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2011
Part I: Three reasons in favor.

 


Social Coupons Story Image.jpgBy Reed Richardson.

 

During the past year, the business world has been significantly reshaped by a new discounting phenomenon, one that combines the ubiquity of traditional coupon clipping with the power of social networking. These new “social coupons,” offered through websites like Groupon, Eversave, Adility, LivingSocial, eWinWin and several others, promise participating businesses access to a plethora of new, local customers, while offering consumers steep discounts—anywhere from 50% to 90% off. With some variations, the basic social coupon mechanism works like this: The consumer purchases the coupon from the website, but the transaction is not completed until a certain minimum number of coupons have been sold; once that threshold is met, the revenue from the sale is split between the website and the business offering the coupon. On its face, this arrangement seems to be a win-win for both the consumer and the business owner. But as the popularity of social coupons has taken off, so too has the debate about their efficacy at the small business level. (For a basic primer on how social coupons work, try Eversave’s FAQ page here.)

 

So, is your company missing out on a golden opportunity if it hasn’t yet tried social coupons or is it dodging a red-ink-bleeding bullet? Perhaps not surprisingly, the answer depends upon a lot of factors, so we’ve decided to dig deeper into the devilish details to help you figure out if social coupons would be a good fit for your business. Let’s begin with the three key benefits:

 

1. Incredible exposure to lots of nearby customers

By their very group-focused nature, social coupons have the potential to radically re-orient a small business’s daily rhythm in terms of customers encountered. A quick look at testimonials by previous users of social coupons finds that hundreds, if not thousands, of copies of a company’s coupon can be typically sold in one day, funneling an enormous amount of new customers to a business looking to break out of a rut. (To read a few Groupon case studies of small business clients, each of which sold thousands of coupons in just 24 hours or less, you can visit this link.)

 

For an entrepreneur strapped for cash, social coupons have proven to be an incredibly powerful way to quickly generate extensive word-of-mouth buzz and new customer traffic. What’s more, because the breakage rate of social coupons is extremely low (breakage being defined as the number of coupons sold or issued that are never redeemed) business owners can feel confident that for every social coupon sold, there’s a very good chance that an actual customer will come through their door and try their products or services. And because sites like Groupon, Eversave, Adility, and others, sort and send out their coupon offers based on location, a business that utilizes their service is mostly gaining exposure to large numbers of consumers who live nearby and, therefore, the thinking goes, are more likely to return and become repeat customers.

 

2. Boosts business activity to cover slow periods and fill excess capacity

If you run a small business, particularly one with a fixed capacity, the traffic generated by a social coupon deal can be a great way to fill otherwise empty seats and avoid having to lay off staff or shut down production. This strategy can quickly turn an off day into a moneymaker. A Rice University study published in October, which surveyed a small sample of 150 small businesses that had used the social coupon site Groupon, found two-thirds of the Groupon business users it surveyed reported making a profit on their social coupon experience. But another key proviso to employing the power of social coupons wisely and profitably involves understanding just when and where those slow periods are and structuring your deal to fill those holes, all while building positive customer experiences and fostering repetitive consumer behavior.

 

“For example, instead of offering $60 worth of food for $30, a sushi restaurant could offer $20 worth of food for $10 on each of the consumer’s next three visits,” Rice study author Uptal Dholakia notes. Or, rather than offering one overall discount on a total bill, he notes that a business would be better off promoting a variety of specific items, to better cross sell all of its products or services. Finally, to insulate a business from cannibalizing full-price sales from existing customers, he adds, “A yoga studio might offer classes on a weekday afternoon, for example, but not on weekends, or an apparel store might promote middle- or end-of-season lines but not the newest arrivals.”

 

Adding these types of constraints will make a social coupon somewhat less attractive, Dholakia acknowledges. But it presents a better upside in the long run because of the types of customers it will weed out.

 

3. Guaranteed, measurable results – in advertising your business

As with any business expenditure, it pays to do your research ahead of time to figure out the true risks and rewards before execution. With social coupons, the first of these steps is to accept that they are, essentially, advertising. Very effective advertising, but advertising nonetheless. (One respondent in the Rice study enthused: “It’s the best advertising for small business!”) Because even though social coupons bring in dozens, hundreds, even thousands of paying customers, no sustainable business could survive selling its goods at such discounted prices, so social coupons can’t be honestly considered a long-term sales strategy.

 

Often, money that an entrepreneur spends on advertising or marketing can seem like it has disappeared into the ether, with its impact all but invisible to small companies that lack the resources to carefully track sales and marketing metrics. Social coupons, on the other hand, simplify the process and ensure a minimum payback on the money invested. Since a business owner knows exactly how many coupons exist based on the number purchased or by setting a numerical cap, it’s easy to track redemptions and then calculate coupon-to-customer conversion rates. (Some social coupon sites even offer complimentary tracking of sales for you in real time.) And because a business owner sees a share of the coupon sales upfront, he or she is guaranteed some return on investment.

