A Modern Business Framework

What follows is a system. One that I have developed over the last half decade of working with fancy people making fancy things, and have refined over nearly twice that long of advising businesses from startups to brands with presences across the globe. I’m putting it together here and now because in the time I’ve spent working I’ve been appalled by how much suffering and failure and delay could have been avoided if only business people were taught how to look at the products they build and the campaigns they run in the light of the dynamic, new business environment that we live in.

While no framework can hope to capture all of the nuances involved in starting a business or running a campaign, the goal of what I am about to describe is to provide you with an 80% solution. To help you avoid 80% of the big, glaring errors that haunt most projects, and to give you the space and years you’ll need to hash out the rest.

So let’s begin at the beginning, at the thing that should drive every product, every organization and every campaign that we run as business people — the question.

The Question

• How do we increase awareness of Cancer and what you can do to help fight it?
• How can we best categorize and organize the world’s knowledge?
• How can we bring classic, Italian cuisine to a wider audience?

Organizations provide answers to questions. The more specific the question, the easier it is to determine what organization is doing the answering. Before doing anything else, it is critically important that you understand the question that your product or organization is seeking to answer.

Anyone can ask a question though, like, for example, “How do we save the world?” That doesn’t mean that a good product or campaign is going to flow from it. Good questions, the ones that build good businsses are of a very particular character: they are specific, constrained and respond to an existing problem.

Specificity. “How do we save the world?” is an awful starting point for any organization because it’s not specific. How do we save the world from what? Form who? What part of the world and in what timeframe? It’s the type of question that’s bad because it’s so absolutely, braindead simple to answer. Almost anything you say will be right because almost anything you say will, in someone’s opinion, take us one step closer to a better world. Very few of the greatest villians in the history of mankind thought that their campaigns were leading to a worse world.

Good questions are specific: “How can we help to protect Western African villagers from blindness caused by malnutrition?” This is a much better question and lends itself to an organizational response. From it we have a clear idea of what we want to do, for whom we want to do it, and how to measure our outcomes. Rearranging to in the form of a statement, “…to help protect Western Africian villagers from blindness caused by malnutrition,” also provides us with a thing both vaunted and maligned in the hallowed of business, a mission statement.

Constrained. “How do we save the world?” also lacks contraint. The world exists for all time and in all places. It’s impossible to explain to someone who or what it is that you’re planning to save based on this question. To do this job you have to be willing to save -everything-, no matter how contradictory and no matter how many resources it would take to do so. Constraining our questions gives our responses shape and gives us a touchpoint from which we can develop budgets, timelines and clear responses.

“How do we increase our total revenue by 10%?” This is a difficult question to base an organizational response on because it lacks both constraint and specificity. Where did 10% come from? Is this projection correct across all business units or will one unit be tasked with driving 90% of the increase? What types of levers do we have at our disposal to make this kind of sweeping change and will they be enough? Why focus on increased revenue instead of cutting costs or improving efficiency?

Each of these followup questions constrains the first and helps us to provide context. Perhaps what we really wanted to know was, “How do we have sufficient operating capital to buy $100,000 in additional infrastructure by the end of next year?” a much, much better question to ask, but based on the first we would have no idea.

Respond to an Existing Problem. This is the big one for entrepreneurs and small business people. Almost all of them have questions that their organizations seek answers to, but sometimes those questions have either already been answered by another organization or don’t exist at all.

Startups have this really bad habit of trying to create demand out of thin air, and a big part of the problem is that digital business makes this demand generation so blindingly simple to do.

The thought process goes something like this:

Billy The Business Guy: Hey, everyone uses a calendar, right?
Leslie The Business Gal: Sure do!
Billy: Then why not, get this, create a calendar application for the iPhone?
Leslie: That’s dumb, the iPhone already comes with a calendar application!
Billy: Sure but ours will automatically send an e-Card to your friends on their birthday!
Leslie: Brilliant, let’s do it!

And a month and a half later it’s finished, in the App Store and Billy and Leslie are wondering why no one cares.

