Friday, December 20, 2013

Personal MBA
The 5 parts of every business (missing a part? Its not a business)
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Value Creation
Discovering what people need or want then creating it.
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Iron Law of the Market- Markets that dont exist dont care how smart you are.
Having this great idea, but launching it to the sound of silence
Why its better to build something around a pre-existing market
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Core Human Drives
The more drive your offer connects to the more compelling to purchase or to
attend your event.
If people are feeling a lack of one of these drives; a market will develop around
the satisfaction around that particular drive.
Maslow ERG - Existence - Relate - Growth (turn to learning more things and
develop skills)
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Acquire - desire to collect material things ; desire to collect power, status,
fame
e.g. status like a mercedes
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Bond - drive to feel connected
e.g. eHarmony.com ; Facebook ; Twitter ; bar/ sporting events
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Learned - like to be exposed to new things ; curious
e.g. Facebook - looking at a facebook feed to keep up to date with your
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Defend - drive to protect or loved ones
e.g. home-security
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Feel - emotional connection ; think of what you are buying when your buying
a movie ticket.
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Status Seeking - Humans are social creatures: we care about what others think
of us.
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Friday, December 20, 2013
e.g. Budlight Platinum
perception creates realities
10 ways to evaluate a market (urgency, size, pricing, potential, acquisition, cost,
delivery cost, uniqueness, speed, investment, up-sells, evergreen potential)
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Rank each criteria 0-10 ; ( 0 is worst case scenario) when in doubt rank on the
low side ; if you have anything over 50 you probably have a workable idea ;
anything over 75 -80 you should quit your job.
Urgency - how badly do people need this right now
Market Size - how many people would purchase this
Pricing Potential - What is the highest price people be willing to pay
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The higher the price they be willing to pay the more attractive the market
Cost of customer acquisition - how easy is it to acquire a new customer ;
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the less it costs in time, attention, and money more attractive the market
Cost of Value Delivery - How much does it cost to create and deliver the offer
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the less it costs in time, attention, and money more attractive the market
Uniqueness of offer - how unique are you vs. the competitor
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Speed to market - How quickly can you get this up and running ; to create
and sell
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the less time and energy the more attractive the market
Upfront investment - how much do you have to investment before having an
offer ready or have something to operate
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the less you have to invest the more attractive the market
Upsells - what related offers can you present to purchasing customers ; are
there something else interested in this thing your offering
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e.g. Gillette (97% of razors market) -upsell: shaving creams, lotions
(related)
Evergreen potential - how much work do you have to put in to continue
selling it
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Friday, December 20, 2013
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The more evergreen the more attractive the market
Stregthens/ Skills - Can I do this with my own capabilities, strengths, and
skills
Hidden Benet of Competition - Youre 100% certain theres a market. You already
know customers are spending money.
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if you cant nd a successful example of the kind of business your trying to set up
- having competition protects you from the beginning
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Becoming customer of your competitor - buying their time to see how they work
Mercenary Rule - Dont mindlessly follow the money. Find something fasantinating
about your business. Something to get you up in the morning.
Crusader Rule - Its hard to change the world if you cant pay the bills Evaluate
before you start investing.
12 Standard Forms of Value
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Product
Tangible goods that can be duplicated.
Key to running a product type business produce that product inexpensively as
possible have an acceptable amount of quality.
Make it at a low price and sell for a higher price for the market will bear.
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Service
Intangible benets or assistance, delivered by a skilled worker.
Multiple forms of value at the same exact time
Usually work that the client would not want to do themselves.
Make sure that the service is provided at a high enough quality to make it
worth that person to pay for it.
Most of what you bring in is prot but cannot be scaled.
Make sure your pricing reects the amount of capacity you have.
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Shared Resource
Durable assets that can be enjoyed by many people.
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Friday, December 20, 2013
Shared resource that you can charge for access
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gyms, time-shares or rentals,
Create or acquire some asset that people want to use ; serve as many people
without affecting each individual experience.
