We’ve reached the final step in the HostGator Home Business Guide, and like listening to your customers, this step is ongoing. Reviewing your business performance is the key to understanding whether you’re reaching your audience and heading toward profitability. Major companies do this all the time, with everything from daily sales goals to quarterly financial filings and annual reports. You don’t need to adopt an enterprise-level review schedule, but you do need to keep tabs on these 11 areas to keep your business on track.
We’re in the homestretch of the HostGator Home Business Guide. Previously we covered the basics of developing a minimum viable product (MVP) to test your business idea and get feedback from customers. Now, we look at what to do after you have at least one viable product or service for sale. It’s time to refine it and maybe expand your offerings so you can make more sales to your current customers and reach new customers, too.
Start (always) by listening to your customersHow do you know what to offer next? Listen and your customers will tell you. If they don’t have any requests for you, you can ask--then use your active listening skills to hear their answers clearly. Start conversations with your customers about their needs when you see them face to face in your shop or at your event booth. Use your website, email list, and social media accounts to ask for direct feedback, host polls, and take surveys. Just remember to ask lots of questions and take your time developing the ideas you get from these talks.
Present your existing products and services in new waysWhile you’re listening to your customers, you can also work on new ways to offer your existing product or service to appeal to a broader range of customers. In fact, your current and would-be customers may suggest some of these options to you.
Use tiered pricing to appeal to customers at different price pointsThis is a tried-and-true tactic for businesses of all sizes, because it changes your customer’s decision from a single binary choice (do they want your product at the one price listed, yes or no?) to a mini-buffet of options they can choose from. Let’s take the hypothetical example of Snappy’s Party Rentals. He started off with a single service – bounce house installation, monitoring, and takedown at parties for $50 an hour. So far, business is good among customers who are hosting 2-3 hour events. But some prospective customers with all-day events have been skipping Snappy’s, and a few churches and schools have been unable to rent from Snappy’s for their fundraiser fairs.
Snappy hears what these would-be customers have to say and decides to offer three tiers of pricing for his bounce house rentals:
- an all-day rate for $250
- the current $50 per hour rate
- a nonprofit rate of 50% off in exchange for listing Snappy’s as a sponsor and giving out promotional material at the event
Snappy’s not offering anything new (yet) but he is giving customers some options when it comes to meeting their bounce house rental needs. This gives him the ability to bring in new customers—nonprofits on small budgets and homeowners who host all-day events.
Package optionsPackage deals are another way to win customers. You bundle your next MVP with your current products and services, or you can partner with another business to package your offerings together. For example, Snappy might hear from his customers that planning a kids’ party takes a huge amount of time. So he might offer a package that includes a 20-minute performance by a magician and delivery of a birthday cake, plates, and napkins to the event site. Grateful parents may respond better to that package (and pay more for it) than a basic rental. You can create landing pages for your tiered pricing choices and your packages on your web site. Then promote these pages through your social media and email channels so your customers know they have new options.
Cross-selling and upsellingIf you have new MVPs to offer, you can sell them as standalone products, but you may sell more if you have a plan to cross-sell or upsell them to your current customers.
Cross-selling: offer something newLet’s say Snappy has heard from some customers that they would also like something their party guests can enjoy in the pool. He does some research, buys several big rainbow unicorn pool floats, and offers them as a separate rental option for his customers. The unicorn armada is a success, but his higher net worth customers say they’re still looking for more “wow” factor for their backyard pool parties.
Upselling: offer something betterSnappy wants to cater to these high net worth customers. Because it’s a great time to be alive, he finds an option online he thinks they’ll like: a rainbow unicorn pool float encrusted with thousands of crystals (yes, this is a real thing). He also pays a set designer to make coordinating sparkly decorations for the outside of his bounce houses to offer a “glam” option at a higher rental rate. Snappy’s dolled-up bounce houses and crystal unicorn pool-float party rentals become must-haves among his moneyed clients. When you add cross-sells and upsells, be sure to feature them prominently on your website, especially if they make compelling images.
Refine and revisit your MVP and USP to deliver better productsIt’s important to note that Snappy didn’t just plunk down $6K for a sparkly pool toy without doing his market research and his math. He knew before he made the purchase that there were enough parents (and other adults) in his customer base with the means and the willingness to make it a profitable decision. And he ran a minimum viable product test with some un-sparkly unicorn pool floats to test the pool-toy rental idea first. It’s also crucial to remember that Snappy’s new packages and offerings help refine his unique selling position (USP). He’s moving from being a run-of-the-mill bounce house provider for children’s backyard parties to being a fuller-service party entertainment and rental company for house parties and community events – but he’s still firmly focused on his core business of party rentals and services. Well done, Snappy. Next time, in the final post of our HostGator Home Business Guide, we’ll talk about how to review your business from top to bottom to make sure you’re getting the most from your hard work and to find ways to keep growing and improving.
