Boil It Down To One Customer

Let’s say, I am selling a software product for $100 per month subscription. How much would I pay for a new additional customer? In other words, if I can simply pay to acquire another 40 or 50 customers per month, what would I be willing to part with?

To answer this, you should calculate the “Life Time Value” (LTV) of your paying customer. In other words, how many months does one customer continue paying the $100? If the answer is 5 months, then your LTV is $500. Of course, to earn $500 you would not spend more than this amount on acquiring a customer.

There are lots of equations, depending on the product, to derive the ideal acquisition cost. But I believe the situation is different for everyone. For example, in venture-funded software companies, or newer ecommerce companies, folks spend an insane number of dollars to acquire customers (at first), because they are trying to capture a large portion of the market and create their brand name. In other cases, there is stiff competition in what you are pursuing, and thus you will need more marketing muscle.

However, my view is simple – you should spend what you are comfortable with. I will be chewed out by analysts and math geniuses for suggesting this approach, but I have my reasons.

Unless you have a strongly defined goal, such as, “I need 1000 paying customers to launch the phase 2 of my idea,” you should spend based on:

1.) The cash you have available for the next 12 months

2.) all other costs that you have to account for, from the $500 revenue per customer

Of course, not all costs are variable (on a per customer basis), but you should assume that you are not going to acquire 10X customers in the next couple months.

But Where Do I Spend My Money?

After all the above calculations, you may conclude that you are comfortable spending $100 to acquire one new customer. Since we do not have a specific business or product example, I am going to stick to my software subscription model from above.

Let’s assume you will scout out all the different options such as Google Adwords, email newsletter campaigns run by reputed vendors/partners that serve your audience, online banner ads and ad networks. “Scouting out” means you will have to make an estimate (educated guess) on what traffic is going to give you one new customer for every $100 spent.

Let’s look at this example to understand how to make this guess better:

You are setting up an Adwords campaign with a total budget of $1500 per month ($50 per day). The keywords that you want have suggested bids of $3/click for the first page. Assuming your budget gets utilized every day; this translates to 500 clicks for the month. From your site’s past traffic data, you must have calculated the number of visits that convert to customers.

For example, if 10% of visitors sign up for the trial, and then 10% of those pay – your result for the Adwords campaign would be 50 trials (10% of 500) and 5 paying customers (10% of 50). At $1500, that translates to a $300 acquisition cost. Three times more than your $100 comfort level.

So maybe Adwords is not for you. The only way to find better channels is to either experiment with a few different networks or get references and reviews from advertisers going after the exact same market. On the flip side, keep in mind that you need to stick to a campaign for at least 4-6 weeks. Doing something for a week and calling it a failure is simply not enough data.

While assessing different ad networks, ask them what their average CTRs (Click through Rates) are. This is relevant when you are paying per impressions, instead of per clicks. These networks will take a fixed sum of money from you and promise, let’s say, 200,000 impressions. But you need to know the average clicks that advertisers get on those particular sites.

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Of course, every manager has a different outlook – some of us “hire fast, learn fast and fail fast,” whereas some of us passively look at many resumes and only make an addition to the team when it feels right. I’ve made my fair share of errors and would like to share an example that might help when you are at the next crossroads and in a hurry.

I was looking for an online marketing person and started furiously going through LinkedIn for profiles that had keywords of certain skills that were required. After I found a few profiles, I cold wrote to a particular prospect and heard back from her. She shared her detailed resume with me and it looked like a dream. After I explained the role to her, she seemed positive that it was her domain and she joined the next day.

Over the next few weeks, she worked very hard and made a difference to our efforts. Her skills were matching with many peripheral tasks, except for the core role she was hired for. And the mistake was entirely mine. I made a few notes to myself:

Never Absorb The Resume Or The LinkedIn Profile On Face Value

Get evidence of past work or go through some testing or sample review. For engineers, this can be writing a piece of code during the interview.  For content writers it would be writing a sample piece.

Understand The Cost Of Hurrying

You can fill a role quickly but if the person is not taking your load off instantly, then chances are they are increasing the load. The relevant experience can contribute to your workload, but if a person needs to be taught everything from scratch – you will be taking time out of your job to show them the way. Depending on how fast your small business is growing, this can be challenging.

