Getting Your Company Started

I know that there have been some companies that have sets of services for helping out the harangued entrepreneur with some of the many many tasks he has to take on to get his company up and rolling — and often tasks that the business owner is not familiar or expert in.

1. Legal
2. Choosing an appropriate format (LLC, inc, sole prop., etc)
3. Registering the company with various state, county, municipality
4. Dealing with IRS (tax payer ID, etc)
5. Setting up your site
6. Logos
7. Stationary and Business Cards, etc.
8. Setting up your books properly

Unfortunately, none of this likely has anything to do with running your business, right?

Enter Company Kickstart

Company Kickstart is making a business out of helping others get their business started. Now, truth be told I don’t know ANYTHING about this company other than what I read on their business site. And, it shouldn’t be taken as a direct endorsement of their services — au contraire.

However, I noticed them commenting in my Do Follow Blog ‘guess the keyword’ contest and thought that I would throw them a little bit of Link-Love and help them out with their search engine optimization with this incoming, non-reciprocated link.

Good luck, Company Kickstart, and keep us up to date on your progress. I am starting 2 new companies this week and may have an opportunity to sample your services and report back to the readers here.

It’s really no contest.  Probably the top 8 keyword phrases or so are some combination or derivation of  ‘Coke bottle‘, ‘Coke Bottle Shape‘ or something like that.  Crazy, huh?

So, there were several ‘takeaways’ that I wanted to share with you all in regards to this observation:

All of this traffic is just from some random images I put into my “Sex Sells” post about Subliminal Advertising and some Ad-art work in South America that caught my eye and made me laugh.  It has very little to do with the subject or topic of this site

Yes, it’s true that this isn’t a ‘commercial’ site and hasn’t been optimized for SEO purposes, but c’mon.  None…NONE of the comments/guesses were even on the right track.  It just goes to show:

1.) Our eyeballs and intuition are no match for STATS to tell what Google, (et al) think our site is about

2.) Big, popular topics drive a LOT more traffic than relatively obscure things like ‘do follow’ links

3.) Our TOOLS for determining traffic and focus of sites SUCK — if you aren’t looking at the sites’ stats you can pretty much ignore all those ’spy’ tools for telling you what’s going on (in my opinion), and, the biggest lesson.

4.) do NOT overlook the importance of having relevant and interesting images related to your subject matter and the power of ‘Google Images’ alone to drive traffic to a site.

Obviously, merely blogging about this pushes the Coke image further down the page, so maybe that effects my results going forward, but I thought it was an important lesson/reminder in the power of imagery…I’ve NEVER put that much emphasis on images and image tags, but it maybe time to revisit those age old assumptions about their relative importance in on page optimization.

I’ll follow up on this post to talk about some of the better guesses people threw out there…and that will give me a chance to throw around some ‘link love’.

DoFollow and Prosper,

r8r

It’s been a ‘month of Sundays’ since I updated this blog, but as I was approving relevant (and some not so relevant) comments, I took a peek at some of my traffic sites for this blog and had an idea.

I’m gonna run a contest.

To WIN, you have to:

1.) Guess what search term or phrase (close is good enough) sends the most traffic to my site from search engines (all of ‘em)., and

2.) Tell us how you derived your answer.

The first person to properly guess (or keyword spy successfully ) the keyword, or keyword phrase that sends the most traffic to this site from the search engines will win….(drumroll please).

A short post, written in my own words (thus making it relevant to your site’s topic) and a big fat bold link back to your site using your choice of anchor text.

I will be showing my stats and doing a brief analysis of what I think is going on, so you can all see/comment and perhaps learn something…(or not).

Not that anyone using scrapebox will read this, but:

If you robo-comment this post, I will spam report you. I’ve been pretty lenient up until now, but if i get a comment like, “you sir, have produced a most excellent topic for discussion and i will return to this blog frequently for updates…you will be spam reported”.

Actually guess.  It’s Do Follow.  And, if you’re first, and close, I’ll give you a post with some flav’in’ linkage meat.

Well…what are you waiting for!?!?

Guess.

Alexa.com has made a business out of providing metrics to the marketplace on various sites.  Alexa’s data is aggregated from several sources, one of which is (I believe) the alexa toolbar.

The Alexa ranking of a site, is the ranking of a site’s popularity among all web surfers.

As you can see from the above link, Google.com is #1 (duh)

What’s kind of cool, is that you can individual searches for sites like corporateraiter.com on the site by doing a search.  For CorporateRaiter’s alexa.com rank you can go here CorporateRaiter Alexa Rank

Madness!