Charge enough to maintain and improve your asset so that people can
continue to enjoy it over time.
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Subscription
Ongoing benets in exchange for a recurring fee.
Expectation in the paying for the future for benets that is going to be provided
in the future.
Buying convenience ; asking your customers to make a purchasing decision
once.
Have to provide value consistently
Build a subscriber base and constantly attract more subscribers than your
losing.
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You to bring in more people consistent basis
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You have to retain your subscribers for as long as possible
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Resale
Buy low, sell high.
Purchasing an asset from another business to sell later at a higher price.
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e.g. Grocery stores buy a lot of stock from a bunch of suppliers
Resale exist for convenience
Keys to doing this effectively
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purchasing products as inexpensively as possible through bulk
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Managing your stock levels
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Connecting wholesale suppliers with retail buyers and pocketing the
difference.
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Lease
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Friday, December 20, 2013
Rent a durable asset for a certain time in exchange for a fee.
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Storage units
a passive income -
Catch is the damage or loss
Individual experience and a shared resource is a group.
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Agency
Market and sell an asset you dont own for a commission.
E.g. Residential Real Estate - connect buyers and sellers
Being compensated if there is a transaction
Find a seller with a valuable asset.
Establish contact and trust with potential buyers
Negotiate agreements of sale
You have to make sure that deals are actually closing
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Audience Aggregation
Capture the attention of a large group of people, then sell access to
advertisers.
Hardest business model to get right.
Case Study: Google
Be attuned to the balance of being valuable ; not overowing the content with
ads
Have your customer perceive that your ads content
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Loan
Lend resources, collect interest.
Pay it back over time ; pay some interest.
Keys:
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You have to have resources lend
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Friday, December 20, 2013
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nd people that want to borrow
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set interest rate that compensates you for the risk
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estimate and protect in case the loan is not repaid
Immediate access to products you couldnt purchase outright.
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in exchange for accessing it soon they pay more were the interest is
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Option
Offer the right to take a valuable future action in exchange for a fee.
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e.g. Movie Tickets - buying the right to occupy a seat under a certain amount
of time
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Season Tickets
Increase Flexibility in exchange for a fee
Offer potential buyer right to take that action before that specied deadline.
Enforce that deadline.
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Insurance
Transfer risks, collect premiums, pay out claims.
Legal contract
Binding legal contract
Make their money in underwriting
Not insure costs in regards to claims
Like drive to defend
Good way to alleviate risks in that protable for the insurer
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Capital
purchase other businesses, in whole or in part.
how much is this business actually worth?
What would this translate to percentage ownership?
Possibility of negative scenarios
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Friday, December 20, 2013
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Hassle Premium
Effort, drudgery, and pain = opportunity
The bigger the hassle the bigger the opportunity
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Perceived Value
Value is in the eye of the beholder
How much your customers are willing to pay for your offer ; changes all the
time
The most valuable offer
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satisfy one or more of the prospects core human drive
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offer attractive and easy to visualize end result
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less work ; less hassle
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satisfy status-seeking tendencies
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Modularity
Mix and match Forms of Value for best results
Diversication
Bundling and Unbundling
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e.g. Records/Albums - collection of songs (Bundling) ; sell individual songs
(Unbundle)
Prototype
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An early sketch of what your offer might look like
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easy in a way for the prospect to give feedback whether or not its valuable
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Physical Product
Model or a sketch
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Service
One pager
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Make your prototype match to the realistic vision
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Friday, December 20, 2013
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Iteration Cycle
Watch
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What works and what doesnt
Ideate
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what could you test, improve, and what are your option in changing it
Guess
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what change or improvement will add more value to your customers
Which?
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which one you are going to change
Act
Measure
Repeat
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Iteration Velocity
The more you iterate, the better your offer becomes
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Feedback
Learn from your customers to make your offer even better
Ask opened questions
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What do you think about __?
