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or, the power of expiring offers in making more sales

Here is a simple secret to make more sales. Just include an expiring offer on your product. Something like 10% off ends on 30th of October. And see what happens.

I have been testing expiring offers ever since I launched my first product in 2009. And every single time when we add an expiry clause, we see a spike in sales.

Read that again – Every Single Time.

What is an expiring offer & Why it works?

An expiring offer is just what it means. A sales offer that has an expiry clause attached to it. Examples:

  • A product that will not be sold after certain date
  • A price that will go up after certain date
  • A discount code that expires on a certain date
  • A bonus element that is valid until some date

Why expiring offers work?

We are prone to avoid losses than make gains. Risk aversion remains one of the key motivators for a majority of humans ie customers. So when presented with an expiring offer, many people think like this:

Hmm, I am going to loose this offer if I do not go for it.

The same customer when presented with a normal offer (buy this instead of buy this before x) thinks:

Ok, by purchasing this I am going to get a,b,c… But I will part with $$$. Let me think and decide.

I am not saying the rational side of a customer shuts down when presented with expiring offer. Instead, when faced with an impending deadline (offer expiry), the customer will make faster decisions.

Examples of Expiring offers

Expiring offers are one of the most prominent & time-tested marketing ploys. They are everywhere. You just have to walk in to a near by mall or online store to see them.

These are popular examples:

  • Amazon.com’s shipping suggestion: When you visit a product page, Amazon indicates the a shipping date like this: “Order now to have it shipped by October 29”. Many online shopping sites do this too.
    Amazon.com - Expiring offer example - shipping date
  • SALE posters you see in malls, stores: Almost any store has a sale going on these days. Sometimes, you see “Going out of business”, “SALE” posters round the year. And yet they work.

My Own experience with Expiring Offers – case study

As mentioned earlier, I try expiring offers every now and then. Let me tell you a recent experience.

In September (2012), Daniel Ferry (one of the fellow businessmen in my industry) announced launch of his training program. Daniel is also my good friend and partner. And his program is going to expire on October 15 (that means anyone interested must enroll before that).

I called up Daniel to ask how I can support him in his launch. During the discussion, I got a crazy idea: Why not partner with him and offer one of my courses along with his course as a bundle.

We discussed it and worked out the specifics. And in no time Excel School + Excel Hero Academy Bundle was born.

I offered 3 options for our customers:

  1. My course alone
  2. Daniel’s Course alone
  3. Both courses combined (Bundle)

I promoted it to our customers and readers. Since it is an expiring offer,  I expected that on the last 2 days we will have a spike in sign-ups. And we got lots of people going for the bundle option as expected.

But here is the kicker.

On last 2 days, I got lots and lots of customers for my course too. That is right. Even though my course has no expiry, people still bought it.

How do you explain that?

Very simple. Just like you walk in to a store that advertises SALE on few items and buy something else that is not on sale, my customers went in to buying mode due to expiring offer and then evaluated the options (3 courses) and signed up for one.

But is this right thing to do?

As an entrepreneur we all face these challenges often:

  • How do we push customers make the purchase decision without being pushy?
  • How do we remain ethical, honest and valuable to our customers?

The answers need not be contradictory. You can come up with something that is ethical, valuable & win-win for you & your customers.

Here are the guidelines we follow:

  • Expire offers very few times an year. I usually do this 3-4 times every year. Often combining with product launches.
  • Never lie or provide incorrect information about our offers.
  • Give time to our customers so that they can make informed choices. For example, we advertised the bundle offer (above) 3 weeks prior to close date and reminded our prospects few times in-between.
  • Allow customers to call / email / chat with us to know more and decide which works best for them. For our bundle offer, I had many customers call me and ask if it is right for them. And in several cases, I have advised them not to go for it because it might be overkill for what they need.
  • At all times, observe our values and keep customer priorities in sight.

Remember – Expiry looses value too

It is like the proverbial golden goose. Just because we can temporarily spike sales with an expiring offer, if you over do it, your offer looses its power.

So use it wisely. Mix it with other selling techniques – reminding your customers, product launches & more to get best results.

Do you use expiring offers?

Have you tried an expiring offer? If not, go ahead and experiment with it. Tell me how it went.

Please share your experiences with us in comments.

PS: Comments on this post will be closed tonight. So hurry up 🙂

The Jack Welch Rule for Startups: Fire bottom 1% of your customers!

I dont remember when I read Jack Welch’s Straight from gut. It must be 2004 or ’05. But I do remember the core of the book – his relentless thirst for excellence, his passion to make GE the best company in world, his management philosophy and his pioneering ideas.

There are several ideas we can copy from Jack’s journey to make our startups better. Let me tell you about one such idea and how I use it to fire bottom 1% of my customers!

During Jack’s tenure as CEO of GE, every year, he would regularly fire bottom 10% of his managers.

Each year, Welch would fire the bottom 10% of his managers. He earned a reputation for brutal candor in his meetings with executives. He would push his managers to perform, but he would reward those in the top 20% with bonuses and stock options.

[more on wikipedia]

Today, It might not seem like a bold move, but in 1982 it would have taken a lot of guts to even think about such a policy.

Why I fire bottom 1% of my customers

You know that I love my customers and strive to make them heros every day. All our products are designed to make our customers awesome at their work. So the thought of firing a customers seems to contradict with what we do.

Well let me explain.

Every business, no matter how big or small, has a tiny portion of annoying, nagging and irrational customers. In case of a large company, dealing with such annoyances is no problem because they have a lot of resources (customer service teams, marketing budgets etc.).