According to alexa.com corporate raiter is among the top 300k sites WORLDWIDE.  And, ranked 82,977 in the US.

C’mon.

There have to be at least 83,000 porn sites that are more popular than Corporate Raiter.

In fact, I have some blogs on other topics that get more traffic that haven’t even broken the top 1MM on Alexa’s rating scale.  While I’m not complaining, I wanted to point this out since I mentioned it as one of the criteria that I would be tracking as part of my dofollow experiment.

On that measure I would have to say that the dofollow experiment was a smashing success.

As far as PageRank goes (a criminally lagging indicator) I had much better results on some subpages of mine using another technique.  I’m going to do some more experimenting to see if I can narrow down the specific reason that this “other” technique had so much success in getting pagerank *quickly*.  One of my posts actually has a pagerank of 4, and another has a pagerank of 3.

Let me know what you think about the alexa algorithm and your experiences with it?

Is Alexa worthwhile at all, or just a tool to dupe unsuspecting newbs in the Internet space?

Sound off.  Leave a comment.  It’s dofollow.

Most of it is just text based advertising. Much of it however consists of search engine marketing and direct marketing pieces — like the paid placements you see in pay per click or google adwords.

On a rare occasion I take a client into some light print advertising stuff, but when I’m working in financial services even this is often only boring black, white and gray-scale and utilizing a very small area and I need to put together an attention getter, a benefit or two, and a call to action in a very small space.

There is typically not much room to get very “artistic”.

Regardless, I like to look around at what the other wizards are doing in other spaces/markets/mediums, and one of my favorites is the world of “subliminal advertising”.

While copywriters do it all the time with inferences, and suggestions (get this or you’re a loser and your family won’t love you anymore) the really funny/interesting ones are when the photographers and graphic elements folks get in the mix, as it usually involves the suggestion of sex.

The Coke Bottle

Coke Bottle's Classic 'Hourglass' Shape

While there is some argument that the developers of the original coke ‘hourglass’ shape actually knew what they were doing, they’ve undoubtedly benefited from having the iconic bottle shape.

Pierre Cardin Men’s Cologne Bottle

While there are a million other examples, the one that has always cracked me up as being absolutely *blatant* is the pierre cardin men’s cologne bottle.

Phallic inspired Pierre Cardin Bottle

The television commercial that they ran in the late 80’s on this one is just classic. Alas, I was unable to find it on youtube. So, unfortunately, you’ll have to live with my description. In short, it is a series of quick, sexy cuts that builds up to a climax that has the bottle “exploding” and gushing forth the contents at the end of the video. Subtle.

Sex Sells in Latin America

I spent the last few years living in South America. Below are some classic snap shots I took while walking around town I wanted to share with you.

Ta Ta Stores Punta Del Este Uruguay

I’ll start slow with the venerable Ta-Ta stores. Ta-Ta in and of itself isn’t that funny unless taken with the next entry

Tits Store

Fun with Food

Photographers and videographers have a lot of fun creating sexually suggestive images and video clips with food elements.
Below are two pictures that I snapped while grocery shopping in Montevideo, Uruguay

Strawberries in the Grocery Store Sign

This last picture shows up on floor coolers in retail outlets.

Tastes Creamy!

In summary, until proven otherwise, I think we have to assume that sex still sells

The allure of working with other start up companies is undeniable. As struggling entrepreneurs, you are ‘brothers in arms’. They are eager to prove themselves and more likely to work with you and be flexible. Simply put, they just ‘try harder’.

Why Shouldn’t Start Ups Work with Other Start Ups?

Simply put: Start ups fail.

While this statement should not come as a revelation to anyone — least of whom, anyone with any entrepreneurial experience, I’d like to walk through a through experiment with you to drive this home and help you internalize this concept.

For this exercise I’m going to borrow a formula I first became familiar with while doing online marketing for the sports book industry in the 90’s. Please bear with me for a moment while I explain.

The Parlay Formula

One of the biggest moneymakers in sports booking is the ‘parlay’. To win a parlay (often 3, 5, or even 10 team parlay), the bettor must correctly wager on the winning team 3, 5 or x number of games.

In any given contest the sports book looks to even the betting on both sides (and thus maximize the chances of getting the ‘juice’ or ‘vig’ for the entire book). That said, roughly, by throwing darts at a board you will have close to a 50/50 chance of winning on a sports bet. Expressed as a decimal, that is .50.

