Chat with your Customers

Image via WikipediaI've got to admit to a bias towards small business. I want to see small business be as effective at using the Net as "the Big Boys."
A few days ago, one of my clients said, "Can you put online chat on my site? I've heard it's the best way to make a sale."
I'd talked to this guy about a number of options for his site: animated FAQs, online chat, and messaging. Like most small business owners, when he found out it would cost him a monthly fee, he suddenly was looking for the door and his watch. So I asked, "How many sales do you think you'll make if I do?"
It wasn't really fair. He had no idea how many sales he'd make from online chat. Recognizing I had to get him out of a corner, I said, "How much do you make on a sale?"
That same expression. Now this one he should have known: I'd given him a spreadsheet with a complete breakdown of pricing and profits. Obviously, he hadn't looked it over or just didn't think of it in terms of average profit.
Fortunately, I had. But I was interested to see what his number would be. After all, I don't know the sales he's made. I just get a fee for my work.

Like anything else, the online chat facility has to be considered in terms of ROI - How much is it gonna pay to play?
When you're just starting out, you gotta try stuff to see if it works for you. You need to think realistically though. It's not just a monthly fee, or a per-minute use fee, there's also your own time involved.

Online chat costs
If someone is asking about something, it's time to go find out about it. Soo...
I had always looked at online chat as a means of making a site more 'sticky' - meaning it would keep potential Customers around longer. Turns out that was a pretty naive perspective,
Let's look at the upside first.
From the Internet Retailer:

Orvis, a multi-channel outdoor gear and apparel retailer, invites customers to chat only when they are on certain pages, such as customer service. “We have a lot of stuff on the customer service page,” says Brad Wolansky, vice president of e-commerce. “If 15 seconds go by and you’re still on that page, you’re probably looking for something and haven’t found it.”
Orvis also offers chat to customers lingering on the checkout page. But the retailer does not offer chat on product pages, where visitors may linger reading reviews, examining photos, watching videos and comparing products. “Sitting there for a long time is not an indication you have a problem,” Wolansky says. “I don’t want to bother you.” Wolansky says customers who chat convert 15% to 20% of the time, roughly triple the rate of e-mail.

Mr Wolansky is getting sales from 20% of his Customers he chats with. Considering that 68% of visitors will abandon the shopping cart before checking out, he's saving a lot of sales, too. He's effectively reduced the number of abandoned shopping carts by 15% or so - based on the averages.
It's interesting when and why Orvis will offer to chat. Picking up on lingering customers on the checkout page is a great idea. And Orvis will offer to help a (potential) Customer understand his customer service page too, which adds a lot to Orvis' credibility and reputation for integrity.
That's long tail advertising. It just goes on and on.
Kevin Kohn at LivePerson Inc. claimed that 15% of site visitors accept invitations to chat.
One thing about averages and ranges: They are just averages and ranges. Your business may do much better. (It could do worse, of course, but why expect the negative?)

• 20% of web chats result in a completed purchase
• Web chatters spend approximately 35% more per order
• 30%-40% of Web site traffic includes self-service shoppers (consumers who make purchase decisions without vendor assistance)

Online chat services range in price from $39.99 to $159.99 per month for single seat or 1-5 seats.
If we can estimate the average sale online is about $25.00 with a conservative markup of 50%, or about $8.00 and change, it would take at least 5 new sales each month to break even - on just the cost of the software.
There may also be setup fees, costs for employees to attend, training costs and other niggling costs.

SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.

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ROI: The 800 lbs Gorilla in the Corner pt 2

Image via WikipediaA surprising question appeared on a business forum recently: Do I need to get business cards?
The poster said that his business was entirely online. He had no face to face contact with his customers. The only communication was by order and email, with an occassional phone call to clear up immediate problems. He didn't see why he needed business cards - and his arguments were pretty sound.
The question must have astonished most of the forum. No one replied for nearly 3 weeks.
Finally, someone posted that business cards had helped build his business. He included business cards in all packaging along with the invoice, and passed them out whenever he met someone. The business cards helped his customers remember his business, or to find his online store.
The discussion ended there.

The question is valid though: Does a small wholly online company need business cards?
Marketers will say emphatically Yes. Invoices with contact information are good. Most people put them away after they're paid. The only time an invoice gets any attention is at tax time.
People handle business cards differently. They're usually put into a card file on the desktop. Whenever the person thumbs through the cards looking for something, they momentarily see each business card. Even though it's just a fraction of a second, that's enough to remind customers of the business.
For that small moment, the Customer will remember the purchase. They may even return to the website - and buy something else. That's enough. The business card has paid for itself and more.
5oo business cards cost about $100, or about 20 cents a card. If the merchant makes $5.00 on the purchase, that's an ROI of $5.00 (- not counting the original purchase -) for 20 cents.