 

Still, a business owner must factor in all their soft costs, a few other sales metrics, plus a healthy dose of skepticism in terms of repeat customer conversion before he or she can get a good handle on the potential long-term positives and negatives of a social coupon offer. “There are eight key calculations you need to consider to determine whether this is a better advertising vehicle than something else you may already be doing,” writes entrepreneur Jay Goltz on The New York Times’ You’re the Boss blog. Goltz’s post, which includes a very handy breakdown of a social coupon deal’s financial implications, can be found here.

 

The three benefits discussed above offer very tangible reasons you might want to consider utilizing social coupons as a means to grow your business. But does it all seem just a bit too rosy to be true? You may be right. Be sure to check out Part II of our social coupon series, which offers three reasons you might not want to use social coupons.

by Reed RichardsonStory-Image.jpg.

 

For many small businesses, the relationship with their customers relies heavily upon the long-distance tether of a shipping company. And as great as an entrepreneur’s products may be, if it costs too much to get them in the hands of consumers, or if the product arrives late or damaged, all that good faith and customer loyalty will quickly disappear. As a result, choosing a shipping provider necessitates using the same diligent approach that a small business owner would use when bringing in a business partner or hiring a new employee. After all, the last step in any sale is the delivery of product and, because of this, your shipping company is essentially a proxy for your business.

 

The first step in picking a shipping provider involves looking inward at your company’s needs and figuring out your customers’ expectations when it comes to receiving your product. For example, are they buying items from you that, typically, they will want the very next business day or even by some specific time the next day? If so, you’ll need to concentrate your search on the best overnight shipping providers and those with the best guaranteed on-time delivery rates. If you sell delicate, fragile products, you and your customers may be more willing to forego speed for the guarantee of a safe, secure delivery. Oblong, or oddly sized products may require special packaging and handling and therefore the shipper’s ability to provide those services should be your primary criterion when searching for a provider. But if your products fall into the overwhelming majority of items that are relatively unbreakable and able to fit in either the standard flat envelopes or small boxes used by the three major shipping providers—UPS, FedEx, and the U.S. Postal Service—you might be best served by doing a price comparison first.

 

Price Shopping

Fortunately, the latter has been made much easier thanks to the Internet. Just as there are now entire websites dedicated to examining and comparing prices of airfares, cars, and electronic gadgets, there are now several resources online for doing the same with shipping rates. For example, Shipping Sidekick, asks for only a few pieces of vital parcel information before giving you a handy, straightforward grid comparing times and prices for next day, two-day, three-day, and parcel post deliveries. The website ShipGooder, despite its somewhat awkward name, does much the same thing, although it doesn’t include inputs for estimated values of your product or whether or not you want a parcel pick-up service included in the price. Postal Annex is another, similar comparison site, but it only looks at shipping rates from UPS and FedEx and excludes the Post Office.

 

For those small companies perfectly satisfied with the USPS’s shipping options, it would still behoove you to investigate one of the many business-based postage and label-printing options out there. These can save both time and money by letting you avoid standing in line at the local Post Office to buy stamps and/or drop off packages. Because there are a few different choices in this niche market, it’s worth digging into the details of all of them before making a selection. One of the most popular is Stamps.com, which, for an affordable monthly subscription fee, provides a five-pound parcel scale and software that lets a business create labels using its existing printers. Other USPS-based alternatives include the similarly software-based Endicia.com or renting a postage meter from a company like Pitney Bowes. These mail meters offer the advantage of being all-in-one machines that let you weigh parcels, print out labels, and automatically refill postage remotely. However, to do a thorough savings calculation, a small business owner should factor in the additional costs of ink, paper, and other supplies associated with each choice before deciding.

 

Special handling issues

If your small business’s bottom line could be threatened by lots of returns due to fragile products damaged in transit, the different level of TLC exhibited by the major shipping companies might be the most critical aspect in your decision making process. Coincidentally, the editors at Popular Mechanics recently wondered about this very same question and, as a result, commissioned a survey, albeit a small one, of the three shipping companies’ handling. The results, published online in late November were somewhat surprising. Among the big three, the U.S. Postal Service averaged the fewest hard knocks, but was also the most likely to flip or turn a package’s orientation and expose it to the greatest temperature extremes. Still, for small businesses with very specialized, climate-controlled shipping needs, FedEx has recently partnered with the company SenseAware to provide a number of unique package tracking options—like whether the package has been opened or exposed to light, is within a certain temperature range, as well as its exact location—that aren’t yet available to the general public.

