Why Now Is a Good Time to Review Your Online Store's Product Mix and Pricing

Millennials are upgrading their lifestyles. Is your store ready to help them do it? Shoppers age 20-36, as we mentioned in our future of e-commerce post, are driving growth in luxury online retail sales. In the US, Europe, and China, young consumers are spending more freely than before on luxe items—and are expected to do so for years to come. This means that if you've been holding off on adding more expensive products to your shop, this could be the time to go for it, to keep your customers from leaving you and to see better profit margins. But before you invest in new products, you'll want to do a market analysis, find your break-even point for those products, come up with a plan to market your luxury items to young adult shoppers, and create an online shopping experience they'll enjoy and want to experience again.

How Can You Analyze the Market for Your Luxury Items?

In general, interest in luxury goods is high among young adults. Consultancy Deloitte found that 55% of US Millennials are “very interested” in “high-end fashion or luxury items.” The percentage is even higher in Italy, the UK, and China. But you'll want more details before you decide whether to invest in high-end products for retail or develop your own brand of luxe goods. Let's say you sell handmade leather wallets but you'd like to add handmade shoes, which are a much costlier product. Through a combination of surveying your existing customers, studying demographic data, and online marketing research tools, you'll want to answer these questions:

• Who are the target customers for your product?
• Do they need and/or want what you're planning to offer?
• Do you have (or expect to attract) enough of these customers to make your investment in the new product profitable?
• How is the competition presenting these products or similar ones?
• How can you set your shop apart from competitors selling the same product? (Remember, competing on price is usually a losing proposition.)

 

What's Your Break-Even Point?

Once you know that there are customers who will buy your handmade shoes, you'll need to fine-tune how to price them and figure out how many you'll have to sell before you break even and start turning a profit. To find your break-even point for different retail prices, you can use this clever break-even analysis tool from Harvard Business Review. You'll need to know, or have a good estimate of, your:

• Fixed costs, which are the expenses you'll rack up in developing your shoes, like design software, shoemaking equipment, and the money you're budgeting for general promotions. (If you're buying finished products from a supplier, you can substitute the wholesale cost of your initial goods purchase for product development costs). Let's say setting up your workshop costs you $10,000.
• Variable costs per product unit, which include the cost of materials and your time to make each pair. Variable costs can also include pay-per-impression digital marketing campaigns. Let's put your materials, labor, and digital marketing costs at $200 per pair.
• Revenue per unit, which is your retail price. Small-brand handmade shoes are typically priced around $300 per pair.
• Unit margin, or how much money you'll get to keep after each pair sells.  In this case, it's $100 per pair.

Plugging these numbers into HBR's calculator (or using their equation) yields a break-even point of 100 pairs of shoes sold at $300 per pair. Raise your retail price to $350, and your unit margin rises to $150 while your break-even point drops to 67 pairs, although it may take you longer to reach your break-even point at the higher retail price.  

How Can You Market Your Luxury Items to Millennials?

With your shoes ready to go, your price set, and your break-even point calculated, it's time to let luxury shoppers know you've got the goods. How can you do that? Start with your email list and social media followers. (If your shop doesn't have an Instagram, know that it's a popular channel for major luxury brands trying to reach Millennials.) In your messaging, you'll want to include great, share-worthy photos and text that emphasize the “quality and uniqueness” of your items. That's because Deloitte found those two things matter more to the under-35 luxury shopper than legacy brand names do. Promote your company's ethics and sustainable practices, too—89% of US Millennial luxury shoppers in Deloitte's study said they always or sometimes make sure a luxury brand is ethical and sustainable before buying.  

How Can You Create a Luxury Customer Experience?

There are two basic elements that can take a basic online shopping experience to luxurious new heights: product details and excellent customer service. Deloitte found that a slight majority of young luxury shoppers in the US prefer shopping online to buying in-store. However, these Millennials also said that being able to try products and get a sense of how they feel are important benefits to in-store shopping. If you're selling your handmade shoes online only, how can you give customers a clear sense of what your goods are like? Invest in high quality product photography, add product videos, and write brief but detailed descriptions of each luxury item you sell. To further encourage new customers to try your products, you'll want to highlight your fair and reasonable return policies, free shipping and expedited shipping options, and guarantees on what you sell. If you're doing double duty as chief shoemaker and customer service rep, remember to make each interaction with your customers as positive as possible. Answer questions about products as quickly as you can, and when people do buy from you, make sure the packaging is impressive, too. If your first foray into upscale products goes well, you may want to expand your offerings to include more high-end, high-margin items. In each case, remember to do your market research first so you can get the most return on your luxury-goods efforts.

