Website vs Businesses Part 3

Are you still with me?  Good.  We’re halfway through the Plan that websites and businesses need to be successful.  I’m glad you’re hanging in there.

You can have a money-making business without a website, but you can’t have a money-making website without business.  So, if you’re thinking, “Wait a minute, this is just a Business Plan that’s been reworked and presented differently,” you’re right!  I always had a hard time relating to traditional business plans.  They were full of too much jargon and accountant-speak.

I’m a right-brained Creative, not a manager, so I need to organize my business in a way that makes sense to me.  My hope is that it also makes sense to you or someone you know who is desperately trying to escape the cubicle, the assembly line, or wherever it is that they toil unhappily every day.

People have been conducting business since the dawn of time, so there isn’t much that anyone is going to say that’s revolutionary.  The best we can do is offer a variety of perspectives, so that everyone who wants to start his own business can find an approach that helps him succeed.  That’s my goal.  I’m in the perspective business.  Now, let’s get back to the Plan.

Moving It

Now that you’ve decided how you’re going to Make and Market your product, let’s make sure you can afford to Move It.  The fancy word for this part of the Plan is Logistics and, given that there are world-wide corporations who specialize in just logistics, there’s no way we can cover everything there is to know.  We can, however, cover the important things like drop-shipping, warehousing, and shipping product yourself.

Drop-Shipping Product

Drop-Shipping is my favorite way to move product.  In case you aren’t familiar with this method, here’s how it works.  You feature a product on your website.  Someone buys it through your e-commerce store.  You receive an email with the order details.  Then you simply call your distributer, pay for the product, and have them ship it from their facility to the customer in unmarked packaging.

The customer receives the product, the distributer makes a sale to your company, and you keep the difference between what the customer paid you and what you paid the distributer.  And you never had to warehouse or handle any merchandise.

The real beauty of drop-shipping is that the distributer handles damaged products and returns while passing their shipping price (which is almost always better than what you can get, because of their volume) on to you.  All you do is play switchboard and communicate.  The distributer receives the benefit of your marketing and sales volume while you receive the benefit of hands-off fulfillment.

Now, depending on how many warehouses the distributer has and where they are located, drop-shipping may or may not be the best value for you.  Make sure to ask enough questions to fully understand how their drop-ship program works.  Then do the math to make sure you’re margin is better than if you shipped the products yourself.  Also, keep in mind that drop-shipping is often only available for large products.

Warehousing Product

If you are going to receive and store products, warehousing becomes necessary.  The most important thing your warehouse space can due is protect and preserve your product.  On the day you ship it, your product needs to look, feel, function, taste, etc. exactly like it did the day you received it from the distributer.

This may mean that your warehouse space needs to be climate controlled and/or equipped with shelving to keep your product elevated off the floor.  Make sure you address factors such as temperature, exposure to light, vulnerability to pests, and protection against theft.  All of this will cost you something, but neglecting these factors could cost you everything.

Consider the location of your storage facility.  If you can safely store products in your home (basement, spare room, garage), you may be able to save yourself money on warehousing.  If you need to use space in a separate location from where you live or work, consider renting a storage unit.  Try to locate it between the office and home or near a post office or shipping company (UPS, FedEx).

I recommend that you avoid warehousing if possible to save on cost.  But, if you must warehouse your product, just keep in mind that any stock in a warehouse is continually costing you money until it is sold.  Try to move it and turn over your inventory as quickly as possible.

Shipping Product Yourself

If you are manufacturing or warehousing your product, you’ll need to ship it to the buyer.  Unlike warehousing, the goal with shipping is two-fold: Protection and Prompt Delivery.  Choose a delivery service that guarantees your product’s quality upon delivery.  That way if it gets damaged during transport, they have to pay to replace and reship it.

Also choose a delivery service that guarantees its delivery time.  Nothing upsets a customer more than a late delivery.  A buyers anticipation is sacred.  It’s like a child’s wonder on Christmas morning.  When it is fulfilled, it’s magical, but when it’s neglected, it’s tragic.  Picture the excitement and satisfaction on your customer’s face when she finds that her purchase has been delivered safely and on time.  She tears open the box and gets exactly what she wanted.

How many times in life do you get exactly what you want?  That’s right.  It’s rare.  So, make your delivery count and you’ll win a repeat buyer.  Blow it, and you’ll likely lose one.

While we’re discussing your customer, consider ways in which you can over-deliver when you ship.  You could have the product arrive earlier than expected.  You could include a small gift in the box just to say, “Thanks, for your business.”  One of my favorite online retailers includes a handful of candy in every box they ship.  It seems silly, but I love opening their boxes and looking for the candy.  Shipping is often considered a bothersome expense.  Look for ways to over-deliver and use it to further win your people.

Questions: Can you qualify for a drop-shipping program with your distributer?  Is drop-shipping the most economical method of moving your product, or would you be better served by shipping it yourself?  Can you store your product in your home or office?  What kind of warehousing will your product require (climate control, elevated shelving)?  Will your warehousing space protect your product from light, water, and pest damage?  How about theft?  Can you find warehousing located between your office and home or near a shipping source?  Does your shipping company offer guarantees of quality and prompt delivery?  How can you use the shipping process to over-deliver to your customers?

