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Annual Review: 2009 Business Lessons

As part of my Annual Review series, I’m looking back at the development of AONC and the related business during 2009. I hope you’re having a great December, wherever you are. *** The business side of AONC happened quite organically in the beginning. The only real business goal I had when starting the site was…

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Now Open for Business (A Limited Consulting Service)

now-open-for-business
Image by Mag3737

By popular request, I’ve decided to begin a limited consulting service to help those who want help from me. The key phrase for this is limited, because I want to keep my focus on the free writing I do for everyone.

It will not be cheap, and I can only help with specific things – so if this doesn’t apply to you, feel free to skip it. On Friday we’ll do Travel Hacking part II, next week more on Doing What You Want, and so on. Stay tuned.

For those who are interested, here’s more info.

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Unconventional Guides:

Working for Yourself: Creating Personal Freedom
Discount Airfare: Surviving Stress and Maximizing Fun

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Affiliate Marketing That Doesn’t Suck

How-to-Make-Money-Online
Image by Geek&Poke

Now that our second Unconventional Guide is out in the marketplace, and the first one continues to sell every day, I’m ready to open up the affiliate program for these and future guides.

I’ll tell you about that in this update, but I’ll also tell you why most affiliate programs aren’t worth your time. If you have a web site, blog, or any kind of business, this should help you learn what NOT to do with affiliate marketing.

The short version is:

1. Most affiliate programs are heavily weighted in favor of the merchant. The merchant gets a lot of exposure and pays a token commission to its affiliates.

2. Then again, most affiliates don’t do any work or make any sales. In some cases, this can be as many as 98% of affiliates.

3. To fix this, the merchants need to restructure the terms and the affiliates need to add value somewhere.

My goal with the project is to create an affiliate program that doesn’t suck. That may not sound like a lofty goal, but as mentioned-- most affiliate programs are fundamentally flawed.

Here is how I’m trying to fix that with the small Unconventional Guides business:

1) By Application Only. We have to know each other somewhat before you can promote something I offer. This is not meant to sound elitist; it’s just that I don’t want you to waste your time with something that is not going to help you. And of course, I also need to maintain the integrity of the brand, so I won’t allow any promotion through unsolicited email, mature sites, etc.

2) High Commissions. I pay 51% on everything, meaning that my affiliates will make more money than me. I’ll also be adding a few bonuses to the program as more people get going with this.

3) Customized Promotions. This is where the affiliate’s work comes in. Putting up banners and hoping someone will notice does not work very well anymore (if it ever did). It’s better to take the time and write up something unique about what you choose to endorse. Why should people buy it? How will it help them?

On my side, I’ll help a bit with the custom promotions. If you have a high-traffic site or other responsive community, I’ll give you a special discount code exclusively for your readers. This will help increase sales and also ensure that all sales are 100% credited to you. If you want to do an interview for your audience, I’ll do my best to accommodate your request.

Regardless of whether my program is a good fit for you, think about these questions when deciding what you are going to share with people who trust you.

  • Do I believe in the product enough to tell my friends and family about it?

  • Is it truly win-win? (Will my visitors benefit from these endorsements or ads? Will I sufficiently benefit from taking the time to do this?)

  • Is the merchant credible, both in terms of their general practices and with the specific products being offered?

  • Is there any way I can use this to compliment something I already do?

If you can answer "yes" to these questions for a particular opportunity, it's worth considering. If not, there are better things you can do with your time and energy.

If my program sounds like something you’re into, send me a note with some info on how you plan to promote the guides. I’ll get back to you shortly.

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Trust and Authority: A Marketing Lesson

Trust and Authority: Shop Yourself Happy
Image by Estherase

As promised, here is the analysis and full results from the latest product launch. But first, a few notes on trust and authority – the good kind, not the kind you should fight against.

Having established that all purchases are highly emotional, and that buyers conduct an elaborate, internal analysis about price and value whenever they choose to purchase something, let’s talk know about trust.

We experience a certain combination of fear and trust whenever we buy something. The fear is that we will have wasted our money; the trust is the expectation that we haven’t. We look for immediate validation. Is the first song on the record good? Does the first article in the magazine hold my attention beyond the title?

If trust is confirmed, good. If not, we get worried. That’s why it’s important, whenever you sell something, to work hard at establishing and keeping the trust of your customers. Validation can come in many forms (and it’s good to mix it up a little), but the more, the better.

“Working for Yourself” Case Study

Two weeks ago, I launched my second information product, the Unconventional Guide to Working for Yourself. I completed this one after a month of writing, including an all-night session in Sri Lanka, and a few days of recording audio after I had returned to Seattle.

It was no exaggeration to say that I was hesitant to create a product that had to do with making money. It’s not that I think there’s anything wrong with making money – we all need money, and I prefer earning it on my own instead of working for someone else. Aside from robbing banks, those are the only two options (and I suppose that bank robbers are technically self-employed).

I was hesitant because I knew that when you sell something even remotely related to finance and employment, certain people get twitchy on you. They think you are up to something suspicious, even if you have an established reputation you probably wouldn't want to squander.

By the way, most rational people don’t do this, only those who were suspicious or skeptical to begin with. The rational prospects look at the offer, consider the qualifiers and “reasons why,” and then make their decision based on the value consideration. If yes, they buy; if no, they don't -- but they don't usually think less of you for it.

It’s Kind of Like Saying Who You Vote For

This week I received my early voting packet for Washington State, and I was proud to cast my vote for Barack Obama. In 12 years of being an eligible U.S. voter, this is the only time I can remember being genuinely excited about electing a candidate. There are a lot of good reasons to vote for change, but for me one of the most important is that this election has the chance to restore America's standing in the rest of the world.

If you don’t like Obama, do I worry that you’ll be turned off by my saying who I voted for? Not really. I have friends who support John McCain, and I don’t suddenly think their opinions are invalid just because they have reached a different conclusion than I have. I read blogs that are somewhat critical of both mainstream candidates, and as long as they don’t hit me over the head with too much rhetoric, I don’t mind.

It’s only the people who decide that you are a bad person or somehow naïve for expressing an opinion who will get upset.