Let's have a little fun with the numbers.
If that were the only purchase anyone made because of a business card then the guy spent $100 to get $5. That's assuming he got rid of all 500 of the cards. If he did put all 500 cards into potential future Customers' hands, the chances of him getting the one sale is .. 500 to 1.
That's pretty good odds. - Sorta.

How many Customers have to buy something for him to break even on the business cards? $5 per sale. He needs to make $100. That means he has to make 20 sales to cover the cost of the business cards. - What are his chances of that? 20 out of 500, or .. 25 to 1.
The odds are getting closer. But most people would make a bet if they knew there the odds were 25 to 1 in their favor.
What if he only passed out 100 cards? That's 5 to 1.
Or 200 cards? 10 to 1.
The odds are still in his favor. But where does he decide he's willing to make the bet. He's betting his business and income, remember?
The potential ROI on his business cards depends on how many cards he puts into potential customers' hands.

There's a joker in this deck of cards. What he makes depends on how quickly he gets the cards out. Let's say he finds for every 10 cards he passes out, he makes a sale.
If he passed out 100 cards, - That's 10 sales. - or $50. He hasn't paid for the cards.
If he passed out 300 cards, - That's 30 sales. - or or $150. He's paid for the cards, but hasn't really made much.
How long will it take him to pass out 300 cards? A week? A month? A year?

If he made $50 ($100 for the cards. He made $150 from 30 sales.) from 300 cards in a year, that hardly makes the cost reasonable. He could make more money from doing something else to promote his business.
Thinking about ROI means thinking about thinking about how long it will take to recoup the investment.
If his online store made 1000 sales in a year, and only 30 of them resulted from the cards, is that a worthwhile investment?

The answer is .. Yes. -- Why?
After the cost of the cards, he only made $50. Then again, he sent out 700 invoices that didn't have business cards, didn't he?
There are maybe 700 of his Customers that never got a card. And he could have handed out cards in other places.

But none of these numbers are the real reason he should have a business card. The reason he should have a business card is Customers' expectations. A business card with the invoice supports the perception of the business.
If he meets someone, handing out a business card is expected. People question of he's really in business if he doesn't have one.
A business card supports his reputation. There is nothing more valuable to a business -especially a small online business- than their reputation. It reflects upon the perceived integrity of the business.
But how do you put a value on reputation? It's part of his investment in business cards.

There are significant factors in ROI that can't be expressed in hard numbers.
How valuable these factors are to a business depends on the nature of the business.
If the owner assumes that Customers will come to the site one time to either make a purchase or not, then there is much less value to distributing business cards to help establish reputation. There is still some value since one-time Customers may refer others.
If the company expects to sell repeatedly to Customers, then the value of business cards to establish reputation -and to bring Customers back- is much greater.
More depends on the long-term plans of the business:

• Does the business plan to add more products?
• Will the new products be more profitable?

We now have a significant factor that affects many more significant factors. In order to understand the value, how do we quantify these factors?
Incorporating a little fuzzy logic may help. There is an old marketing adage that it costs 6 times as much to keep a Customer as it does to find a new one. That means the $150 he made from the business cards is worth .. $900. He only made $5000 for the year. Suddenly, the value of the business cards is worth nearly 20% of the revenue.
It is using fuzzy logic, but the difference of $650 can be seen as the long term value of the investment in business cards.
On a card by card basis, the $100 spent on each card represents an ROI of $900. The cards that cost 20 cents each have returned $1.80 per card (- really $3.00 because only 300 of 500 cards were distributed.)

There are many other factors. Some can be quantified, and some can't. Determining the quality of these factors depends on the priorities of the business.
Assuming again that the company made $5000 for the year:

• How many visitors came to the site? We know that 1000 people bought products.
• How many times did repeat Customers return to the site?
• How many times did visitors come to the site before buying?
• Why did people return to the site?
  

For web design, software training, community building, and web programming a similar sort of analysis can be made. Hard numbers can be put to some things. Some things are difficult to express in numbers. Overall, the value of these unquantifiable aspects is qualified by the goals and vision of the business.
We'll explore a few of the specifics in another article.

SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.

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Why some businesses stay small

Image from WikipediaHogan's Heroes is still popular in Australia. Frequently in off-prime time advertising, you'll see commercials for DVD sets of past episodes. It's been the same ad for more than 5 years. Must be doing pretty well still.
Hogan looks around the room. "Look. I came up with the idea to steal it, right? -- Well, the rest is just detail." - He could be talking about parking a Tiger tank behind the barracks...
Bob Crane's (Hogan) wife was Col. Klink's secretary in the series. You can almost hear her say, "He's just like my brother. He has all sorts of great ideas."