For a startup, if you want to please an irrational customer, you would have to do that at the cost of not helping 10 nice, rational customers. And that is not all. The negative energy you get from one annoying customer can make you unproductive and down for several hours or days.

But how do I know which customers to fire?

Oh there are always signs. I have a set of group of customers who I fire most often.

The haters

No matter what size your business is and what you do, you will always have someone hating you. If I realize that a customer hates us, I usually offer them full refund and let them go. It is easier to break-up than make-up when someone really hates you. For example, there was one person who bought my e-book a while ago. We have an automatic purchase process, so as soon as the payment is thru, we send an email with download link to get the e-book. But this person some how did not receive the email. So he sent an email which went like,

Hey … I bought your book, but I guess you were more interested in my $10 than book. Because I never got it. I think you are a cheater….

I replied with the ebook as attachment and apologized to him. This should have solved the issue. But he refused to acknowledge the receipt of book and instead went and complained about my business on PayPal. I issued full refund immediately. But this did not stop him either. He kept sending emails with abusive language and never acknowledged my replies or accepted my offer to call him and talk.

The free-riders

It goes like this: a prospective customer would drop an email and ask for a free copy to see if the product works. They promise that if it is what they want, they will purchase 100s of copies for their entire team. At this point, the request is quite normal. So I tell them to visit a page where we keep demo files / videos. These are samples that give a very good understanding of what our product is all about. But the trouble starts when they comeback and request for a full free copy.  A request like this from a student or unemployed person is quite normal as they cannot afford to buy stuff. But a department head in a large company? a sure sign of annoying customer.

The cry-babies

Whether you have an extremely simple product or selling subway tunnel drilling machines, you always find customers who require excessive hand-holding and attention. I think not all customers in this group require firing. But if it gets to a point where the cry-baby customer lets you not work on helping regular customers, you are better off firing the baby.

The buy-this-want-that-ers

I dont know what to call these people, so I gave them a name – Buy-this-and-want-that-ers. One of the things we try to do is provide a clear picture of what we are selling and give free demos. All our sales pages have sections like “Who should go for this?” and “What do you get when you buy”. These clearly state the benefits of the product and who should purchase them. We also have detailed brochures and videos to help our customers decide. And this works very well for 99.5% of our customers. But once in a while we get someone who thinks they are buying X when we are selling Y. Usually they email me and say “Hey Chandoo… I thought your product can do this. But it is not. Can you help.” And I usually offer them a full refund before even suggesting how Y (what they bought) can be used to do X (what they want).

Note: If a large fraction of your customers are in this group, then you should create X too.

The conditional buyers

Often we get customers who say things like, “We will buy this, provided you include a,b,c.”. Now this type of request is very common and easy to address in most cases. Examples of such easy requests are,

  • I would love to buy your templates, do you have any training videos to help me use them?
  • I would love to join this course, but I cant finish it 6 months as I have a busy assignment / personal thing? Can you extend me for few more weeks?
  • I would love to attend your workshop, but I may need some orientation material before attending.

All the above have obvious yes answer with some easy solution. But once in a while, we get requests like,

  • I would love to buy the templates, can you visit our office and conduct a free training on them after purchase?
  • I would love to join the course, can you also solve my work problems?
  • I would love to buy this, but can you heavily customize it so I can use it for my work?

My usual answer to these is NO. I say YES only if the number of licenses / purchases is large or there is a possibility to learn new things.

Various ways to fire customers

We do not want to hurt others, thus firing can be an unpleasant experience both firee and fired. Let me list down a few tactics I use to fire customers.

  • Discourage them from buying: This is easy, especially if the customers are in groups other than hater group.
  • Refund: This technique works well, especially for haters. My philosophy on this is simple. If someone hates you, do not have them more reasons to hate you. [related: when a customer refund leads to love]
  • Ignore: Just ignore haters and naysayers.
  • Say no: Especially if someone wants to negotiate or asks for free stuff. Tell them that you have 100s of customers who pay in full and it would be unfair for them if you offer free stuff or give un-reasonable discounts.
    • Note: If you are dealing with corporate clients (who usually buy lots of copies), then negotiations and discounts are a must.
  • Block them: The last resort. If someone absolutely hates you and wishes nothing but your total failure, just block them. You can block their IP address, email IDs so that they cannot purchase from you or reach you. You are better off focusing on your mission that one person trying to sabotage you.

Do you fire customers?

Fortunately, 99.9% of my customers are nice folks who want to learn, use and benefit from our products. Many thanks to them, I go months without a single negative experience. But when there is someone really annoying, I do not hesitate to fire them and move on.

What about you? Are you saying YES to everyone or screening your customers to serve them better? Have you fired a customer recently? Share your story in comments.

Trust Your Customers

Often, I have a choice to make,

  • Should I trust my customers
    or
  • Should I go thru some checks and balances to ensure validity of a claim?

Some examples of this,

  1. Customer emails me and asks for a duplicate copy of a software / templates she bought because her hard disk crashed and she lost the files.
  2. Customer tells me he has deposited money in to my bank account and provides a transaction number. Now he wants to have the access to the purchased product.
  3. Customer purchases a product by paying full price. Now, she realizes that I offer 25% discount to ex-students of Excel School on this new product. So she asks me for partial refund to match the discount.

During the initial days of my business (in first half of 2009), I used to check for the authenticity of such claim before issuing a refund or providing access details.

But, now I do something radical yet simple. I trust my customers. I take their word and provide the help or offer the discount they asked.

[Related: My start-up values help me make better decisions]

In each of the above cases, I,

1) Tell her that I feel bad for the loss of data and email the software/ templates. (99% of time, I do not check sales records. In the exception cases, I just have to search by customer’s email ID in my gmail to see if she made a purchase in past).