References Are Not Always Helpful

When you ask someone for a reference, of course they are going to give you a positive one. Skip this step. Especially if you are a small business without corporate guidelines.  Go with your gut and use logic.

Lots Of Trial Projects

If you can, take people on short-term projects to help you with different parts of your business. As a small business, you have to depend on freelancers and consultants for certain roles anyway. Make sure you have a good pipeline of folks helping you as freelancers. As your business grows, you will have the opportunity to offer full-time roles to these folks, and you will know them extremely well by then.

There is no perfect hire and there are no perfect hiring tips or guidelines. We can simply learn from our own mistakes and hopefully from mistakes of others.

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Do I have something to say?

Most blogs or publications provide tips, advice and/or opinions. If you are providing any of the above, ensure that you are presenting your experience. Your true experience is valuable but a collation of generic facts found online is not. Folks are being flooded with more and more articles online and if they start to read the same, it is a disservice to the reader.

Will my words help the reader in any way?

Usually, the blogs that I learn from have a combination of an experienced author with a lot of deep research. By experience, I mean the author is an industry expert or leader that has several years of execution under their belt. The research is analysis that they have gathered over a period of time. Such information is bound to be helpful to a certain set of readers. Are you providing the same value?

Why am I doing this?

Do you want to maintain and share a regular blog to increase traffic to your site? This is a totally valid reason. But there might be other ways of increasing traffic which are more in sync with your strengths. You do not have to start giving out tips just because there are many other examples out there. Listing your sites in the right places and doing the occasional guest blog might be more rewarding than pushing yourself to produce content every day.

I want to talk to my target audience

Good content increases engagement with your relevant audience. This is proven. So if you are bent on taking on the challenge of maintaining a blog – find the right people. Another author on this site, Lisa Barone, writes a lot of stuff through observations and research. Her former company helps folks build content that is right for them. You can get professional help from such companies to get the right content around your product and business. It does not have to be everyday – you could do a deeply researched piece once a week.

Through this approach readers will look forward to your content every week.

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While I am learning about all the things that possibly work with online marketing, it seems that doing things “well” require me to be creative at all times.  However, every once in a while, a lot of us get the ‘creative-block.’ Or is it just me? Here are a few things that I do, to get inspiring ideas that move the dial:

Overcoming Writer’s Block

A lot of us write online – on our own blog or guest posts, business or personal. I am writing this article right now, I write product updates on my own blog and emails communicating what we do, to prospective customers and partners. However, I often stop writing when I do not have fresh thoughts. I envy folks that can produce words and articles on demand.

To overcome this, I came up with “story-telling” my thoughts. If I am thinking about a topic or a discussion or my product – I start writing a story around it. The best part about this is that it is honest. It requires no superficial effort to come up with dangling thoughts. The story will be a free-flow form of writing and you can extract the facts from it to write a more concise post.

Overcoming Analytics

While it is great to have access to where all your website visitors come from, it can be very frustrating when a good part of them fall under “direct” traffic. This means that they came to your site by typing your company URL or feeding your company name into Google. Hence, you do not know for sure where they heard about you or what source, referral or marketing activity worked. You could try asking them during a signup form, but usually that field has to be optional.

You have to use some broad-brush approach to carry on all the wonderful things you are doing for marketing. Check the day’s or week’s traffic and if there is a spike, try to understand what happened during that period. Did an article or review on your company get published?

The point is you cannot stop doing something which will give you consistent, long-term results just because you do not see traffic coming from that activity in real-time. There are word of mouth and gradual brand building efforts, which I have seen grow to a formidable number in our business.

Overcoming Rejection

You are doing content marketing and high energy social media stuff. Now what? Maybe a channel partner would really make an instrumental difference. You reach out to a few suitable partners and let them know how awesome you are. Some may respond or initially you may get nothing.

You need to keep reiterating on what kinds of incentives make sense for different partners. Additionally, some of these partners may respond to you when you have more traction or frequent press. Reinventing and improving your proposals is not only going to land you good channel partners eventually, but also teach you more about your industry and product. While pursuing such initiatives, the creative aspect is in thinking of how you can help others. People will help you grow, if you can help them grow as well.

