Letters From Dan

Last week I spoke at the SMAC conference about the role of social media in your business. Social Media is nothing more than a collection of tools you can harness for your business. While some make social media the crux of their business – most have choices. The questions I posed are:

• What are your business goals of social media going to be?
• Where are you going to focus your time?
• Are you actively moving your audience with you?
  more The Role of Social (…)

This is a chapter from our Marketing Calendar Blueprint product (which I’ll also be talking about at the SMAC event you see above in the blog header). The Marketing Calendar Blueprint teaches you how to strategically plan your year so you always be providing to your audience what they are looking for.

The idea is simple . . . and so is the execution. One of the chapters is about deciding which social media site to work on. . . there are so many, aren’t there? Here’s a sneak peek:

Nissan’s Social Media Marketing campaign has the engine of a huge company, but the heart of small one. I was truly surprised by the sincerity, integrity and intimacy by which Nissan operates their program.

For a car company trying to make money in times that are extremely difficult, I I was surprised how little of the discussion was about sales, ROI, or monetization. It was quite obvious during the course of the discussion that sales were the goal of some other Nissan department. The social media marketing department was about customer experience and branding.

So many horror stories, and yet they can all be avoided. Learning how to use Groupon for your business really means . . . what do you know about your business?

How do you make money?

The first step in using Groupon for your business is understanding where money is made in your business. For most businesses, a customer’s seventh purchase is more profitable than the first purchase because of the media cost required to acquire them as a customer. In that case the money is made in repeat buyers.

Some business owners understand that if they can get a customer to come in a 5th time, that customer will likely come in many more times. They may have detected customers who don’t make it past 4 just don’t have the same proclivity to shop there regularly as the ones that make 5.

In some businesses the money is made in large items. For example a watercolor painting store may really do well selling the large canvases and specialty brushes, whereas their paint-by-number and smaller painting kits don’t have the same margin. For restaurants that may translate to big money in catering dollars compared to the high cost of the single slice pizza customer.

Part of learning how to use Groupon for your business is understanding what kind of customer makes you the most money – and what is it about those customers that are different than the rest.

Defining the strategy

Before we get to Groupon, it’s imperative to understand the path that someone takes from before they know you exist until they are buying your high margin items. How does that path compare to the customers who never make it to the high margin items? Drawing or tracking the path that your customers take on that journey will give you great insight into what types of marketing you should be doing.

While it’s not easy to do, tracking the source of your customers over the long term makes enormous business sense and well worth the money spent. For a cleaning company it would be great to know if the “get your bathrooms squeaky clean” or “spend time with your kids, hire a maid” produced the most profitable batch of customers.

Crafting the Deal

If your ideal client is the mom who buys a full year of gymnastics lessons, because that parent is likely going to buy 2, 3 and 4 years of gymnastics lessons, then it makes sense to create a special that encourages mom’s to buy a full year. Whether that special is on a flyer, in Groupon or through e-mail it doesn’t really matter. Anyone gained through that effort is likely to be a customer for the next 4 years.

Suppose it is the large, blank canvas buyer that makes you the most money. . . If that’s the case, is it the beginner painter or more intermediate painter who takes on a large canvas painting? If it’s the more advanced, perhaps creating an offer for a very specialized art technique class would appeal to intermediate painters – the ones who buy the big canvases. An “intro to painting” class may not be as lucrative in the long run.

For the businesses that need customers to come in that magic 5th time to make all the difference, perhaps the strategy is to get a loyalty rewards card in their hand, which offers a discount or free item on their 5th visit. Defining the type of customer that takes and uses loyalty cards is what’s to be decided then. That’s whom you direct the deal or special.

The messaging in the special, whether it’s Groupon or not, is critical to the success of the marketing. There’s a huge difference between a list of serious, intermediate artists who’ve bought at your shop versus a list of beginner artists who just wanted to try their hand at painting. Which list can you monetize later?