Having a well constrained question isn’t enough. The question you ask needs to respond to a problem that actually exists. Not everyone does use a calendar, and even if they do very few of them are really looking for one that does something they could accomplish just as easily with an alert and an email. Understanding demand is no cake walk, but one good way to approach it is to ask yourself why you thought this idea was the right one? Where, in your mind, did the demand you’re responding to originate from? Have you seen people with this problem riding subways and playing in traffic, did most of the demand you assume come from just really, really wanting to make another calendar app for the iPhone.

“How can we get the team to work together more effectively?” is the the mid to large sized business equivalent of the calendar question, and it fails for all the reasons we’ve listed above. It is neither specific, constrained nor does it respond to a clear problem. Work together in what, doing what and for what reason? Maybe the issue isn’t even teamwork but is instead an organisational structure that doesn’t promote cross communication. Heck, maybe the problem is how the desks are arranged. It could be anything, but you’ll never know if the question you are responding to is one like this.

Good organizations and campaigns begin with good questions, but they don’t end there. For consumers to respond to what you are hoping to sell them, they need to see benefits in it. Benefits are what we are going to talk about next.

Time and Resources

When thinking about whether or not a new business is worth pursuing, I use the ten year rule. I try to imagine whether or not an organization or product could continue doing what they are doing today in ten years time and still be financially viable. This helps me separate out interesting features which will likely be gobbled up by larger, more robust entities from companies with the potential to shape the future on their own terms.

Don’t get me wrong. There is absolutely nothing wrong with building interesting features and getting bought out by the Google’s and Facebook’s of the world, the problem is that often we are doing the former and expecting the latter.

That brings us to the two benefits that differentiate sustainable products and campaigns from those who are relying mostly on fads or good fortune for their daily bread, time and resources.

In the final accounting, the only thing that consumers look for in a product they plan to integrate into their lives is whether it provides them more time or resources. Let’s define terms.

Time. When I talk about time I mean productive time to spend on things that we enjoy doing (see my section on entertainment). A product that increases our total amount of time is one that automates a menial process, opens up greater opportunities for productive cooperation or makes us more efficient at a task we already do. A Smartphone is a lot more efficient than an Internet Cafe, a Roomba is more automated than a traditional vacuum cleaner, Kickstarters is a lot better way to cooperate than asking your Uncle Larry for another loan.

A Time based product can also be one that makes us healthier, giving us more productive hours where we aren’t coughing ourselves into an early grave. For good or (mostly) for ill, this explains the massive industry in herbs and potions that we consume as a society every year.

Resources. Resources are way more than money. Money has never been the only currency that consumers trade in and very few products purport to directly pay you for using them. Resources are those things we use to convert into money, happiness or time.

Resources are benefits like energy, autonomy, intellectual capital, and yes lower costs and higher wealth. A product that allows us to purchase fewer products is resource positive. Take AAA, for example, by consolidating a huge number of services under one price, AAA reduces the overall cost of purchasing each of these products separately. Twitter is another example, it has evolved to become a great source for rapid information dissemination and has significantly reduced the cost in time and money of acquiring this intellectual capital. In addition, like blogging, it has increased the autonomy of content producers, giving them greater, unmediated access to their audiences.

Think of Time and Resources as a sliding scale. The more of each you can provide to a consumer, the more likely they are to choose you over their next best alternative. If you automate a menial task, reduce a cost, open up greater opportunities for productive cooperation and provide more intellectual capital and autonomy you’re much better off as an organization than one that only provides one of these benefits, especially if you are also answering a good question and responding to a real problem.

That being said, there are thousands of products that ask great questions and would provide fantastic benefits in terms of time and resources, but that never see the light of day, either because they are watered down in the process of creation or simply aborted as impossible. These problems usually boil down to not having the right team for the job, I tackle that next.

A few words on entertainment. While I could make an argument that entertainment and the happiness that flows from it is a resource, I won’t because that is a path that leads inevitably to a madness where everything and the kitchen sink becomes a resource and the entire edifice of common sense I’ve built up so far falls flat on its face. Instead, I offer you a mea culpa and an explanation.