I don’t care much for intolerance anyway, so if someone stops reading because I say I like Obama, then I think they’d probably be offended at something else sooner or later.

In the end, I decided that the same kind of principle holds true for creating a product about finance and self-employment. A few people get mad because it’s “not what you are supposed to do,” and a lot of other people will happily support you. Others decide it’s not right for them, but that’s OK – because they still care about other things you’re doing. I'll show you all three groups in the analysis here.

When I launched the first guide on Discount Airfare, I was careful to explain my controversial (apparently) opinion that artists should be allowed to make money. I did that to preempt the complaints about selling a product, lest I be unfairly accused of "selling out."

This time I took the qualification process even more seriously, clearly explaining several good reasons to not buy my product at the beginning of the launch process. I did this because I wanted only the customers who I knew would be thrilled and find the product very useful to them.

The Launch Day

I always get up early when launching a new product. In this case, I set the launch time for 7am PST, and I usually need at least 45 minutes to review everything before the actual launch.

I used to launch products and web sites at 8am EST, which meant that after I moved to Seattle I’d need to be up around 4:30 a.m. to accomodate this preference – but I decided that 10am EST would be just fine for this one.

Test… test… test.

There are always a few surprises when you sell something new. No matter how many times you test things, something will always go wrong for someone. The order link won’t work, the thank-you message won’t go out, the site will go down – count on it. This is why it’s good to stay close to the phone and email during any launch.

This time I got up at 5:30 a.m., ran through all the logistics, placed a test order, and so on. A few minutes before 7:00, I made my coffee and uploaded the order page to the site.

The Response

Some of you said you liked how I was willing to share real sales figures in a recent update. I’ll do the same thing here.

My initial goal was to sell at least 100 copies of this product in the first week. Within 24 hours, almost exactly 100 copies had sold, helping me reach the goal six days early. Yay!

More copies have continued to sell every day since then, and a number of people have asked about setting up a consulting session – something I didn’t really like to do before, but now I’m considering as a limited commitment for people who have already started their very small businesses.

The total conversion rate from the first week of regular readers was about 3.4%.

Since 1% is a general marketing baseline and I deliberately tried to disqualify people from buying the guide if it wasn’t a good fit for them, I thought that 3.4% was great. If anything, I want to be sure that I don’t focus too much on this side business while I continue to work on the more important goals of getting my book contract (more on that in a moment) and building our community here.

After all, even though I sold about $4,000 in the first 24 hours, the figure of 100 buyers represents only a small subset of readers. I have to keep the focus on the reason why people come here to begin with: to hear about unconventional strategies for life, work, and travel.

You guys are why I am doing it, whether you buy something or not… although naturally, I greatly appreciate the support and endorsement of your investment.

Good News / Bad News

The bad news was that, like last time, I heard from a few people who were upset about something that seems fairly irrational to me. Without fail, these comments come in from people who have never bought anything, and in fact have never communicated with me before.

I’m going to quote from one of these emails below for your consideration:

You preach about everyone being the master of their own destiny, but expect everyone to buy your [expletive] ebook on making money. This was a good blog until you blatantly tried to rip us off. How could you possibly try to [expletive] tell me what to do?

At first I thought this guy had meant to send this message to someone else. Expect everyone to buy? Blatantly try to rip you off? Tell you what to do?

I’m at a complete loss as to how anyone could get these ideas. I actually told people why they shouldn’t buy the guide, offered a more comprehensive guarantee than any I’ve ever heard of, and said that the primary goal of the guide is to help people create their own freedom to do what they want. Ironic, isn’t it?

There’s not much I can do in these cases except say, “I wish you the best” and move on – never argue with a crazy person, my mom likes to say -- but it does make me a little sad to hear how misguided someone can be.

Anyway, I know that the vast majority of people don’t think that way. Such is life with any kind of marketing in the blogosphere, even the no-hype kind. I posted the email here not because I’m upset, but so you can see that there will always be critics out to write you off whenever you do something of interest.

The lesson for me in this case is to avoid being distracted by random, negative messages like that. Before the end of the first afternoon two weeks ago, I had 60 new customers who were excited about the new product. I should have been thinking about those 60, and then the additional 40, and then everyone else who is happy -- not one negative message that I don't feel is valid.

Here is a sampling of the feedback from new guide owners:

First of all, congratulations. You've put together a great guide. It's helpful, realistic and down-to-earth, and I think it's one of the best ebooks I've read in a while. Very well done, and I hope it gets picked up widely!

Every bit as good as I'd expected, so many congratulations on putting together such a fantastic resource. I know a lot of people will benefit from it, including me. I've been in business for more than twenty years, and my view is that it's loaded with invaluable tips and top ideas which I'll be putting into practice myself.

I especially enjoyed the strategies for starting a microbusiness - especially the parts where it's broken down into pros, cons, and next steps. Including actionable items that I could get started on NOW is extremely helpful, especially for getting me to get off my butt.

I have about 50 reviews like those so far, both from the new guide and the first one. I’ve also asked people to send in suggestions for what could be improved in a future version or an email series I’m doing for the buyers. The feedback I’ve received thus far from many of you has been excellent. We’ve already issued some new material on the basis of those comments, and more will be on the way.

What’s Next

I have three more Unconventional Guides outlined, but at least two of them won't be written until early 2009. For now I want to continue promoting the current guide and working with the affiliates who are selling it around the internet. I’ll probably do a short post on the unconventional affiliate program in the next couple of weeks, but for now if you’re interested, just check out that link and let me know.

My number-one, most important work priority right now is finishing the latest version of my "real book" proposal (it’s up to 40 pages; who knew such a thing had to be so long?) and getting the process for the publisher shopping fully underway.

Next spring, I want to take the business side of things further and do a series of webinars for those who are interested. The webinars will be like the guides, only in multiple sessions and highly interactive. Anyway, more on that later – as mentioned, the proposal completion and book shopping are the most important projects for me at the moment. Onwards and upwards.

