Step Formula To Start An ONLINE BUSINESS

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Ninety-five years ago a young Jewish man of 16 left a small Ukrainian village in Czarist Russia to flee from persecution and almost certain death. He had a cousin in America who sponsored him, and he was able to leave Russia to settle in the most northern part of Wisconsin. Apparently they loved cold weather! This newcomer fathered six children. When the oldest was 18 and the youngest was only 4, he was killed in an automobile accident. Those six children lived through poverty and then all went on to become very successful beyond the wildest of dreams of that Russian immigrant. This man did not live a distinguished life.

His life was one of hard, backbreaking work as a fruit peddler with long hours. His evenings were filled with reading and studying. Very few people knew this man, but he is remembered mostly for the four simple words that he lived by and repeated to his children over and over again. The words became the mantra for his family and the battle cry of his six successful children. The words seem almost meaningless until you look at them a little closer: “It’s a new America.”

Online Business Solutions

We started to learn about the Internet in the early 1990s, although it had been around a lot longer. By 1995, we learned what WWW meant worldwide web and began to hear predictions that it would change the way we live and do business. New businesses started to pop up. Web designing became an industry. Someone with two years’ experience creating web sites was referred to as a seasoned pro.

The big concern early on was how people were going to find you online. Obviously that was before Google and Yahoo. Then came the onslaught of Internet-only businesses. In the late 1990s, it seemed that the whole world would be buying everything online. From furniture to pet food, everything was being sold online. It was the age of the Dot Com. We got an Internet drunk.

 Wall Street started throwing money at Internet startups that frankly didn’t deserve it. Companies that were losing money were getting millions of dollars in the hopes that they would eventually make money. The problem was with the word eventually. What investors perceived as eventually and what it would actually take were two different timetables. Unfortunately, investors couldn’t wait and the exodus began.

Overreaction has always been the M.O. of Wall Street. Understand that widespread Internet use is less than 10 years old; that’s when Netscape introduced the first browser. Growth has been nothing short of phenomenal. Customers are feeling more and more secure about purchasing online and they are doing it in record numbers every year.

Yet online businesses still only represent the minority of total revenues produced. Having said that, there are some industries that have become dominated by online methods. The travel business—think Travelocity—is one of them, as is the legendary success of Amazon.com in books and media and Monster.com in the personnel business.

MORE GOOD NEWS IT’S ALL ABOUT THE SPEED

Online businesses have opened new doors because of the speed and quality of the information. You can make a great buy in the morning, tell your customers you have something they need in 10 Uncovering the Possibilities c02_segel.qxd 8/7/06 10:50 PM Page 10 the early afternoon, and receive orders before 4:00 P.M.—before the merchandise comes in the next morning. Better than that is you don’t have to take possession of the merchandise You can get paid for merchandise before you get an invoice. If you are selling services, it gets even better.

Think of which online solutions have touched almost every industry in the world. New applications are only limited by one’s imagination and desire. The sacred cows of the industry are being slain. Entire sales processes are being converted into online solutions daily. Who would have thought the neighborhood yard sale could be replaced by an online auction site?

ONLINE SOLUTIONS ARE A NEW WAY TO MARKET

Think about this: We, as business people, have a new way to market to both potential and existing customers. Online solutions have become a new basic in marketing. The exciting part is that within the online world there are many different ways to solve today’s marketing challenges. We have progressed from selling from carts to storefronts with free and ample parking, catalogs, home parties, telemarketing, fax marketing, TV shopping networks, and now the fastest and least expensive of them all— e-commerce. It is the promise of a new platform to sell our goods and services. That alone would be sufficient, but there is more.

The Online World Creates New Ways to Communicate to Your Customers and Build Relationships

There was always face to face, the mail, or the telephone call. Now we have added e-mail, e-zines, instant messaging, text messaging, informing our customers or clients about promotions, new products, techniques, new arrivals, previews of what’s coming in, changes in the industry, how to best use the product, or even just topics of interest to our customers. Again, doing it faster Online Business Solutions 11 and cheaper than all of the rest. To say that we are just communicating with our customers is an understatement because we are getting our customers involved with our business—we are creating an interactive community.