[related: Customer service tips using Gmail for startups]

2) Issue login details or access to the software they bought. Later, once a week, we reconcile all the bank transfers and make sure there are no mistakes. I never had a false claim from our customers.

3) Thank her for the purchase. Issue a partial refund at the earliest.

Why you should trust your customers?

1) Because it is the right thing to do.
2) Because it is the easiest thing to do: If you do not want to trust your customer, you must go great lenghts to check authenticity of a claim. This takes a lot of time and energy from you. Not to mention, the possibility of an argument and bad feelings. The easy thing to do would be to trust them. You might be fooled a few times, but consider the amount of good-will and positive feelings you are building by trusting others.
3) Because it differentiates you from rest: Most of your competition would be *not* trusting their customers. By trusting your customers, you make a difference and it is a good long term investment.
4) Because trust works both ways: Once you trust someone, they also trust you. And this is very important for a successful business. Consider this example,

Ilona, a customer of chandoo.org, accidentally bought 2 units of a product. So she emailed me and asked for a refund. I went to the shopping cart system, tracked the duplicate sale and hit refund button. The refund was processed immediately. But there was a problem.

Since, Ilona was an existing customer, she used a special discount code to claim 25% off on the product. So, instead of full price ($97), she paid $72 only. But when I refunded, the shopping cart system issued a refund for $97.

I noticed this mismatch, so I emailed her,

Sorry I took time to issue a refund. I have processed a refund of $97 to you. (I accidentally refunded more, have a dinner on me. 🙂 )

This should reflect in your credit card statement in next few days.

To which, she replied after a day,

Thank you very much for the refund.

I really would like to send you back the difference. You earned it, you are absolutely marvellous what you are doing, helping others to concur the mystery of the excel, you are a great business man and you work hard for your money. You reply is always quick and very efficient, you don’t let people hanging there in limbo for a long time. So I can’t keep this money and enjoy knowing that you worked for it.

I felt really happy reading the email. Trust works both ways.

Not only customers – Trust employees, prospects and everyone:

You can extend this philosophy to trust everyone in your life. Trust is an amazing life value that removes a lot of negative energy and keeps things simple. While it is not possible to trust everyone, you can practice it whenever possible to make yourself and others feel awesome.

Do you trust your customers?

How do you trust your customers? Do you have any specific examples? Please share using comments. I would love to learn from your experiences.

You have NO Market Differentiators – Deal with it.

Recently, someone asked me this question in an interview,

Q) What is your market differentiator?

During my MBA days, we had all sorts of fancy, meaningless answers for this type of questions. I could take any number of jargon words like market penetration, excellent quality, strategic tie-ups etc. and mix-and-match them to spew an equally vague answer to this.

Now, I did not know what to say about “my start-up’s market differentiator“.

After thinking for a few minutes, this is what I told the interviewer.

A) Nothing really. Whatever I am doing can be done by anyone. What makes Chandoo.org successful (and profitable) is that I love Excel and share information about it enthusiastically. I love making people awesome and create products that go with this philosophy. I am eager to learn as much as I am eager to teach. So naturally we build a very good community of Excel users from all parts of the world (at last count, our website as 24,000 members). Many of these become customers overtime and enjoy my products (We had 1700 customers in year 2010).

I bet of many of you would be having similar questions when you think about starting your own company,

  • How can we differentiate from our competition?
  • What makes us special and creates warm-feelings in our customers’ heart?
  • How do we protect our product from imitation?

So, lets examine what makes us special.

What will NOT make you special?

In order to understand what makes us special, first we must understand what makes us same (ie not special). Once we know that, you can easily focus on your uniqueness.

Your product:

In all likelihood, your product will not be unique. There will be several equally good alternatives for what you sell. Take anything, for eg., your beer, your car, your bank, your coffee, your boy friend (or girl friend), your shoes etc. etc., everything can be replaced with something else that is equally good. Your customers too think the same way and thus, being over-protective about your product is not going to help.

Your partnerships:

Unless you have a water-tight agreement with your partners, chances are, they will collaborate with others in the same industry. So this makes any type of partnerships you have same as any partnerships your competition has.

Your Website / Store Design:

Very few designs are iconic (like a bottle of coke, ipod, Google homepage or an ikea store). Getting an iconic design would take a lot of time, money and expertise. And small business are short on all 3.

Other things that will not make you special:

* Your website ranking very well on Google for a particular term
* Your business having the best location
* You have the most memorable phone number, website address or whatever.

So What makes you special?

You:

You are special. Although, there are 6 billion others with similar features as you, no-one can match 100% to what you are. Realizing this is the biggest thing in running a small business. Unlike large companies, which can remain faceless and build a generic brand image, a small business like yours, has better chance of success if you focus on individuals.

Why are you special:

No one else in the world has the same story that you have to say. Your passions, your ideas, your values, your sense of humor, your story will remain unique, no matter how many more people flock your industry. Some important areas of your uniqueness,

  • Your story
  • Your values
  • The way you express
  • Your sense of humor
  • Your passion & knowledge

Never let that go away from your business in the name of growth. Instead, keep your image a core part of what your business is. That is what many successful business have done. Think about Apple (Steve Jobs), Microsoft (Bill Gates), Infosys (Narayana Murthy) etc.

Your Customers:

Just like you, your customers too are unique. It may so happen that the same set of people might be customers for someone else too. But the kind of interactions they had with you, the relationship they hold with you and the attention & respect you command from them will be special.

Your Team:

This includes your employees, board members, vendors, partners etc. All of them are special, gifted and rare, just like you. And no other company in the world has the same combination and that makes your company special. The real uniqueness is the kind of experience, passion and energy your team brings to the table to make your company a success.

