Marketing podcast, PreneurCast, is for entrepreneurs, by entrepreneurs. Each week, author and marketer Pete Williams and digital media producer Dom Goucher discuss entrepreneurship, business, internet marketing and productivity.
Pete and Dom discuss areas of your business where you might be letting things leak, and therefore losing effectiveness (and eventually profits). Using the 7 Levers as a framework, they identify and share some ways to stop some of the more common leaks.
Pete and Dom discuss ways to stop common leaks in your business using the 7 Levers of Business
Transcript:
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Episode 055:
Leakage
Dom Goucher: Hello, everyone, and welcome to this week’s PreneurCast with me, Dom Goucher, and him, Pete Williams.
Pete Williams: Hello, hello!
Dom: Hello! Welcome back. You’ve not been totally well the last couple of days, Mr. Pete.
Pete: Little bit of a sinus-y nose block, mild flu-kind of thing going on. Nothing that’s too devastating. But yeah, not feeling 100%.
Dom: OK, I do hope you put something over your microphone just in case you have an accident. Then let’s get on with the show. I just want to say, before we do dive in a little bit of a geek detour, I’ve upped my productivity this week with a single purchase.
Pete: Ooh, here we go.
Dom: I’ve got a second monitor.
Pete: Ah, nice work.
Dom: Remember the book we talked about a while ago, Pragmatic Thinking and Learning?
Pete: I do! I think we have a second show still to do.
Dom: We do, we do. But one of the great tips about productivity, overall productivity in there, and they were quite insistent about this, was getting a second monitor. Now, when I was in a previous life working in design and publishing, I used to use two monitors. Well, back in that day, it was thought of as a decadence. And I’ve kind of lasted forever and a day with my wonderful, big shiny iMac.
But with all the stuff that we do, all the things that we manage, it became just a bit crammed. So I thought, why not, and I looked into it. And these days, a second monitor, even a decent-sized one, is not expensive. It’s one of those things once you’ve done it, you wonder how you’ve ever survived without it.
Pete: Absolutely.
Dom: Even just another monitor connected to a laptop can make a huge difference.
Pete: Yeah, I couldn’t agree more. There’s that extra bit of space where if you’re doing a lot of copying and pasting or if you’re working off of lists or anything like that, it’s great to have that source document in one window and then the actual action application in the actual window in front of you. It’s very handy, saves the old alt-tab that is kind of a killer for lot of people.
Dom: Absolutely. And by the way, I do not advocate what some people talk about which is to have all of your emails, Twitters and Skype chats on one screen, and all your work on the other. Because they’re open, they’re still distracting you.
Pete: Yes. Absolutely, absolutely. But no, definitely, a second monitor is something that a good chunk of our team in the telco office have, dual-monitors. Definitely our accounts team do and our development team do. Not all our sales team, because they don’t really need it as much, but all the people who do the admin-y, very heavy computer-based things definitely have two monitors.
Dom: Yeah, it is a great productivity boost. I’ve only had it two or three days. It’s just really changed the way that I work and really speeded up a lot of those operations. So, just a tip for everybody; sounds a bit geeky, but seriously, if your computer is capable, and most of them area, of running a second monitor, seriously look into it. They’re very, very inexpensive nowadays for a good-quality monitor. It will make a huge difference to your productivity. Anyway, that’s my geek news. But we have exciting news, don’t we, Peter?
Pete: We do! We released our new project recently. For those who play along at home and keep a finger on the pulse of the stuff that we do, we try, and for want of a better term, to be a bit of an incubator with random ideas and projects. Just when new stuff comes along, we love to play with it and get it out there, and see what’s happening. One of the new projects we’ve got is a magazine for Apple’s Newsstand, which is called LD Magazine for lifestyle design.
It’s a magazine that we’ve put together using the MagCast platform, which is a brand new platform that allows you to create magazines for the Apple iPad. Apple hasn’t released a platform to allow people to do this yet. They’ve released some high-level documentation for the Cleo’s, and the Cosmo’s, and the news world who have big resources and big budgets; but they haven’t released a platform to allow the everyday person and small publisher to play in the Newsstand.
But MagCast platform is the first, in my opinion, easily accessible platform that allows people to publish their own magazine. And we’ve been beta and alpha testing that, and had our first magazine edition come out recently which had some fantastic content in there from some of the leading bloggers and writers in the lifestyle design and life hacking space. So very, very excited about that. That’s been released to great response.
Dom: And the MagCast platform is incredibly easy to use. In fact, it was harder to get the content for the magazine as it were than to actually publish the thing. So, that was a great thing. Just want to say, we’re testing this for lots of different reasons, and we will be talking about this both in PreneurCast and in other places soon because it’s a very interesting thing to do.
Not only are we interested in the topic, we have a lot of background in the lifestyle design space, both Pete and I. But it’s a great way of reaching an audience in your niche if you’re into that kind of thing. We’ll be coming back to LD Magazine. But you can check it out if you have an iPad, and at the moment it is iPad only. But if you have an iPad, pop over to LDmagazine.com, and there’s a link there to the Newsstand.
You can get yourself a copy, which is great. And if you’re interested in finding out more about the MagCast platform when it goes live and is open to the public, then you can get more information by signing up at MagCastPlatform.com. I’ll put those links in the show notes. But yeah, we’re very excited about this. We’re just getting Edition 2 ready, and that will be on the Newsstand soon, as they say.
Pete: Absolutely, it’s very exciting. A lot of people say, “Why would I want to publish a magazine?” If you’re in the information marketing space, it’s pretty obvious. But as we saw recently from the Preneur Community Survey Results, which were just so overwhelmingly positive and I love them; if you haven’t checked them out, make sure you head over to the blog at PreneurMarketing.com. There’s a post on there in the video with all the results from the community members, and who they are and what businesses they have.