Market Research 101 for Small Businesses

“Do your market research” is standard advice to people thinking about starting a business. But what does that really mean, and can you afford it? The good news is, there's a lot of useful free market data—although you may have to get reacquainted with your local library to access some of it. In this post, we'll go over the basics of market research, helpful resources, and DIY tools to help you gather the business intel you need.

What is market research?

Market research is the homework you do before you start your business to learn as much as you can about your prospective customers, the geographic market where you'll operate, and your industry. The great thing about market research today is that, thanks to massive amounts of consumer data collected by government agencies and research firms, you can get as detailed a picture of your customers, market, and industry as your time and budget allow. At a minimum you'll need to know:

• Who is the target market for your product?
• Do they need and/or want what you're planning to offer?
• Do they have money to spend with you?
• Do enough of these customers exist to support your business now and in the future?
• How's the overall health of your industry?
• Who's your competition?
• What sets you apart from the competition?

To find the answers, you'll need to do two types of market research. Primary market research is research you do. Secondary market research is all the demographic and industry data that's out there for businesses to use. The names don't mean that you should do primary market research first and secondary market research second. To be efficient at planning your business, you need a good understanding of the industry, geographic market, general customer characteristics, and projected trends before you invest time and money in conducting surveys and focus groups with primary sources.  

How do you do primary market research?

You'll need to identify people who fit the profile of your ideal customers – people who are interested in what you want to sell, have the money to buy it, and will continue to have money to spend with you over time. The way to do this, usually, is with online and maybe phone surveys, based on demographic data you've gathered from secondary sources, in-person connections you've made with your target market, trade and professional groups, and more. The Small Business Administration has a handy 7-page Market Research Worksheet that not only guides you through the basics of setting up a primary research questionnaire but also helps you avoid some newbie mistakes as you go. For online surveys, SurveyMonkey is the most popular option. Not only does the service offer free tools you can use to collect data, there's also a resource library where you can learn how to design your survey, how to finesse tricky topics, how to structure numerical rating scales, and tips on market research. If you've already started building your business email list, you can share your surveys with your subscribers to start collecting info. You can also embed SurveyMonkey surveys on your Facebook pages. You can use both SurveyMonkey Audience and Facebook Ads to share your surveys with audiences that match your target customers.  

How do you do secondary market research?

There's a lot of good data online, but for some of the most valuable secondary market data, you'll need to either buy access or find a library with access to those databases. Free online resources to get you started include:

• SizeUp from the Small Business Administration, which lets you research local competitors, benchmark your business against them, and find advertising outlets.
• American FactFinder from the US Census Bureau can help you determine the size of your target audience, get general demographic data, and gather industry information by state, county, or city. The Census Bureau site has other resources you can explore, too.
• The Bureau of Economic Analysis has a trove of national and regional data, including personal spending, income, and savings data displayed by quarter. Wonder whether spending on shoes is rising? Find out here.

At the library, look for these resources:

• The State and Metropolitan Area Data Book – The more recent, the better. This covers general demographic data like population, employment, education, and more.
• The Statistical Abstract of the United States – Again, the most up to date edition you can find. This includes data on everything from sexual orientation, healthcare usage, veterans, and lots more to help you refine your research.
• Databases – Each library system has access to a variety of databases that cost too much for individuals to tap into on their own. Cardholders may be able to use some of these databases online at home, but others may require you to make a trip to a branch.

These are just a few secondary sources, and there will be a learning curve as you explore, but that's true for just about every aspect of starting a business. Stick with it, ask your library's information specialists for help, and remember that learning to do identify worthwhile market research sources is a skill that will help you as your business grows.  

How long do you have to do market research?

After you launch, you always should keep tabs on market trends that affect your industry, your competitors, your geographic market, and your target customers. This can help you when you want to introduce new products or expand into new areas, and it can help you serve your customers better as their needs and income levels change.

How to Network Like Your Small Business Depends On It

Networking can be daunting for small business owners because it takes time, energy, and a certain amount of extroversion if you're meeting people in person. But networking is essential for connecting with prospects and building a peer group to help you work through business decisions, learn about new trends in your field, and promote each other's work. Networking doesn't have to be hard. If you know what you want to accomplish and how you work best, you can find a networking approach that works for you.

1. Know Your Networking Goals

Small business owners are sometimes disappointed with their networking efforts because they lump networking and marketing together. Networking may lead to sales eventually, but expecting any particular networking event to generate new business is like expecting to get married at the end of a coffee date. (Sales expert Jill Konrath describes a similar problem with rushed sales pitches.) What are some realistic networking goals?  