Rick recently experienced the power of creating a community when he spoke for a group that he has spoken at before. Many of the attendees read Rick’s weekly free business tip that is e-mailed to them every Tuesday morning. As he shared experience in story form, people in the audience started nodding their heads as if to say, “We read that in your column and it does make sense.”

Online initiatives can make things obsolete very quickly because we are communicating in real-time. When we communicate better, our relationships build. It’s all about keeping in touch with our customers and following up on the things that are important to them. Communicating better is knowing more about customers than ever before, what they like, when they usually buy it, and what price is the right price.

It is about the friendly reminders that pinpoint our customers and build relationships. It’s not about sending generic pieces or blind messages to the masses. It’s about low cost, highly effective personalization to our community. That’s what online solutions for business are all about. It’s about keeping in touch almost effortlessly.

Online Solutions Are a New Way to Price and Present Our Goods and Services

If there is one single universal error that businesses make, it is not stopping to see what their competition is doing. The bigger the business, the bigger the teams that spy on—or shop—the competition. We know the word “spy” is a bit rough, but that’s really what it is. Plumbers don’t always shop other web sites for plumbers, but they should. Most smaller businesses will do it occasionally but rarely on a regular basis. Obviously, in years 12 Uncovering the Possibilities c02_segel.qxd 8/7/06 10:50 PM Page 12 past, it wasn’t the easiest thing to do. Today there is no excuse. That’s what the online world has done for pricing and presentation.

You can see what other people in your industry are doing, what you like, what you dislike, what could work for you. You can even go on eBay to see if similar items appear and what they are selling for. Let customers decide the price they want to pay. Auction has allowed the business to do just that.

Yes, auctions are an integral element of e-commerce that should and are being included in almost every business’s online initiatives. Isn’t that the simplest and surest way to price? What someone is willing to pay for something is the right price to sell it at. We can obtain presentation and pricing information easily online and seamlessly integrate the information into our business.

Why Do People Buy Online?

The strange thing about this chapter title is the instant reaction people have when we discuss why we buy online. People become very opinionated, emphatic, and even stubborn about their reason and everyone believes they are right. Some automatically say price. Others say “It’s easier.” Some say, “It’s fun.” And the insomniacs and overworked say they can shop in the middle of the night.

E-commerce and specifically buying online represent different things to different people. We all have different motivations and they are all justified. It is almost a “Tastes Great or Less Filling” controversy. No one is wrong and everybody is right. However, traditional marketing tells us that there are two basic ways to define our customers and clients: either with demographics—the statistical information of who our customers are, or psychographics—the lifestyles information of what our customers do.

The online world has clearly made a strong case for a new category that we refer to as Motographics or the motivation for why we buy what we buy. Certainly, demographic and psychographic information can be an indicator of one’s motivation; but Motographics is the actual reason that the sale or transaction occurs. Are we splitting hairs a bit? Yes, but with today’s technology we have the ability and information to be able to microniche a market, or what we like to refer to as “niche within a niche, within a niche . . .” It is important to understand these motivations or reasons before we design our online business. We need to first decide what buying motivation group or groups we are appealing to, because this will change the way we do things and why we do things.

You will begin to see what I mean as we discuss various reasons. Many are the same reasons our clients or customers already do business with us but because of the unique qualities of online buying, the motivations either change or strengthen. A convenience buyer, someone that is motivated by the currency of time, will love the online experience only if it has a perception of saving time. One-click shopping at Amazon was made for this form of motivation. Let’s look now at some of the biggest motivators.

THE PRICE MOTIVATION

It all started here. Go online and you can save money. We all looked at the reduced level of operating expenses and said it only makes sense that something would be cheaper online. No expensive locations, no salespeople, fewer employees, and you can be open 24/7. It made sense that prices would be cheaper. To further justify that way of thinking, there was a sense of risk in the begin18 Uncovering the Possibilities ning in relation to security.

That only forwarded the belief that the prices must be cheaper. Before you question risk, let’s not forget that greed and money are powerful. Then throw in the thrill of the hunt. You were putting your credit card information online to a vendor that had only been in business a few months. We weren’t even sure we would get the merchandise let alone have our identity or credit card stolen. As dangerous as that might have sounded, it all added to the lower price mystique.

