing.
We wanted to drive traffic to http://ift.tt/19KJplo, so we encouraged visitors to share with a tiny bribe and a bit of gamification.
As each subscriber came to the site and downloaded our report, we awarded them one referral point.
When a subscriber referred three people, they earned three referrer point and were rewarded with exclusive access to the first two modules of our advanced 7 Levers training course (which focus on increasing the first two levers: Traffic and Opt-Ins).
The result is that an impressive 25.14% of the 3,404 new subscribers shared our opt-in page on social media, netting us 856 unique shares.
The reason is because we gave our new subscribers incentive to share. An article from Mashable (a site great at encouraging sharing – more on that in the last section of this article) tells us that people are more satisfied when they get something in return for their effort. By offering two free advanced training courses, we met with that desire to be rewarded, which drove social shares appreciably.
The very nature of lead generation on the Web hinges on creating irresistible lead magnets – content offered in exchange for information (typically, customer contact information). But here we’ve used the offer to drum up social proof.
Urging sharing comes down to offering some incentive to share. We used a $37 WordPress plugin called ListEruption V2 to help us maximize our subscriber list, which is a worthwhile investment, because we all know that the money is in the subscriber list – especially in light of the 8.5% bump in opt-ins that we saw when we incentivized sharing and measured our results!
HubSpot is using customer case studies effectively. The site has created a dedicated page for case studies and given each of its featured customers a video and a box that pulls out some relevant metrics that have improved as a result of using HubSpot.
HubSpot has even taken social proof a step further, adding customer testimonials beneath each case study.
This is a great approach and you will do well to take note that Hubspot is carefully calling out numbers that matter to its audience –“100% increase in lead to customer conversion since launch,” “doubled revenue in the first year,” “70% year-over-year increase in Web traffic,” etc.
Hubspot is admittedly good at what they do, and they’re nailing down case studies with what may be the perfect model of how it’s done.
For most companies, case studies are often an outgrowth of customer feedback, which you might be collecting for reviews or testimonials. If you can identify a particularly helpful review or testimonial that has come through one of those channels, you can always reach out via email to the customer who created it and ask them, “Hi, would you like to be featured on our homepage?”
This is even more ideal if the customer is clearly successful at what they do, which translates well to your audience and adds to the credibility of the case study.
4. Avoiding negative social proof
Not all social proof is created equal.
Negative social proof can upend your marketing efforts and act as deterrent to customers. When people see negative social proof, they bounce.
Negative social proof can manifest in the following ways:
Consider the screenshot from Forbes shown above. Forbes is a widely read outlet, and in small print, the site does display its sizeable view count, which is a good thing. But what about follows and comments? Could this omission be hurting social shares? Could Forbes stand to learn a thing or two from the example below from Mashable?
Mashable makes prominent use of social proof with its share counts in green text, while encouraging further shares.
When was your last tweet on your company’s Twitter page? Was it last week, last month, or last year? When was the date of your last Facebook activity? If it’s been too long, that is negative social proof.
Ask anyone and they will tell you that you’ve got to have social media for marketing, and they would be right. What is often left unsaid is that you have to remain active in social media for it to be effective.
Leaving a social media profile without updates for more than a couple of days is like trying to run a brick-and-mortar store with boards on the windows – everyone assumes you have gone out of business.
Inactivity is one of the worst forms of negative social proof. As Nelson Ta points out at Omnibeat, negative social proof resulting from inactivity amounts to laziness – so fire up that Twitter feed, recover that lost Facebook password, and get active!
Too many social sharing buttons
Social sharing is a great way to spread your message, but we have a word of caution when it comes to social media buttons. Social media buttons have been shown to reduce bounce rate by 1%, according to Business2Community, but your social media buttons need not be huge or redundant.
If you have big social media buttons going on in multiple places on a particular page, you give the customer too many chances to become distracted and migrate away from your page, immersed in the world of social media.
Search Engine Journal reports that social media buttons can also slow site performance by 1.12-ms per button, and using too many different social platforms can lead to indecision instead of sharing, which can in turn drive bounces higher, as well as curb opt-ins or conversions.
The same article also points out that in 2007, Amazon reported that for every 100 milliseconds of loading time for a given page, sales decreased by 1%, thereby negating the 1% bump afforded by having social sharing buttons in the first place.
