"Penny Wise and Pound Foolish"

This saying came to mind when reading one of the newsletters I receive. The author was discussing things that Chuck and I talk about all the time. A couple of weeks ago while listening to Jim Edwards’ audio newsletters he ranted about the “psycho freebie seekers” (love that name). Jim rants almost as well as Dennis Miller.

Anyway these two newsletters and what they had to say have been rolling around in my head for a couple of days now. What came to mind is that people who run Internet businesses from their home are no different than those who ran businesses out of their home in the 80’s…..they don’t want to pay for anything. You would think with all the failed businesses they’ve had it would dawn on them that it is because they have done no research, no business plan, no determination on whether or not there is a market for their business in their vicinity. They don’t do mission statements. I could go on and on.

Unfortunately, too many people still think all they need is a computer, fax, and some business cards. In fact, they don’t even give out the business cards, they leave those in their office in nice little card files. A lot of good that’s doing them.

They will spend money on all the trappings but not on education, mentoring or consulting. As Chuck once said to me when I started my first business, and didn’t do any marketing “You will be the most organized business in bankruptcy court”. It was a wake up call.

As Jim and JL discussed, and Chuck and I run into every day, people want to pick our brains for information and answers. After all, they have been conditioned that IT’S FREE. They feel it is their right to do so.

The Internet especially has made people think that information is FREE. Yes, it is, but those of us who have niches, and have written books all put in a lot of time, effort, and energy in researching, writing and marketing our products. SO NO IT IS NOT FREE. We worked very hard to put together excellent products to the best of our ability and WE EXPECT TO GET PAID FOR THEM.

These individuals also have over inflated egos. “Who me, ask someone for help, and what pay for it. Oh, no I’m sure my way is the right way. People just don’t appreciate my great product (service or fill in the blank). I’m just as good, if not better than he/she is.”

It would never occur to them to pay someone to show them what is wrong. Or take a class, or purchase a book that might help. Nope, they say, it’s not that, it must be something else. It’s always some one else’s’ fault or some things’ fault, never theirs.

Unfortunately, the impetus for this behavior was fostered starting back in the 80’s when home based businesses were just starting to come into their own. Many of  the magazines and publications of the 80’s (and now the Internet) fostered the idea that ANYONE can run a home based business. Remember those magazines that had little kits for Word Processing businesses, basket making, medical records, etc. People bought them, followed them. Some did well, but others couldn’t figure out why they didn’t succeed.

They didn’t succeed for several reasons. First, none of them did the basics, the grunt work. Checking first to ascertain whether or not this business was even a viable one in their area. If it was, checking out the competition, making up a business plan, a mission statement. Setting up goals for themselves for daily, weekly, monthly, short and long term. Setting up a publicity campaign, working with the different media, setting up a marketing plan, networking.

All of the things that those of us that have been in business did so that we can stay in business. We were not “penny wise and pound foolish! “ We succeeded, through a great deal of hard work, effort and hard knocks that we plan to get compensated for. We are not going to give it away for “free”.

Hens Lay Eggs (HLE)

“HLE” is a bit of a joke term, (or possible tongue in cheek could be a better label) coined in my Network Marketing Group - it stands for "Hens Lay Eggs" and is a take on the exponential growth theory - recruit two people, who recruit two, etc, and in six weeks you'll have 50,000 people sending you $250,000 - the false promise of MLM.

The MLM exponential growth chart makes sense mathematically but is flawed. Unfortunately the ordinary person can't see the flaw, so buy into it, and you get your 95% of people who do MLM and can't make it work. We all know the story.

The logic is the same as "Zeno's arrow", based on an ancient greek philosopher and mathematician who preceeds Archimedes and Pythagoras. Or in the famous “missing pound” logic problem. More on these in future issues.

But here is the HLE analogy explained:

A hen lays six eggs. If the chicks grow up to be hens they also lay eggs and the hen becomes a “grandmother”. There is no guarantee that all 6 chicks will lay 6 eggs, etc. Also there's nothing to stop the hen laying another batch of eggs, maybe six, maybe 5 or 8. It's not set or guaranteed.

Also there is no guarantee that the eggs will hatch into chicks – “don’t count your chickens before they hatch” after all. In this sense, an egg is a prospect, a chick is an affiliate who has signed up. Whether that chick now grows into a hen and lays their own eggs is the next issue. And a lot of that is down to how you – the mentor – or “Mother Hen” – help them develop in their early days, months, even years.