Dr. Greg Chapman PhD, business coach and university lecture -also a Telstra Business Awards judge- , has authored a new book about Australian small business "The Five Pillars of Guaranteed Business Success.

AUSTRALIAN small business, in many respects, is recognised as the backbone of the economy. According to government statistics, there are more than 1.88 million small businesses, employing 3.6 million people. Their combined capitalised worth is $4.3 trillion -- more than four times that of the Australian Securities Exchange. (The Australian)

Dr Chapman's book and Col. Klink's secretary are talking about the same things.

SEO and SEM is a part of the expansion of a business. Even successfully applying a few techniques can put pressure on a business that it may not be prepared for.

Why do small businesses stay small?
My first reaction is deterministic: They choose to stay small. One way or the other, it's a choice made by the owner(s) of the company.

Some businesses choose to stay small consciously in order to be more involved in projects and to offer better service and response to their customers. There's a sort of critical mass here. The profits must be enough for the business to survive and prosper. That means the business has an established reputation within a region or profession. If either of these factors is missing, then the choice to stay small is only going to lead to the business closing.

In some cases, there may be no choice. The business must stay small because of limited resources. The qualifications of the owner are the reason the business works. Or the business may be based on some legally or physically limited natural resource, such as water. The business is defined by the resource, not the market, and that sustains profits.
Expansion means stretching those resources or lowering standards. If the business is based on the owner's qualifications, even adding a second truck could mean those standards will not be maintained. To expand means making compromises the owner is not willing to make.

Planning
As Dr Chapman points out, most businesses fail because of planning - or more correctly, the lack of it.
If you ask most small business owners though, they will cite financial reasons. At a given point in the growth of a business, this may be a valid reason.
Most often though, that point has been reached because of a lack of planning and good financial management. Few small business owners are skilled at maximizing the value of their assets, receivables and cash flow.
On the ground, too often the business is financed using credit cards. Small business owners will say over and over, "You have to spend money to make money." - not to explain why they've invested in marketing or financial planning, but as an excuse for why the company has not grown. The saying is followed by: "And I don't have the money!"

Two ways of saying the same thing: "90% of businesses don't have a plan. 90% of businesses that have a plan succeed." and "Only 2% of small businesses have a plan for their business."
Which brings us to..

Goals
Planning for a small business is critical. But not grandiose. It's incremental:

• Set goals,
• Take a step,
• Evaluate it,
• Then based on the results look to the next step.

Too often small business invests in a new project because someone told them it was a good idea, or they feel pressured by recent circumstances. The volume of business grows, so they add a new truck. When the momentary volume falls off, the business is stuck with a new -now non-producing- expense. There was no Goal, and the business is forced into the Evaluation phase. The only evaluation is less money.
The business is forced into the cycle of Planning without any Plan to work with. The business capacity has expanded, but there is nowhere to use it - until another rush of business.

Establishing an online presence by applying SEO/SEM can be one of those steps. Within a Plan, SEO can help a business accomplish its goals. Without a Plan, the business may see SEO as just another expense, and abandon the effort before it bears fruit.
One of the keys is to have some means to evaluate the success or failure of SEO. Most of the time, that means placement in the SERPs.
When a reputable SEO Specialist tells the owner that they can't guarantee placement in a week or a month - that's all they hear. Sometimes, a little work is all it takes to get into the top 1-3 or 4-6 listings. To maintain that placement though, and usually to establish it, takes a few months if not a year or more.
What's frustrating for SEO Specialists is to find that the company has not incorporated the successful placement into the Goals of the company. Which brings us to the next topic...

Utilizing Resources
Resources are not just money or equipment. The most valuable resource a business has is its employees.
Small business owners find it difficult to transition out of the "founder mind-set" in which they micromanage others and do everything themselves. At all levels of business, one person may lack all of the talent and skill-set to grow a company. It's rare to find one individual with all those skills. This mindset limits the growth of the company to one person's capacity for work.
Learning to respect others for their skills and abilities is a critical element in growing a business.

The old saying goes, "Get good people. And let them know how much you appreciate them."
Another common problem for small business owners is the failure to communicate with employees. The small business owner is defensive and fails to share with employees how they fit into the big picture. The business fails to enroll employees in the company's success.
Too often, a small business owner is offended to find that someone working for them has skills they lack instead of being delighted to find this person has added much more than expected to the company.
Small business owners that do not grow do not look at their company as a portfolio of skills. There is no team concept. Many are unaware of the skills and experiences are required to run the company, much less grow the company.

On the ground, employers in Australia too often see hiring someone as giving them some sort of gift. The employer is not hiring a valuable person to contribute to the value of the company.
The question was asked on an Australian employment networking site recently: "If the guy didn't hire you to add something to the company, why did he hire you?" - It's a valid question for both employer and employee.
Small business owners cannot grow their company without knowing what skills are needed. If the owner is unaware of the skills (and assumes s/he has to have all of them) how can they appreciate the person being hired?