The point? Keep social sharing buttons simple, unobtrusive, and focused on your most engaging social media pages.
Sending the wrong social signals
The most famous study on the effects of negative social proof was published by Noah Goldstein in Yes! Secrets from the Science of Persuasion. In that book, Goldstein recalls a study of social media conducted in the United States’ Petrified National Forest Park. The experiment measure the effectiveness of certain approaches to combatting the theft of petrified wood by visitors to the park. Park visitors were alternately presented either of the following signs posted in the park:
- (Social proof) Many past visitors have removed petrified wood from the park, changing the natural state of the Petrified Forest. (Accompanied by a picture of people taking petrified wood)
- (No social proof) Please don’t remove petrified wood from the park, in order to preserve the natural state of the Petrified Forest. (Accompanied by the circle/slash universal symbol for “no”)
In the experiment, the control group was shown no sign. For that group, petrified wood was stolen at a rate of 2.92%. The group shown the sign without social proof resulted in a 1.67% theft rate. The group shown the social proof stole petrified wood at a rate of 7.92% – a huge increase over the control group with no sign at all.
The reason for this is because people saw “Many past visitors have removed petrified wood” and took that as a permission slip to do so themselves. This is negative social proof, functioning in the opposite way intended. Rather than curbing theft, the sign encouraged taking petrified wood!
Takeaway Tip: Be careful with numbers! Social proof works best when it is positive. So for example, referencing the comparatively modest 24,355 users you have is better than referring to the 347,268 people who could benefit from using your product because the big number makes your prospective customer wrongly think, “well, I shouldn’t worry about using it either.”
When to hide social proof
Remember the early days of eBay, when sellers would put a page counter at the bottom of every auction, in an apparent effort to urge buyers to go ahead and bid? The hit counter was once at the footer of a majority of webpages (even outside of eBay). Now, though, it is all but gone from the Web, perhaps because hit counters reek of 90s webpage design!
The page counter has fallen out of favour because it became a negative form of social proof. Often, the hit counter would show just how unpopular a particular page was. At other times, like eBay auctions, it exposed how many visitors had passed on an offer.
On the other end of the numbers spectrum, small numbers do nothing for your marketing efforts. If you start posting podcasts on SoundCloud, for the first few weeks or months, you will have double-digit plays, which are publicly displayed by default (though plays can be hidden with SoundCloud Pro).
That is negative social proof that says no one is listening to your recordings, thereby urging others not to listen. We experienced this ourselves when we first added our podcasts to SoundCloud. The low play count was hurting our social proof, despite the (literally) thousands of downloads we were getting on iTunes. We hid our plays and, unsurprisingly, got more listens as a result.
As Marketing Funnel Automation points out, there is no “neutral social proof,” and there is no creating “a little social proof.” Little social proof is always negative social proof.
It’s better to turn off views or comments altogether than to let them become a glaring example of negative social proof for your company.
Phony social proof
Consumers know when they are looking at phony social proof. Overly glowing testimonials, rave reviews, and paid, manipulative social proof isn’t worth the effort (or cost).
Pre-recorded TV comedies have been manipulating social proof on the sly for decades. It’s called a laugh track or “canned laughter”– a recording of an audience chuckling and clapping that is cued right after every punch line of a situation comedy.
Of course, canned laughter has been a standard practice in the television industry for decades, and the modern audience is keenly aware of it – in some ways, even accepting of it. On the Web, manipulative, falsified, or otherwise “drummed-up” social proof has a more damaging effect than the canned laughter of bland sitcoms. In fact, in the digital space, phony social proof is no laughing matter at all.
As the public becomes more aware of phony social proof, the phenomenon has brought criticism even to US President Barack Obama. USA Today reported in 2012 that upwards of 70% of Obama’s 18.8 million Twitter followers were fakes.
Obviously, Obama won his re-election bid that year, despite the minor damage to his online credibility stemming from negative social proof. Nevertheless, it’s better to avoid the bad publicity, and work to weed out phony social proof relating to your business. Not everyone has a full pack of saber-toothed political campaigners behind them!
Takeaway Tip: If, like President Obama, you have many bogus followers, you have a few options for dealing with them.
5. Social proof superstars [Examples for opt-ins and conversions]
Since social proof works equally well for both opt-ins and conversions, let’s examine a shining example of each usage.