So it is with network marketing, MLM, EMM - whatever you want to call it - we call it "HLE". As Shakespeare said "a rose by any other name will still give you hay fever", or to quote Bruce Lee "it's just a name don't fuss over it"

The same goes for EMM - Exact Method Marketing - the McDonalds formula example (more on that later).

So what I now do is lead with FREE affiliate programs, the best of which is the SFI scheme with their free online VStore. This means no signup fees, no upgrade fees, no forcing the distributors to buy inventory. The money is ONLY made from the sale of the product and money is ONLY made by helping your downline make sales.

When someone joins under me they HAVE to sell the products and I HAVE to help them, I can't just sell them the opportunity as they do in so many companies that are DESIGNED to take advantage of the fact that the new affiliate won't be able to make any sales or recruit any downline. THESE schemes don't need them to - they have made the money from selling them the opportunity - the startup fee, upgrade fee, and they sell product to the distribrutor who "must stock inventory" - they don't ever expect him to be able to sell it on - they don't need him to.

HLE, taken literally, is more "viral". It's like when someone sends you a joke on email, if you look, each "level" has dozens of different names the joke has been spidered out to.

That is "viral", and that is how you pass on the products and opportunity. It spreads like a virus – person to person – which is how network marketing is supposed to work. No spam, no sticking people on autoresponders – no junk mail.

Real people, real products, real opportunities, real results.

Home Based Business : Small Business Marketing Solution - Is Database Marketing Right For You

Database marketing sounds like something Wal-Mart or Amazon.com is fantastic at. And they are. But so are many small businesses down the street. My local coffee shop has one of the best database marketing systems in the world. Their order processing machines remember my favorite cup of joe and serve it up to me hot, on sight, without my even asking.

Of course, their order processing machines are bipedal, with organic computers known as brains and eyes in lieu of optical scanners. Database marketing essentially seeks to emulate what the baristas at the Coffee House do naturally.

So, how can you know if your company is a good candidate for database marketing? There are three essential questions to ask:

1. Do you have best customers? Do you possess a group of customers that clearly drive more profits--not gross sales, remember, but profits—to your bottom line?

2. Can you identify those customers?

3. Can you reach those customers? Can you communicate with them, individually, and treat them special?

It is extremely valuable to you, then, to answer the above three questions…after you answer this one:

Are you already a successful database marketer?

Many sole proprietors already are. So are thousands of sales reps. They are familiar with their customers, they understand their preferences. If they have under a hundred customers, maybe even fewer than 500, they know their names and their likes and dislikes and know which ones contribute the most to their pocketbook.

But once a business achieves a certain size it becomes impossible for any one person to know all the customers. This is where the aid of the computer comes in. But, we don’t want to discuss tactics in this article. Rather, let’s simply focus on whether or not your company is a candidate for a database marketing program. And that means we need to devise some questions that help us answer each of 1, 2 and 3 above.

Payment. Can you capture their individual financial contribution? Does everybody pay with cash or credit card, and then scoot out the door? Or do you invoice your customers?

Communication. Do you know their name and address? Can you acquire their name and address? How about email address? Can you acquire it?

Acquisition Method. Do you know how they heard about your company in the first place? Can you track and quantify how much it cost your to acquire that customer?

Decision Maker. Does the person who actually buys from you control the purchasing decision? If you sell to consumers, the answer is probably yes; but if you sell to businesses it can get a bit more complex. In some industries even finding let alone reaching the true decision maker can be tough but--that’s the person you need to market to for you to be effective.

OK, the above are entry-level questions to ask when evaluating if your small business is a candidate for a database marketing program. Again, the key advantage the application of a database marketing program affords as part of a small business marketing program is the ability to target best customers. You find those customers that send the most to your bottom line, and spend more of your advertising dollar on them.

If you can’t identify and communicate with a best customer segment, then it is probably best to look at a mass marketing program, where you essentially spend the same marketing promotional dollars on each prospect.

If you can identify these best customers, then you are ready to learn more about specific database marketing techniques.

Remember: Brand (who you are) + Package (your Face to the Customer) + People (customers and employees) = Marketing Success.

© 2006 Marketing Hawks

Craig Lutz-Priefert is President of Marketing Hawks, a firm providing essential marketing vision for small business. Marketing Hawks also provides expert sales presentation review at their VideoMyPitch website.

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