Unlimited Resources
Even a small business can offer a wide range of service and product, even if they don't provide the service or manufacture the product. How?
For the products, the answer if simple: find a supplier. Even if the business is service-oriented, offering quality products makes the service much more valuable. The answer is the same for a service: find a supplier of the service. Whether the small business is product- or service-oriented, having ready answers for customers is always appreciated.
For small business owners in Australia, this means calling their mates.
Mateship is a wonderful part of Australian society. But in business it fosters mediocrity. Mates will refer business to someone they want something from; which means the referral from a mate may never be forthcoming.
If a mate takes a quality and professional attitude towards the service, there is no reason not to call them in. Otherwise, network to find someone who adds to the quality of your own business. Australian small business has been slower to learn that fact than large business.

Market Driven
Small business owners see their products or services as first-rate. They work hard to maintain the quality, and are rightfully proud of what they do.
A roadblock to growth is to fail to look at the business from the Customers' view. Customers don't want a custom-made doll because they are impressed with the quality of the fabric. Customers want a custom-made doll as a special gift for their children, or because they want a blond doll to fill out a collection.
The wants and needs of the Customer are what sells the product. It's reassuring to the Customer that only the best fabrics and sewing techniques are used, yes. And those facts may make the Customer choose one manufacturer over another. But at the end of the day, if the child weren't having a birthday, or they already had a blond doll, the Customer wouldn't even be looking for a doll.
For the company to remain product-focused business and ignore the definitions of market demand leaves alternative distribution channels or market segments for someone else. The company's focus is directed inward, not by the needs or wants of their Customers.

Keywords define the Market
SEM uses keywords to define these market segments. The keyword analysis may suggest new distribution channels for the company's services and products.
One of the keys to successful internet marketing is permanent links to a site and deep links to specific pages. Linking strategies abound today, but the basics still apply. And SEO Specialist will find complementary services and products in the course of their research. The linking strategy can be seen as a first step, incrementally, in a broader strategy of channeling and partnerships.
Any good marketing effort includes polling the company's past and current customers. Too many opportunities are missed by small business because their focus is inward. An inward focused business ignores one of the most valuable resources of marketing information: their own customers.
Customers may suggest product enhancements that hadn't occurred to the owner. Customers may reveal trends in the market that the inward focus missed. Other companies will find those trends and enhancements, and business market share will ultimately shrink.
Successful businesses, large and small, constantly change and expand by actively listening to their Customers. SEO/SEM can keep a company aware.

Which brings us to the most important factor:
Implementation
Entrepreneurs often cannot execute their vision. They find it difficult to stay focused, jumping from one great idea or opportunity to the next. As often, a good run of business is just as distracting.

Integrity is the foundation of small business. It can be seen as a multiplier of the value of the product or service. That multiplier can double or halve the value of the business. The integrity of the owner or representatives is what makes a business valuable or useless in the eyes of the consumer; and other businesses.
Big business can absorb and defend itself against a bad reputation. A small business cannot.
Once a small business gets a reputation for reneging on agreements or poor service, it may as well close its doors.

A good idea is put forth. It's "new" and exciting. "I wish we had that." or "We'd have it made if we were..."
Instantly, other ideas or opportunities discussed within the company are forgotten.
A professional is called in to provide the service or product. A plan is put forth. Benchmarks are set to implement the plan - probably more planning than the owner has ever done for their business.
Agreements are made. Initial payments billed and paid. And the plan is put into action.
Then the circumstances change. The small business owner decides that this is not a plan they can afford, or cannot make the compromises from their inward focus.

Small business owners in Australia take the attitude that they can change an agreement on a whim, -- especially if mateship is involved.
Verbal and written agreements are equally vulnerable. Documenting progress is only useful if taking the dispute to court. Since the owner did not have a long term plan to keep the agreement in perspective, the goals of the agreement are lost.
There may be valid reasons, but small business owners don't seek agreement. Instead of communication and negotiation, the attitude is taken that they are "the Boss", and that's enough.
Although unprofessional and rude, the practice is common. The practice is so common as to be acceptable to many small businesses when dealing with other small businesses.

One good idea after another is begun, then cancelled. Money is spent. Time and money wasted for all involved.
Implentation depends on the integrity of the business owner The business owner -as the primary representative of the small business- must depend upon a plan to keep any effort in perspective. Planning provides the confidence to enroll employees in the success of a business, and to build a team to make the business successful.

SEO/SEM in Australia is a special issue for so many reasons. Join me was we explore. It will be a fascinating and informative journey.

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