Lessons Learned

Miraculously, I don’t think I made any huge mistakes with this product launch. I’m certainly open to constructive feedback, and I realize there are things I could have done to increase the sales further, but overall I’m happy with the results.

Here’s a couple of technical points, for those interested in the details:

  • I haven’t quite made up my mind yet about using different domains for the different products. For now, the Discount Airfare guide and the Working for Yourself guide still “live” directly on this site, although I also have a simple structure set up on UnconventionalGuides.com. I should probably decide what I’m doing with the navigation before launching the next product

  • Someone asked why I am using e-junkie and PayPal to facilitate the payments when I say in the guide that having your own merchant account is a better solution. Good question. The short answer is that I don’t want to comingle my bank accounts (at least, as little as possible) and we are coming to the end of the 2008 tax year. I didn’t really start this project to make money, but if it continues to do so, then I’ll probably incorporate a more complete payment processor in the beginning of 2009.

(If those two statements don’t mean much to you, don’t worry, you’re not missing out on anything terribly important.)

The Best Lesson

When people trust you, they know you are going to put out good work. Some of them are actually willing to pay for it.

I’m tremendously grateful for that trust. Thanks so much.

And for everyone who does not want a very small business, as promised, I am not “selling out” (whatever that means). As you can see from recent posts, I will continue to write about lifestyle design, world domination, unconventional travel, and whatever else I come up with that you guys enjoy.

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How to Create an Incredibly Convincing Satisfaction Guarantee

satisfaction-guaranteed
Image by whalt

Here’s an idea: if you sell something, think about why prospects don’t buy from you.

I don’t mean the unqualified people – there are always good reasons why people should not give you money.

But for the qualified prospects -- people for whom your product or service is a good fit -- why don’t they buy?

Maybe you haven’t done a good job with the sales copy, maybe they’re not in the right place at the right time, or something else. But at the heart of the matter, people are afraid, skeptical, or just plain not convinced.

To help prospects come over to your side of the fence, you need an incredibly convincing guarantee. This guarantee has to go far beyond an offer to get your money back.

The basic, “money back within 30 days” guarantee is no longer very convincing. It’s expected. It is the norm.

For Example

I haven’t eaten at Taco Bell in a long time, but ten years ago when I didn’t care about my health, I used to spend quite a lot of time and money over there.

Back in the day (and maybe now still, I have no idea), they came out with what they positioned as an amazing guarantee: “If you don’t like it, we’ll eat it.”

In other words, if you weren’t happy with your cinnamon crisps, they would refund your 59, 79, or 99 cents. I was new to marketing at the time, but I still remember feeling skeptical about this offer. If I hadn’t already been a Taco Bell customer, did they think this offer would bring me in the door?

I mean, my average bill for a full meal was about $2.70, so the risk was very low. They were promising to give me $3 back? Not convincing.

This is why you need to go above and beyond to convince skeptical prospects.

Not many businesses get this, but some do. Look at Zappos, which has done very well selling shoes and service. At Zappos, they actually encourage you to order multiple pairs of shoes and send back the ones you don’t want. They pay the shipping both ways, so you have effectively no risk. That’s incredibly convincing, since the idea of buying shoes online used to be considered strange and unmarketable.

For another good example, look at Kiva, provider of economic empowerment from Afghanistan to Zambia. Kiva facilitates loans between rich people (like you and me) and motivated entrepreneurs in poorer countries. They currently have a 98.6% repayment rate, which is good because the first objection most people have when they hear about loaning money to a farmer in Uganda is, “Does that work? How will I get my money back?”

98.6% is pretty convincing, I think, especially when our own banks in New York and Frankfurt aren’t doing so great these days.

As for me, you may have noticed that I will be releasing my second information product on Wednesday.

It’s called the Unconventional Guide to Working for Yourself: Creating Freedom through a Very Small Business.

I’m excited about it, and I know it will help many people. Since I’ve previously explained who it won’t help, I thought it would be fair to explain who it will.

Here is the goal:

  • In the short-term, the guide will help a lot of people start very small businesses which earn at least $200 a month.

  • In the long-term, some of those people will build out a series of very small businesses to escape the tyranny of traditional employment.

That’s pretty much it in a nutshell.

I don’t want to guarantee too much, because as I’ve said before, self-employment is not for everyone and it takes a lot of work. But I also don’t want to guarantee too little, so that’s why we’re doing something unique.

The 60-Day, $2,400 Guarantee

First, the typical satisfaction guarantee applies. If it doesn’t rock your world, you get your money back. No problem.

But here is the second part.

In the first section of the new guide, I will be asking everyone to take the time to set a couple of goals for the new business they are going to start.

My second guarantee is that I will refuse to accept your money if it doesn’t work for you, according to these specific metrics:

Satisfaction Effectiveness Guaranteed

If, after 60 days, someone has read the guide, listened to the audio files, and put in a fair effort on their part (they will be the sole judge) but has not been able to start a project that earns at least $200 a month, then they get their money back even if they like the guide.

In other words, the burden is on me to deliver, or I don’t get paid a dime.

A minimum of $200 a month x 12 months = $2,400 minimum. There are no geographic restrictions or other fine print.

See, I want my products to actually help people. I’m interested in mass accountability, and this is the latest experiment.

What You’ll Get

The Unconventional Guide to Working for Yourself consists of an online guide and downloadable MP3 files:

  • 55-pages of strategic and tactical info in a professionally designed report

  • 3 25-minute MP3 audio downloads

  • 1 Special Bonus (it’s not from me, so I’m not allowed to say more yet)

  • Free Updates for 6 Months
There are no shipping charges and everything will be delivered through instant download right after purchase.

As for the cost, in the future I will probably price the guide in the $60-89 range, but we’ll kick it off this week for less than that – probably around $45 or so, with a small discount for everyone on the newsletter list.

And in the end, the people who buy it will succeed at a measurable rate far greater than the purchase price, or I will insist that they keep their money. No exceptions.

Fair enough?

Oh, and one more thing: since I know this won’t be for everyone, to make it fun for the whole group we’ll be posting a few specific case studies beginning 45 days after the launch. The goal is to feature real-life stories showing exactly what kinds of "very small businesses" have been created as a result of this project.