Bettors are attracted to the parlay because a winner will be paid better than in x number of separate standard wagers. For example, a 3 team parlay will typically pay 5 for every 1 wagered.

Why the Parlay is a Sucker’s Bet

While every bettor figures they can choose the winner of three games and thus win 5x their wager, the fact of the matter is that most don’t understand the math of probabilities working behind the scenes.

To accurately calculate the chances of a parlay bet coming in you have to take the probability of any individual bet being wagered correctly: .5

Then, take the probability to the power of the number of consecutive bets which must pay off…. In the case of a three team parlay, this is 3.

So, to calculate our odds, we calculate:

.5^3 or .125.

If we express this another way, that is a 1 in 8 chance to win 5x.

If we add just one more game to the mix, the chances for success drop to .0625 or 1 in 16

What Do Sports Book Odds Have to Do with Start Ups?

Each and every variable you place in your critical path to success increases your odds of failure exponentially. Literally.

Start ups, meanwhile, have a much higher failure rate in general. So, placing young companies anywhere in your critical path accelerate the exponential formula’s decline towards zero.

By way of example, if we are ‘betting’ on three outcomes each with a 30% probability of success, the predictive formula looks like the following:

.30^3 = .027.

Or, expressed another way, three things that have to work out that each have a 30% chance of succeeding give your project a 2.7% chance of success.

That’s the definition of ‘long odds’

Lessons from Your Bookie

Like any good bookie would teach you, you increase your probability of success in two ways.

1.) decrease the number of successful outcomes necessary for overall success of your project
2.) ensure each critical factor which defines your success is as close to a ’sure thing’ as possible

I hope this article was able to provide you some food for thought. If you have any comments or questions, go ahead and drop me a note. It’s a dofollow link for anyone with relevant commentary.

What are that person’s hopes, goals, fears, dreams, and aspirations?

It’s incredibly easy to lose site of the fact that your website, landing page, sales letter, opt-in page (whatever), is a one-on-one selling tool that needs to tap into your target audience’s emotional triggers if it will ever be successful.

Yes, it’s true that there are sites like Corporate Raiter that aren’t trying to be ‘commercial’, but it doesn’t mean that I’m not selling anything. I’m ’selling’ you on the fact that you should read beyond the headline. I’m trying to entice you into coming back and seeing what is new. As you read through the content, I’m pleading with you to continue reading to the end of the post. I want you to believe that the ‘ah ha’ piece of information that will ‘change everything’ for you and your online experience is in the next paragraph.

For newbies, just starting out, they can look at the blinding number of statistics I track on my web properties and be a bit overwhelmed. Even on the not-for-profit Corporate Raiter, I’ve written blog entries detailing my traffic metrics by looking at google analytics to check my traffic flows, the number of comments, my goolge page rank and my alexa ranking.

However, the reality is, for most website one metric trumps all others: Gross Profit / Marketing Dollar

This, obviously, gets back to that whole ‘efficiency‘ thing I talked about in an earlier post.

If you think about your website like a ‘black box’ whose sole purpose is to turn marketing dollars and effort into profitable sales, how efficient is it at carrying out that task. And, as machines often do, how does that efficiency change over a range of volumes?

Those website owners who understand this metric and how it effects everything they do will have a natural ‘feel’ for the size of their market or niche. Some markets are so large and under served that you can increase the energy you put into the site seemingly forever without getting to the point of dimishing returns.

However, in most cases you will quickly determine the ’sweet spot’ in terms of the ratio of effort which returns the greatest amount of profit for a given niche.

Seemingly every company in the space seemed to be breaking one of the supposed fundamental, ‘immutable’ laws of marketing as laid out by Ries and Trout’s seminal 22 Immutable Laws of Marketing.

In their book they tout the ‘law of focus’ and ‘the law of line extension’.

In short, the law of focus and the law of line extension say that while there is irresistible pressure to extend the equity of a brand through “line extensions”, that proper branding focuses the brand on one word or word phrase and works to own that (key)word phrase in the prospects mind.

In the face of this logical argument, I’m struck by the myriad of products that each of the successful skin care and beauty lines has produced. L’Oreal, Clarins, Este Lauder, Clarins…basically, all of them. Even the old standby, single product, Vaseline couldn’t resist taking it’s petroleum jelly and extending it into a line of lotions and skin care.