It was really enlightening because the majority of people who listen to the show and subscribe and follow the blog, traditional business owners, there’s most people actually have a business. The vast majority, I think it’s close to 60% of the community, are people who are making a full-time income or more, which is fantastic. Some of these online communities are just made up of wantrepreneurs, for want of a better term. They’re chasing the next shiny object and haven’t really gotten started or made any money.
But it’s really cool that the stuff we’re talking about on the podcast, on the blog, is obviously helping people make a real difference and actually make full-time income, which is so cool. But if you’re in the chiropractic space or you’re a tradey, imagine being able to actually publish a magazine about your industry or your broader instruct. Maybe you’re a roof tiler we keep referring to, but you can actually create a magazine about tradeys in general and helping tradeys with just that sort of space.
It positions you again as a market leader, which helps you make more sales in the everyday world. It allows you to create connections with other people in your industry that you can then network with and leverage off. So, there are some really easy ways to use this platform if you’re in traditional business. You can make catalogues and put your catalogue on the Newsstand as an option and things like that too. There’s a lot of great ways you can use Newsstand if you are a traditional business owner and not actually an information publisher.
Dom: Absolutely. As I said, we’re going to come back and maybe do a whole show about that. We’re certainly going to be writing about it in different places, and following up to keep you posted on how we get on with that and what we find out. As Pete says, we like to try these things out. We have the opportunity to get in on the ground floor with some of these technologies. We find out about them and we want to make sure that you, the members of the Preneur community, can find out and benefit from them too.
Pete: That’s it. Google has Google Labs, we have Preneur Labs. No?
Dom: Do we have Preneur Labs?
Pete: It’s basically you, dude.
Dom: Oh, cool. With my two screens.
Pete: Yep. I’m going to buy you a white coat for Christmas.
Dom: Don’t make me wear a pocket protector.
Pete: No, realistically though we have a lot of guys in the Philippines, guys in our office internally here in Australia who do a lot of testing and playing with these different things as well, so it’s really cool.
Dom: Cool. OK, so do check out LD Magazine at LDMagazine.com. As with everything, let us know what you think. Please do. Moving on, this week’s sponsor. Pete, let’s do a little bit of a backtrack. Again, about practicalities and realities; we talk about Audible, one of our sponsors. Every week, we talk about what we’re reading, what we’re listening to more specifically because Audible is the audiobook service. We talk a lot about business books, and occasionally, the personal development books. But there’s a lot of other things on Audible, isn’t there?
Pete: There is! They’ve got newspapers as well, I think, from memory. They have a way to download audio versions of the news on a daily basis, or at least used to. But I have a whole bunch of fiction books and just general nonfiction stuff as well. Something I’m really enjoying at the moment, given that the NBA Finals are on and watching them on ESPN, is a book called These Guys Have All the Fun. It’s basically a story on ESPN, how it started and how it came to become the world’s leader in sports media.
It’s really cool, so there’s a whole bunch of other stuff on there beyond just nonfiction business how-to advice books, which is obviously what we tend to highlight when w talk about Audible but it’s a fantastic service and if you want to just try it out you can get the free trial which is at AudibleTrial.com/PreneurCast where you can just sign up and get one audiobook and give it a crack. You don’t have to actually go and invest any money and subscribe for the long haul. You can just sign up, take it for a test drive, download a book of whatever tickles your fancy.
You could go and download The Hunger Games if you really wanted to and listen to that in audio format. Check out the service. If you’re doing any personal training or you’re driving to work or however you consume this podcast – unfortunately, we don’t have 20 hours of content a week for you to listen to on your commute to work and stuff like that, so Audible’s a great way to consume books and other great content in the same way you listen to the podcast. I highly recommend their service.
Dom: Cool. Excellent. It’s just another way of looking at the different resources that are out there. Alright, Pete, I want to get into this because you set me off the other week. In an offhand manner, you mentioned leakage and said that we’d come back to that. Ever since you mentioned that, it’s really been preying on my mind. Leakage is like the elephant in the room, isn’t it?
Pete: Absolutely. I think you made a whole bunch of notes about this, haven’t you? I’m really excited about this because you’ve done some homework for this week’s show.
Dom: Well, it’s just a huge topic. I always do make homework, don’t be like that. The dog eats it occasionally, but I do it. Leakage. Let’s give a context, let’s set a frame for leakage. Leakage is anywhere in your business where you are letting things slip away. So really, I mean at the top level, in very simple terms, leakage, if you can stop it, is like free money.
Because if you look at your business, anywhere where you’re not being efficient, where you’re not efficiently doing things, like efficiently getting traffic or efficiently converting opt-ins or conversions and things like that, going back using the 7 Levers as a guide here, you’re taking away potential revenue and potential profit from your business.
Pete: Yeah. Like the way I kind of look at leverage is very similar in that most business…
Dom: Or even leakage.
Pete: Or even leakage, sorry.
Dom: The leverage show is another show.
Pete: It’s the cold, it’s the flu, it’s the haze. But when it comes to leakage, and I guess attracting new revenue for a business, most people are looking for that shiny object that I mentioned before when I was talking about the wantrepreneurs. They just always sort of jump from one thing to the next and never really maximize what they’ve already got. And it’s that also, it’s that maximization of what they’re already doing which is another way to look at leakage.
If you’ve got a certain marketing campaign being run and you’re not split testing at least a portion of that on a continual basis, there could actually be a better way to do that particular piece of marketing. Maybe it’s you writing an AdWords campaign, and in your ad group you’ve got just one ad running. Well, why not do an AAB split test where you have three ads running in that ad group where two of the ads are identical and then one of the ads is unique?
It’s a split test. That way, you’re only risking 33% of those impressions on the test. By having two ads run simultaneously identical, they take up obviously 66% of all the impressions, and 33% goes to this test. It’s a way just to maximize that marketing channel because you could be getting some leakage with lost revenue. It’s not having to actually learn AdWords again or learn a brand new marketing or traffic strategy; it’s just getting more out of what you’ve already got.