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Can you tell me about this thing you do
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How would you use this thing we are showing you
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Stead yourself and keep calm
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Just observing - e.g. watching them clean
Are you ready to preorder this thing?
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Trade-Offs
You cant be all things to all people. Do what your BEST customers value
most.
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Friday, December 20, 2013
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Will choose delity ( high quality experience) or convince (faster or
cheaper)
If you can anticipate how your customers will make the tread -ffs you
can choose the alternatives in the value creation process that ging to
give your customer more of what they want
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Economic Value
Efcacy
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how well does it work?
Speed
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how quickly does it work?
Reliability
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can I depend on it?
Ease
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how much effort does require to get the result I want?
Flexibility
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how many things does it do?
Status
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what does it tell about me to other people?
Aesthetic
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How beautiful is it?
Appeal
Emotion
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how does it make me feel?
Cost
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How much do I have to give up to get it?
Different people have different perceived values on different aspects of
economic values
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Friday, December 20, 2013
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not just choosing what it is your offering but how your going to offer it and
what economic values are you going to emphasize and which one are you
going to de-emphasize
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Relative Importance
Testing how people actually make trade-offs when they cant have everything.
you can gure out the trade-offs they are going to make if you make it clear in
the feedback session
Tell early adopters to rank economic values
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Critical Assumptions
Facts and characteristics that MUST be true for the offer to work.
Shadow Testing
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Pre-selling an offer before it exists minimizes development risk.
e.g. Pre-selling Fitbit ; Kickstarter
Minimum Viable Offer
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The smallest number of delivered benets necessary to land a paying
customer.
Incremental Augmentation
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Continue to iterate after launch to make your offer even better over time.
If your worried about competition, you should focus on incremental
augmentation
e.g. Apple spends the least time imitating competition because of
incremental augmentation
Whom are your serving, what do they care about, how can you add
additional service or do something a little different helps customers get
more of what they care about - can you bundle or unbundle in a way that
helps them.
Field Testing
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Use what you make.
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Friday, December 20, 2013
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Creating, using, and iterating your offering before offering to customers by
using it yourself in the eld.
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Henry Ford metaphor - the choice was no contest
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Marketing
Attracting attention and building demand for what you created.
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Attention
You have to be noticed before you can sell what you have to offer.
Attention is limited
What you are offering is more worthy of your prospects attention than all the
other things in the world that can possibly compete
Attention from prospects that are qualied to purchase this thing of value that
youve created.
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Looking for attention from idea customers
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Receptivity
How open the prospect is to your offer
What you talk about, when you talk about it, and who you talk about it to
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Remark-ability
What makes your offer worth noticing and paying attention to?
If you can build something into your offer that is remarkable
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e.g. Toe Sock Shoes
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Probable Purchaser
The type of person who is perfectly suited to your offer
The more you understand about your probable purchaser the more effectively
you can think of ways to get your attention
What characteristics do they have in common, what are some of the things
they value..
How can you make something that is distinct and remarkable that hits the
probable purchaser in the right way.
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Friday, December 20, 2013
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Preoccupation
What are your projects already paying attention to?
In order to earn the attention of a prospect divert attion from what they are
already paying attention to too you.
To get that attention is to break pre-occupation
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to provoke intense feeling (this is worth paying attention to right now)
curiosity
surprise
concern
Part of our job as marketers is to come up with something that is emotionally
compelling enough for a prospect to stop paying attention to what there
normally doing to the thing that you want.
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End Result
Whats the point? Sell that
What is the end result that people are buying ; what do they get if they pay
attention to you and maybe purchase this thing
For more effective to market the benets of your offering ; spend all the time
benets that your offering has
If you can connect the benets of your offering to the drives it will probably be
compelling ; it will probably be compelling to pay attention to.
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Qualication
Serve the best, lose the rest
Who are the folks that are probably not a good t for us
Who are you idea customers and how can you nd them
Intentionally turning your customer away
The better your able to identify your probable purchaser the more effective you
can qualify.
