One Huge Mistake that New Startups Make

I recently spoke with a client who is planning to launch a startup in the personal coaching space. I’m not able to go into details because of confidentiality issues, but I can tell you that the technology involved in setting up the platform to enable client/coach communications in a secure fashion along with some other features will cost him between $20k $30k.  Considering that the company is self funded and bootstrapped, that’s a pretty hefty sum. But like most entrepreneurs, this one wants his product to be the best that it can be so that people will want to use it and, more importantly, pay for it.

Intrigued by the startup idea, I asked the client whether he and his cofounders had any paying clients lined up to justify investing such a relatively large sum of money. The answer was no, but that they are positive, based on their knowledge of the market and experience in the industry, that their product will take off in a big way. So they want to do it right from the get go.

I then suggested that they read The Lean Startup by Eric Ries and that they first create a Minimal Viable Product (MVP) with which to test their business idea. Their MVP would consist of a website that would explain their product, collect contact info and allow visitors to sign up and pay for their service. The actual coaching sessions and all the logistics surrounding it like scheduling, follow up and anything else that might arise would all be done manually using free tools such as Google Docs and Sheets and Skype. The users would still be getting the service they paid for and the startup founders would only to pay a fraction of the cost they originally estimated.

I told my client that once they get enough paying users to prove their business model, they can then invest in building out their custom system. Best of all, they’ll be making money as they do it. On the flip side, if the demand they thought existed turns out to be insufficient, they can either modify their model, pivot in a different direction or just close up shop without having lost a lot of money.

What I described, in a nutshell, is the lean startup method. Instead of following the classic “if you build it, they will come” method of spending tons of resources on creating a product that people may or may not want, the lean startup method advises created an MVP to test the business model. The feedback that is then gained from real customers can be used to refine and modify the product, resulting eventually in a finished product with proven demand. A portion of the money that you didn’t pour into premature product development can be used to market your MVP and get users, to validate your business model. Many bootstrapped businesses that fall into the trap of spending heavily on product development end up with no money to market their masterpiece. That equals big trouble.

It’s important to remember that customers are looking for solutions to their problems. They care about the end result, not what you had to do to arrive at that result. If a client pays for a ditch, they couldn’t care less if you dig it by hand or with a brand new Caterpillar excavator.  As long as they get their ditch on schedule and according to specs, they’re happy. If you can solve your customers’ problems without spending a lot on technology, then it makes sense to do that until you know you have a healthy demand for your product or service. Then you can invest in technology to scale your business with much more confidence and much less risk.

Have you used the lean startup method for your business?

Sell the Benefits, NOT the Features

I recently evaluated a website for a prospect who signed up for my 3 free tips offer, and my first suggestion was one of the most fundamental principles of sales and marketing that most companies ignore. At the top of their homepage, in a large headline font, they wrote a description of what they do.  In their case it was something like We Do Management Consulting.

Granted, it’s important to tell prospects what product or service you’re offering, but you need to do it in a way that persuades them to buy. The way to do that is to sell them the benefits that they will get from you or your product.

Let’s stay with our management consulting example. You might produce awesome spreadsheets, incredible analysis and kick-butt reports. But does your client want all that?

Companies that hire management consultants are looking for specific benefits, like increasing efficiency, decreasing waste, improving profitability and so on. They want those benefits and could really care less about the techniques you use to get them their benefits.

Web design clients don’t care about the software you use or your advanced project management tools. They want a website that is going to help them grow their business. Accounting clients don’t want to know the details. They want to pay less taxes.

You ever wonder why ads for sports cars usually include beautiful women? When a 32 yr. old man considers buying one of them, he isn’t thinking about the gas milage efficiency or time it takes to get from 0 to 50 or any of that other cool stuff. What he IS thinking about is pulling up next to a Victoria Secrets model in his brand new Corvette, top down, and saying, “Hey, want a ride”… and she does (hey, it’s his fantasy).

The benefit of the car in his mind is that it can help him attract beautiful women. As they say, “sex sells”.

People have little interest in purchasing a bed. What they want is a good night’s sleep. — source

Whatever it is you’re selling, you need to identify the benefits of your product or service and present that to your customer instead of just listing your features (as awesome as they might be).

There are countless productivity tools on the market that help you do everything, from scheduling your social media posts to getting the weather when you first wake up. The only ones that I’ll even consider paying for are those that offer me a very tangible benefit that impacts me in a meaningful way.

If you tell me you can save me a little time or make my existing tasks a bit easier, I’m probably not gonna bite no matter how cool your features are. But if you promise to save me hours of time per week or get me something that I could not otherwise find, them you’ve got my attention.