Since I don’t know exactly what will happen, this should be interesting… but my hope is that we’ll get some people willing to show actual web sites and sales figures.

***

What do you think? Am I crazy to offer this kind of guarantee?

AND… if you already have a business, what kind of Incredibly Convincing Guarantee can you offer your customers? Is there a way you can rock their world so they keep coming back to you?

See you all on Wednesday morning…

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Good Reasons to Keep Your Money

Money - Keep it
Image by moal

Marketers tend to deliberately over-hype their products in an attempt to break through a crowded marketplace. In an environment where we receive 3,000 advertising messages on an average day, the idea is to be bigger and better – but if that’s too difficult, the theory goes, we can at least be noisier.

I’m coming out with my second information product exactly one week from today, and instead of trying to sell you on it, I thought I’d tell you why not to buy it.

On Monday I’ll explain how to create an Incredibly Convincing Guarantee. The idea is that most promises of “satisfaction guaranteed” aren’t that convincing at all anymore. Almost everything we buy has some kind of guarantee, but we still end up ignoring most of those 3,000 messages each day.

Since I’m in the marketplace of ideas, I’ve decided to create a guarantee for my own product that goes beyond the usual. I think I’ve found something unique, and I think it will resonate. I also can’t wait to tell you more about the guide itself – which currently runs to more than 55 pages and also includes several 25-minute audio segments.

I was going to write about both of those things today, but then I got worried… what if I’m writing for the wrong people?

See, I want to deliver great products to the right customers, and I am the first to point out that there are usually a number of good reasons to keep your money instead of exchanging it for something else. Therefore, I need to do some disqualification for your benefit and mine.

The next product will be called the Unconventional Guide to Working for Yourself. The subtitle is “Creating Freedom through a Very Small Business,” and that’s basically what it’s all about:

Creating Freedom = finding a way to work for yourself instead of someone else, or at least finding a way to bring in additional income that allows you to do more of what you want and be less dependent on a job

Through a Very Small Business = not trying to start the next Google or Amazon.com, but instead building a microbusiness that brings in at least $200 a month, and potentially a series of these opportunities that eventually allow you to quit your current job

Please understand that this is not for everyone. Not everyone values freedom over traditional employment, and not everyone wants to have a business of any kind, even a very small one.

The ever-insightful Tim at Soul Shelter recently wrote a post entitled In Praise of Salaried Employment. Reading it was an affirmation that I (still) don’t want a “real job,” but I see Tim’s point -- and it also served as a good reminder that not everyone wants to work for themselves. Like most art forms, the way people on the outside perceive self-employment is quite different from the way it actually works for most of us who practice it.

Why Not to Buy the UG to Working for Yourself

As mentioned, there are many good reasons to not buy any particular product or service. A few of them for this one are:

If you’re looking for the quick path to riches. Feel free to keep looking for that – but please, not here. If I had found such a thing, I would probably not be selling it in a low-cost ebook. I might still travel around the world, but I don’t think I would sleep on the floor of airports from Rome to Dallas to save money.

If you don’t like to learn or aren’t willing to work. I use a lot of irony in my writing, but there is nothing ironic about this. A lot of people are simply not comfortable with learning new things, and if you have never worked for yourself before, there’s a lot of things you have to learn.

One of the things I mention in the guide is that you don’t have to be especially intelligent to earn money without a job, but you do need to be willing to work.

If your primary goal is to build a huge business. I have nothing against huge businesses for the most part; I just don’t know anything about building them. I’m far more interested in finding a way to pay the rent so I can do what I want.

On a higher level, I’m also interested in convergence and alignment, where my whole life is related to what I want to do for myself and how I think I can best help others. But in a nutshell, this guide is just about starting a very small business. Getting the cash flow coming in. Ready, fire, aim – that kind of thing.

If you are a complete beginner to technology. I write almost exclusively about online business because that’s what I’ve done for ten years. If you don’t know how blogs work or how Google makes money (for example), there will be more of a learning curve. The guide is targeted to the low to mid-intermediate level – not the guru who knows everything, but also not the complete beginner.

Don’t worry too much about this if you’re on the fence – I am a fairly low-tech person. I write on a $500 laptop and don’t do any programming or complex work at all. But I mention this because if you are going to work online in some kind of business, it does help to be fairly proficient with the world of computers. You should know what eBay is, you should probably have your own internet connection, etc.

***

Creating Freedom through a Very Small Business

I do not know how to create internet millionaires because I am not one myself. What I have done instead is find a way to create a lifestyle that works for me and gives me a great deal of freedom. It’s not a four-hour work week, but I spend a lot of time doing exactly what I want to do instead of being tied to a desk somewhere.

For me, the freedom itself is the most important thing – it is definitely the highest goal and most significant benefit of working for myself. That is what I know how to do, and that’s why the subtitle of the guide is “Creating Freedom through a Very Small Business.”

It can sometimes be unpopular to say so, but money and freedom are related to a certain point. Is there anyone who can argue that it’s fun to be poor? Let’s be honest: it sucks.

So you have to do something to avoid that, and if inheritance or litigation is not an option, then you either have to work for someone else or work for yourself.

I have chosen to work for myself. And if you’re interested, I’ll tell you all about what I do and how you can work towards creating your own freedom, doing it your own way, creating your own rules. By popular demand, I’ll include a lot of personal stories (especially “big mistakes” I’ve made along the way) and a lot of specific, actionable items you can take to get started right away.

The time for that will be Wednesday, October 8, at 10am EST / 7am here on the West Coast.

On Monday I’ll tell you all about the unique guarantee, what you’ll get, how it works, how much it costs, and so on.

Sound good?

For Everyone Else

I needed to address the fact that the Working for Yourself guide is not for everyone – which will hopefully be clear now. If it’s not for you due to any of the reasons mentioned above (or something else), you won’t be left out of the party entirely.

I write three times a week and will never charge for that. I’m currently writing the sequel to the World Domination Manifesto, which will be released in January. I have more plans for the next 6-9 months that all involve scaling up the project without putting ads on the site or selling anything other than a few more teaching products like this one.