Dom: Absolutely. And for anybody that glazed over when he got to AAB split test, the message there is absolutely getting the most out of what you’ve already got rather than chasing something new. It’s like anything that you do; most people, I think, in business have heard the adage that it’s cheaper to keep a customer than to get a new one.
It takes less effort to keep a customer than to get a new one. And so, leakage is our way of saying that there’s very often an opportunity to improve your processes and improve areas of your business without doing something actually new, without going to find a new source of traffic, without, as Pete says, starting a new campaign or whatever.
Pete: Well, to take that saying you spoke about and Preneur-ify it if you will, I’m going to get this into the language and vocabulary of everyone I know: it’s easier to convert an existing prospect than finding a new one.
Dom: Preneur Hierarchy.
Pete: That’s it. So that’s what it’s all about, really tweaking and fine-tuning what you’re already doing right now. I think we mentioned this a couple of times in the show, especially when we talk about the 7 Levers; that for a lot of people, just by measuring what they’re already doing they actually will just suddenly see where the leakage is.
As you say, it’s the elephant in the room. And quite often when you start measuring something, you’ll clearly see there’s actually a hole in what you’re doing right now. You can plug that very quickly and often get five, six, or even 10 or 15 percent increase in that lever because of just identifying that hole and fixing the leak.
Dom: Absolutely. And this is actually what I wanted to say as the starting point to this discussion, is that before we do anything, we have to measure. Once we’re measuring, we have to monitor. This is the main guidance that we give to anybody following the 7 Levers as a framework. It’s not just about tweaking, pushing, adding, moving, changing, but you start by measuring.
And you’re absolutely right, Pete. In the mastermind groups that we’ve done and the feedback that we’ve got about the 7 Levers, the biggest thing we’ve got back is that people have got improvements just by going through the process of measuring and noting down where each one of those things is. That’s a really important thing when you’re handling any part of your business. As Peter Drucker says, you can’t manage what you don’t measure.
Pete: Very true.
Dom: Very true. So we’ve danced around this a bit. I think the best way to give some examples of where you can have leakage and how you can plug a leak, as it were, is actually using the 7 Levers framework.
Pete: Let’s go, let’s get the Scotch Tape out and fix some of these leaks. Doesn’t Scotch Tape fix everything? Is that right?
Dom: I think that’s duct tape.
Pete: Duct tape. Isn’t it the same? What’s the difference? Besides the name.
Dom: Yeah. In England, Scotch Tape is Sellotape. That’s the transparent stuff.
Pete: Ah, there you go. Yeah, duct tape. Let’s get the duct tape out.
Dom: Yeah, let’s get the duct tape. Or just one big cork. Or even stick your finger in it. OK, so starting with traffic. How could you be leaking traffic? Well, obviously, it depends. We talk about it in the 7 Levers, it depends what traffic means to you. Is traffic foot traffic? Is it people coming through the door or your store? Is it people visiting your website after searching for you?
Is it people clicking on your Google ad? What is it? But whatever it is, I’ve come across some – from our experience – I’ve come across some examples of how you can leak traffic. It’s amazing how many people don’t think about this and don’t think about these things. Basically, one of the ways you can leak traffic is by not putting out signs.
One of our examples from the mentoring group for 7 Levers, from the Mastermind group, was someone put an A-frame sign out in the street, out in front of their shop. And because it was sticking out, people could see it as they walked along instead of having to turn to look at the front of the shop. They were made aware that the shop was there, and that increased traffic into the shop immediately, yeah?
Pete: Yeah, absolutely. Because traffic was already walking past the shop. They just put a bit of a signpost, if you will, in front of them.
Dom: Yeah. Another kind of signpost and another kind of example from one of my clients is making sure people know what you do. One of my clients is an instructor and they have a lot of courses that they teach. They told me a story about people coming to the training center and taking the basic courses and at a certain point they stopped taking courses.
They’ll come and use the facilities of the center to kind of partake as it were, but they won’t come for the actual course. They’ll come back and say, “Hey, I just did this great course.” And my client was talking to me and said, “But why does this keep happening?” I said, “Why don’t you ask somebody?” And the first person they asked said, “Oh, do you teach that subject?”
Pete: So it had the basic introductory sort of courses covered; and then when people would go to do the intermediate or advanced stuff, they’d hire the gear and use the facility but get someone else to do the training.
Dom: That’s exactly it, because they were completely unaware that that training center was capable of teaching that course. They just hadn’t told people their entire range of capabilities.
Pete: That’s where the newsletter comes in, the touch marketing, the back-end, upsale sort of stuff we keep talking about when we talk about the 7 Levers.
Dom: Absolutely, and also the Preneur Hierarchy, about keeping an existing client. If you’ve got an existing client, if you’re educating that existing client to what you can do and as they move through, like the example you’ve given before, Pete, about the cycle shop. The first time somebody comes into your shop and they buy a basic bike, then keeping them informed, keeping in touch with them, letting them know how they can service their bike, options for upgrading their bike, extra clothing.
Extra things like that, then you’re generating new traffic, new sales back to your business just by educating your customer. Otherwise, they may cycle around and they may see another cycle shop with a big sign in the window saying ‘cycle servicing.’
Pete: Absolutely. That’s exactly right.
Dom: A very simple, very almost trivial traffic leakage can happen by people not even seeing your business. And, OK, it can be like do you even advertise? If it’s relevant to you, do you even advertise? But also, not seeing if your signage is up to scratch. Pete, we’ve talked about before an example of the garish luminous signs in the window with your offers on.
Pete: Absolutely. A number of clients I deal within that retail space, the first thing I tell them to do is get the sign with the fluoro yellow on the window. It absolutely works, it stands out. It might not be aesthetically pleasing for the wife to talk about at her bridge club on a Friday afternoon. But it will actually get people in the door, which will allow you to buy the wife the big diamond bracelet, which will distract her from the ugly signs. So, what’s the outcome you want?