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Point of Market Entry
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Friday, December 20, 2013
When does the prospect naturally begin to care about what you offer?
All of a sudden you care about something ; seasonal ( Tax Day)
Make sure the people are talking to are past the point of market entry
If you can get a prospect attention immediately after crossing the threshold of
caring about a certain market that is the best time most receptive and most
inuenced by what you tell them.
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e.g. babies in hospital companies send parents home with gift basket with
their stuff.
When does your prospects become interest in things ? reach them before the
point then after the point.
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Addressability
How easy is it to get in touch with your ideal prospects?
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e.g. you can nd people who are interested in mailing services you can
easily nd an addressable market for people that want to mail things
Its better to choose an addressable market a market you can identify people
are interested in something than it is to try to track down people in a much less
addressable market
Measure how easy is it to reach the folks that are good candidates for what
you are offering
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Desire
Presetting your offer in a way that encourages the prospect to want it
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e.g. Mad Men
Cant force someone to desire something
Marketing is process of attracting attention, creating interest, and provoking a
desire
If your able to provoke that desire or response then your doing a good job
Bring their attention to things that remind them of a desire that already exist
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Friday, December 20, 2013
Understand your probable purchaser well enough to know what they already
want and to tune your marketing emphasizing things about your offer that tune
in to those things that they want. ( luxury goods, social status)
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e.g. Omega watches AD -
Your job is to connect whatever is your offering to some aspect or quality that
your prospects already want the more effective you do that the more effective
your marketing.
Certain amount of repeated exposure - after 7 or 9 exposures people get
annoyed ; as long you talk about something legitimate.
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Visualization
Helping your prospect imagine life after buying
Anything you can help your prospects do to visualize what their life will look
with your service the benets their going to get is going to encourage that
desire.
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Framing
Emphasizing and deemphasizing details to increase persuasiveness
Emphasizing certain benets of your offer
You really need to understand who your probable purchaser is
Does not allow you to do or permission to do is lie
Do not leave out important information
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e.g. look at a Fancy Restaurant Menu on Framing
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Free
To get enormous amount of quality attention by giving out something for free
People are willing to break their pre-occupation
e.g. test drive of a car
Very cost -efcient form of marketing
Give people an opportunity to test drive
Attention does not pay to bills need to convert to some way of free purchase
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Friday, December 20, 2013
Focus on giving away real value to people who are good qualied prospects
What does that free value mean?
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what would someone nd worth purchasing in a sense
whats the end result they are looking for
how does this thing help them get that
by providing it for free they get the benets of that without the risk of full
purchase decision
highest quality holding nothing back valuable thing, so that prospects are
encouraged to do more things.
Personal MBA
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at rst was totally free on the website
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over time that allowed build up enough readers - book and courses made
sense
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all of the people that received something valuable free in the past know that
it is quality material and more highly likely to pay attention when something
new comes out
The more you give away the better experience they have with you the more
they will pay attention with you when something new comes out.
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Permission
Asking your prospects to allow you to follow up over time.
If you like this stuff and want more of it there is little box to plug your email
address
Ask for permission when new cool things come available
Ask for email address, phone number, appointment
The more folks you have permission to follow up with the higher the likelihood
they will be purchasing customers
The best outcome in marketing is getting permission to follow up with
additional information
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Hook
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Friday, December 20, 2013
A single phrase that captures the core benets.
Either as a product name or a tag line
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e.g. Tim Ferris - 4 Hour Work Week ; Rich Dad poor Dad
How can I make a promise that is going to be relevant to my idea customer,
short and concise and memorable as possible as I can
Keep than less than 4 or 5 words
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Call-to- Action
Telling interested prospects exactly what to do next.