And as we did last time, I’ll also post a detailed analysis after the launch with what went well and what I could have done better.

Here is the launch schedule:

Friday, October 3: Working from Any Country in the World
Monday, October 6: The Incredibly Convincing Guarantee
Wednesday, October 8 (10am EST): The Launch

Thursday, October 9: Chris retires! (Wait, probably not yet. It may take a few more days.)

Thanks for listening, and see you all next time. Feel free to share your feedback in the comments section.

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United Airlines and the Case for Value

united-airlines-pretzel-case-for-value
Image by SummerTX
I read an interesting article about Applebee’s last week. Personally, I don’t like Applebee’s or its numerous imitators – not eating burgers, chicken tenders, or something they call “riblets” kind of limits the menu of the average Americana-themed restaurant for me – but I enjoyed the analysis of how these kinds of places are trying to survive in an economically challenging environment.

My favorite part was when the CEO was asked why Applebee’s and IHOP (also owned by the company) don’t have healthier choices on their menu. People are more health-conscious than ever, right?

“What people want and what they say they want are different,” she said, and as much as I wanted to disagree, I couldn’t.

This idea, my friends, is especially true with business-to-consumer relationships. In the example of restaurants, people may say they want healthy choices, but (many of them) actually want to go and eat food that is bad for them.

If Applebee’s replaced the mozzarella sticks (531 calories) with a large order of carrot sticks (120 calories), they might win some good press, but their average diner wouldn’t start eating more carrots. He or she would go down the street to the T.G.I. Friday’s or wherever else offered the food they really, really wanted – not the food they said they wanted.

Even though it doesn't attract customers like me, Applebee’s seems to understand what their typical diner wants. But in other cases, companies fail to see the disconnect between what people want and what they say they want…. or they may even manipulate the feedback to reinforce what they wanted to do in the first place.

For example, people may say they want the lowest-priced airline without any concern for comfort, but that’s not usually true.

Most of us know how stressful travel can be, and we don’t appreciate it when airlines cut out the little things that can make the experience slightly better. We know it's not going to be great, but we really do want the pillows, soft drinks, and advance seat assignments that the airlines have been cutting out. It doesn’t take much to provide them, but when you take them away, we’re not happy.

The solution to this problem is not to take even more away, like United Airlines did recently.

United recently announced an all-new series of steps to cut out service on its flights. To begin with, United will no longer offer meals to Economy Class passengers traveling to Europe from Washington, D.C. Instead, they’ll receive the same service provided on their flights throughout the U.S., where you can purchase a sandwich for $11. United is also taking away the free pretzels (really), reducing staffing even further, and discontinuing the lunch service for Business Class passengers on domestic flights.

That’s right, no pretzels, fewer flight attendants, and if you fly to Europe from D.C., you won’t even get a meal. People used to joke about airline cuts – “One day they’ll charge us for seats after we’ve already boarded the plane.” Ha ha.

But wait – one guy who flew JetBlue was forced to sit in the lavatory for 3 hours earlier this year because he was on a discounted ticket. I wish it were a joke this time, but JetBlue has no comment.

Back to United - as several travel bloggers have been pointing out (see here and here, for example), the latest cutbacks represent a new low for the already-low U.S. airlines. It’s a race to the bottom, and those of us who travel frequently are starting to wonder when we’ll finally hit it.

Isn’t it just the cost of fuel?

The airlines say that fuel cost is the main reason for these kinds of cutbacks, but no one really believes that. Oil was at $145 a few weeks ago. Now it’s back to $118, but the same fuel surcharges are still there. Do you think they just forgot to reset them? And how do other worldwide airlines manage to be profitable even with the price of oil being so high?

The funny thing is that United claims to have made these latest changes based on “customer feedback.” I find that claim to be even more disingenuous. Does United expect us to believe that passengers said they no longer want to eat on the flight? Oh, and go ahead and take away the free pretzels while you’re at it?

I’d like to say to United, “You know, go ahead and do this. It will harm your shareholder value in the long-term, since business travelers have even less of an incentive to travel now. But please, don’t lie to us about it. Just say you don't want to give away pretzels anymore.”

Why Competing on Price Is a Losing Prospect

Choosing to compete on price alone is almost always a mistake. Unless you can be the next Wal-Mart, it’s not worth trying.

It’s usually better to give customers what they really want – quality, value, an experience worth talking about – and not the lowest price and lowest service that they may say they want.

Even in the airline industry, some airlines manage to do this. Emirates does, as does Virgin Atlantic most of the time, and even the budget Kingfisher Airlines in India. When flying from Hyderabad to Calcutta in March, I got a full meal and a soft drink – no extra charge. There were no pretzels, but the lentils were quite nice.

***

If you’re in business for yourself, what do you think about commodity pricing and cutbacks? Are you in a race for the bottom, or are you trying to provide good products and services for a fair price?

And everyone else, what do you really want from a business like United Airlines or Applebee’s?

###

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Price and Value: A Marketing Lesson for Life

Price, Value, Shopping
Image by Armel
I have survived as an entrepreneur for 10 years not because I am inherently good at most aspects of running a business. I am a terrible salesperson, I get bored easily, I don't like busy-work or higher math, and I have the classic ADD personality.

None of this is tremendously helpful in business, and in a lot of ways, it's made things more difficult than they are for other, more balanced people.

Instead, I trace my success at survival to two key skills: first, I am a decent copywriter. Writing well really does help you do a lot of things. Second, I have a fairly good understanding of the twin concepts of price and value.

There are some other "life skills" that are also important -- notably, persistence -- but in terms of specific business skills, that's pretty much all I've got. And for the most part, it works just fine, if a bit haphazard at times.

Today I thought I'd tell you about the second skill of understanding price and value, and I'll do so with a real-life case study from the launch of my first AONC product. I'll tell you what I did wrong, what worked well, and why I chose to market the product the way I did.

Ready?

First, all understanding about the whole subject of pricing comes from one critical principle:

Whenever we spend any amount of money, we undertake a complex, emotional analysis of price and value.