I look at traffic a little bit differently to what you’re looking at when it comes to leakage anyway. Let’s go back to that example I spoke about before, what are you already proactively doing that you can tweak? I’d say what you describe is absolutely 100% true when it comes to leakage about traffic, but there are almost ways just to very easily get additional eyeballs to your business.
Whereas, if you’re already doing Google AdWords for example, or you’re already doing Google Local, you already got a local page in Google Maps. Well, are you really maximizing that? Have you put coupons on it? Have you got all the images you can possibly have on your Google Local account? Have you got a video embedded into your Google Local page?
All that sort of stuff, to me, is a form of leakage because you’re already doing the AdWords campaign, but probably without the AAB split test. Or, you’ve already got that Google Local page, but you haven’t maximized it. That’s the sort of stuff I consider and work with a client when I first think about leakage. It’s like, OK, let’s list out everything you’re currently doing right now to generate traffic.
If that’s the level we’re working on, and actually go through each one of the actual tools, mechanics or tactics they’re doing when it comes to traffic, and almost creating a checklist against that and saying, “OK, are you maximizing everything you can with that particular tactic?” Before you do anything new, let’s actually asses that particular tactic and see where the leakage is.
Dom: Yeah, absolutely. That’s it. We can look at the leakage from both perspectives. We can look at literally, are you doing anything or are you doing the main things that you should be doing that are easy, that are easy wins? But also, whatever you’re doing, are you maximizing it before you pick something else? And I think traffic is one of the things; we spend a little bit of time on traffic and we’re focusing on it a lot. But I think traffic is one of the things that people do get hung up on, and they will go and go off after the next big shiny thing.
Pete: Oh, absolutely.
Dom: I think we’re going to just over-make this point. So many people get caught up in just shiny-chasing – there’s my word for it, it’s not as good as yours – but they get caught up in it. Instead of looking at what they’re doing and maximizing the effect of that, they just drop it. If it doesn’t seem to work for them, they just drop it and go to the next one. And that is very, very hard work, very inefficient. There’s a lot of leakage just in that activity alone.
Pete: Absolutely, absolutely. If you look at ROI, what it takes to learn, implement, and get relatively right; a brand new tactic versus tweaking and molding and maximizing a current technique, the ROI on the latter is so much more powerful.
Dom: Absolutely. I mean it’s just a classic example. Just to get a little bit geeky for a second, the current screaming and kicking that’s going on with Google having changed its policies for different things. Let’s say for the last two or three years, you have two people. One person sat down and focused on the one thing they were going to do. They focused on their Google AdWords. And for three years, they’ve ignored all this, “You can get traffic by going here!
People will beat your door down if you go!” All that, they ignored it all and they just focused on their AdWords. They did the split testing, the really optimized their website, they optimized their landing pages – and we’ll come back to that in a second – but they really focused on attracting the right people into the top of their funnel, getting the right kinds of traffic using that one primary traffic method.
We’re talking about search engines now, it’s not the only traffic method, but we’re focusing on search engines. And then there’s the other guy that tried AdWords for about a day, maybe a week, went all out and tried it for a week, and just really slugs through it and got himself set up and didn’t get a great result. So he dropped that. And since then, he’s tried Facebook Ads and he’s tried different advertising campaigns.
He’s also tried grabbing traffic from video. He’s tried everything and nothing seems to have really worked. And he’s expended a lot of energy. Whereas, the guy with the AdWords, I would imagine has now got a very consistent source of traffic. And anybody having flittered around and not been consistent has probably suffered quite a lot from these recent changes.
Pete: Yeah, absolutely.
Dom: You know, much less effort, much more result, better return on investment. And that’s what we’re about here; we’re about a return on investment.
Pete: What other sort of leakage notes have you put together, dear Dom?
Dom: Well, let’s move on, let’s move on. Because, as I say, we just focused on traffic because that is a big one. The 7 Levers is not about one thing, it’s about a compound effect. It’s about making a small change and rolling it up to the next lever and the next lever and the next lever, so the compound effect is massive. People get hung up on traffic and really, you don’t need to change any of the levers that much, as we talk about regularly. So let’s move away from traffic, let’s move to opt-ins.
And opt-ins is anybody taking an action in your space. And again, opt-ins might mean one thing to one person or one thing to another. It might mean somebody trying on a shoe in a shoe store; it may be somebody filling out your email subscription box on your website. But the thing that I’ve got, and again I’m coming in from a simplistic angle and I’m sure Pete has got some more technical stuff; but for me the big thing – and it’s always the same – whatever an opt-in is, whatever your goal is, don’t make it hard.
And classic examples of this, say, first, an online example, somebody wants an online response. They want you to fill out a form to enter into their email list on their website. Classic example of making it hard: hiding the email subscription box, putting it down at the bottom right-hand corner of the page, or just making it not easy to see because it’s not highlighted, that kind of thing.
Even making it not clear that that’s what you want them to do. That’s an example of making it hard. But the other one, I have my personal favorite, which is pretty much I get like a 75%-80% hit rate on this with anybody with an online presence when I say, “What’s your primary goal?” And they say, “We want people to phone us.” And what’s my response to that usually, Pete?
Pete: Where is that phone number you want them to call?
Dom: Exactly. That’s the classic example of making it hard for people to opt-in. If you want someone to phone you and you’ve got a website, make sure the phone number’s really big and at the top of the screen. And say, for a suggestion next to it, “Phone us.” Possibly, even say why, like “Phone us for a quote.” So they’re my, again, really simple big wins.
Very simple to do. You’ve already got whatever it is you’re already doing, whether you’re placing an advert in print, whether you’re building the website, whatever it is. What is your primary goal? Make sure it’s easy for people to actually get that done.
Pete: Yeah, absolutely. I take that to a slightly deeper level and say split testing again. Anywhere it comes to the actual traffic opt-ins, conversion scenarios, with a lot of things, particularly, if you’re a web-based business, whether you’re an information marketer selling eBooks or you’re a dentist trying to get people to call up and make appointments, or whether you’re a removalist trying to get people to fill in a form to get a quote for your removal services, using split testing tools.