This is Step 9 of our 11-step HostGator Home Business Guide. At this point, you’ve developed your first basic product, or you’re working on it. You’ve put together your marketing toolbox, which includes social media accounts, your business website, a professional email address, and the results of your social media listening. Here’s how to use them to establish your brand and connect your audience to your product.
1. Social media best practices for home-based businessesWhen you put together your marketing toolkit, you found the social media platforms that your ideal customers us, set up business accounts on those platforms, and studied their tutorials for business users. (You can review the marketing toolbox steps here.) Each platform is a bit different, but some practices work well across all of them: Post regularly. You don’t need a constant volley of posts, but regular posts keep your business visible and show that it’s active and engaged. Abandoned social media accounts can undermine customer trust in your brand. Share useful information. Your ideal customers need and want certain things, and you can earn their trust by posting information that helps them out. It doesn’t have to be--and shouldn’t always be--your own company’s products or services. You can share other people’s how-to articles, video tutorials, inspirational pins, and interviews. When you do share your own products and insights, focus on building trust and connections first, and making the sale may follow. Promote wisely. Social media is great for announcing flash sales, sharing coupon codes, and other deals. Be sure your language is clear so there’s no potential for customers to misunderstand your offer, and stick to your offer deadlines, even if no one bites the first couple of times. It’s tempting to extend deadlines, but that trains your audience to ignore them, which can reduce responses to your offers. Track your results. Some posts may get lots of shares and clicks, while others get few or none. Study what does well and steer more of your posts in that direction. Invite followers to visit your site. An easy way is to promote a blog post or lively comments discussion. Don’t have a blog yet? We’re about to fix that.
2. Starting your own small business blogA blog is a necessary marketing tool, and it’s easy to start a blog on your business website. Keeping your blog updated with fresh and relevant content that helps your business rank well in search results is a the real challenge, but you can do it. Here are the basics. Make a list of topics your target audience talks about, especially problems your business can solve for them. Maybe they can’t find locally made food gift baskets. Maybe they want to customize their lawn-care services each week via a smartphone app. Whatever it is they’re talking about that relates to your business, you’ll want to talk about it on your blog. Build a content calendar. Just as you want to post social media updates regularly, do the same with your blog. A regular deadline will help you focus and keep your business fresh in the minds of readers. Use the keywords your customers search for to find businesses like yours. Don’t beat the copy to death with the same keywords over and over, but do include important phrases like, say, “bulk order temporary tattoos” or “healthy school lunch delivery” or whatever it is you’re trying to rank well for in search results. Write simply. Write as if you’re talking to a good friend or customer and you’ll connect with your readers. If the act of writing ties you up in knots, dictate your posts to your phone or PC and then transcribe them. Promote your blog posts on your social media accounts. Be sure to include images (your own or stock photos) to increase click-through and read rates. Track your results. Regularly review traffic stats for your posts, such as unique visitors, time on the page, where they’re coming from, what search terms they used, and the number of comments per post. Invite your blog readers to join your email list so they’ll always know when you publish something new. That brings us to…
3. Email marketing for small business ownersYour email list is a valuable asset, because it’s all the people who have bought from you, who are interested in what you have to say, or want to know what you will offer them next. In other words, these folks have already said yes to your business, to some degree. They may not buy everything you offer and they may not read every email you send, but they’re open to hearing from you. Email regularly. Don’t bombard your list members, but don’t let them forget about you, either. I’ve heard from email newsletter experts that once a month is the minimum for keeping yourself in customers’ minds. That’s plenty for a new business owner who already has lots to do. Write great subject lines. Treat them like headlines and make them short enough to display in the preview window. Say something useful. Share insights, promote products and offers, and answer frequently asked questions. You can also promote specific blog posts or social media discussions that are going strong. Another popular option is to include a case study or testimonial from a satisfied customer. Track your results. Free-to-low-cost tools like Constant Contact show you how well each campaign performs. See how many recipients opened your email and clicked on links within your email. Use what works in your next message and drop the things that don’t work.