Using Groupon

Determining how to use Groupon for your business comes down to what you can afford to pay to acquire customers who fit the mold of your most profitable ones. If that gymnastics mom is going to spend $2,700 over the course of 4 years with you, would it be worth spending $150 to acquire that customer?

Groupon doesn’t work too much differently than ValPak, Yellow Pages or Billboards. If you post the same deal at all 4, you’ve got all the same expenses- just allocated differently. With Groupon, you may be offering $75 of services for $30 – which means you end up with $15. If you did that same ad in ValPak, Yellow Pages or on a Billboard, you’d get the whole $30 from the customer – except you’d have to write a check later to pay for the media. Either case you end up with $15.

The key to Groupon is starting slow. Create a deal that isn’t super fantastic, like $75 worth for $55. You might go broke doing $75 of value for $5 – and attract the wrong customers. Then try at $45 and see who that attracts, if not enough lower the price to $35 the next time and see what that brings in. Test. Test. Test.

If you play your cards right you’ll craft a deal you can sell anywhere, anyday, anytime and hopefully everyday.  And the testing you get through Groupon can certainly be repurposed into your Yellow Page ad, your Billboard and anywhere else you advertise. The only other problem you have to consider is cash flow. But that’s a different discussion.

On April 9, 2011 TEDx Nashville took place at Tennessee’s Performing Arts Center (TPAC). It was a day filled with great folks, great speeches and equally wonderful speakers. My favorite, by far, was given by Greg Stielstra. Greg authored the book PyroMarketing, which I highly recommend for anyone interested in marketing.

Greg covered a variety of topics, all building upon one another until he made the case that it only takes changing 5% of the population to change the entire population’s behavior. That could be your audience, your city, your country. Even though we’re all individuals, our choices are highly influenced by those we interact with. That sense of “group think”, “Lemming leadership” and “social proof” work together to make Social Media what it is.

Please, watch how Greg cleverly explains why the new Social Marketing Paradigm is logically replacing the mass media strategies of old. It’s not just an entertaining speech; it’s truly a wake up call to marketers. Ultimately, if you don’t understand how people behave, you won’t be able to affect their decisions.

Also on the TEDx Nashville schedule that I’d recommend watching are David Mead’s talk on Amateurism. Amateurism was a great title, but it doesn’t really describe it for the unknowing. David eloquently explains how taking on the role of an amateur in his own life and business has really made all the difference in his love of life, joy in his job and appreciation for what he really brings to the world.

And on a bit of a lighter note, Roger Cook’s song and talk about the history of Coca-Cola was pretty cool. Roger wrote the song “I’d like to teach the world to sing” which became Coke’s mantra and help propel Coke to marketing stardom. I’ll find that and will post it soon. Stay tuned!

If you haven’t seen this carp hunters video that went viral out of Peoria, IL – then you’re missing out. While it doesn’t have the giggling associated with the talking babies video – it’s got a whole lot more that makes it an instant video hit!

Watch the video, then let’s talk about what makes it great – or not so great:

So what are negative elements of this video to start with? I’d say the intro is the one thing that will have slowed its viral growth. When you can get directly to the meat of the action within seconds of pressing play, you’ve got a much better chance at someone passing it on.

While the lead-up pics of the costumes drag for a couple more seconds, they do lend to the wonder and mystique as to whether these boys are going to impale themselves or not. Without that wonder, I think most wouldn’t get to the final frame of the video.

Imagine all the angles this video features that has people recommending it to others: kids, music, speed boats, boating, danger, “holy mackeral moments”, swords, fighting, the medieval angle, water-skiing, carp fishing, jumping fish, home made costumes, spikes. . . .etc. . . This has everything you’d ever want in a viral video . . .except babies and dogs.

What do you think? As of the publishing of this post, the video has 101,231 hits (May 4, 2011). What does it have now? Take a look and leave the viewcount in the comments below.

I’ve sent out e-mails with different links to the video and will share with you what happens as some people forward it and others do not.