That is all. I cannot think of anything else that will make us specail and distinguished from rest of the competition.

How do I apply these ideas to my business?

During my initial days of business, I used to worry too much about my website design, too protective about my files & ideas. I used to consider other Excel bloggers as competition.

Then, almost by chance, I experimented by following a different approach.

I started collaborating with my fellow bloggers. I started sharing my ideas and files openly. Instead of focusing on more customers, I asked myself, “how can I know more about the ones we have”. I started sharing personal stories and connected with our readers.

Over-time, I have established a relationship with our readers who now consider me unique, for what I am + what I know.

Now, if you ask my customers, why they use my products, some of the keywords they use are,

  • … like your style …
  • … you explain very well …
  • … your passion for excel …
    etc.

How do you differentiate your business?

I want to learn from your experience too. What do you think makes your business (or you) special? Why do you think customers purchase from you?

Please share your story using comments. I am all ears.

More reading on this topic:

What I learned about Google Adwords by spending $103.9

During February, I have set myself a goal of understanding how Google Adwords work by testing them for a few products I sell. I have allocated a budget of $100 for this purpose and set out to create my first ever campaign in Google Adwords. This article tells you the story of how my experiment turned out.

Specifics about the Ads I ran:

I ran ads for 2 of my products – Excel School & Project Management Templates. Both of these sell quite well. The sales pages convert about 3% of visitors (about 1.2% if you calculate conversion ratio based on page views).

  • The ads ran between February 9th and 27th.
  • The expenses were – $61.2 for Excel School & $42.7 for PM Template ads

Experience with Google Adwords:

Ad Creation & Setup:

It took me a while to figure out Google’s Adwords website. It looked cluttered and confusing to say the least. May be I am not qualified enough to use the site. After spending a couple of hours, I could figure-out quickest way to setup ads, adjust budgets and start the campaign. The details of particular ads I have ran are below:

Ad creatives:

  • I have designed 4 ads in total, 2 for Excel School and 2 for PM Templates. The ads are shown below:
  • I have specified that ads should be shown uniformly over time (ie, each ad get same number of impressions).

Targeting & Budget of the ads:

  • Keywords: I have used a dozen highly targeted keywords that are relevant for each product. I am omitting specifics as they are not relevant here.
  • Geographical Targeting: I have analyzed my sales and based on that data, I have targeted most of Western countries.
  • Search vs. Display Network: This is Google’s way of asking whether you want your ad to be shown only in search results or even on sites that have adsense blocks. I initially set this to everything, later (I guess after 4 days) changed it to Search only.
  • Device Targeting: I have specified that ads should be shown only computers (ie not on mobile phones etc.)
  • Budget: I set the budget to $10 per day for Excel School & $4 per day for PM Templates
  • Bidding: This is Google’s way of asking how much would you pay for each click. I set the maximum CPC (Cost per Click) to $1.00 for Excel School and $0.75 for PM Templates.

Sidebar: How much budget is appropriate?

Since I was running a one-off experiment with the ads, I just set my total budget to $100. But in general, it is prudent to decide budget based on your daily sales & conversion ratios.

For example, if your sales page conversion ratio is 3% (ie for every 100 visitors, you sell 3 units), and your profit (sale price – cost) per sale is $25, then, for every 100 visitors you make $75.
That means, you cannot spend more than $0.75 per visitor to acquire traffic.
So this should be your maximum budget.

In fact, your budget should be much lower than that as you will have other expenses (for eg. taxes, shipping, customer service, returns, website hosting etc.)

How did the ads perform?

My Adwords results were mixed.

  • Google Adwords sent me 63 clicks for Excel School & 64 for PM Templates. (Note: These numbers are too small to conclude anything statistically)

Since I use a 3rd party shopping cart system, measuring exact conversion ratios was not possible (at least, I did not know how to). So I just used a crude approach.

ie. How many sales did we make?

  • Between 9th and 27th Feb, I sold 76 units of Excel School & 95 units of PM Templates.
  • There were 4650 and 7880 page views to these products respectively.
  • So the conversion ratio was – 1% and 1.2%.

Since I had no idea how many of these 63 and 64 clicks converted to sales, I just assumed that “Ads convert 3X better.

Mind you, this is a highly stupid assumption that favors Google. But I went with it anyway.

So, with that logic, I sold 63*1%*3 = 1.89 Excel School units and 2.3 units of PM Templates.

If I take the sale price of these 2 products ($97 average sale for Excel School and $30 for PMT), we get,
$187 and $72 as revenues.
Now, my Adwords expenses were, $61 and $42 for both the products
That means, I had a notional profit of $126 and $30 on these products.
Mind you, I have not included the actual product cost in this calculation. If I did that, my profits would be even less.

Detailed report of Adwords Performance:

Google Adwords Performance Report
Google Adwords Performance Report

What is the real truth?

I was not satisfied with the above calculations. So I explored my Google Analytics to understand how the visitors from Google Adwords behaved.
Wait for the surprise…

Google Adwords Report from Google Analytics
Google Adwords Report from Google Analytics

(Note: For some strange reason, Google did not track the visitors it sent to my site in the first 4 days. I later enabled the setting in my Adwords account. Only then, I could find the adword visitor details in Google Analytics reports. I suggest you double check these settings to avoid shooting in the dark.)

As per Google Analytics, I had 20 visits to Excel School & 35 visits to PM Templates pages.

Now comes the kicker. Out of the 35 visits PM template received, on an average each person spent 4 seconds on that page.
There is no way anyone could have made a purchase decision in such short time. In other words, I am sure, I did not sell even a single unit of PM Templates to adwords visitors.