4. Influencer marketing for small businessWith social media, a blog, and an email marketing program in place, you’re ready to start courting influencers. You probably know from experience that people are more likely to buy from businesses that friends and family recommend. Influencer marketing is a similar way to generate word of mouth from experts and high-profile people in your field. Businesses of any size can engage in influencer marketing, although you should calibrate your expectations to your business size and scope. Shayla Price explains how to identify, contact, and work with influencers in this detailed post. When you do run an influencer campaign, track your results to see how well it worked and to get ideas for making your next influencer campaign even more effective. Just two more steps to go. Our next post will delve into developing new products based on feedback from your customers, how and when to market new lines to existing customers, and how to reach new customers as your product offerings grow.
We've come so far in our series on starting a home-based business, and now it's time to focus on the details of your first product. You’ve probably had a product or a whole line in mind all along and you may have some very specific ideas. As we discussed in the previous post on customer feedback, what we think our customers want and what they actually want may not be the same thing. As you listen carefully to your target audience, you can develop a clearer idea of what they'll buy from you and what might be a misfire. To be sure, though, most business experts recommend starting small and simple, with something called a MVP, or minimum viable product. Confession time: As useful as the term “minimum viable product” is, I don't much like it. "Minimum" sounds like slacking to me, and maybe to you, too. After all, the reason you're starting your own business is to wow your customers and impress them with how well you meet their needs, right? Shouldn't you roll out your very best idea right out of the gate? Not exactly, according to many successful small-business founders and serial entrepreneurs. Your very best idea may not be quite what your customers want, for whatever reason. If you've spent all your capital on this one product that doesn't quite get customers to buy, your business may run out of money before it recovers from the misstep. That’s a big risk to take, especially if you’re funding your new home-based business out of your own savings.
The 3-step MVP approach to product developmentA more prudent plan is to start by offering a basic version of what you've heard your customers ask for and then...
- Ask for lots of feedback from your first customers.
- Listen to that feedback actively and with as little confirmation bias as you can manage.
- Roll out a new version with improvements suggested by users and clients OR scrap the MVP if it flops and go back to listening to your customers for new ideas.
Skipping the MVP step: a cautionary taleIn case you're considering skipping out on this important step, let me share my personal cautionary tale with you. I skipped the MVP step once, when I was the sole proprietor of a tiny dancewear business. I thought I knew my customers' tastes, buying habits, and interests well enough to invest $600 in an embroidery machine to embellish products I was already selling and add new products with embroidered designs. What I learned was that although most of my customers thought the designs were cool, they weren't motivated to spend the extra money on them. Also, embroidering things, even with a digital machine, was time-consuming. I had to watch the fabric in case of snags and to change the thread from time to time. Even when I did sell the occasional embroidered piece, the extra revenue it yielded didn't come close to covering the (highly discounted) value of my time. When I spoke to a more experienced dancewear designer and vendor about my problems, she ran through a quick list of questions and suggestions that identified my problems on the spot. My prices were too high for customers and too low for me. My process wasn’t optimized to reduce costs, and it couldn’t be with the type of machine I’d bought. That also meant I had no way to scale production. She was too polite to say I’d really messed up but she didn’t have to. What I should have done before I invested money and time in my product idea was listen more carefully. If my customers had told me they’d be willing to pay more for embellished items, the smart next step would have been to ask my experienced designer friend for her advice. She would have told me to keep my expenses to a minimum by renting or borrowing the proper equipment to make samples cost-effectively and test sales. That would have also shown how much time each piece required. My only consolation is that skipping ahead is a mistake that more experienced entrepreneurs sometimes make, too.
Won’t early customers be disappointed when you bring out a new version later?Take care of your first customers by offering them a deal on your updated products later on. Software publishers do this when they roll out new versions. You get a discount on Microsoft Office, for example, if you're upgrading from an older version. It's good business (and a smart marketing strategy) to reward your existing customers by giving them a “preview sale” on your new version before you make it widely available. We’re getting ahead of ourselves, though. Right now, the focus is on your first MVP.
The MPV reviewRemember to base your first product on what your customers say they want and need. Ideally, you’ll invest only enough time and money to meet your customer’s requests without risking too much on your end. Ask for advice from mentors and peers to make your first product cost-effectively. Then, see if your MVP sells. Listen to what your customers tell you about it: why they bought it or didn’t, what they thought of it, what they like, and what they’d like to change. Keep those notes for future product updates and changes, and keep track of your first customers so you can reward them with deals later on in exchange for their feedback. There are three more posts in the HostGator Home Business Guide. Next time, we’ll look in depth at the marketing methods you can use to get the word out about your MVP, drive traffic to your business web site, and grow your customer base.