This process is hard to overstate, and few of us are immune. In fact, it is pretty difficult to buy much of anything without going through the process. It's often subtle or even subconscious, but it's definitely real. We often have expectations for how much something should cost, and when our expectations are unmet, we respond with emotion.

  • BAD Feeling (skepticism, uncertainty) - "Wow, that's so expensive. Is it really worth it?"

  • GOOD Feeling (happiness, fulfillment) - "Wow, it's on sale! I'm getting a great deal!"

These feelings are not always rational -- have you ever known someone who will drive 30 miles to save a couple dollars? Or someone who uses coupons to buy products they don't like?

Like I said, our expectations of value are not entirely rational, but they are very real nonetheless. From a $4 latte to an $8 movie to a $15,000 car, we evaluate purchases based on the expected emotional benefit in exchange for the money we give up to receive it.

When we go to Starbucks, we complain about the $4 latte... but then we go back the next day or next week. Apparently, the latte is worth the price even though we feel a little guilty about the $4.

There is a lot to this - the great book Influence covers the topic in far more detail.

The important thing to understand is that buying something is not simple. There's a lot going on, and that's why it's critically important for businesses to get the pricing right.

If you price something too high, you alienate buyers. People will kick the tires, but most of them won't take the car off the lot without more persuasive selling. That may seem fairly obvious, but the opposite is true as well.

If it's priced too low, this is also a big mistake, because perceived value is directly related to price. People are skeptical of advice on the cheap. Free is good, and reasonable-to-expensive is good, but cheap is bad.

What if you heard about a consultant who works for $9 an hour, would you think, "Wow, what a deal?" I suspect that most people would think, "Wow, they must not be very good."

Again, this may not reflect reality -- perhaps there's an awesome consultant out there who just likes pricing at the low-end -- but true or not, it reflects how we perceive value. When you hear about a $300 an hour consultant, you might not be able to hire her, but you usually respect her. The perception is that a $300 an hour consultant is much better than a $9 an hour consultant.

For another example, say you walked into Best Buy and saw a $99 iPod killer on the shelf. Would you buy it right away?

I suspect not. You'd automatically think it couldn't possibly be as good as a real iPod. You'd be very suspicious, because you expect iPods and even iPod knockoffs to be more expensive because they're worth more.

Those are somewhat hypothetical examples, but you get the idea. Let's take a look at a real-life, recent, highly-personal example.

Discount Airfare GuideThe UGDA Case Study

As many of you know, last week I released my first commercial product, the Unconventional Guide to Discount Airfare. This was definitely a labor of love and an emotional investment for me, because I've spent a lot of time working on the AONC site and building an audience over the past five months.

For anyone who believes that bloggers shouldn't sell things, let me assure you that there are a lot easier ways to make money. But on the other hand, I passionately believe that artists should be allowed to make money. (I wrote that post in part to preempt complaints about creating an online shop in addition to my free essays and other content.)

Since I've been an online entrepreneur for ten years, I'm not normally indecisive with pricing. I can usually look at something and know fairly quickly how much it should cost. But since this was a new market and my first "branded" product, I was a little nervous.

Before the launch, I sent off some emails to people I know and trust to get their advice on pricing. Unfortunately, there was no consensus.

My internet marketing friends, who sell ebooks every day for $67, $79, or $97, took a look at the guide and said I should price at $49. "Look at what you are giving people," said one.

"You're telling them how to get access to airline lounges, the truth and lies about upgrades, how to get elite status without flying, and on and on. This is worth hundreds of dollars."

Yes, that's all true. But I felt uncomfortable pricing at the $49 point -- I really wanted it to be more accessible. On the other hand, a few other respected experts said I should price lower than I expected.

$14.95, said one. $18 max, said another.

Yikes - I was equally uncomfortable with that idea. There is real value in the information I provide, and if I was selling it on the cheap, I'd rather just give it away. I'm not a mass-marketer; this is a niche product, and the average airfare costs $413 in North America. If someone can't afford $25, I don't mean to be insensitive, but they probably don't do much flying.

Thus, I had to make my own decision, and as much as I dislike the middle ground, that's what I went for - $24.97. I might sell more copies at a rock-bottom price point, and I might make more money selling at a higher price, but such is life with pricing decisions. You just have to make a decision and see how people respond.

So, how was the response?

Well, I won't be retiring to Monaco anytime soon, nor can I rely on this as anything close to a full-time income... but I think I have the potential to build a nice little business over the next year.

There were a couple people who complained about the price, and a couple people who said after reading the guide that they gladly would have paid more. I can live with that kind of healthy tension.

Oh, by the way - social proof is another important part of the price and value correlation. We'll have to cover this later, but in short, social proof is the public display of what other people think about your work.

Here are the early reviews, from real-life people:

I feel like I’ve stolen the book for that price. Well worth the investment. -Elliot Webb

And here's another, from Naomi who writes from Ontario over at Ittybiz:

"While I admit it takes a shotgun to my head or a hefty handful of Xanax to get me on an airplane -- I seriously considered taking a boat to Bali for my honeymoon -- sometimes it has to be done. This book actually makes flying seem kind of fun. Very informative, value packed, no fluff. The guide to airport lounges alone was worth the cover price. If you don't save money after reading this book you are quite frankly too stupid to be allowed on a plane without a chaperone."

(You may have noticed that Naomi is quite a direct person. Don't be offended. She's a friend.)

I have a lot more feedback like that, and I'll publish some of it on the product page over the next week or two. Elliot wrote his note to me at the same time someone else (who did not purchase) sent me a long rant telling me how expensive the guide was and how I was doing a disservice to the world, all marketing an evil, etc. I appreciated reading Elliot's note right after hearing from the unhappy person.

Despite the fact that the launch went well, there's always a few things you can learn from any success.

Here's my list of what-to-do-better in the future:

  • I should have included a 2-page sample. Someone said that they would like to know more about what they are getting. You guys are correct, and I've fixed that. Here's the sample. The sample is representative of the practical information included on each page of the guide.