What do you do to stay creative at work?

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However, a rock star candidate must be vetted in terms of attitude and culture. The simple fact is that people can be awesome but they need to fit together well. Here are a few tangible points that can help your decision on the next 10/10 candidate:

Energy and Passion

Your small business may not have a household brand name and the best package. Most of the early team members come together in a startup because they are excited about what you are doing. If you are unable to feel the candidate’s excitement for your vision – their skills maybe irrelevant to you in the longer run. A lot of energy drives the early growth in a small company. If the person does not care at all about why you are in business they might not be a game changing employee.

The Wrong Questions

If the candidate’s questions hover around your current milestones but not your final vision, you should make more of an effort on communicating the longer timeline again. For instance, the discussion should definitely weigh more on why you are doing this and what your final goal is. This provides insight into the candidate, which may be missing on that 8 by 11 inch resume sheet.

If the discussion doesn’t seem to move beyond the current revenue level or ongoing projects (depending on the job profile) – something is off.

Know It All

A candidate may have a lot of relevant experience for the role, but if he has an arrogant disposition about what he knows then it might be hard to share thoughts and feedback with him. You have to think about the rest of your team and make sure that everyone is going to be comfortable with the team chemistry.

Flittering Focus

Is the candidate inclined towards doing everything at once? They might be talking to you about a particular role, but suggesting that they enjoy doing a little of everything and always had a varied focus on all previous jobs. This could be really valuable in a certain context, but a disaster depending on what you are looking for. There is a clear line between multi-tasker and task jumper.

Greener Pastures

Has this person been changing jobs every one to two years? Well, then your hypothesis of a 10/10 candidate needs to be revisited. Enough said.

So make sure you look at your entire stack of applicants a little more carefully – there might be diamonds with rough resumes.

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The post 5 Signs Your Perfect Job Candidate Wouldn’t Fit Your Team appeared first on Small Business Trends.

Here are four simple steps every small company can follow:

Get Backup for Your Inbox

Email is great. But you cannot open 100 attachments from your email and make notes in spreadsheets. How are you going to keep track and share important pointers within your team? Resumes are bound to get lost in the ever building pile. To start getting organized – sign up for an online recruitment software, which caters towards small businesses. There are web-based ones that have free trials, so you can see if they fit your requirements before setting up your process and paying for one. For an average need of a small business, a good one should cost you no more than $50 per month. Here is a list of a few on google apps.

Get Candidates to Apply on Your Careers Page

Instead of simply putting an email address on your careers page, it helps to have a company overview and a job description. This gives the prospective applicant a more complete picture of what you are looking for. Moreover, you can have an application form under the description that asks for all the things you need to screen the applicant. For instance, instead of simply asking for a resume attachment, you can request a cover letter, linkedin profile and add a questionnaire as well.

How are you going to add this on your site? If you don’t have the IT resource, your above chosen recruitment software should be able to help you with this. Most of them provide a widget which enables you to display all openings, along with the form, on your website. All the information that comes in from the form will be organized on your recruitment software to help you screen faster.

Share the Fun

You may be the person assigned to screen all the applications, but you need to get the relevant inputs from all the hiring managers and stakeholders. Thus, if you organize the screening process using an online tool as described above, you can add team members to this system after the initial screening. Let’s say you narrowed down the 100 resumes for the ‘financial analyst’ position down to 15 by filtering for ‘CPAs,’ you can then move these 15 to stages which the Finance Manager can work on – either by adding her feedback or scheduling an interview. Having everything in one place gives a clear view to the entire team.

Find the Right Ear

When you create an opening, you can share its link on Twitter, Facebook, LinkedIn and Quora in the relevant groups and lists. If you want to receive the most fitting applications, you have to make an effort on pushing them to specific places where your prospects hang out. On the other hand, large job boards bring a lot of clutter with the cream.

Good Luck!

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The post Overwhelmed By Job Applications: 4 Ways to Manage the Madness appeared first on Small Business Trends.

Here are some of the things that have worked for me:

Measure Your Chatter

About six months ago, I came across a tool called Buffer. It basically allowed me to store tweets that I thought were worth sharing, and shoot them out at pre-determined times. This allowed me to catch up on news for 15 minutes in the morning, and share my thoughts and other links over the next 8-10 hours without having to go to Twitter.