Thursday, January 12, 2017 by Casey Kelly-Barton
We’re at Step 7 of the HostGator Home Business Guide, and today’s post is about the fine art of listening to your prospective customers. Listening is a tried-and-true technique for success. Business guru Richard Branson, who is a big fan of careful listening to customers, advises, “You can never have enough feedback.” Listening is important even before you launch your first product or start promoting your business, because customers will tell you what they want and how they want it.
What are you listening for?The first thing to listen for is demand. Let’s say you’re a baker and you know that gluten-free products are popular and sell for more than traditional baked goods. Before you roll out (thank you!) a gluten-free product line, listen to gluten-free shoppers in your area. Do they want sandwich loaves a couple of times a week, or are they more interested in the occasional birthday cake? Is there enough demand to sustain your business locally? Next, listen for what potential customers are willing to pay. If they’re not talking about it, you can ask. You may find that prospective buyers aren’t willing to pay a sustainable price for your offerings, or you may find that your planned prices are too low and you can raise them to grow your business without losing customers. [bctt tweet="'You can never have enough feedback.' - business guru Richard Branson #entrepreneurship #quotes" username="hostgator"]
Listen to your ideal customersListen to people who match your customer personas when you’re making business decisions. Your friends and relatives may be supportive but unless they’re in your target market, their input may not be helpful. I’ve seen small business owners underprice their services because they listened to their peers—often other cash-strapped new business owners—instead of their target market of high-income households or medium to large businesses. What might seem overpriced to your uncle might be a worthwhile expense to your ideal customer, although they’ll probably buy it at your lower rate, too. You just won’t earn as much profit for your efforts.
Where to listen to your customersIf you already know people in your target market, ask if you can pick their brains. In Step 6 we talked about finding the social networks where your customer personas spend time, and now it’s time to listen to their social media conversations. There are many social listening tech tools to help businesses automate and refine their social listening programs, but for most solopreneurs and brand-new businesses, the most cost- and time-effective social listening method is to do it yourself. Are there blogs your ideal customers follow? You can follow them, too, and pay attention to the comments. Join in if you have questions or ideas to bounce off commenters, but avoid thread hijacking and self-promotion. Remember that social media is more than just Facebook and Twitter. Your target customers may be following makeup-tutorial channels on YouTube or joining computer-industry discussion groups on LinkedIn. They may review hotels on travel sites or bakeries on Yelp. In fact, reviews of businesses similar to yours, even if they’re not direct competitors, can help you see what customers want from a business like yours. Give potential and existing customers many ways to talk directly with you, too. Make your phone number and email address easy to find on your website and social media channels, and if your business website includes a blog be sure to respond to comments regularly. Follow up with people, thank them for taking the time to share their opinions with you, and make the most of what they say.
How to really listen to your customersTo get the most value from listening to your customers, get familiar with active listening and start learning to spot and avoid confirmation bias. Confirmation bias is how psychologists describe the human tendency to place more value on information that supports our assumptions and give less credit to information that contradicts them. Confirmation bias can prevent you from really hearing your customers and can lead to bad decision-making in other areas of your business, too. All of us have this quirk, and even business titans like Warren Buffett have to work against it by consciously seeking out, and really listening to, viewpoints and opinions that don’t match theirs. What does it look like when this bias plays out? Here’s an example. A retreat organizer loves everything about his venue—the food, the décor, the setting—because it reminds him of where his family took vacations when he was a kid. When retreat clients give positive feedback, it confirms his feelings for the place. When guests bring up problems, he’s likely to dismiss their complaints as minor or baseless because he’s biased toward seeing the retreat location in a very positive light. Both types of customer feedback could help him improve his business, but he’s only really listening to the positives. Knowing that confirmation bias exists can help you combat it and make better decisions. Another bias-buster is active listening. It’s used by everyone from couples’ counselors to customer service trainers, and you can use it, too. These are the steps:
- Listen to your customers without interrupting and without forming a response in your head while they’re talking (or while you’re reading their email).
- Respond by outlining what you heard them say in neutral terms or in ways that reflect the customers’ feelings. You don’t have to agree or disagree right now.
- Listen to any additional feedback from the customers and make sure you understand what they’re really saying. It’s a good idea to thank them for their input, too.
When should you listen to your ideal customers?Always. Remember, you can never have enough feedback. What are we going to do with everything you learn from listening to your prospective customers? The next step is to develop or refine your MVP. That’s the minimum viable product that you’ll debut and then update over time, based on (you guessed it) listening to your customers. We’ll go into detail about your MVP in the next post for HostGator Home Business Guide.