The results for Excel School were encouraging. On average, each visit laster 2 and half minutes. I am sure there are 3-4 visitors who spent much more than that. And may be, 1 of them would have joined Excel School.

Bottom line: Conclusions on Google Adwords:

  • Unmatched Exposure to your products: Even though, there are only 120 odd clicks, As per Google’s report, my ads got a whopping 290,000 impressions. Even if only 1% of these impressions were noticed by actual prospects, that is 2,900 people. I am impressed.Google Adwords - Ad Statistics
  • Costs not in favor of small businesses: Again, this is not based on any statistical proofs. Based on the amount I spend, time involved in setting up Google Adwords and managing it, I find that Adwords is not that promising. It might work well, if I can figure out the magical combination of right keywords, targeting, CPC bids and sales page layout. But then, often, start-ups and small businesses are too busy doing other important things, like marketing their products, working on product features etc.
  • Do not advertise if you cannot measure: That is right. If you cannot measure your conversion ratios, there is no point advertising. I am in the process of setting up an online store so that I could track conversion ratios, run split tests and simplify purchasing process for customers. Once it is ready, I can re-run the adwords experiments with more confidence.
  • Mysterious Keyword Quality Score from Adwords
    Mysterious Keyword Quality Score from Adwords
  • Do not target 6Bn people: simple, you will never sell by targeting entire population. Instead, focus on a handful of specific keywords that convert very well. As an aside, Google has some strange mechanism called as Quality Score for your keywords. Again, unlocking the mystery behind this is an art and Google Adwords website is like a maze. You could spend 2-3 hours without doing much there.

If Google Adwords is like this, then what is the best way to sell?

Of course, there are cheaper and more effective ways to sell online. Start with these,

More: 7 ways to sell more while keeping expenses low.

What is your Experience with Adwords?

Do you run adwords campaigns frequently? What is your experience with it? Do you find the returns on investment good enough? What tips and ideas can you share with our readers?

Please comment and share with us

PS: I also ran similar experiments with Facebook Ads. More on this in the next post.

PPS: Also read Patrick’s take on Adwords. His blog is a recommended read if you are running web-based startup.

Should you charge more for your product? [my experience]

A frequent dilemma for many startups. “should we charge more for the product?”

I too face this question often. Here is how I find out the correct (well, almost) answers to the question and profit.

When in doubt, Test

Testing is my favorite way to find the answer. Although I never ran split tests on price, I did test by launching expensive products or adding expensive variants. Both times my intuitions were proved wrong. (I thought no one would buy, but the test proved otherwise).

For example, soon after opening 3rd batch of Excel School training program, I received several requests for adding an option to learn Excel Dashboards. I was in two minds whether to include them or not. So on trail basis, I announced that all Excel School students will get 2 hours of dashboard training as a one time bonus. The response to this was very good. More than 350 students signed up for 3rd batch of Excel School.

So while running that batch of classes (between September – December 2010), I created a lesson plan for an all new module on dashboards. And then, I launched that in Excel School next version in Jan 2011. I priced it almost double ($197 as against $97 for normal excel classes).

Guess what?!?

Now, more than 60% students join under dashboards option. So, even though, I had fewer students (about 300) than earlier batches of Excel School, I have more money in the bank and feeling lot better.

How to test?

  • Sign-up for a free account with Google Website Optimizer. You can very quickly create variations of sales / sign-up / landing pages and then tell google to split incoming traffic to the variations. You can set some goals and observe how well people are converting based on the variation they visit.
  • Just do it already! For a week, switch pricing, options or any other thing you have in mind. See if the responses are more or less in comparison to what you normally get.

When in doubt, Ask

You may worry about the implications of pricing tests or creating costly products. A better and cheaper alternative is to ask. Just run a survey and ask if your prospects would be keen to purchase the product.

For example, just before launching my first excel crash course product on dashboards, I ran a small survey asking if my readers would be interested in such a product line (excel crash courses). I got several enthusiastic responses. Instantly I knew what to do.

How to ask?

  • Write a simple blog post or send a newsletter: When it comes to asking, you should not beat around the bush. Just send an email to your prospects or post in your blog about the idea and gauge the response.
  • Run a survey: Surveys are excellent way to gather feedback or opinions. You can setup a simple google form and post it on your site.
  • Do not ask unqualified customers: This is important. No matter what your idea is, do not ask people who will not be your customers. That means, you should not offer any free gift for completion or send the survey to your grand-mother.

Find the value of your product

Often while creating a product, we find the cost of it and then add margins to arrive at price. This approach may fail you if your company grows and the overhead increases. Also, you might price a product too low (or too high).

Finding the value of your product – an example:

A better approach is to find out how much your product is worth for your customers. Lets say your product is aimed at carpenters to send invoices. And you assume that it saves them about 1 hour every week. If you go by the hourly rate of carpenters that is about $50 per week (or $200 per month). Now you know the value of your product. You can then factor in various things like,

  • how much time your customers need to learn and use your product
  • what additional activities they need to do because they are using your product
  • any switching costs involved

Once you factor in all these things, you will know the true value of your product. Just charge 50% of it as the price (or even less if the competition is huge) and you should be good.

From my experience:

For example, when I created my first e-book, I blindly priced it at $5. After 2 months of selling, I only made a couple of hundred dollars. So I decided to try out a different price. I upgraded the book and changed its price to $10. Suddenly the sales jumped up.  This is because people perceived the product as high value. But when they saw the price at $5, they felt discouraged. Now, after 2 years of releasing it, I make about $200 each month from it.

Give Options to Customers

If you are not sure whether the high price will fly, just create 2-3 variants of your product and give options to your customers. For example, I have 3 variations in Excel School ($67, $97 and $197).