Google has a free split testing service, there’s also Zen tester which is a great service that allows you to sort of do split tests very easy on your website. So you can test headlines, test opt-in boxes, even test vides. When we did the re-launch of the MCG project about 12-18 months ago it probably would have been, we actually completely split test the first page of the marketing funnel where there was tree videos, three headlines, and three different calls to action right above the opt-in box.
So the page layout didn’t change, just the actual copy on the page changed and it was remarkable how different the results were. I think one of the combinations was let’s say, I can’t remember the exact stats, but something like 6% conversion rate. Whereas, another combination got up to like 13% or 14% conversion rate. If I just had a gut feel and went with Combination A, I would have gotten a 6% conversion rate, which is not too bad realistically for cold traffic.
But by split testing, I found out very quickly that a different combination actually got me twice as many opt-ins, which means my cost of acquisition for new clients was halved, or cost of acquisition at least for prospects was halved. I got twice the amount of people on my list for the same cost in traffic generation. That’s the leakage I clearly see in so many businesses by not split testing their website or their marketing pieces.
If you’re doing cold calling to generate business for yourself, split testing the scripts that the cold call center uses, maybe using direct marketing. Again, doing split tests is just a huge, huge leakage-reducer. It’s a plug that is so vital to do for opt-ins and conversions, because that’s where leakage is in my opinion.
Dom: I completely agree. Do you know what? I think split testing, as a principle, applies across; a lot of people think that it’s just an online thing, and some people may not even know what we’re talking about. What I think we should do is we should do a show on split testing.
Pete: Let’s get Brent Hodgson on the line for that one. He’s one of the best copywriters. He’s the man behind one of the best split testing software platforms and he has split test websites, sales letters, copy, a whole bunch of stuff.
Dom: That’s absolutely a person that I had in mind as well. Brent, you’re on notice, you’re on the show. OK, let’s move on. But absolutely, I think split testing is one of those standard things now that we can say, “Split-test it” and it has an amazing effect against leakage. I do think it’s important. We should; we should get Brent on and talk from scratch about split testing, it’s that important. OK, let’s look at the next lever which is conversion. One of the things I think- in options, I said, “Don’t make it hard for people to opt in.”
A lot of people don’t notice, but they actually make it hard for people to convert. They make it hard for people to buy. They don’t think they are, but very often they do. Again, simple big hits are things like: hiding the buy button, seriously, hiding the shopping cart in an online service, hiding the tills in a shop. Honestly sometimes I’ve been in shops and I can’t find the till. I actually literally can’t give people my money, can’t do it. Take the flip of that, the complete opposite, the ultimate streamlining of purchases, walk into an Apple Store.
Pete: Fight through the crowds first.
Dom: Ah, it depends where you go. Depends where you go and what time as well. Usually you just have to wade through the students using the machines to check their email. But you walk into an Apple Store, and even from Day 1 you could walk into an Apple Store and somebody could actually take your order where you stood.
They had portable point-of-sale devices and they could take your order from where you stood. Now, it’s got to the point where if you have an Apple device, in certain stores you can actually scan the barcode and pay online with your own Apple device. You literally just pick a box up, scan it, press a button and pay through your Apple account, and that’s it, all done.
Pete: That is very, very cool.
Dom: It’s crazy, but it’s a reduction of friction. But you don’t have to go to that extent at all; it can be the simple things. One of the things that really, I think, is a source of a massive amount of leakage, depending on your business, is actually asking for the sale.
Pete: Yep.
Dom: People don’t ask for the sale sometimes. They don’t ask people to buy things, they just don’t do it. And that, for me, is a big one. But the other one is being unclear, and I see this a lot online. It’s not so much in retail, bricks-and-mortar; but I see it a lot online, being unclear about what people are buying. The more people spend, the more they want to know what they’re getting to a point.
And then after that, honestly, I’m amazed what people will spend without knowing what they’re getting. But there’s this middle ground where people- I do this all the time; I’ll go and I’ll look at an offer, I’ll look at a product, I’ll look at something. It might be a piece of electronics, I’m looking for the specifications. It might be an information product that I’m looking for the contents or the method of delivery or whatever.
But there’s a massive amount of friction there when it’s not clear what you’re being offered. So that, to me again, either asking for the sale or at least make it easier for people to buy things, but also informing them are ways of getting over that leakage, getting over people walking away from a purchase.
Pete: Yeah, absolutely. I think you hit the nail on the head when you said it before, just reducing that friction and asking for the sale. They’re the two keys to sort of stopping conversion leakage.
Dom: Yeah, and this is the thing. When we talk about the 7 Levers, there’s another side to this which is how to improve conversion. But we’re not even talking about improving conversion. In my mind, if you’re addressing leakage, you’re actually getting yourself to a baseline.
Pete: Yeah, absolutely.
Dom: If you’re currently preventing people from buying from you, then, to me, that’s a different thing to actually improving. You should at least get to a baseline. Don’t hide the tills; don’t make it difficult for people to buy from you.
Pete: I think that’s a very important point you hit on. I think it’s – sorry to interrupt you – it’s a very, very important point, and a very clear way of getting clarity, funnily enough. We’re sort of repeating ourselves here, but I think it’s really important to drive it home, so many people want to start the new thing or do the new thing because it’s exciting, and that’s just human nature.
But the leakage is just allowing your boat to float before you sail off to the new journey, and making that new journey easier because you’ve got that non-leaky boat underneath. That’s something that’s really important to do.
Dom: In fact, something that came up this week, and I had to pull out one of my stock phrases. Somebody asked me to look at a website for them, to review a website. And we do this; we’ve done this for the Mastermind group before. We want to know what the goal is, and we’ll review a site or a piece of marketing material or whatever against the 7 Levers. I looked at this website and I sent them back basically a one-line response. I said, “This is a brick-wall website.”