 

Convenience, both customer and company

Few small companies or their customers are going to need such highly specialized shipping specifications, however. Most likely, both business and buyer will be focused on making pickup and dropoff as convenient as possible.

 

For the customer, this usually involves having a range of timed delivery options—from more expensive next day air to parcel post ground—that fits their schedule and pricing needs. Beyond that, the only other shipping nicety for the customer involves getting a tracking number shortly after purchase so they can follow their purchase’s progress. Here, UPS and FedEx have a slight advantage as every one of their deliveries gets assigned a tracking number, whereas only the USPS Priority and Express Mail services are available with tracking numbers.

 

As for making parcel pickup as easy as possible on the company, all three major shipping services are now jostling to win over small businesses. After years of losing business to UPS and FedEx’s small business outreach programs, the U.S. Postal Service has recently begun such a campaign—called Shipping Assistant—aimed at companies with smaller, more rudimentary shipping platforms to remind them that its postal carriers can do free pickup in the course of their regular rounds and, to be even more flexible, can do pickup on demand as well at $15.30 for each pickup. In addition, to further compete with UPS and FedEx, the USPS recently rolled out a series of flat-rate, “If it fits, it ships” Priority Mail boxes and envelopes to make cost estimates easier for businesses with infrequent shipping needs.

 

In conclusion, a business’s shipping needs will vary greatly depending upon its product, volume, and customer expectations. Often, choosing just one shipping solution won’t make sense if you have a wide range of shipping needs, but knowing what you need will make it easier and more cost effective in the long run when making those choices.

How blogging can help your small business.

By Reed RichardsonWhite-in-article.jpg.

 

For small business owners, time is a precious resource that is often in short supply. So, the notion that they should devote an hour or two a week to blogging about their company could seem like an extravagance born of either fat corporate budgets or shiftless hobbyists with nothing better to do. But that’s a shortsighted viewpoint that only looks at what a small business owner has to put into blogging and doesn’t look at all the things he or she can get out of the effort.

 

“The best marketing tool you will ever have as a small business owner” is a blog, explains social media adviser Danny Brown on—what else?—his own blog. Brown, a partner at southern Ontario, Canada-based Bonsai Interactive Marketing, adds that the only limitations to what a blog can do for a small business derive from the constraints the small business owner puts upon it. And what is the common thread that keeps most small business owners from taking the blogger plunge? Fear, says Brown.

 

“Fear of what to blog about; fear of how to target an audience; fear of how to promote a new (or existing) blog; fear of setting yourself apart when there are so many other voices around,” he explains. But once a small business owner overcomes this fear and sees the many things they stand to gain by blogging, they’re likely to never turn back.

 

In fact, according to a 2010 State of the Blogosphere Report, published earlier this month by the tech website Technorati, 21% of all bloggers now identify themselves as self-employed. And among this self-employed cohort, 57% own their own company and write a blog related to their business, a figure that roughly translates into one out of every eight bloggers overall. So, what have these business owners learned? Well, below are seven reasons savvy entrepreneurs should invest a little time and effort each week into talking about themselves and their business online.

 

  1. Increase visibility – For many small business owners, the term “marketing budget” might be akin to other pie-in-the-sky things like easy credit, free lunches, and days off. But blogging about one’s business can be a very effective way to market your business with little or no additional cost beyond what you’re already paying to host and maintain a company website. What’s more, the 2010 Blogosphere Report found that “among respondents who own their own company, 64% say they have greater visibility in their industry because of their blog.” For entrepreneurs that are looking to gin up greater brand awareness and product visibility for their relatively young business endeavors, this statistic alone should be reason enough to consider hanging out a blog shingle.

  2. Improve search engine ranking – Since search engines are increasingly designed to reward websites that offer richer and fresher content, adding a blog to your company website has the added benefit of helping to raise your search results rankings. Writing two to four genuine and straightforward blog posts each week on topics of legitimate interest to fellow professionals and/or customers can do wonders to liven up an otherwise static, unengaging company website. Get your blog noticed by others, to the point that it generates some inbound links from other websites and blogs, and its impact on search rankings will grow exponentially. (For more details on how blogs affect a websites’ search rankings, click here.)

    Also realize, however, that blogging can be even more important when search engine rankings aren’t key to a startup or small business’s success. If, for example, your business is launching a groundbreaking product or survives mostly on impulse purchases, customers won’t be searching you out online in the first place, so building buzz through blogging (and social media) will have to come long before any search engine optimization campaign pays dividends. “If this is the type of product you sell,” explains Search Engine Guide expert Jennifer Laycock in an online column, “chances are high you'll be better served by a word of mouth driven social media campaign than by making it easier for people to find your product.”