Goal #1: Get on their Radar

Letting people know what you do is step one in networking. You can let people know what you're doing without being too promotional, and you can introduce yourself to prospects without trying to make a sale. Your URL is enough to let people check out your business and learn more at this stage.  

Goal #2: Learn More About Your Industry

Networking with other business owners is a great way to find out what works, what doesn't, and what's the next big thing in your niche or region. This should be an ongoing part of your networking.  

Goal #3: Build Relationships

This is the big goal. Whether you're building relationships with prospective and current customers, getting to know vendors, checking in with your peers, or touching base with people in media, the real aim of networking is to build connections to people who share some of the same professional interests and goals so you can help one another succeed.  

2. Know Your Networking Style

Does meeting new people give you a boost of energy? Congratulations, extrovert! You're an ideal candidate for in-person networking. Do you feel drained after a big meeting or crowded event? Welcome, introvert! You'll probably excel at networking online. These are generalizations, of course, and you don't need to stick to only one approach. When you're new to networking, though, it's easier to start if you're comfortable. You can always branch out later as your skills and confidence grow. Here are some of your options.  

Digital Networking

Online networking opportunities may be the best thing about social media. Industry groups on Facebook and LinkedIn give you access to people in your industry, and local business groups on Facebook can help you keep up with events you may want to attend in person. You can also set up your own groups on these platforms or on Skype or Slack to keep in touch with your colleagues and bounce ideas off each other. If you follow industry leads and experts on LinkedIn, Facebook, and Twitter, comments and replies can be a great place to connect with others in your field. Make sure that your social profiles include a link to your website for people who want to learn more.  

Local In-Person Groups and Events

From general groups like chambers of commerce to specific niche groups for different professions, there's probably at least one local group near you where you can do some local networking. If you live in a mid-size or larger city, there may even be neighborhood-level groups that host business networking events. Even if you're not ready to mingle in person, sign up for their emails to get a sense of how active they are and who participates.  

Regional and National Conferences

TED events. SXSW. CES. There's no shortage of conferences and industry trade shows you could attend. Before you invest in conference admission and travel expenses, research your options to make sure you'll have the opportunity to make connections in line with your goals. Conferences also have email lists, social media channels, and webinars you can sign up for to find people to connect with throughout the year.  

3. Know Your Networking Budget

Once you've found options that feel comfortable and fit your goals, focus on the ones that fit your budget and schedule. If you're an an extrovert with a new digital business to launch, trade shows and big events like SXSW could be well worth the investment of several days and a few thousand dollars in registration, travel, and lodging costs. If attending a big conference isn't doable, present your gregarious self to local groups and to media outlets as an expert they can contact for quotes and interviews on topics in your field. HARO is a great way to connect with reporters. My fellow introverts may be thinking we've got the sweetest deal because most of our preferred networking options are so inexpensive: a LinkedIn Premium membership, local business group dues, and national professional groups. There are some pricier introvert-friendly networking options that can pay off, too. Paid mastermind groups give a small group of working professionals access to knowledge and feedback from an industry expert. A good mastermind group can help you step up your game and build close connections to people in your business—and you can stay connected long after the program is done to talk about rates, contracts, and business trends.  

4. Know Your Networking Etiquette

Once you've figured out your best networking methods, growing and maintaining a healthy professional network is relatively easy. Offer a good product or service and treat your connections the way you'd like them to treat you.  

Please and Thank You Go a Long Way

Respect your connections' time when you make a request or issue an invitation, and don't take it personally if they're too busy to engage. Always thank people who share their expertise, offer their advice, or send you referrals.

Be the Connection You Want to See

When you have information you think your connections can use, share it with them. Do you have a client project you need to hand off? Refer it to someone in your network. Did one of your peers earn an award? Give them a shout out on social media. When you get a boost from someone in your network, give them credit for the assist.  

Bring Something to Share

At in-person networking events, bring something to hand out as you connect with people. It can be as simple as your business card or as fancy as samples from your bake shop or boutique. Make sure it's branded so people will remember where they got that bonbon or handmade soap.   When you set realistic goals, choose methods you like, and treat your connections well, you're on the way to building a professional network that's worth the effort.

Why Customer Testimonials Matter for Small Business

Prospective customers want to know what other people think of your business before they hand you their cash or their card number. That's where customer testimonials come in. Done right, testimonials on your website and social media channels provide social proof, raise conversion rates, and even help promote specific products or services you offer. Here are some best practices to make sure your hard-won testimonials work hard for you.