And brick-wall website is basically, the way to imagine it is that the site is basically so difficult to use that you’re getting in the way of the goal. You’re getting in the way of an opt-in; you’re getting in the way of conversion. The reason that I call it a brick wall is because I want people to understand, would you seriously have a brick wall built in front of your retail high street shop and then ask people to visit your shop? No.
Pete: Good analogy. Very, very good analogy.
Dom: But so many people have these websites that you couldn’t convert if you clicked the button for the visitor. And yet, they’re paying money for pay-per-click traffic, they’re doing extensive optimization, they’re running print ads, they’re doing direct mail, they’re doing whatever. But it’s not even leakage – I’m going to get extreme – it’s hemorrhaging. They’re hemorrhaging if they’ve got a brick-wall website.
Pete: Let me give you another story from a consulting client I was working with once. The analogy I gave to him at the end of it was, ‘you are your competition.’ The reason I gave that to him was, he was laughing about how inept his competitors are and how they do silly things, and how he doesn’t do that sort of stuff, and yada yada yada like everyone does.
We’re looking through the AdWords campaign and doing a bit of a review on that and a bit of a leakage assessment and things like that. We found that there was a number of actual adverts that he’s paying for that’s getting significant traffic that is sending traffic to a 404 error page. He changed his website, but didn’t go and change the corresponding AdWords campaign. Now, A) changing your website and not putting a 401 redirect in there for SEO reasons is a no-no.
That’s probably technical enough for the show. Someone that’s doing that sort of stuff can go ahead and Google that phrase, it’s important. But then also he was running AdWords to those pages, and it was just- he was literally just pouring money down the drain. That’s a perfect example of leakage. He was spending money to draw traffic to a 404 error page and people were just bouncing and leaving the site for obvious reasons.
Dom: What was the actual reason that happened? Not the technical reason, but what was he not doing?
Pete: Measuring!
Dom: That allowed that to happen, he wasn’t measuring and monitoring.
Pete: Exactly right. I guess this is a big wake up call for everyone: you are your competition. If you have been to AdWords, and everyone’s done this at least once, clicked on an AdWords ad and its gone to a page with a broken 404 error page or just the page doesn’t exist or something like that, everyone has done it at least once.
Probably once in the last couple of months, they’ve clicked on a link in AdWords, and you laughed going, “How inept is my competition?” Well, I would guarantee that at least a handful, if not 1000 listeners this week, if they go and check their AdWords campaign, were doing something silly like this. It’s inevitable, if you’re not monitoring and measuring this stuff. So if you’re running an AdWords campaign, please do me a favor.
If you don’t do anything else for this show, this is your homework for this week’s episode: just check your AdWords campaign or the landing pages from your ads to make sure they actually are going to a relevant page. Make sure that is a page that works, and if you have a little bit of time make sure the message to market matches live, that you’re sending them to the right page of your website.
Dom: Very good, very good. And a corollary to that, as you are your competition, and this is equally important from the brick wall, not asking for it, making it easy, friction point-of-view, and one that I tell people is you are not your client. And this comes from the years I spent building websites for people and doing usability. So many businesses, when they go to have a website built, and I say that rather than just saying go to a web design, however they get it done – and this is the reason why this brick-wall website came in front of me.
It’s because the business owner took responsibility for designing the site. I can hear the little voice that always comes back, it’s the same response, “Yes, but I want them to know what I do! I want them to know all my services!” Yeah, you want them to do that. What do they want? They’re the customer, they want something from your business, whether it’s to easily find out what you do or maybe it’s to easily find out your phone number.
Sometimes a website is just for that reason; it’s just a brochure page to do that. But whatever it is, you need to stop thinking what you want your customers to do and overloading them with choices. You’re trying to show them everything, and just realizing that what is your one goal, what one thing do you want them to do to focus them, and then you’ll get the customers that want to do that, or you want to find out what your customers want to do.
And one of the ways – and we’ll come back to this in the show – is through split testing. Because whatever you think is the coolest headline, the best call to action, the right picture, or the right video to go with that sales page or whatever it might be, you don’t know. But if you’re willing to run a test and measure and monitor, your customers will actually tell you.
Pete: Yep. Absolutely.
Dom: Cool. Alright, this show – we are really pushing for time here – so, because I’ve got the rest of the 7 Levers, I can wrap up from my mind with pretty much the same examples. I’m going to jump three of the next levers just to get us some time back in the show. That is that the number of items, the average item value, and the number of transactions per customer, have very similar leakage points, to me.
The number of items that somebody buys, and this is the most common example that we ever give; in a retail space, you can affect the number of items somebody buys by simply offering them another item when they’re buying something.
Pete: “Would you like fries with that?”
Dom: For example. Or putting a display of complementary products at the checkout, things like that. Or in an online service, offering another product during a checkout process. Amazon are absolutely famous for this, “Other people bought this.” Go ahead and put something in your basket.
Pete: GoDaddy take it to the extreme.
Dom: They really do. If you want to see how to overdo that and annoy people, go to GoDaddy.
Pete: But this is my argument though. This is my argument for a lot of people. GoDaddy is a multimillion-dollar company.
Dom: They got there somehow.
Pete: So many people still use GoDaddy as their primary domain registrar, so it cannot be that annoying.
Dom: Oh, no, absolutely. And that’s a topic for another discussion, that is. I mean we think it’s annoying, I think it’s annoying, you think it’s annoying; but I’m sure that somebody that goes there for the first time thinks it’s very helpful to have all these extra services suggested that they may not have thought of.
Pete: Absolutely.
Dom: I’m sure they split tested that process.
Pete: No doubt. Absolutely no doubt.
Dom: So, just simply not asking for or offering those extra items will be a way of leaking potential extra items per sale. Similarly, increasing the average item value, or just not selling items of a high value, leaking potential. Again, if you don’t offer items of a higher value, you can’t sell items of a higher value.