Once you convert a customer, you can always offer them an upgrade if they want to pay you more.

How do you decide how much to charge?

There is as much art to product pricing as there is science to it. I do not have any ground rules for it. I price my products in such a way that they seem excellent value for money to my customers.

What about you? How do you go about pricing? What ideas and techniques do you use? Please share using comments.

How to use Gmail for Fabulous Customer Service – 8 tips

As a start-up owner, one of the easiest ways you can wow your customers is to reply your customers as quickly as possible. Since my business is mildly popular, I get a lot of email everyday and I try to reply to as many of those emails as possible. And Gmail helps me in doing that in the easiest and cleanest way you can imagine. So today I want to share with you a few tips on how to use GMail to provide awesome customer experience.

1. Star your mail

On a typical day I get 120-150 emails. But out of these 60% are regular emails, like notifications for purchases, comments, twitter follows and bills & invoices. The rest of 40% are interesting mails, these are from actual people asking for help, appreciating my work / products, with payment related problems, collaboration requests, consulting work requests etc.

Now, my email routine is quite simple. Whenever I read an email, if I can reply to it in 2 minutes, I would just go ahead and do it right-away. But about 20% of time I cannot find an immediate reply (as the email may contain a big request, complex question or follow-up work). What I do with these emails is, I simply star them. You can star an email by pressing S while reading it.

And once a week or whenever I have free time, I go thru my inbox for starred email (short-cut GS) and carefully work on the items or reply to the mails.

2. Filter your e-mail

You can create rules on incoming email so that only certain mails end-up in your inbox and rest in archives or marked as read automatically. Gmail calls these rules as Filters. I use filters a lot to maximize my productivity and responsiveness.

For eg. I have a rule to mark as read & archive mails with certain subjects.

3. Canned Responses

Another beautiful feature in GMail is canned responses. These are like pre-composed messages that you can either insert in to a reply or set a rule to auto-reply. I have made canned responses for most frequently asked customer questions. For eg. I have a message with my bank account details. So if a customer asks me how do I pay thru online transfer, I just send that canned response. It is both quick and accurate.

4. Mail Forwarding

You can set up rules thru filters to automatically forward incoming email to other email addresses. This is very helpful to outsource certain portions of your work without manual intervention. For eg. I give course completion certificates to students of my online training program. So whenever they request for a certificate, I get an email. I just set up a rule so that the email is forwarded to my assistant. He sends the certificate.

5. Visually Scan your Inbox – use Labels & Colors

If star is a good way to know important mails that need work, labels are a good way to quickly see the type of mail you have in your inbox. Labels are analogous to folders in Outlook or Lotus Notes. See below snapshot to understand how labels help me.

Once I look at above list, I immediately know how many sales, how many comments, how many twitter follows, how many consulting requests I got. Without even opening a single email that is.

6. Keyboard Shortcuts – J K R F S E P N

This is another hidden gem in GMail. You can use keyboard shortcuts to very quickly read, reply, forward email. Here are a bunch of shortcuts that I use commonly.

What do you want to do?Which Key
Open an Emailo
Reply to the email you are readingr
Forward the email you are readingf
Send the email you are typingtab then enter
Go back to inboxgi (press g then i)
Go back to all mails with a stargs
Go back to all mailsga
Read next email (or select next mail if you are in inbox mode)k
Read previous email (or select)j
Apply star to the email you are readings
Archive current emaile
Compose a new emailc
Read next email in a conversation threadn
Read previous email in a threadp

More info on Gmail Keyboard Shortcuts

7. Offline Mode

Offline mode is GMail’s version of downloading emails to read later. Since my internet connection not very stable, I rely on Offline mode to read, reply to mails even when there is no net connection. When the connection is back up, GMail uploads all the changes and downloads new mail. Like magic.

8. Chat

If I find a mail from a customer or reader and I need to reply to them, I see if they are online on google chat. If so, I just chat with them. It is instant and I can help my customers better.

How do you use E-Mail for better customers service?

Please share your tips & ideas using comments. I would love to hear from you.

How to Keep your Startup Website Expenses Low?

This is part 3 of my series on how to lower startup expenses.

  1. How I lower my Rental & Salary Expenses
  2. How I lower my Marketing & Sales Expenses
  3. How I lower my Website Expenses
  4. How I lower my Other Operational Expenses [Hardware, Software, Misc.]

What are various expenses associated with running a website?

I run 3 active websites (chandoo.org, excelschool.in and startupdesi.com) and 2 passive sites.  I incur a lot of expenses each month in running these sites. Below is a table of various expenses and their nature.

Expense TypeFrequencyCost
in $s
Required?Recommended Option
Website HostingMonthly10YesGoDaddy
Shopping Cart SoftwareMonthly5YesE-Junkie
CDN (Content Delivery Network for fast loading of frequently used files)Monthly10OptionalAmazon S3 / Cloud Front
Website BackupsMonthly15OptionalVaultPress
PC BackupsMonthly5OptionalMozy
Payment ProcessorsPer TransactionDependsYesPayPal, 2Checkout
Domain Name RegistrationAnnual10YesGoDaddy
Database BackupMonthly0YesWP-DB Manager Plugin
A/B Testing & Page OptimizationAs needed0YesGoogle Website Optimizer
Website AnalyticsN/A0YesGoogle Analytics
News Letter ServiceMonthly19YesAweber, Feedburner is free but offers little control
Sitemaps, NavigationN/A0YesXML Sitemaps, WP-Page Navi Plugins
Caching SolutionsN/A0Yeshttp://www.w3-edge.com/wordpress-plugins/w3-total-cache/
SEON/A0YesAll in one SEO Pack
FTP SoftwareAs needed0YesFire FTP addin for Firefox addin for Firefox
S3 Admin SoftwareAs needed0YesS3Fox, Also use CloudBerry Explorer Pro if you want more control over S3
Polls & SurveysAs needed0YesGoogle Docs
Advanced Scripts & Plugins for WordpressAs neededBetween $5 - $150OptionalUse only reliable plugins. Do not hesitate to buy something if it is valuable to you. Most scripts /plugins pay back very quickly.