Remember: Most of the critical things that will either win or lose your customer will happen while you are moving your product.

Maintaining It

Not every product will require maintenance (or servicing).  In fact, we usually only think of mechanical or technical products as requiring service, but this aspect of your Plan is more than oil changes and tech support.  Maintenance is an opportunity to nurture a long-term relationship with your customer, make extra money through service plans, and preserve the opportunity to offer cross-sells and up-sells down the road.

Nurturing Customer Relationships

All websites and businesses should plan for how they will nurture customer relationships.  Think about it.  You had a hard enough time winning them once.  Do you really want to have to do it again?  Often times, customers will remember you if you take the initiative to remember them.

Capturing the dates of significant days in their lives (birthdays, Christmas, anniversaries, etc.) during your sales process and celebrating with them throughout the year can make an incredible impact.  Sending a message on the 3, 6, 9, and 12-month anniversaries of their purchase to make sure they are still satisfied can help.  I know of a funeral home who would send a “Thinking of You” card to customers on their loved one’s birthday.  Anything you can do to say, “Hey, I remember you.  How are things?”

Whatever you do, don’t send sales offers on those days!  Nothing says, “Hey, I don’t really give a crap about you personally.  I just want your money.” like a sales ad on your birthday.  This part of the plan is about giving, not receiving.  The idea is to give a bit of kindness and attention to prevent you from starting over the next time you do present an offer.

Extra Money From Service Plans

The summer between my Junior and Senior year in college I took a job as an intern at a company in Milwaukee, Wisconsin.  It was a wonderful opportunity for which I will be forever grateful, and a valuable learning experience.  One of my duties as the intern was to call all of the present customers and offer them service plans.  These plans were designed to provide a measure of insurance on the products they had purchased and bring in some extra income for the company.

There have been times in my life when I have opted to purchase a service plan on a product, but usually I decline and I’ll tell you why.  The service plans offered by most retailers usually amount to gambler’s insurance.  They are gambling that something won’t happen to your product and you are gambling that something will.

A good service plan should involve some level of exchange regardless of whether something bad happens to the product.  Your customer should receive something for paying extra money, even if it’s a six-month service call, free parts in the event of a repair, or free tech support.  It really doesn’t matter how small the value is.  Providing any actual value in exchange for the purchase of a service plan puts your company ahead of most.

Opportunity for Cross-Sells and Up-Sells

By planning for the maintenance of your products, you will not only nurture your customer relationships and increase the likelihood of selling a service plan, you will also preserve the opportunity to offer cross-sells and up-sells down the line.

A cross-sell is when someone buys a product and you offer a companion product with it.

You bought the cookies.  How about some ice-cold milk?

Cross-sells are usually products that could sell by themselves, but make good companions to the product your customer bought.  Some of the best cross-sells are extra batteries with the toy that runs on them, marshmallows and chocolate to go with your graham crackers, or a carrying case for the techie gizmo you bought.  Cross-sells enhance the buyers experience by anticipating the thing he’ll need next.

An up-sell is when someone buys a product and you offer an upgrade to that product for a little bit more money.

You just bought a dozen cookies in a box.  How about 2 dozen cookies in a reusable collector’s tin?

Up-sells usually concentrate on providing speed and/or convenience.  Some of the best up-sells are things like an audio copy of the ebook you just bought so you can listen to it in the car, instructional videos to go along with your set of written tutorials, or a personal consultation in addition to your online video course.  Up-sells enhance the buyers experience by helping her enjoy the product faster or more conveniently.

Maintaining your product well with give you the opportunity to offer cross-sells in the form of companion products and up-sells in the form of upgrades, new versions, or added speed and convenience.

Questions: How could you give kindness and attention to your customers to nurture your relationship with them?  How much would you save in marketing if you didn’t have to start over with your customers at every offer?  What could you offer in your service plan that represents real value to the customer regardless of whether something bad happens to the product?  How could you use your service plan to secure regular interaction with your customers?  What companion products could you offer to create effective cross-sells?  How could you provide added speed and convenience as an up-sell?

Remember: Don’t think of it as maintenance on your product.  Think of it as maintenance on your relationship with your customers.

Well, that wraps up the Plan.  I realize that was a pretty deep dive, but the Plan is the most intricate (and arguably most crucial) difference between websites and businesses.  Thinking through one of these bad boys is considerably more work than just ranting on Blogger or WordPress and tossing up affiliate links.  In Part 4, well cover the last two differences between websites and businesses – Pricing and Profit.

How do you Move your products?  Do you have any great cross-sells or up-sells?  Share a comment and let’s talk about it.

Differences Between Websites and Businesses (Part 3)
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Differences Between Websites and Businesses (Part 3)
Wonder why your websites aren't making any money? I'll show you 5 differences between Websites and Businesses that will help you make money.
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