  • The length could have been extended. This is the ultimate pricing paradox, and I've thought a lot about it. I've bought a few dozen ebooks over the years, and about half of them have cost me $49 or more. Almost all have provided good value, but almost all have been a bit too long for my taste.

There is inevitably a lot of good content but also a lot of fluff in the average ebook, and I wanted to avoid that with mine. I focused entirely on practical strategies and tactics, and left the fluff out. (There's no blank pages for notes, for example, or long checklists that take up extra pages.)

However... I now realize that some people decide on value based on a price-per-page basis.

If you think about it, this is highly irrational. If someone drew you a treasure map, would you worry that it was only on one page? But as noted previously, most purchase decisions involve more emotion than rationality. Thus, even though I offer free lifetime updates and will be adding more to the guide in the future, I probably should have had a few extra pages in there. Point noted.

  • Lastly, I couldn't do it this time, but in the future we'll do a better job with segmentation. I got emails from the U.K. and Australia asking for localized versions. I got emails asking for a higher-priced, higher-end version for business travelers most interested in flying First Class. I got emails from India and elsewhere asking for a bare-bones (but cheaper) version.

We're working on these ideas. I have to find the right balance there (i.e., I don't want 10 different guides for the same subject), but it's on my mind. For now, I have a makeshift solution for those international readers who are interested. If you're one of them, write me and I'll give you the details.

For the next guide, I'll take each of these lessons to heart and see how to make it even better. I'm working on it already, but it won't be coming out for a while. Like the first one, it's better to do it right than to do it quickly.

***

Getting Back to Basics

There's no way to eliminate the emotional process of buying something, but I recommend taking the process into the open. Asking serious value questions - not "What color is it?" or "How many pages is it?" but "How will this improve my life?" helps reduce the tension and ensure better choices. Another good question is, "Do I value this item (or service) more than I value the x dollars it will cost me?"

When I started thinking more about this, I started making different life choices. I made my decision to visit 100 countries by thinking about price and value. I entered and completed a Master's Degree program by thinking about price and value... but then I turned down a Ph.D. program by thinking about the same thing. It wasn't the right time for me.

Your mileage, as they say, will vary. You might not do the same things or make the same choices - in fact, I hope you'll do whatever it is you want to - but when you think carefully about price and value when buying (or selling), you'll usually make wiser decisions.

Good luck out there.

###

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Art and Money

Art and Money
Image by Jblndl
Lately I’ve had a lot of reasons to think a lot about the relationship between Art and Money. There's a lot to say about that subject, and we'll cover it from different angles over the next few months. To kick off the series, here's a quick story from the archives of unhappy people on the internet.

Andrea Scher writes over at Superhero Designs, where she also sells homemade jewelry and does commercial photography. For five years and counting, she’s provided regular inspiration for a hyperactive community of women, fellow artists, and self-proclaimed superheroes.

So anyway, last week Andrea announced that she would be doing a site redesign, and the new site will include a few spaces for sponsors in the right column. This is the normal protocol for full-time bloggers – build a community, write for free, and have some advertisers on the right-side that help pay the bills. That’s not my plan here, but I have no problem with people who do it that way.

No big deal, right? Well... in the comments section of an otherwise tame blog, a few people felt like the world had ended. Here’s what some of them had to say:

  • “it is not right to put an ad on your beauty. it is not healthy for everything to be for sale. this is a cultural sickness.” -kelly

  • “I really never thought I would see ads on your Superhero Journal. I won't read it anymore because I am tired and sickened by the selling of America. You can paint it and dress it in pearls but that's what this is. ADS. Ads. ads. I feel so sad.” –penelope

  • “i am opposed to advertising impacting every aspect of our existence and I wish more of us would keep boundaries around our creative space and say ‘this is not for sale!’" -katie

Someone even compared Andrea to a cocaine dealer and email spammer – yes, seriously. It reminded me of this article in my favorite non-newspaper, The Onion.

Really, putting an ad on a blog is as bad as selling cocaine? It seems that the hyperbole of the internet takes over in full force with some blog commentors, who strangely enough don’t usually provide links to their own blogs.

Of course, most people aren’t that silly. There were dozens of positive comments posted on Andrea’s blog supporting her decision, with 95% of the people expressing their appreciation for all of the free inspiration she continually brings to her community. In the end I have no doubt that she will benefit more from the exchange than if no one had complained at all.

But most of us tend to focus on – and worry about – the complainers who want to hold everyone down to the level of average.

I talked to someone from San Diego the other day and mentioned the singer-songwriter Jason Mraz, who lives there. “I really like his music,” I said.

“Yeah,” he said. “Although now that he is all famous and everything, he no longer plays coffee shops, so I don’t like him as much.”

You hear this kind of attitude a lot about musicians. Now that he can afford to have a house and buy health insurance for his family, Dave Matthews sucks. Coldplay was cool before they started selling out arenas, but now they are the band everyone loves to hate.

(The funny thing is that Coldplay’s new album has been #1 for weeks in most countries that track record sales… so if everyone hates them, who is buying the album? Hmmm.)

When you are a starving artist that lives by donations, that’s cool too. But when you become successful enough that more people want to appreciate your art, all of a sudden you become the target of jealousy and resentment from less successful people.

Unfortunately, it’s not only the critics who feel this way—some artists have a similar complex of their own that holds them back.

I usually end up meeting artists whenever I travel, and I've noticed that some (certainly not all, but a significant minority) seem to have a fear of letting money come anywhere near their art. They think that selling something, anything, is the same as “selling out.” They worry that people will criticize them if they decide to go commercial – and as we can see from Andrea’s recent experience, they’re probably right.

Paradoxically, by not taking the next step in their art, they are severely limiting themselves. Bill Cosby said once, “I don't know the key to success, but the key to failure is trying to please everybody.”

Being 100% non-commercial is safe and easy – no one can complain, because you work for free. To take it up a level, you have to enter the marketplace.

My Upcoming Cocaine Dealership

Talking about Art and Money is not a hypothetical discussion for me. I won't be putting ads on the site because that’s not really my style, but as I have said from the beginning, I have no objection to people earning money from their art form.