As you can see, you can run a decent website with less than $45 per month. For more info read how much it costs to run a website.

How to cut down website maintenance expenses?

Here are a few ideas to help you cut-down your website maintenance expenses.

1. Host multiple sites in one hosting account: Almost all hosting providers supporting hosting multiple sites under one account. For eg. I run startupdesi and excelschool (and 2 other sites) from just one hosting account.

2. Learn some HTML & CSS: HTML is the language of web. CSS is what you use to style a web page anyway you want. These are ridiculously simple to learn. Many people try to outsource the website development work thinking they need to focus on core products. While it is a good strategy, you will find that often you feel crippled as you lack HTML  / CSS knowledge to make immediate changes to your site. In fact, I would say that unless you are running a very large company / website, it is an absolute necessity to learn the language of web to do well. Once you are big, you can always hire someone else to do it for you.

3. Use WordPress: WordPress, the premier blogging platform is what I use across my sites. It is undoubtedly one of the best ways to maintain a dynamic, constantly updating site. It works really well with Google and many people are already familiar with the way wordpress sites look. If you are starting a website today, give wordpress a serious thought.

4. Keep it simple: These days, it is too tempting to make your site look slick and vibrating with all the AJAX widgetry, CSS3, Fonts etc. But always remember the purpose of your site. It is there to provide value to your customers. So keep it simple and to the point. Add features progressively and experiment carefully. A simple site is easy to maintain, easy to navigate, easy to understand and easy to purchase from.

5. Pay for good stuff: Do not skimp when it comes website stuff. You should always get good hosting partners. Just because someone is ready to host your site for few dollars doesnt mean you should switch. Thoroughly investigate if the hosting partner can keep your website safe, available and load it fast enough. Also, pay only for good stuff. Do not throw away money for un-needed features or goodies (I did this a few times and I regret my decisions. More on this in a later post).

6. Use Amazon S3 and CloudFront CDN for frequently accessed files to speed up your sites: Amazon S3 is laughably cheap and very reliable. You can use their Cloud Front CDN to speed up your site by moving various static parts (CSS files, logo images, Java script files etc.) to them. It is a pay as you go service, so you only pay for what bandwidth you consume. [here is a tutorial explaining how to do this.]

Share your tips

What ideas and tricks you use to cutdown website maintenance expenses? Please share using comments.

What next?

In the final installment of this series, I will share with you how I cut down my operational expenses. Stay tuned.

Read the previous part – 7 tips for lowering marketing & sales expenses in start-ups.

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#1 Secret to Selling Better – Remind

Ever wondered what makes the best companies in the world sell more?

It turns out, Despite having a kick ass product, loyal customer base, stellar marketing efforts, all these companies use one simple trick that just works.

They remind customers to purchase.

That simple. See how, Rediff Shopping reminds me to get a gift.

Rediff Shopping sends me a reminder

How you can remind your customers?

Here are some practical ways to remind your prospects and customers about your products.

  1. Send a newsletter: Newsletter e-mails are best way to remind your members about website / business and invite them. Send useful information and add 1-2 sales messages once in a while. The results can be quite encouraging. [I recommend using Aweber for sending newsletter, they just rock.]
  2. Add links: Add links to your products and services at relevant places in your articles. For eg. if you sell call recording software, mention about it when you write about “10 tips to using skype better”.
  3. Do not abuse the permission: Many marketers think, just because a person has given them an e-mail ID, they can bombard the prospect with a ton of mails. This is wrong. You should be sensible and useful. Do not abuse the permission your customer has given you.

How I stopped worrying about page views & started finding customers

Every website owner worries about page views. I am no exception. I used to check my website statistics almost every few hours. I think seeing fresh and constant flow of visitors to my website(s) stoked my ego.

But today I want to tell you why worrying about page views (or visitors) is a waste of time. And why you should instead shift your attention to finding customers.

How I switched my attention from getting more page views to finding customers:

During the initial days of chandoo.org, I used to write controversial topics and post some content purely to get more traffic. While some of these techniques worked to bring in more traffic, the people who landed on my site for this content were transient. They would just move on without joining the conversation.

Very soon I realized this fact. I just had to take a close look at my Google analytics report. Then I made several key changes to the way I produce & market my content,

  1. I sat down to prepare a weekly content plan. I listed the type of articles that I am going to write so that my readers feel empowered and awesome.
  2. I shifted focus away from getting links and hits from irrelevant sites. I stopped submitting my site articles to unrelated websites like reddit and digg.
  3. Instead, I encouraged my readers to sign-up for newsletter and leave comments.
  4. I picked up articles and useful content other sites in my niche are writing and shared them with my readers.
  5. I also picked up interesting articles from other websites and wrote follow-up content on my blog. I presented my readers with alternate views & ideas.  This helped me in establishing valuable friendships with other bloggers in my niche (Jon, Debra, Mike, John and many others).

After making these changes, with in 1 year, I started seeing results. Slowly, my readers found value in what I write. They liked the regular features and occasional surprises.

Once I regained the confidence of my visitors, I slowly launched products that would benefit them and encouraged them to purchase these. And it worked.