Pete: Or if you offer a discount before the customer even open their mouth.
Dom: Oh, that was one of my favorite things you’ve ever said. One of my favorite things you’ve ever said. If ever I’m ever talking to a client, I have my voice in the back of my head that says, “Don’t offer a discount before they ask.”
Pete: A couple of retail stores I was working with, I was just in there actually just randomly, not doing any spying or anything like that; but I was just in the store doing some transactions for my own purposes and overheard some of the sales clerks doing some leakage. They were doing some leakage. And it’s just, it’s infuriating, so it’s the first thing.
It’s like get on the phone to the business owner and say, “Got to get back to training. Got to get back to sales training. Got to train these guys. Got to give them some more assets, give them more tools, give them more weapons in their arsenal so they can actually have other things to communicate and discuss and use to close the sale other than, ‘Here’s a discount!'” And it’s all about training. That’s what it comes down to, training your staff and giving them other tools to use.
Because if all they know is discounting, like if they don’t know how to pre-frame a conversation, if they don’t know how to future-pace a conversation, if they don’t know how to do guided discovery, all these different communications and sales techniques, what do you expect? How are they going to learn that sort of stuff? They’re only going to learn it if you teach them that. If you leave them to their own devices, all they’re going to do is discount.
As a client, as a consumer, which is where they are for the majority of their life, you’re after discounts. That’s how they purchase. So you need to educate them, you need to train them to stop the leakage. That is your Scotch Tape, if you will. Their training is a big Scotch Tape, a very powerful Scotch Tape, duct tape.
Dom: Duct tape, duct tape. It’s something sticky that will hold things together, get on with it.
Pete: It’s your chewing gum.
Dom: Anything, just stop the leakage! Absolutely, absolutely. That’s a big thing. And I’m serious about that, I’m absolutely serious. The reflex to discount is one of the biggest sources of leakage across the board in businesses that I’ve come across as well. Again, just transactions, the number of transactions that a customer will have with you in any given year. How do you know that you’re doing everything to get as many transactions as you can?
Did you ask for any more transactions? Did you communicate with your customers and suggest that they might want to come back and buy something else from you, whether it’s an add-on service, a checkup, an extra piece of equipment, whatever. Just so many businesses by not communicating with their existing customer base are, again, leaking. Leaking very easy, very high return on investment potential for revenue and profit, yeah?
Pete: Absolutely. You just got to measure and monitor it, that’s all it comes down to.
Dom: So the last of the 7 Levers, and I think this might get a little bit bigger than some off-hand big wins, is margins. Again margin, and that is being clear, it’s not the markup you put on your products; it’s what percentage of your sales can be classed as profit, which is a slightly different thing. It’s important to distinguish that because that means that your whole business contributes to the margins, not just the markup you put on the product. So, and this is what I think margins is again, one of the huge sources of leakage.
Basically, every part of your business, every aspect of your business, has an opportunity to affect the margins – from what you pay for the services that your business uses, whether it’s your telephone and internet connection, to what you actually pay for the raw materials for the product, or what you pay for your advertising, or how efficient your staff are, or how efficient you are as the business owner with your time. All those things affect margins, right?
Pete: Absolutely, yeah. That’s exactly what the numbers come up to be.
Dom: Yeah, and so there’s a huge opportunity. And again, just measuring. For example, this is a really easy one and I’m sure everybody has done this or can certainly do it, is how much are you paying for that mobile phone contract right now? Just go measure that, go have a look. Is it efficient? Really? How much are you paying for these services that now there’s a lot of competition in the world: for utilities, for mobile phones, for communications, for internet?
Do you need all those phone lines if you’ve got more than one? Are you using them? Do you still need the fax line? All these things, are you just paying for them because you paid for them 5 years ago and you’ve been paying for them for 5 years?
Pete: Yeah. A perfect example for a fax line is rather than having a traditional fax line – two things we tell a lot of clients in the telco world, to bring it up right now to give people some actionable things around that as well, is you can actually have your fax, your Fpass line and your ADSL phone line, all being the same phone line. So many people I see are paying $30 a month line rental for three separate lines as opposed to putting them all onto one line. That saves you $60 a month right there. eFax is a great solution, it’s eFax.com. It’s a fantastic solution, an alternative for having a traditional fax line.
It actually gives you a real-world phone number. Grasshopper is the US version of this. It lets you have a real-world phone number that you can give out and that’s your fax number. When people will fax that phone number, it gets converted to a PDF and email to one or multiple recipients. Very, very easy to do. This is saying when you talk about doing your 7 Levers ritual where every seven weeks you work through each one of these levers, you should be sitting down every seventh week to look at the margins of your business.
Pull out your P&L [profit and loss statement] and go through where all your expenses are. Go through line by line on your P&L and work out, “How can I reduce this particular expense?” And then call some people, negotiate some stuff. Look for some alternatives and actually work through that. So many people don’t think about reducing their expenses that often, and this is where the 7 Levers habit comes in; every seven weeks, you’re reassessing your costs.
Dom: Absolutely. And my only thing I was going to add to that is that as well as actually kind of negotiating with service providers, and that’s one of those things that some people might not be comfortable doing; try and look for a technology solution. Your example of eFax or Grasshopper, these services that now exist that two to three years ago didn’t exist. Things change and things are changing at a rapid pace.
There are a lot of solutions out there now for things that we couldn’t have imagined five years ago, or that we wished there might have been but couldn’t see or couldn’t find it. They’re out there and they’re very cost effective. There’s a lot of incredible opportunities out there to improve your margins, which improve the efficiency of your business. So that’s that. I want to lean people the other way just a little bit, which is the efficiency of you and your staff.