Entertainment is a category of product that falls well outside of my framework and operates on different principles. Entertainment and art isn’t required to answer questions or solve pre-existing problems. That’s why we like them. Entertainment is, by its nature, not productive in the traditional sense but what it gives us is a reason to do other productive tasks more…productively. Entertainment is a reason in and of itself, not a response. The joy you get from spending time with friends and family and the emotional impact of a good movie cannot and should not be looked at in terms of costs and benefits, and while some of what I’ve said and will say fit with the production of commoditized entertainment products, not everything will and that’s probably a good thing.

Architect, Technician and Connector

Bad teams don’t kill businesses, bad skill sets do. With the right product, you can have a team of one and do just fine. The problem is that it’s usually quite tricky to find one person capable of acting in the three roles that are absolutely critical for any businesses success, the roles of the Architect, the Technician and the Connector.

Architect. Campaigns fall flat on their face when tactics are confused for strategy. Whether you are trying to come up with a Facebook page or launch a satellite into near-Earth orbit, someone needs to be in charge of controlling the vision. Great products and great campaigns are coherent, they tell stories, they take a list of ideas and connect them in a way that is greater than the sum of their parts. This is the main job of the Architect.

The Architect helps to drive the vision of who the customer is, determines what that customer should be sold, and answers why that customer needs whatever it is that you’re selling. In a startup, the Architect stitches together the constraints provided by the Technician with the demands determined by the Connector and integrates them with the product’s overall vision.

In larger organization, Architects act as the project managers, ensuring that whatever campaigns are run and objectives are imagined fit within the structure of the strategy. They are the keepers of the strategy and the ones that act as defenders of the vision against the million cuts and contusions that could destroy it. Steve Jobs was an Architect, Alexander the Great was an Architect, Mahatma Ghandi was an Architect, Architects are on the front lines, providing a clear narrative to an audience of consumers that needs that clarity.

Of all the roles, an ineffective Architect is the most likely cause of a failed product. Bad Architects are responsible for feature creep and incomprehensible strategies. Bad Architects play Connectors off against Technicians and cause infighting between Marketing and Engineering. Bad Architects fail to ask the right questions and as a result fail to lead the rest of the team in the right direction.

Technician. When something needs to get done, the Technician is the one that does it. The Technician is the keeper of the knowledge necessary to drive the project forward. Without a good Technician, no product or campaign can launch because the talents that drive it won’t exist. In larger organizations, campaigns often fall apart here. The business will have a good idea and a clear vision but no one who can actually implement it. Business technologies change so quickly that large, traditional organizations have a difficult time keeping up with the skillsets necessary to implement new ideas.

That’s why the Technician must also be a visionary. With input from the Architect, they must be willing to plan for the long term and develop a list of constraints and requirements that the business will need to move forward. Strong Technicians care as much about the nuts and bolts of implementing today’s campaign as they do about understanding how future developments will affect consumers and what new tools and technologies will be required to respond to them. Good Technicians also work hard to make certain that details of new features actually provide the customer with more time and resources rather than simply looking nice on paper.

Unfortunately, solid Technicians tend to be difficult to find because strong technical knowledge often brings with it a cultural distaste for the marketing mindset. All to often this leads to the classic pissing match between the Engineers and the Marketers that stifles so much good work.

Strong Technicians should respect and understand the work that the other business units do and sell that in to their team. They should provide an open forum for the discussion of new features, new strategies and new campaigns, giving the constraints and the timelines but not simply shutting things down as impossible. A strong Technician is the products past, present and futures and is almost exclusively responsible for giving the other roles something useful to sell.

Connector. Where problems with Technicians are the bane of large businesses, problems with Connectors are the curse of the startup. The Connector is the one that is responsible for determining how your product will be sold to the public. They are in charge of the marketing vision and are primarily responsible for listening to the customer and developing appropriate campaigns and features to respond to them.