Sometimes it is getting people to follow up (permission)
Only 1 thing
Have a call to action on your blog post with a permission component
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Narrative
Prospects respond strongly to stories and examples
Joseph Campbell Hero of a thousand faces
The most effective ads or marketing are case studies, testimonials, people
telling their experience
testimonials who had great experience
increases desire
The best stories are the ones that tell someone that is walking the path that
your prospects are in right now
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e.g. I came across this a while ago and was skeptical for a while
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most powerful tool of social proof
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Controversy
Want an audience? Take a strong position
Movement marketing
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e.g. Mac vs PC
Movement marketing
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Friday, December 20, 2013
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Reputation
What people think about your business and/or offer
You do not control your reputation
Brand and Reputation is the same thing
When you come out with something new they trust you
Long term marketing decision are easier to make decision when you think
about reputation
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Sales
Turning prospective customers into paying customers (convincing something to
buy)
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Transaction
An exchange of value between two or more parties
If you dont have transactions you dont have a business
Goal to go from qualied idea to transaction as quickly as possible
Increasing the number of transactions if you have a product over time
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Trust
No trust, no transaction
The better your reputation the more able people are able to trust you
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Common Ground
The precondition for selling anything.
What am I going to give you and what are you going to give me
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Pricing and Uncertainty Principle
All prices are completely arbitrary and malleable, provided you can support
them.
Being able to support the price you are asking. Why should someone pay you
to pay the price-
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Friday, December 20, 2013
Setting the highest price that you possibly can and support in that with enough
good reasons ; we do that by educating the prospect and encouraging them
the validity of the price
4 Pricing Methods (Basic ways to support a price)
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Replacement Cost - how much will this cost to replace
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Market Comparison - how much are other things like this selling for
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Discounted Cash Flow - How much can you get if you lease it
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Value Comparison - Whom is this valuable to? Typical method that is going
to support the highest possible price
Price Transition Shock
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When you change your prices dramatically, your market also changes
dramatically.
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Prices send signals of status or quality
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Different customers value different things
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When you change prices you change from one target market to another
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Targeting a more protable segment
but sometimes might be a good thing because it might not be a fun idea
customer / customer service may change
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Value-Based Selling
Understanding and reinforcing the reasons your offer is valuable to the
prospect.
The better you understand your prospect the more you will see what parts of
your offer will really help.
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Education-Based Selling
Investing in making your prospectors, better and more informed customers
Upgrade your user not your product
Investing your time and effort in making your customer smarter
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Next Best Alternative
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Friday, December 20, 2013
What will your prospect do if they dont buy from you?
Make sure what you offering is better than the alternative
Dont pay your staff the lowest if the alternative is paying better
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Exclusivity
A unique offer or quality your competitors cant match.
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3 Universal Currencies
Resources - money, gold, oil
Time - how long will this thing take? You can trade time for money.
Flexibility - the cost of not doing something else. e.g. - when you get a job you
are not just trading your time but an agreement that you will not work for
another company. (Money for freedom)
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3 Dimensions of Negotiation
Setup
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setting a stage for a positive outcome of the negotiation
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control the environment, research, and prep work
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understanding enough of the prospect situation
Structure
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What would I want the prospect to do or decide if the deal was to go through
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Finding common ground in advance
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Win/Win solutions
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What are their next best alternatives ?
Discussion
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Present the offer you presented to that party
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Buffer
An experienced third-party that can negotiate on your behalf.
Buffers are usually agents
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Friday, December 20, 2013
Sometimes we cant do everything ourselves
if you are small entrepreneur dealing with a big company they have individuals
who sole purpose is to make you less money. Your job to bypass and get to the
executive that will give you his time.
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Persuasion Resistance - the more you push your offer the more the wall goes up
Reactance
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when a prospect senses that someone is trying to compel them and force
them to do something automatic response is to push away.
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The more you force the more people tend to withdraw
Desperation
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signaling desperation I really want
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signaling that something not exactly right with you and your business
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signaling your not a high quality provider
Reverse - not making compromises
Chasing kill sales
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feeling/sensing your being chased automatically you will run away because
you are feeling threatened
Reverse
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if the prospect feels like the ones to convince you to spend your limited
time, energy, and resources serving them providing this thing that they
want
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Tell me why this is a good t for you. If you dont tell me then Im going
to be booked up.
