Success Rule Book

Marketing - Part 1 - Build a better mousetrap...

"Build a better mousetrap, and the world will beat a path to your door." - misquote of a misquote of a comment by Ralph Waldo Emerson

"Build it and they will come" - misquote of a phrase from the movie Film of Dreams, which is about a man who builds a baseball field in an Iowa cornfield.

The above phrases have entered our culture. Sadly, those aren't just misquotes. They're also mistaken.

If you expect the world to beat a path to your door, you'll be waiting a very long time.

The world is not psychic. If your company's potential customers do not know that your company exists, or what it sells, you won't sell anything. You may have the best product in the world, but that won't help you one bit. The world is full of companies with great products that are having their butts kicked by competitors with inferior products, higher prices, but superior marketing strategies. Firms with great marketing and adequate products will almost always beat firms with adequate marketing and superior products.

So don't insist on product perfection. As soon as you have an adequate product, start marketing it right away. If the market thinks your business plan sucks, it's best to find that out before you've invested your time and money gold-plating your lead balloon!

By marketing early, your business plan can be tested and refined. You'll develop a small customer base on whom you can experiment, testing cross-selling and up-selling strategies. The customers and prospects you encounter can provide you with valuable insights that will help you set your prices, hone your marketing messages, and develop product features your customers will value. Whilst you improve your product, these new customers will pay your overheads, marketing and product development costs.

Many start-ups spend too much time perfecting their product, and not enough time marketing it. They say to themselves that if only they were to create something special, their delighted customers would recommend it to friends and colleagues, and success would be assured. Recommendation-based business models make great copy in business magazines when they work. But most of the time they work too slowly, or not at all. So you're better off selling an imperfect product, and reinvesting the profits made in marketing and product development, than hoping the marketing will take care of itself.

Here's a story that really brought this home to me. Serial entrepreneur Dan Sherman wrote an e-book, which he published for free on one of his web sites. What could be more attractive than free? Well, Dan's a savvy man. He decided to charge for the e-book and invest the money raised into advertising. The result? A fifty-fold increase in traffic. The reduction in the percentage of visitors viewing his product (because of the charge) was more than made up by the tidal wave of new visitors finding his site because of the advertising. More people read his e-book, despite it costing more! Well targeted marketing works. And it can pay for itself.

Back in 1999 US company Shanje Inc (then called PairNet) was providing hosting of an unlimited number of web sites for $30 per month. Few people in Britain had come across it. Savvy school boy Andrew Michael decided to take out ads in British Internet magazines marketing his company's inferior and more expensive copy of Shanje's business model. His firm was less established, and back then had inferior technical expertise. His company Fasthosts Internet Ltd continued to spend its profits on full page ads in UK Internet magazines. The firm, set up in a bedroom in 1999, now has a turnover of over $40m, revenues growing by 40%+ pa, and an estimated value of $80 million dollars. Shanje isn't worth anything close to that.

Why did Fasthosts eclipse Shanje? Not technical knowledge. Not Pricing. Not business experience. At least, not then. The key difference, that made all the difference, was Marketing.

Well managed marketing is a net profit generator, not an expense. It pays for itself by increasing sales. The sort of money you personally want to make in business will only come from owning a business that has millions of dollars in sales. You'll get those sales through marketing.

I hope that in this post I've convinced you to market early, and often, and to take marketing seriously.

As you start the business that will make you rich, I suggest you split your time and resources in the following proportions:
20% - idea evaluation and market research
10% - product/service sourcing and creation
5% - legalities
5% - fulfillment
60% - marketing and selling.

For once you have a good business model and an adequate product or service, there is a larger pay-off to be had from marketing and sales than from other area on which you could focus.

Update: 10th May 2006 - Fasthosts has been sold for £61.5m ($114m)

Should v Fancy: Your Key Life Choice

The life you are experiencing right now, is the result of thousands of free choices you have made in the past.

Your salary, your job, your working hours are the consequence of the choices you have made in the past.

The quality of your relationships? Those are the consequence of the choices you have made in the past.

Your weight and fitness? Yep, the consequence of your past choices.

If you're not happy with your job, your salary, your weight or your relationships, then you must learn to make better choices.
Most choices boil down to a simple question. Will you do as you SHOULD do, or will you do as you FANCY?

For example, will you blow all your income each month, as you fancy, or forgo and delay expenditure - saving money, as you should?

Will you study and put in overtime to further your career? Or will you spend your time on unproductive but enjoyable activities - as you fancy?

Will you choose the tasty meal you fancy, or the healthy that one you should eat?

Examine those areas of your life with which you are dissatisfied. You will find you have failed to do what you should have done, and instead you have done as you fancied.

At the time, you rationalized your poor choices, saying to yourself "it's only temporary" and that you would do the right thing 'soon'. Only you didn't.

You told yourself that the decision was small, and didn't matter. What you fancied was harmless, and the outcome of what you should have done would have provided but a minor benefit. Yet those benefits mount up, and the harm of 'what I fancy' soon mounts up also.

It soon mounts up to a job that does not interest or stretch you, a salary far below the one you could be earning, obesity and in retirement - poverty.

The benefits of those poor choice are short-term, but their adverse affects in the long term are huge.

'It's a bad time for me to make this stressful change in behavior' people say to themselves. But for them, there will never be a good time.

If you're to become the outrageously successful, talented, and rich person you could be, you have to grow the balls to do as you SHOULD, not as you FANCY. Sure it's tough, but after a short while you start to get the pay-off

In an ideal world you would fancy doing what you should be doing.

Back to the real world, life doesn't work like that. We all have things we would LIKE to do, that are at odds with what we SHOULD do. And vica versa.

A key trait of the successful is they do what they SHOULD, not what they FANCY, even though short-term this is not in their interests. They study or work, rather than socialize with friends. They save, rather than spend all their salary each month. They go to the gym, rather than watch TV.

Now some of the successful actually like the good activities. What they ought to do, and what they fancy doing are in close alignment. However most successful people don't like their successful actions anymore than you would.

Those thin toned gym-goers? Most dislike the hassle of going to the gym.

The committed workers who are on top of their game - and still in the office at 8pm? They don't want to be there.

The academically successful? They would rather be out drinking and socializing with their friends than studying and doing boring assignments.

Most MBAs, CPAs, ACCAs loathed their studying to get that qualification. I have yet to meet an ACCA who doesn't hate with a passion the study they had to do to pass their ACCA exams.

The point is that the successful hate doing as they ought almost as much as you would. But they knuckle down and do it, despite all that.

For a long time now you have, like most of the population, picked what you fancied, over what you should do. And you are suffering the consequences right now.

Looking forward, you're not where you want to be.

You know where you want to get to.

You know what you should do.

Learn from your past mistakes. From now on, choose to do more of what you should, and less of what you fancy. It will get you where you want to be. Wealth, enjoyment, health and freedom are worth their price.

So what choice will you make - SHOULD or FANCY?