For this reason, good Connectors have to have intimate knowledge of the product that they are trying to sell. Often in startups, Connectors are brought in as an afterthought as sales people or Generic Marketer #7. These folks are tasked with selling a product they barely understand to a public that they barely know. Unsurprisingly, this often fails.

The Connector is also in charge of managing the business development decisions that help to expand the channels of distribution and drive sales volume. It’s at this point that we can seperate good Connectors from the rest. Weak Connectors are more interested in making deals than driving the organization’s vision forward. They fail to ask “why”. Sure we could approach every company in the Tri-country area and ask them to sell gift cards of our product, but do our customers even buy gift cards? A good Connector is not interested in the “deal” as much as he is interested in the strategy, and working with the Architect, the Connector makes it his job to solve organizational problems rather than simply generating a constant flow of contracts.

The strongest Connectors also know how to work well with the Technicians, to do the pre-work necessary to craft feature requests that fit with the vision, and within the constraints that the Technician has already provided. They understand that development work often takes a lot longer than they might like, and base their strategies around this. If they don’t have technical skills themselves, they at least have the desire to learn enough work effectively with those who do. They are the voice of the organization and its ear.

The skills required for each of these roles are myriad and the interplay between them is critical. Without a Technician to build it, an Architect to package it, and a Connector to sell it and provide feedback it is impossible to build a strong, functional organization. Fortunately these skills can and often are learned, and I’ve seen many organizations that have decided to organize themselves around these principles reinvent their processes for the better. In order to do that though, you need to recognize that a problem exists.

Even the world’s strongest team won’t help if the organization’s basic businesses processes are flawed. It’s this problem I tackle next.

Product Mix, Price and Distribution

In my years in the business of business, I’ve never met a successful organization that doesn’t spend a majority of its time thinking about Product Mix, Price and Distribution. At a fundamental level what you sell, at what price, through what channels -is- business. Everything else that we wile away our office hours doing are just indirect means of optimizing one of these three pillars.

Before I dive into this I want to point out that Product Mix, Price and Distribution is critical both at the level of products and businesses as it is at the level of campaigns. While I will spend most of my time talking about it in terms of businesses, for those in large organizations reading this the same lessons can apply to your next contest, paid media buy, or business development deal.

Product Mix. For any given idea there are a thousand ways to sell it. We can license a system, sell the product itself, offer a subscription, package a report or analysis, train people in a process, or offer consulting or advisory services around it. Ideally we would have the time and resources to do all of these and the marketing prowess and sales staff to find and sell them to a broad base of customers. Unfortunately, all organizations are limited in terms of time, resources and talent so to run efficient businesses we need to make choices. The first of which is what we plan to sell.

Identifying your ideal product starts with identifying your skills and your customers. Are you a technology company with a sales team or a sales team with technology? Do you have an extremely strong, coherent brand or are you selling a generic commodity? Do your customers have deep pockets or are are you going to need thousands of them just to break even?

Companies with strong sales talent and a weak brand would be better off leaning towards a product style that would allow them to generate consistent returns like subscriptions. Subscriptions rely on relatively strong upfront sales, but don’t necessarily require strong brand identity.

Consulting, licensing and training, while appealing from a financial perspective would likely produce too little volume and make inefficient use of this sales team’s time. Those types are products are most typically sold when you have a strong process, expertise or technology and a strong brand identity.

What if you’re a strong technology company with a relatively weak sales staff? In cases like these you would want to lean towards direct product sales. These are typically lower price, lower commitment option that can be sold against benefits rather than against brand. This is also a product type that can be sold using a generic sales message and through third-party distributors.

Maybe you have neither technology nor a brand, but you have expertise and a customer base with extremely deep pockets. This is often the case in the financial sector. In a case like this, analysis and reporting might be ideal choices because you can sell a relatively low volume of product for a high price, and what motivates your customer base is not a generic sales message but your individual expertise.