How Testimonials Help Your Business

First, what is social proof, and why does your business need it? Social proof is a fancy way of saying that we humans like to know that other people have had a good experience with something before we give it a try. Think about your own habits – when you're trying to choose which product to buy online, do you go with the one with no reviews or the one with a dozen mostly positive reviews? Objectively speaking, your choices may be more or less equal, but you probably choose the one that other people have chosen, because it seems less unfamiliar. The idea behind social proof may sound vague, but marketers can and do measure its impact. One business case study found that adding properly formatted testimonials to a company's homepage boosted the conversion rate by 34 percent. (Testimonials aren't the only way to strengthen your business' social proof. Learn more ways to leverage social proof for your site.) Getting more customers to contact you or buy your products is one way to use testimonials, but you can also use them in more specific ways. For example, if you're launching a new product or service, testimonials from preview users or beta testers can help overcome that natural human reluctance to be the first to try something new. Keep in mind that there are some ethical guidelines for sharing testimonials from people who tried your stuff for free, which we'll go over below. You can also use testimonials to raise interest in specific products or services that offer quality but aren't selling as well as your other offerings.  

How To Get Customer Testimonials

Getting testimonials from your customers sounds easy—just ask—but some requests are easier than others, so start with those. If you get great feedback via email or on social media from one of your customers, thank them and ask if you can use it on your website. Most of the time, they'll say yes. You can also embed positive customer reviews from third-party sites like Yelp and Google on your site and let them serve as testimonials, and you don't need to request any special permission to include those on your site. There's also straight-up asking your best customers if they wouldn't mind writing a testimonial for your site. If you have a good working relationship and they're naturally expressive people, they'll probably agree to share their feedback. Make your request something short and sweet like, “I'm inviting my best customers to write short testimonials about our widget/service for our website. If you'd like to contribute, I'd really appreciate it.” Be sure to thank them for their time, too. As we mentioned above, you may have preview customers or beta testers for a new product or service, and you can use their testimonials with their permission. However, to stay on the right side of ethics and Federal Trade Commission rules, you must disclose it if the people providing your testimonials got a discount, a free trial, or anything else in exchange for what they're writing about.  

4 Ways To Make Your Customer Testimonials Even More Effective

Getting testimonials from clients and customers is just the beginning. To get the most value from their comments, follow these best practices.  

1. Use names, faces, and places.

Prospective customers seek out testimonials, but more importantly, they seek out testimonials that seem real. In an age of bots and online shenanigans, it's more important than ever to show that your testimonials are from real people. The simplest way to do that is to include their names (full or just first), photos, and city or company—with their permission, of course.  

2. Include specific positive feedback.

Prospects check reviews and testimonials to see why other people like your business. If you have the best customer service in town, try to get testimonials that mention it. If your products do something none of your competitors do, get a testimonial that says so. And if you're easy to work with and deliver great value, let one of your customers sing your praises in their testimonial.  

3. Keep testimonials short.

The best testimonials are only as long as they need to be to share specific positives about your business, so keep testimonials to a couple of sentences at most. That respects your visitors' time. It also makes it more likely that local prospects who are searching on their mobile phones will see your testimonials and take action—reading short blurbs is much easier than reading long paragraphs on a phone. What if you get a great testimonial that's more like a story than a blurb and really makes your company look great? Turn it into a case study and level up your marketing.  

4. Update your testimonials.

A good testimonial can work for your business for years, but it's a good idea to check your testimonials every now and then to make sure they refer to products and services you still offer. Keep asking for testimonials as your business grows to cover more aspects of what you do. Asking for feedback is also a way to find out what your customers like best and what they're only lukewarm about. Those are the areas you can work on until they're worthy of a testimonial, too.  

Testimonials Help Grow Your Business

Testimonials are just one way to get the customer feedback you need to help your business thrive. Learn more about listening to your customers to grow your business.

YouTube is big business – and not just for Google (the company that owns it). Over a billion people use YouTube. That number sounds big enough on its own, but to really it put it into perspective, that’s about a third of the people on the internet. And some of those users are on YouTube just about every day. We can pretty well bet that if you’re reading this, you’re one of the more than a billion people that watch videos on YouTube, so you know that when you watch a video you normally see an ad. Naturally, some of the money for those ads goes to Google. In some cases though, the people who created the video get a cut too. YouTube has paid out $2 billion to content creators and rights holders that have taken the proper steps to claim their part of the earnings.   If you're looking to join their ranks, then read on.  

Who Can Make Money on YouTube?