Now shopping BOTS such as Google’s Froogle have arrived, which search the web for the lowest-price vendor online. This has advantages and obvious disadvantages. The advantages are that a little-known business can get noticed by the world if it chooses to become the lowest-price provider. Yes, you will probably do business that way but can you make money that way and is it the type of business you really want to be? Do you want to build your business with just a price? Every business, however, needs that promotable item, and if you are using the price to lure them to your business so that you can wow them with speed, reliability, or service, then it has its place.

It is not hard to believe that we would go online originally for the savings. Many people believe it is the purpose of the web: to save the consumer money and to be the low-cost alternative. The goal is to build a customer base. Don’t try to do it with just price because the customer it attracts is not loyal to you but rather your low prices.

If someone is cheaper, then you are history. Although e-commerce has its roots as the low-price alternative, it has come a long way from those days. Remember, you are entering the online world after the first two waves of the infantry have hit the beaches. A path exists for us and fighting the price wars is full of landmines that have been the demise of many of the first wave of online businesses.

How Do You Appeal to the Price Customer?

Before you answer that, ask yourself the question, “Why would you want to appeal to the price buyer?” If you are in the business of “deals” or discount or off-price merchandise, then you embrace that customer. But, as opposed to the traditional channels of doing business, don’t try to fool customers because they can comparison shop in seconds.

Live by price and you will die by price. The problem is the buyer is only loyal to the price, not you unless you can wow them in another way. Southwest Airlines, which made its mark with low prices and fun, added an additional differentiator that has become as important as the price and that is a web site that is so easy to understand and use.

You scroll through a list of cities Southwest Airlines flies to and from, and the site lists all of the available flight times and a choice of fares. By making its web site easy to use, Southwest was able to differentiate itself from competing airlines that had begun matching it on price.

THE RESEARCH MOTIVATION

This was definitely the second motivation for the earlier online shopper. Let your fingers do the walking. Shop 20 different businesses in an hour and you could become a better-informed consumer. As this trend was developing, businesses would joke that customers would know more about what they sell than they do. That part hasn’t changed, but the difference between now and then is that in the past, the customer would physically shop the business or at least call the business during the times the business was open. Today, however, the customer eliminates the additional step since trust of the online business has increased, security features were instituted, and remedies were put in place.

How Do You Appeal to the Research Customer?

Understanding that customers shop you for information, it is important to plan our e-commerce initiatives with information, knowledge about our products, ways to use it, and a continuing source of that degree of expertise. That is why it is critical for most online businesses to offer regular newsletters or e-zines or e-mails that solely focus on educating the consumer. Position your business as an expert and you will have more traffic than you can handle. We pay extra for expertise. We can justify that premium in our minds.

THE CONVENIENCE MOTIVATOR

The power of convenience won the web. Any time we can make things easier and faster, it always beats out the alternative. For example, we can all buy a five-year-old computer that is dirt cheap and probably very reliable. But do you really want to wait 40 seconds to change programs? If you have been working with a Why Do People Buy Online? 21 high-speed connection and have to use dial-up, you are willing to spend almost anything for a high-speed broadband connection. That’s why hotels can charge $10 or $12 a day for a highspeed Internet connection.

It’s easier to go online to look for a specific product without having to waste time driving to or even hunting for the business on phone. Besides why hassle with parking the car or shopping various places when it can all be done with just a few clicks from home? But that’s only the beginning of convenience. What about shopping at 3:00 A.M in your bathrobe? That’s convenient. When we get an e-mail from a business that informs us that the item that we are looking for just came in, as Amazon does with specific books we like to read, that’s convenient.

When we shop at a site and it recommends alternatives to the selection off to the side, that’s convenient. Just go to Land’s End and pick out a pair of chinos. The site will make suggestions based on what you have chosen. It is helpful, and many times we will buy the suggestions. They are saving us time, serving us better, while increasing the vendor’s business. When we can go online to a business we buy from regularly, it has all of our pertinent information, including credit card information, on file and all we have to do is a fast click. That’s convenience.

One of us recently bought a book on Amazon in less than one minute from start to finish. That is why convenience is winning on the web. The key question we must constantly ask ourselves is, is our business as easy and user-friendly as possible? As discussed earlier, look at the Southwest Airlines web site. It is so simple and easy to use that you wonder why other airlines don’t utilize its model. We can build a business without the best product, without the lowest price, but by being the most convenient. Convenience is king. Master it and you will be well on your way to online success.

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