It’s easy to make the decision to sell everything that isn’t bolted down, but this is often little more than a distraction. Worse, it leads inevitably towards feature creep, as you try to tweak your product to work for a wider range of product types. In almost every case, it’s better to focus your attention on the product that aligns with your talents than trying to shoehorn your talents to sell a product type that is inefficient.

A note on projections. Often bad product mix is the result of dishonest revenue projections. If you can’t make the numbers work with one product, just throw in a higher priced or higher volume product and add that to the total. While this makes nice spreadsheets, it’s very bad business and should be avoided.

Price. The process of product pricing is at best an artform and at worse an educated guess. Without significant testing and focused iteration, finding the optimal price for your product is like finding the recipe for the Colonel’s secret herbs and spices under your kitchen sink. When dealing with a new business, however, there are a few rules of thumb to take into consideration.

The first and least often done is to take a look at your burn rate, infrastructure cost and pre-revenue period. Your burn rate is the amount of money you must spend to keep the business operational. For young businesses, the largest percentage of that will be taken up by salary costs. Even if you are the sort of small business that doesn’t pay salaries, it’s a good idea to think about how much you will pay once your landlord and creditors start forcing your hand. Other parts of your burn rate include necessities like office cost, server fees, and anything else you need to rent, lease or subscribe to in order to keep your business running.

Next on the docket is your infrastructure cost. This is the cost of any and all one time fees you will incur during you pre-revenue period. If you have to buy equipment, pay a consultant or take care of legal fees, this is where you put them.

Finally, you need to understand your pre-revenue period. This is the amount of time (in months) that you’ll need to exist before you are capable of implementing your business model and starting to generate cash.

Once you have determined all of this the math is pretty simple:

(Burn Rate)*(Pre-Revenue Period) + Infrastructure = Soul Crushing Debt (SCD)

When trying to determine the price you are going to charge, you need to ensure that you are charging enough that you can at least meet your burn rate and preferably start eating into your SCD.

Parity

The second method of pricing is to try to develop competitor parity. This is a common method for new businesses and works if and only if the infrastructure and organizational costs of your businesses are also similar. Parity pricing also does not mean pricing precisely like your competitors, but it does mean looking at what your competitors charge for their services, measuring the differences in your benefits and calibrating your price from there.

When combined with burn rate pricing, parity pricing can start to give you a number that works both in your competitive environment and that also meets your organizational needs.

Finally, don’t be afraid to price a bit higher than your models dictate. Chances are very good that you have grossly underestimated your costs and grossing overestimated your sales volume. Even if you have not, it’s always easier to reduce price through rebates, discounts, contests and other margin slashing campaigns than it is to raise price if you later discover that your costs have significantly increased.

Distribution. A rule of thumb that might just save your business is the 1% conversion rate. Assume in all cases and for all channels of sales that in the end you will convert 1% of the total number of people visiting into customers. The real rate for your average business could range anywhere from approximately 0% for high volume, low intention channels like Social Media to upwards of 10% for medium volume, high intention channels like email. Even so, while it’s really nice to have more money than you expect, it’s potentially deadly to have less, so 1% errs strongly on the side of caution.

Now there are three questions remaining, and the first is the easier to answer, “How much money do you want to make?”

Let’s say that your answer isn’t, “How much money do you go?” but is instead something like $1,000,000 before taxes and expenses. Now let’s say for a moment that the average price of your product is $50. That means that in order to make your million you need to sell 20,000 units. No big deal, right?

Maybe.

To sell 20,000 units every year using this rule of thumb you would need distribution channels that, in aggregate, produced 2 million visitors per year. That means that every single day, your distribution channels would need to generate 5,479 potential customers. Even for a well designed site (a requirement to even hit your 1%) with a small budget to devote towards pay per click advertising, this would be a monumental feat.

Since you could never hit these numbers internally, the next question becomes what other distribution channels do you have at your disposal? Maybe you have access to a big box retailer who is willing to put your product on the shelf? Perhaps there is a larger, more prestigous site that you can develop an affiliate relationship with? Maybe there is another business in a sister industry that you can forge a strategic partnership with that will allow you to share marketing channels? Regardless of where you find it, you need to start thinking of places outside of your little patch of grass that would be willing to help you sell. This is especially true when your Product Mix analysis or your organizational structure has shown you that high volume sales is not your businesses forte.