If you’re a solopreneur, if it’s just you, and this brings us really full circle to wrap this up. Pete and I do a lot of things just on our own. Pete’s got businesses that he has to employ staff, and I’ve got my businesses and I employ staff, but some things I do on my own. There are some things that really, at the end of the day, there is only you can do it. And whether you’re a solopreneur or whether you’re the person at the head of the business or wherever you are in the business, your efficiency is a factor in that business, in the margins of that business.
And so, for example I spent $200 this week, bought myself a new screen. I probably made that $200 back in efficiency within five hours of opening the box. So, in terms of efficiency, in terms of profitability of my business and in terms of effectiveness of my business, whether it’s in actual physical dollars in the bank or whether it’s just in spare time that I now have because I’m not working double the effort that I need to, I’ve looked at my own personal efficiency.
And Pete and I always look at the efficiency of our staff as well, and ways we can improve that through training or communication or tools as a way of addressing margins in our business. It’s not all about the flat money and what you’re giving out in money; sometimes it’s slightly less tangible, but it’s just as important.
Pete: Love it.
Dom: Love it. Already, I think at extremely overtime, that’s a great wrap up. As you can tell, that’s been on my mind. Since you mentioned it, leakage has been on my mind. I think that was a great conference there. We did dash through a little bit due to time; but hopefully, people have got an idea about what we’re talking about, and some ideas about where you can go and look at leakage in your business.
But the big thing is the message we had at the start, and we’re going to close with this message, is it’s about measuring and monitoring. It’s not about guessing. If you measure, then you know. You know what you’re paying, you know how many percentage you’re getting on conversion or opt-in, or whatever. You’ve got to measure it and monitor it; otherwise, you can’t manage it.
Pete: Sounds good.
Dom: Cool.
Pete: I’ve got a topic for next week. And I want to say this right now. Yes, that was actually a pun which you’ll understand in a minute.
Dom: Oh dear.
Pete: The topic I want to talk about next week is low-lying marketing and productivity fruit.
Dom: Ah, low-hanging fruit.
Pete: Or low-lying, same thing.
Dom: Low-hanging or low-lying fruit, I like it. I like it as a topic. I like it. Easy wins.
Pete: Yeah, the easy wins. And this is not stuff that you have to do. We’ve spoken about this in a previous episode recently where people sort of say, “This is the stuff every business must do.” Now, I think the stuff we’re going to cover in the episode will be applicable to most listeners. But again, get the context right and see how they apply to you business.
There’s going to be a whole bunch of stuff: marketing techniques, productivity techniques, efficiency, business management stuff, just a whole bunch of low-lying Preneur Marketing. I’m going to use low-lying, low-hanging Preneur Marketing fruit.
Dom: Cool. I like that; I’m looking forward to that one. But folks, just to remind you, if you want to help staying on track with the 7 Levers habit, if you want more ideas, more in-depth strategies and tactics, and even real examples of what you can do to either plug the leakage or improve the 7 Levers in your business, we are putting together a 7 Levers Home Study Course. Pete and I are putting the finishing touches to this.
There’s a really, really good reason why it’s not there yet, folks, and you’re going to love the reason. We decided to plus this beyond what we originally envisaged for the product. So we’re just getting it right. But popover to 7Levers.com, put your name and email in that box that’s there, and we’ll let you know as soon as the home study course is available. And when it is, we think you’re really, really going to like what we’ve done.
Pete: I’m going to give people a little bit of a hint. It’s more than just a home study course, there’s actually going to be a whole lot of interaction on an ongoing basis and support with this. So, consider the 7 Levers Course a very structured way to grow your business and apply the 7 Levers to it; but along with that, there’s going to be, for want of a better word, an advisory board community aspect to this on an ongoing basis where we can support you and your business from arm’s length as almost your advisory board, which I’m super excited about.
Dom: Absolutely. Because we realized that, and certainly through doing the Mastermind Group for the 7 Levers, we realized that whatever we say, if we just send this information out, it becomes up to you to look at it from your business point of view, apply it, pick out the things that are relevant, go and do it.
And we don’t want to leave people hanging, this is a community, this is the Preneur Community, and we want to be a part and join in with that community and help. So we’re putting something in place to make sure that we can do that. Let’s leave it to that shall we, Pete?
Pete: Yep. So, 7Levers.com, if you want to pre-register, just a little bit of an email list so we can tell you guys first and not bombard everybody else with pointless and irrelevant marketing material. It’s all about message to market-match as we’re doing what we preach. 7Levers.com, put your email address in there and we’ll let you know when all that’s ready. It’s very, very close.
Dom: That’s it. OK, folks, that’s it for this week. Thank you all for listening. As always, love your feedback. Thanks, everybody, again that filled out the survey results over on PreneurMarketing.com. There’ll be a link to those in the show notes. Do go and have a look, it’s very interesting reading.
But on top of the specific surveys that we’ve sent out, please do carry on with the feedback, whether it’s on PreneurMedia.tv using the really cool SpeakPipe service. Got some great messages on that. You just click on the button and you can record an audio message, which is great; or in the comments or wherever. You can email us at…
Pete: support [at] preneurgroup [dot] com.
Dom: And you can leave us a comment on iTunes in your particular country. Any of those things would be appreciated. We really like to hear back from you, folks, see how we’re doing. Keep us honest, aye? So with that, see you next week, folks!
Pete: Thanks, guys!
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Links:
Online:
http://ldmagazine.com – Get a copy of Pete and Dom’s Digital Magazine on your iPad
http://magcastplatform.com – Find out more about the publishing platform behind LD Magazine
http://www.preneurmarketing.com/petes-businesses/preneur-community-survey-results/ – The results of Pete’s recent survey on PreneurMarketing.com
Books:
Pragmatic Thinking and Learning – Andy Hunt
PreneurCast Episodes:
These previous episodes are talked about in today’s show. If you missed them, go back and listen over at:
PreneurCast Episode 54 – Unfrequently Answered Questions – responses to some of the questions asked in the Preneur Marketing Survey
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. Using the 7 Levers as a framework, they identify and share some ways to stop some of the more common leaks.){kind=link}