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When in doubt project condence
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Reciprocation
The automatic desire to pay back favors or benets
Seth Godin giving a lot of free stuff
Moving the free line
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Friday, December 20, 2013
People reciprocate when you are generous to them
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Damaging Admission
Acknowledging the drawbacks of your offer increase trust.
Can increase the prospects trust that you are being straightforward and
working in their best interest.
As a salesperson it can be enticing to gloss over the damaging admission
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Barriers to Purchase - selling begins when the prospect says no
It costs too much
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They have to value your offer more than the money they currently have
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value based selling
It wont work
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Asking for more narratives or stories
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Social Proof
It wont work for me
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This barrier is asking for customization
I can wait
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this isnt urgent
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This barrier is asking the prospect to visualize what happens if they wait
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education based selling
Its too difcult
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help them understand how much time and energy is required of them
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the more things you can do to make their life easier the more the are willing
to value it more.
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Education based selling
Two things you can do to break down barrier
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convince them the objection isnt true
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Friday, December 20, 2013
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their objection isnt relevant to what they want
e.g. waiting for a photo to nish is a benet to the prospect
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Ask straight up what they are concerned about
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Risk Reversal
Transferring the purchase risk from the buyer to you.
Take on the risk of a bad purchase decision
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If you are not happy with the results I will bear the cost
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100% money back guarantees
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If something doesnt work we will make it right in these ways
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For service - for full refund
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Reactivation
Convincing past customers to buy from you again
Going back to your old customers and presenting them with a new offer
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NetFlix - canceled come back and lower price - Retaining business
some money is better than no money
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Value Delivery
Giving your customers what youve promised and ensuring that theyre satised.
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Value Stream
Everything that happens from the beginning of Value Creation to delivery to the
customer.
Imagine as one big process and nd ways to optimize
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Distribution Channel
describes how your offer will be delivered to the user
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Two types of channels
Direct-to-user
Intermediary - means that there are multiple channels or reseller
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Friday, December 20, 2013
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Predictability
Can you customers predict that they are going to get a good result
Uniformity- delivering the same characteristics over time
Consistency- delivering the same value over time
Reliability- delivering value without error or delay
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Expectation Effect
Quality = Performance - Expectations
Outperform expectations = Quality is good
Underperform expectations = Quality is bad
If you want to make customers happy you have to delivery above and beyond
the expectations
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One good way unexpected bonus
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Throughput
The rate at which a system achieves a desired goal
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Dollar throughput - how quickly your business creates a dollar of prot
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Unit throughput- how much time it takes to create an extra unit for sale
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Satisfaction throughput- how much time it takes to create a happy customer
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Duplication
Reliably reproducing of something of value.
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Multiplication
Duplicating a system that can duplicate something valuable.
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Scale
The ability to duplicate or multiply as volume increases
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Accumulation
small helpful or harmful changes produce huge results over time.
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Amplication
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Friday, December 20, 2013
Small changes to a scalable system are multiplied by the size of the system.
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Barrier to Competition
Every improvement you make to your Value Stream makes it harder to
compete with you.
Warren Buffet: adding alligators to your moat
Book Recommendation: Blue Ocean Strategy
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Force Multiplier
Tools that amplify your effort to produce more output
Attain the very best tool that you can best afford
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Systemization
Make your processes explicit and repeatable, then improve them.
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Finance
Brining in enough money to keep going and making your effort worthwhile. If not
should I change something.
LEFT OFF @ 3:01:48
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Q&A
New Ideas: Get 10 people to pre-order, recurring at least 3 customers
Charge a high price at rst and do everything to over deliver on the promises your
making.
Spend a lot of time educating your customer about exactly what your doing and
why the asking price is a small faction of what you are going to deliver.
Red Bull Marketing : Association Type of Marketing - Red bull attaches its logos to
already existing stories
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