We already covered the good news: YouTube does pay content creators. The bad news is that most people that load videos to YouTube will never see a dime. And many of those that do actually get paid won’t be making enough to leave their day jobs. For you to earn anything, your videos have to attract not only a lot of viewers, but also viewers that are willing to engage with the ads. That means they have to actually watch a decent portion of the ad before clicking that “skip” button (you know the one, you’ve probably clicked lots of times yourself), or actually click on the link that shows up at the bottom of the screen during the ad. Those who are popular enough can reach the point of earning thousands on the website, but it’s a rare few that reach that point. The platform hosts billions of videos, so your competition is pretty fierce. So don’t quit your job or base all your future hopes on YouTube. But if you like creating videos anyway and you want to see if your hobby can start to pay off, it doesn’t hurt to take the proper steps that make it possible to get paid by YouTube. Note: In early 2018, YouTube made changes to its Partner Program. In order to be eligible for monetization, accounts must have accrued 4,000 hours of watch time in the past year and reach 1,000 subscribers. Follow the steps below to opt-in to the program so once you reach that threshold, you can make money on YouTube!  

7 Steps to YouTube Monetization

If you want at least a chance at making money on YouTube, here’s what you need to do.  

Step 1: Set up your YouTube channel.

If you already have a Google account, as most people do, then use that to login to YouTube. If you don’t yet have a Google account, start by creating one here, and then go ahead and log in to YouTube. Once you’re logged in, click the Upload button in the top right of the screen and you’ll receive a prompt to create a channel. Click “Create Channel” and you’re done.  

Step 2: Create your video plan.

Now you need to make some decisions about the videos you’re going to upload. If you really want to gain subscribers and encourage engagement, then your goal should be to build a following of people that like your videos enough to subscribe to your channel and return again and again. A good video plan therefore needs to do a few things:

• Make sure you understand the audience you want to reach.
• Brainstorm a list of topics for videos that will appeal to that audience.
• Create a schedule for your videos. You’re more likely to gain and attract followers if you upload consistently at regular intervals.

You might want to spend some time during this step perusing some of the most popular videos in your space to see what people respond to. You don’t want to do the same thing that other content creators are doing, but you can glean some insights into what works best to apply to your own videos. Your plan doesn’t have to be set in stone, but having a plan in place to guide you will help ensure you stick with it and approach your YouTube channel in a strategic way that's more likely to pay off.  

Step 3: Enable monetization.

Now click on the Account icon in the top right corner of the screen and then click on the Creator Studio button that appears. On the menu on the left side of the screen click on Channel, then choose Status and Features in the submenu that opens up under it. Now you’ll see the option to enable monetization. (Note: You may have to provide Google with your country before the enable button shows up, simply follow the instructions the screen provides to do so).  

Step 4: Sign up for Google AdSense.

Once you’ve enabled monetization, clicking the Monetization option in the menu will take you to a page where you can start the process of setting up your Google AdSense account, or connecting an account you already have to your channel. Simply select “Next” and follow the instructions to create your account.  

Step 5: Start loading (good) videos.

Now the basic stuff is covered and you’ve reached the hard part.  Create the videos you decided on in your plan and start uploading them to the channel. We already established that your videos have to be pretty darn good and appeal to a large audience for you to make any money, so spend some real time working to make sure your videos are especially educational, entertaining, or unique so that they’ll gain attention in a crowded space.  

Step 6: Promote your videos.

Even if your videos are awesome, people won’t automatically know to come looking for you. Research the best practices for optimizing your YouTube videos for search so it’s easier for people to find you that way. Share your videos on social media. Talk them up to friends and family members that may be interested. If people love them, eventually you’ll reach a tipping point where your subscribers start to do some of the promotion for you. In the meantime, you need to put some real effort into getting your videos in front of people.  

Step 7: Keep an eye on your analytics.

At first, your analytics won’t tell you all that much. As you get more and more viewers though, you’ll be able to use your YouTube Analytics to figure out which types of videos or topics get the best results – both in terms of views and engagement. You’ll also be able to figure out a little bit about who your audience is and how they’re finding their way to your videos so you can refine your promotion efforts based on what’s working. Use that information to continually improve your video plan. The better your videos perform, the more you’ll be able to make in the long run. Don’t be surprised if you don’t make much headway with making money on YouTube. If you have fun creating your videos, then you won’t be wasting your time even if you never reach a payday. Keep your expectations realistic and stick with making videos of a type that you know you’ll enjoy creating, so the possibility of making money will simply be a nice bonus if or when you achieve it. Have you had success monetizing your YouTube videos? Share your channel in the comments!