So if it’s such an ill-fated, short term strategy, why is every brand under the sun doing it and getting away with it?

The only reason I can imagine is that it is such a highly fragmented market of bogus claims, smoke, mirrors, and vanity, that it becomes very difficult to get a foothold in the prospects mind, much less beauty counter shelf space. If a store is going to dedicate shelf space to a brand they almost *demand* that the company create more skus so that the consumer will drive the average ticket price up.

I know there are probably more forces at work here that I don’t quite understand, so if you have any insight, sound off! I’ll give you a dofollow link and you too can join the legions of entrepreneurs in the beauty market with more skus than employees!

If you haven’t already done so, please read part I, titled, ‘customer acquisition costs‘.

While the method for calculating the ‘lifetime’ customer value is a bit crude, and frankly, the lifetime value can’t be known until either the customer or your business expire, what you can do is get an average value to date of all your customers.

There are probably 101 ways to tweek this calculation, but for simplicity sake, just count up the number of customers you have who’s purchased from you.

If you don’t have this number handy, try perusing your orders table and do a query looking for unique customer IDs and ask it to return a count.

Once you have this number in hand, simply take your gross total sales over the same period (in the numerator), and place your unique customer i.d.’s (who’ve actually purchased from you) in the denominator.

total sales / number of actual customers

I’m not trying to insult anyone’s intelligence here, but by way of example, if you have 100,000USD in sales over a 2 year period and 100 customers, your lifetime customer value is 1000USD — at least to this point.

Since ‘lifetime’ is a relative unknown while the relationship is still alive, some analysts like to look at annual, or two year numbers. You can tweak this 100 ways to sunshine, but I’ll leave that up to you and your individual creativities.

Why is Lifetime Value of a Customer Valuable Information?

The LVC can be paired with the customer acquisition costs to get you some pretty interesting information pretty quickly.

Once you have these two numbers, see if you can subdivide your market by demographics, lead source, salesman, etc.

What you will (usually) find is that one lead source or market is providing you MOST of your ‘bang for the buck’ (so to speak).

Then, you should take some time to further segment your market and look for the areas that are costing you the most and you can focus your energies on those that give you the best return.

Lifetime Value of Customer versus Customer Acquisition Costs

In situations where your LVC is less than your CAC you either need to be able to *realistically* justify continuing to pour money into a broken machine.

There are specific cases where fierce customer loyalty and high switching costs will justify paying more to acquire a customer than can reasonably extracted in a year or two’s time. There are also cases where self liquidating offers are set up to bring customers in the door. However, successfully utilizing such a strategy means that a ‘back end’ sales funnel has been thought out and thoroughly planned for — ahead of time.

In the next part of my series I’ll touch on the sales funnel. Remember, although a lot of the material covered here will feel remedial to many of you, it never hurts to review the fundamentals from time to time to make sure we haven’t misplaced the forest for the trees.

Until next time,
r8r

I’m continually amazed that there are people who are running (sometimes profitable) web properties who can’t tell me what their customer acquisition costs (CAC) are.

As the name implies, this is what it costs for you to acquire a new customer. While any real meaningful analysis would need to include the lifetime (or annual) value of a customer (LVC), we’re saving that for our next post.

So, Why Should I Know my Customer Acquisition Costs?

Once you know what your current CAC is, you can use that to evaluate the validity of new customer acquisition methodologies, campaigns within your existing strategy, or more specific/granular tactics and their effect on this number.

Obviously, when taken with your LVC, it will allow you to determine when a specific strategy or tactic is a bad fit for your market or your current offering within that market.

So, how would one go about calculating their own customer acquisition costs?

This is pretty simple, but it’s (costs of acquiring customers over a given period/customers acquired)

The only ‘art’ in all of this is determining what the total costs were for acquiring customers. Well, like many things this will depend.

Direct advertising costs are obvious, as are the salaries of those that work in a marketing or advertising capacity for your company. In addition marketing materials made to support existing customers (and encourage future business) should be included as well.

Some, more conservative, marketers also included the ‘loaded costs’ or ‘fully loaded’ costs of the marketing personnel. This includes the office space, pcs, phones, admin, medical, parking space, etc. of the salaried marketing execs working with you. Depending on your state and your benefits this usually runs between 1.4 – 1.9X their salaries. You can play with this to see how conservative or aggressive you want to be.

Tune in next week when we discuss, your Lifetime Customer Value!

Leave a comment — It’s dofollow after all!