  3. Establish industry expertise This might sound like a daunting challenge for new entrepreneurs, but more often than not, their startup experience has already made them into budding experts. After all, many entrepreneurs launch their startups precisely because they’ve found themselves frustrated by an industry or profession that wasn’t meeting their own needs and then spent a lot of time thinking about how to fix those problems.

    “You might be thinking that you aren’t an expert in anything, but that simply isn’t true,” explains Kyle James in his article, “Becoming an Industry Expert: Watching Out for #1”. “What is important to remember is that others don’t know that you are the expert in something unless you make it a point to say so.”

    Starting out, you might limit your blog posts to the one subject where no one else can match your expertise—your own company—and then establish your larger expert voice by broadening your blog discussions to general trends within your industry. Eventually this will require consistently engaging others within your industry on their websites and posting comments on external blogs (with a link back to your own blog, of course). Once you’ve built a backlog of insightful industry comments and a robust network of resources and links on your blog, you will have little problem proving your bona fides to any prospective customer that happens upon your website. But understand that a little, tactful self-promotion of your expertise doesn’t hurt.

  4. Prime the online lead generation pump When it asked how bloggers measure the success of their blogs, Technorati’s 2010 Blogosphere roundup found that self-employed bloggers used many of the same metrics as part-time, hobbyist, and corporate bloggers: personal satisfaction, unique visitors, linkbacks, volume of comments, and number of RSS subscribers. However, there was one other response that self-employed bloggers were nearly twice as likely to choose than any of their blogging cohorts: “number and quality of new business leads”. This brings up another important point to remember about blogging—when done well, it’s more about having a two-way conversation with your readers than it is about offering up a series of from-on-high monologues. Good comments are a vital part of making a blog worth reading and their insights are a great source of future posts. And the regular, repeat commenters that make them are a natural vein of online leads to be mined for referrals and direct sales.

  5. Perform customer service While microblogging site Twitter has garnered more attention lately for a being a low-cost, high-response way to handle customer service issues, a blog can serve that purpose as well. This shouldn’t be done for every little customer complaint, however. But if your small business suddenly faces a broader consumer-related problem, like a product recall or a coupon misprint, a blog can offer a much better platform for heading off a potential public relations nightmare than Twitter.

    After all, it’s hard to carefully acknowledge a problem, clarify facts and dispel myths, offer up a pre-emptive solution, apologize if necessary, and give upset consumers a way to (constructively) seek redress all in just 140 characters. Plus, by handling a major customer service issue on your blog rather than on Twitter, you stand a better chance of keeping the online complaining contained to just your website and limiting the potential spread of damage to your company’s reputation.

    “A lovely new company/customer etiquette has emerged, and small startups are especially suited for exploiting it,” explains angel investor Jason Cohen on his startup-focused blog A Smart Bear. Rather than never accepting mistakes, Sobel says consumers increasingly understand things will go wrong, but now just want a company to make a sincere effort in fixing them. “This doesn’t mean you get a free pass,” he clarifies, just that “you’re doing your honest, level best to do right by your customers,” evidenced continuously through all your communication—blog, tech support, website—not just after a crisis.

  6. Suggest new products or services Nearly half—45.6%—of consumers surveyed now trust the content they find on blogs, according to the Technorati Blogosphere survey. While that figure still notably lags traditional media sources like magazines (60.4%), TV or radio news (61.2%), and newspapers (62.4%), the gap is closing. Likewise, trust in blogs stands far above other branded content on social media sites like Twitter (19%) and Facebook (26.7%) and even surpasses content found on online news aggregators (38.0%).

    What’s more, the survey also found “blogs outpace other social media and many traditional media in terms of generating consumer recommendations and purchases.” As a result, among survey respondents who blog about their own company, nearly six in ten—58%—reported that prospective clients had read their blog and then subsequently purchased products or services.

  7. Build brand loyalty Once you’ve hooked those initial customers, a company blog is also a great way to keep them coming back for more. Through things like video posts about the latest improvements to your product line or updates on new services your business has added, as well as notices about special online-only deals and discounts (linked to your company Twitter feed and/or Facebook page), your blog can be a great conduit for building a stronger sense of loyalty among your customers. So armed, these loyal blog readers can become an army of positive word-of-mouth advertisers for your business, constantly spreading the gospel about your awesomeness both online and off.

 

Keeping all of these reasons in mind, it is perhaps not surprising that Technorati’s Blogosphere Report found that nearly half of all small business bloggers planned to increase their posting in the near future or that more than one quarter said blogging has had the greatest impact on their businesses. For entrepreneurs who haven’t yet made the leap, the potential return on a few hours of time spent blogging deserves a strong second look. It might just be the best investment you make all year.

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