With that in mind, I’m creating a series of Unconventional Guides that will be offered for sale here on the site. The guides will feature 100% practical information focused on specific topics related to Life, Work, and Travel. In the guides I’ll explain exactly how I travel around the world, pay relatively little for airfare, earn money without a job, and so on.

More importantly, I’ll explain how you can do the same, or even better—how you can use the strategies to do whatever it is that you are interested in.

The first report is called the Unconventional Guide to Discount Airfare and will launch on Wednesday morning. I’m pretty excited about it. In 31 pages of specific strategies and tactics, I’ll tell you exactly how you can become your own travel guru and pay a lot less for plane tickets than virtually everyone else out there.

Of course, the guide will be professionally designed, include free updates for life, a complete satisfaction guarantee, coffee refills at Starbucks, etc.*

(*The coffee refills may not happen. But everything else will.)

I already know that some people will love this. I get emails every day asking for this kind of information, and I spent a lot of hours writing the Discount Airfare guide. I'll be surveying the readers who purchase it to determine which guide I should write next, and to keep it as accessible as possible, I'll price the guide a lot lower than market value.

Other people won’t love it or just won’t need the information, and that’s fine too – that’s why it’s a paid product, so that those who can benefit from it will buy it, and those for whom it is not relevant for can sit it out. No problem. Assuming this guide is well-received, I’ll be making more of them, and maybe something else will be a better fit for you. Or maybe not, and that’s also OK, because my writing on the site will always be free.

But if someone thinks I’m as bad as a cocaine dealer for selling products that improve people’s lives, well, they’ll just have to think that, because I could probably not convince them otherwise.

For everyone else, I hope you like it. I’ll see you on Wednesday with more details about the guide, and an order link for those who are interested.

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Building a Command Center for Your World Takeover Plans


Image by fensterbme - Click to enlarge
Before I went to Africa in 2002, I had been working as an entrepreneur for about two years. During the first year, I worked at a $50 plywood desk in a corner of my bedroom that was too small and threatened to fall apart whenever I set anything on it. It did the job for a while, but as I spent more and more time sitting there, it quickly got old. I finally broke down and decided to upgrade. I went to Office Depot and spent nearly $500, a huge sum of money for me at the time, on what I decided to call The Ark. The Ark, recreated above thanks to a public domain image, was my Command Center. My actual Ark was dismantled when I went overseas, but that's pretty much what it looked like. When you go from a $50 desk that threatens to fall apart at any moment to a desk like that, you feel pretty powerful. You also get a lot more done. If you’re going to take over the world, or do pretty much anything worthwhile, you’ll need a Command Center of your own. This Command Center—you can call it a workspace, if you want to be traditional—must enable you to do all the work you need to do to accomplish your goals. Ideally, a Command Center that suits your own unique abilities will foster your productivity and facilitate a good working environment. You can save money in lots of ways, but don’t skimp too much on a workspace that helps you work well. Looking through the Office Max and Staples websites, where you can find a decent selection of Command Centers, here are a few that I like:
I chose a selection of different sizes to accommodate varying work spaces. Ideally, you won't shop for a desk like that online -- it's a lot better to do this kind of shopping in person whenever possible. Other Weapons of Mass Construction Many good workspaces are not technology centric. I do my best writing with a pen on a legal pad, so be sure to have plenty of pens and paper around even if you usually prefer the computer. Another important element of your Command Center can be a series of project boards that you can hang up. These project boards – bulletin, dry erase, calendar system, choose your favorite or use them all– exist to keep you focused on what you’re trying to accomplish. If you’re like me, you have a lot of things going at once, so use several different boards. Put the projects up and start working on them task-by-task. Here are a few other things you may want for your Command Center:
  • A nice chair
  • Inbox for your GTD system
  • Nearby coffee maker that is as simple or as fancy as you like
  • Nice lamp
  • Cell phone charger
  • Dual monitor system
  • Laser printer
  • Wireless router
What if your goals call for constant work on the road? Simply put, if you’re working on the road, you need a Mobile Command Center. To be honest, I find this challenging. As much as I travel, I wouldn’t rely on a mobile model exclusively. I do travel with a laptop, a SmartPhone, and my Moleskin journal… but beyond that, I haven’t worried too much about setting up my show on the road. I once heard of a guy who carried two laptops and a printer with him wherever he went, but that just sounds stressful to me. Lots of other people do this well, though, so maybe you should check with them. What about artists and other non-business types? You still need a Command Center. You need a space to create or do whatever it is you do. It doesn’t need to be a whole office—a corner is fine. A coffee shop may work for some people, although as I mentioned above, a stationary space is usually better in the long run. Writers and artists of all kinds are just in need of their own space as anyone else. *** Your Command Center is your ultimate workspace. It’s where you will plan and accomplish great things. Are you completely satisfied with your working environment? If so, great! You’re ahead of most of the rest of us. If you’re not satisfied, think about what you need to upgrade. Make a plan to get your own Ark, or whatever you need to make a space of your own. Make it a priority, and as you work on taking over the world—or at least changing it for the better—your Command Center will reward you. ### RSS Feed | Email Updates | A Brief Guide To World Domination Did you enjoy this article? Please pass it on to others at your favorite social networking site, or share your own thoughts in the comments below.

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Scaling Up Your Business or Your Life

Let’s say you have a decent little business going. Something on the Internet, perhaps—since that’s the way an estimated 24 million of us earn our living these days, just in North America alone. I’ve found that there are two sets of Big Challenges faced by most Small Businesses. The first challenge is getting some initial…

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9 Insane Strategies to Transform Your Business

My friend Jonathan Fields wrote a post once about how the road to blogging success is paved with insanity. Being a conventional blogger is not only boring, as Jonathan noted, but it also fails to lead to much attention. The same is true in most small companies and organizations. If you’re running Proctor & Gamble,…

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How To Retire the Day After Tomorrow

Fed up with work? Not enough time for the things you want to do? Here’s the answer: decide to retire! You don’t have to be 62 ½ years old, and you don’t have to be rich. In fact, you can usually make plans to retire in about 36 hours. That’s the average time it takes…

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