Social proof for opt-ins
Constant Contact promoting opt-ins with social proof.
Social proof via peer pressure – 465,000 peers to be exact.
Constant Contact is asking you to join the 465,000 subscribers who already read the newsletter. The action is easy enough to take. After all, who wouldn’t want to be among those clearly “in-the-know?”
Note that Constant Contact has placed social media buttons below the sign-up form in an unobtrusive way that encourages sharing, not bouncing. As you can tell, there’s a lot to learn from this simple, understated example.
Social proof for conversions
Basecamp is using social proof to drive conversions.
Basecamp makes great use of social proof.
Note that Basecamp is using social proof to drive conversions in a couple highly effective ways. In the bold text, it’s hitting the visitor with some big numbers, right above the anxiety-inducing call to action. Beneath the button, Basecamp supports the desired action with a smaller but more specific number (6,324) and an in-text call to action.
Basecamp brings together several angles on social proof (including a blip about “word-of-mouth alone,” which we think is bold, but effective).
P.S. – Social proof is not one-size-fits-all!
While we think our examples in this essay are all helpful, as always, we urge you to assess your business’ unique needs and make decisions that work best for your situation. Social proof works in many contexts, but not all.
If the social feedback for a product or services are squarely bad, you have to factor that and work to overcome the challenge.
Ultimately, as Brooks Bell contends on her blog, unanimously bad social proof can expose opportunities to improve your delivery of customer expectations in terms of quality and consistency. In such a scenario, social proof is not working for your marketing efforts as much as it’s highlighting another area of business that you should focus your energies on.
Rest assured though, that social proof always enters the picture in the world of business. In all cases, be sure to test your results with social proof and do what works for you!
The post [Ethically] Manufacturing Credibility + Social Proof To Increase Opt-ins & Conversions appeared first on Preneur Marketing Blog.
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Pete talks to Mark McDonald of Appster, an Australian company that specialises in Mobile App Development (with a very impressive client list). They talk about the business models behind apps, and Mark gives some tips for creating successful apps.
Appster, Mark’s App Development Company – http://ift.tt/TlheYH
Get a copy of the 7 Levers Report – http://ift.tt/18TtjF6
Auphonic, online audio processing – http://auphonic.com
Asana, simple online project management – http://asana.com
Article: Avoid Visitor Abandonment – http://ift.tt/16n3xz7
Article: Contests and Sweepstakes – http://ift.tt/16n3xz7
The Art of Learning – Josh Waitzkin
Daily Rituals: Daily Rituals: How Artists Work – Mason Currey
You can try out a lot of the books we recommend in audio format with Audible:
http://ift.tt/1b3Xyxk – Free trial with a free audiobook download for PreneurCast listeners
Read it now.
The post The Business of App Development with Mark McDonald of Appster [PreneurCast Ep132] appeared first on Preneur Marketing Blog.
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What does it take to be an Entrepreneur? Join us as Mark shares his Entrepreneurial mindset and an inside glance at his journey to becoming a successful Entrepreneur.
Mark is the Founder and CEO of The Peak Performance. In addition, he is the author of the book SHORTEN THE GAP, which is endorsed by some of the top experts in the personal development industry.
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- “Constant and never-ending improvement.” ~ Unknown click to tweet!
- Mark shares a POWERFUL failure that, if avoided, could save you a TON of time, energy, and effort!
Entrepreneurial AH-HA Moment
- Mark’s AH-HA moment came when he realized the power of investing in yourself.
- Peak Performance Club is cranking out incredible value for its followers, and Mark can’t wait for for an amazing 2014!
Mark’s answer to the $500 question
I would identify a problem that people are having and create 3 solutions to the problem. Then, I would create a lead magnet to get opt-in’s to build my list. My lead magnet would be a video describing my high value product, which I’d offer for free for a limited time – (in exchange for people’s name and email).
I would then go to LeadPages.net and invest $67 towards a one-month, unlimited access membership to test ads and conversion pages on Facebook.
Next, I would use $50 a day to promote targeted Facebook ads, and as I built my list, I would continue to offer high value content at little to no cost, with the end result ultimately being to sell people on a killer product or service that will offer a major benefit or solution to a problem their currently having.
And with my remaining $83 I would get a Spanish Latte at Urth Café in Santa Monica and donate the rest to educational charity.
Small Business Resource
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