For business buyers, you’re stressing “bottom line” benefits from innovative features. If you can demonstrate that the prospect will be a hero because your CRM product will save her company $120,000 a year compared to the current choice, you’ve got an excellent shot. — Copyblogger

Features are important to support your benefit claims. Once you make your claim, you’ll most likely need to be able to explain how you’ll achieve. That’s the point where you want to highlight your features.

No Fakes

When you do offer a benefit, make sure it’s a real one.

Direct response copywriter Clayton Makepeace asserts that fake benefits will kill sales copy, so you have to be on the lookout for them in your writing. He uses this headline as an example:

“Balance Blood Sugar Levels Naturally!”

That sounds pretty beneficial, doesn’t it? In reality, there’s not a single real benefit in the headline. — Copyblogger

People don’t really care about “balancing their sugar levels”. They DO care about avoiding all the illness and hardship that results from unregulated diabetes.

Bottom Line

When you’re trying to sell something, make sure to identify and then emphasis the benefits of your product and service. Don’t just highlight the features.

Sell the Benefits, NOT the Features.

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How NOT to Ask for Something in an Email

I received a direct message on Twitter today from someone who just recently followed me (I followed back). I thought it would be a really good exercise to analyze it in order to extract an important lesson in marketing and sales communication.

According to his Twitter bio the sender is “Co-Founder and Director of Customer Success” of a company. He doesn’t say what the product or service is (he should probably do that). Here’s his opening message to me:

Hi arnie, I’d love your feedback on our new platform for landing pages built for mobile optimization & speed. Open to talk?

Now, I think I’m a pretty nice guy (at least according to my wife) who’s always looking to do the right thing. But something in his message really rubbed me the wrong way. He’s asking me to give him “feedback” on his new platform, and he wants me to have a conversation with him about it.

No big deal, right? Well…wrong. I’ve got a list of about 38 things I need to do for MY business. And you want me to stop working on paying the mortgage in order to help you pay yours?

Dude, if you want me to help you then give me a reason to do so. Show me how helping YOU will benefit ME. If you want something from someone, especially if you don’t know them well (or at all), make sure to show them how you will help them before asking them to help you.

It seems like common sense, but most people asking for favors or work or whatever seem to ignore it. I ignored it too for the most part, until I learned the lesson from Noah Kagan. It’s one of his primary rules of emailing, and it’s pretty fundamental…and brilliant. (You can grab his 33 Email Templates here. Super useful.)

What our Co-Founder should have done is at least offered me a free subscription to his soon to launch product. That might have been worth me spending a few minutes of my time. It would also show that he valued my time and input (and it wouldn’t cost him a penny!).

I could have just ignored him, but I felt like I might be able to teach him this lesson for his own benefit. So I responded to his message:

Really busy these days…

I thought this might make him understand that my time was valuable and he might get the message. Here’s his response:

No sweat, thanks for the quick response

Ok, so he didn’t get it. But I could just leave it there and let him continue making unreasonable requests from innocent Tweeters. So I replied with this:

Not trying to be a jerk, but what would I gain by spending time talking to you about your platform? Something to consider when asking…

There, I said it. Crystal clear. But did he get it? Here’s what he replied:

If you use landing pages as part of your business you could increase your conversion rates:)

Seriously? So now he’s selling me on his product, which is obviously better than what I’m already using or the other 100 landing page tools on the market. And it isn’t about feedback anymore is it? He wants me to become a customer. Fair enough, but don’t try to fool me with the feedback ask.

I couldn’t resist:

So what feedback are you looking for? Sounds like you know that it works.

His response:

We’re opening private beta soon and looking for beta testers. If you have a full plate I get it…

Yes, I do have a full plate but maybe if you told me you were looking for beta testers up front and sent me a login and the promise of getting it for free once it launches…maybe I’d try it.

Instead, you gave me some great material for a blog post and reinforced the lesson that I learned from Noah:

If you want something from someone, make sure to show them how you will help them before asking them to help you.

Are you already doing this?

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5 Ways to Compete Against the Giants in Your Industry

If you own or manage a small business you probably stay up nights trying to figure out how you’ll ever be able to survive, let alone compete against, the huge companies that dominate your industry. This could apply to any field or industry, but for the scope of this article I’d like to focus on service businesses whose main asset is the skill of their workforce.

In the marketing classic The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk! (this book is a MUST read), law number 9 is “The Law of Opposites.” The law if based on the following concept:

In strength there is weakness. Wherever the leader is strong, there is an opportunity for a would-be #2 to turn the tables.