How to find customers:

While this is not a definitive guide to getting customers, here is what you should do instead of manicly stuffing your site links on social media or unrelated sites.

  1. Have awesome content (and products): If you have awesome content and develop killer products, customers will find you. So the first step is to focus your energies on making great content, great products and offering great customer service. [related: make customers heros]
  2. Get links from sites in your niche: What would you prefer? a link on Digg home page or a link on 2nd best blog in your niche? If your answer is Digg, then you are in soup. Most of the people in Digg or any other popular link aggregator, social media or news sites are not really looking for your products. They are just looking for what is happening. So having a link on digg’s front page will not help you in any way (other than may be crashing your server). It is much easier and more valuable to have a link to your site from one of the best blogs in your niche.
  3. Engage casual visitors by enrolling them in to your community: Everyday, thousands of new people land on my website searching for something related to Excel. I encourage them to sign-up for my newsletter or browse more content. A tiny fraction (<5%) of these people join my community everyday. And that is enough for me to scale up my business and make a living out of it. You too should do that. So re-arrange your website layout in such a way that the first thing visitors notice after finishing their business on your site is an invitation to join you.
  4. Convert passive readers to active customers: Getting new visitors to your site is very easy, but converting them to customer is the hard part. The good news is, you can play a vital role in this process. Start by encouraging your prospects / readers to purchase something (either from you or from one of your partners). Do not just give the idea that your site is amazing for getting free stuff. Instead make your site a place where they can get value (both for money and time they invest in you).
  5. Ask: Many times small businesses under-estimate the power of asking. You can have a kickass product, but unless you open your mouth and ask your readers / prospects to purchase it, they will not make their first move. So Ask. Do not be afraid or ashamed to do it. Instead do it with pride and passion. Tell world that your product rocks and your readers are better off getting a copy of it. (this only works if point 1 above is met.)

What do you worry about?

Do you worry about visits or customers? Please share what you use to measure your success in business using comments.

Related: 7 ways to reduce expenses & increase sales & How small businesses can win customers

Startup Marketing & Sales – 7 ways to reduce expenses and increase sales [Part 2 of 4]

This post is part 2 of my series on how to lower start-up expenses.

  1. How I lower my Rental & Salary Expenses
  2. How I lower my Marketing & Sales Expenses
  3. How I lower my Website Expenses
  4. How I lower my Other Operational Expenses [Hardware, Software, Misc.]

Why is Marketing & Sales important for a start-up?

Simple, this is where you will make money. You may have stellar product, awesome website with rainbows (double) and nice looking office. But without effective marketing, you are not going to make even one penny. Many start-up owners or dreamers neglect this aspect of running a company. In fact, marketing is so important that, you should ask yourself, “who is going to be buying what I sell and where do I find them?” even before designing your product.

How I do kick-ass Marketing & generate sales while keeping expenses low:

Ok, may be my marketing is not as much as that of Naomi’s Ittybiz. But I think it is fairly effective. After all, it has been putting bread in my family’s mouth for last 6 months. So what do I do that merits as Marketing & still costs very little.

  1. My blog is my marketing platform: I use my blog to mainly write about Excel and teach people how to be more productive with it. I also market my products and services thru it once every 2-3 weeks (sometimes more often if I have a product launch going on).
  2. I showcase my work and offer free samples: Again thru my blog, I give-away free excel templates, files, tutorials and videos, all great content with no strings attached. In fact, all my best selling products have almost equally awesome free versions, all shared on my blog. This helps me build my brand, increase my credibility.
  3. Email newsletters: I use aweber email newsletter system to create and maintain multiple newsletters. It costs me about $25 per month and provides amazing service and pays off almost immediately. If you ever want to start an online business, having email list is a must. You should consider getting an aweber account.
  4. Asking my prospects to buy: You can have a kick ass product, great website and tons of readers. But unless, you open your mouth and ask, no one is going to buy from you. That is why I frequently remind my readers that I sell some products and they can get them to become even more awesome. I do this while keeping regular flow of great content, ideas and keeping my community alive. So, naturally my readers love to hear these sales messages too.
  5. No Outside Advertising: I do not have ad-words or other types of advertising. Not because they don’t work (I have never tested them). But because, I intend to keep my expenses low and operations simple. Plus I prefer to have good, organic content that ranks well on similar search phrases. So naturally people looking for products in the area where I operate tend to land on my site any ways.
  6. Partnerships: Instead of advertising, I partner with reliable, established folks in my niche. I do this by actively following their blogs, reading their news letters and contributing to their communities. Once the trust is established, I casually ask them if I can partner with them in their ventures and invite them to sign-up for my affiliate program. This has worked wonders for me as they get me new customers, prospects and readers and in return I offer them a cut in my sales.
  7. Awesome support: As much as possible, I keep my products easy to use and straight-forward. But if my customers need any support, I strive to provide nothing short of awesome. This will result in good feelings and makes them come back. [Related: 7 ways startups can differentiate from big businesses]

How this differs from Traditional Marketing & Sales:

Many of my friends who are interested in starting a venture ask me, “how do I generate sales?”.

Traditional model for generating sales is like this:

Make a product > Advertise > Get Prospects > Convert > Advertise more …

I think the above model is inherently doomed. Your success depends on advertising and competition can outspend all the time.

A better model is something like this:

Find prospects > Design product > Sell > Use feedback to improve product

This model is excellent for small startups as it doesnt assume advertising. But, how do you find prospects? Simple. Start a blog.

What Next?

In the next installment of this series, I will share how I lower my website maintenance expenses.

Share your experiences:

How do you market your products, how do you sell while keeping expenses low? Please share using comments.

Image credit: Photo by HLIT