The real value in Buffer is the analytics feature. When I logged into Buffer at the end of the day, after the tweets had been sent, it showed me how many people had clicked on them and who retweeted them. This allowed me to learn what was appreciated by my audience and what times of the day got the most clicks.

Do Not Chase Followers

A higher number of followers translate into having a larger audience for your words and thoughts – agreed. But you will grow a much more meaningful base of followers – if folks follow you for your tweets, as opposed to a reciprocal follow. In other words, stick to organic content that can benefit people in some way, instead of following people by the hundreds and expecting a follow back.

There are two good tools that can help you clean the clutter and follow relevant folks aligned with your interests:

1. Manage Flitter allows you to see who in your follow list is not following you back, and who is not an active user. You can use this tool every couple weeks to assess what kind of news feed you want to receive.

2. Twellow is a proactive tool that allows you to search for people by interests, industries and professions. You can get lists of people with their Twitter descriptions and can add them if you like.

Don’t Annoy People

Too many Tweets might not be a good thing. Imagine if you were following someone who was hogging your feed all hours of the day. You might lose more followers with excessive, irrelevant posts.

Here are three little tricks that you can use to have more weight with your followers:

1. Five Tweet rule: If you have a several article links or other data to share, stick to around five tweets a day (at three hour intervals using Buffer). Your followers will not be overwhelmed and might look forward to your links on an ongoing basis. You can answer questions and engage in conversations in addition to these five tweets.

2. Ask a question: This is a genuine way of engaging with real people rather than throwing information at them. If you have the right follower base, asking questions is the best way of introducing yourself and vetting out who wishes to remain engaged with you – this might give you a few pointers as to who you should write to about your next product update.

3. Personal Critique: Whether it’s a person or a brand, posting negative tweets on a consistent basis might alienate your followers. You might have a valid reason but don’t get too personal with your attacks. Keep it professional and polite.

There is some charm in moderation. I know it’s easy to fire off seven words and hit enter, but try to resist it – until you have something meaningful to say.

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Get a Higher Goal

We all know how hard it was to start our company, get the product out and get those first 10-20 customers. Now, you are sitting at 65 customers and there is a little bit of money coming in. There is hope for more. You would be at a super comfortable income at 200 customers. Make sure you aim for a 1000 this year. If you don’t plan for a large enough target, you will find it a tough hike to 200 as well.

Get in Deeper

What can you do different for this higher goal? Let’s say you have certain marketing channels to promote your site/product. You are spending on online advertising, have a part-time sales person, are sitting on Twitter and have your web designer helping you with SEO. It’s time to become proficient at some of these things yourself. If you know that getting your site showing on Google will make a much more accelerated impact than making cold calls – learn some basics on SEO (search engine optimization). Take a course, ask people, see what your competition is doing. Sites like blekko give you detailed insights into what makes your competition rank higher on Google.

Get Some Uncle Scrooge in You

Are you still spending $500 per month on those banner ads? Have you calculated conversions on these particular ads to your site? Or is it just a black hole? Those customers you got last month could have come from word of mouth, not those ads. Make sure you measure every dollar that you spend on marketing. Early on, you might not have the cash to splurge on “brand building.” Spend the money if you know you are getting something out if it. I know, it’s hard at times, but you have to be a hawk – don’t give in to sharp sales pitches and good looking sites.

Get a Physical

When was the last time you checked in with your old customers? I know they are still paying you and hence happy, but make sure you know if something is hurting them, or if they are missing something that you could add easily. Also, keep an eye on Twitter, Quora and LinkedIn on what people might be saying about your product or the competition. You can also post questions on this forum to learn more about what you could do better. For the customers that left, send a gentle, personal email asking them what was missing.

Get Some Rest

Thinking of quitting? This might be because you are burnt out with all the effort and hours you are putting in the business. The only reason a business fails after getting to 100 paying customers is because the primary driver (you) did not continue long enough. Make sure you switch off for a few hours in the evening, go to the gym, take a trip or a vacation – you need a reset button. Come back and kill it!

Setting daily goals will convert some of the above ideas into habits that will ensure you hit your targets for this year.

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