Here’s how you do that:

…study the firm above you. Where is it strong? And how do you turn that strength into a weakness? You must discover the essence of the leader and then present the prospect with the opposite.

Think about it. If you’re an accounting firm with less than 50 employees, how are you ever going to compete with one of the Big 4, or even one of the much larger midsized firms in your region? By turning your weakness (ie. size) into your strength and selling point, and their size into a disadvantage.

1. Client Attention

As a small firm (ever hear of the term boutique?) you have the ability to give your clients the personal attention they deserve (if they want it) in a way that bigger firms simply can’t. Or even if the big firms can, you can still create the impression that they can’t. You can emphasize that they’ll get lost and just be another number with a huge firm. That will reinforce their existing perceptions of working with a large firm. But make sure you can follow through on your promises of super attention.

2. Quality of Work

Tell your potential client that their work will be handled by skilled senior level people with years of experience. In a large firm they might get relegated to the desk of a junior level employee. Whether this is actually true is questionable, but the perception certainly exists. And marketing is all about perceptions. Again, make sure your work is as good as you say it is.

3. Specialization

As a small firm you have the ability to specialize in a particular niche which you can target. The big boys might have specialists in that area, but the perception is that if you only specialize in one thing, then you’re probably pretty darn good at it. An expert. Yes, that big firm does A, B, C, D and E, but if you’re looking for just B, that what we focus on and are experts at.

4. Location

Business is about relationships and being local can be a huge advantage in building and nurturing those relationships. Most clients value the ability to meet with you face to face when they need to, which is something the local guy can do with ease. If you can create a strong personal relationship with your clients, you can hold your ground against the big guys. There’s also the aspect of supporting local business that can work in your favor.

5. Don’t Compete

Sometimes the best way to compete is NOT to compete. There will be times when, due to the size, nature or complexity of the project, the client will go with the big guys. Don’t waste your resources competing for those jobs. Instead, focus on all those juicy companies that fall below the radar of the big guys. To succeed, the large firms need to target large companies that can pay super large fees. As a small firm you can do quite well with the rest.

Frame your large competitor’s size as disadvantage and your small size as a strength…and let the fun begin!

How to Become the Leader in Your Category

The goal of every business owner or marketing executive is to occupy the #1 position in their category. No one sets out wanting to be the runner up, even if being second or third means making huge profits. If you’ve got an ounce of ego and competitive spirit, you want to be at the top of the charts. Number 1.

There’s good reason (beyond ego) to want to be #1. In the marketing classic The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk! (this book is a MUST read) the first law presented is the Law of Leadership along with the following example:

What’s the name of the first person to fly the Atlantic Ocean solo? Charles Lindbergh, right?

What’s the name of the second person to fly the Atlantic Ocean solo? Not so easy to answer, is it?

It turns out that the second person to fly the Atlantic solo was Bert Hinkler (don’t worry, no one knows that). So far the lesson is clear. Being number 2 wins no prizes. But the most interesting insight comes next.

Who was the third person to fly the Atlantic solo? Emilia Earhart (Yes, you HAVE heard of her).

Does that destroy the law of leadership? Not exactly. Although Emilia was only the third person to fly the trans-atlantic journey, she was the first woman to do it. She was first in her category.

If you can be first in your category, then the benefits are obvious. I know from first hand experience how being first in the Itunes app store dramatically increases your traffic. People want to work with, interview, and use the leader. It’s good to be king.

But let’s face it, not everyone can be #1. Odds are that you aren’t and probably never will be. So what can you do about it?

The secret is to be number one in your category. Just because someone else is holding the number one position doesn’t mean that you can’t be number one in your own category.

Let’s use online dating as an example. is the largest and one of the oldest online dating sites in the US (maybe the world?). Trying to launch a new dating site to take over the #1 spot is futile. So launched and became the largest FREE online dating site (Match is paid. They subsequently acquired okcupid). become the #1 Jewish dating site. Tinder became the largest dating app (they too are owned by Match’s parent company).

Get the idea? If you can’t compete against the undisputed leader, find or create a category that you CAN be #1 in.

You probably will never be a larger retailer than Walmart, but you might be able to be the largest retailer of a particular item. And within that item category you might be able to be the leader in your particular geographic area.

At some point, if your niche or category is too small, being number 1 might not matter anymore. But as long as your category has enough room, being #1 will definitely help.

As you work on establishing your positioning in the marketplace, going up against the market leader might not be the best strategy. Instead, try to identify the particular niche or category that you CAN be number one in. And then own it!