The final question left to ask is, “How?” How do you form these strategic alliances and get these new distribution channels online? Who in your organization can act as the Connector, approaching these businesses and guiding the development of these deals. Business deals take a long time, an amount of time often measured in months or even years, so the faster you start development your hit list the less money you will burn hoping that your internal channels will pick up. Even if, by someone alignment of the starts, your internal channels do manage to drive the traffic you need to hit your revenue goals, there will rapidly come a point that you will hit saturation and will need other sources of traffic, from different demographics or source markets, to allow you to maintain revenue growth.

Product Mix, Price and Distribution are the engine that drives your business but once in place, they say nothing about the day to day processes necessary to keep that engine running smoothly. That’s what we look at next.

Channel, Engagement and Resale

Where do your customers come from, what do you do with them and how do you get them to come back after they leave. This is the pattern that will take up the majority of your mental cycles for the entire period following your product launch. It’s also the place where an otherwise good product or organization can fail to preform as well as all the other factors leading up to this point would assume. Let’s look at each of these questions in term and deconstruct why.

Where do your customers come from? This is a question of channel. For our purposes a channel is any source of potential customers. Your channels can include email, social media, affiliate, organic, paid media, referral traffic from partners and traditional traffic from offline sources. Each of these channels has its strengths and weaknesses, but to truly succeed you need to develop a strategy that allows you to exenuate the strengths of each.

Email. A good email campaign is one of the most important marketing activities that your business can undertake. Email is startlingly effective for a wide range of product types and customer demographics. Email, being a push channel, also gives you an opportunity to remarket to customers who have already shown that they are interested in what you have to say.

Explaining how to design good email campaigns would take much more than this introductory guide would allow, but a good rule of thumb is to look at email as a way of welcoming a new customer to your community (through a post purchase welcome series), educating customers still trying to make decisions (through a newsletter), and selling customers who might be on the fence (through a cart abandonment series).

Social Media. Social Media is a bad sales channel. Some people could argue that point with me until the end of time, and while I welcome the debate, for now I would advise anyone looking to use their Facebook, Twitter and Blogs as primary sales channels to look elsewhere.

Where Social Media excels is in helping to educate customers who have not yet made the decision to buy. For product types that a customer only needs to purchase a few times a year at most (vacations, appliances, cars) the secret to making a sale is to give them a reason to believe in your brand and to stick with it even when they are not quite ready to hand over their credit card.

To do this, the best social campaigns either engage users (in the form of contests, competitions, user generated content etc…) or educate the user on a subject that will encourage them to make a purchase, from you, in the future. If you sell expensive digital cameras, for example, a well written, consistent blog about photography could help you make a sale, especially if the blog is setup drive users back to your main commerce site.

Social Media also works for highly commoditized products with little differeniation. There are a lot of shoe stores in the world but only one Zappos, and their policy of encouraging their employees to participate fully in Social Media is one reason for that.

Affiliate. This goes back to our discussion about distribution channels, a well designed affiliate program can be as good if not better than a well designed email campaign. Why? Because an affiliate program leverages the power of other professional marketers to sell your goods. Especially for products with relatively high price points, an affiliate program can be an excellent way of opening up new market opportunities and demographics that you might not otherwise have access too.

The downside to affiliate marketing is that you need to be extremely careful about who you let sell your products. The world of affiliate marketing, like the world of SEO can be grey in places and bad affiliates can use techniques to make sales that might not fit within your brand identity. Your best bet is to either hand select your affiliates and provide them with terms that you can live with (a difficult process), or to engage a company like Commission Junction to do it for you.

Organic Traffic. Organic traffic, driven by Search Engine Optimization will make up the preponderance of the people coming to your website. More importantly, it will make a large percentage of your customers. People who are looking for you through search engines already are interested in what you have to sell, so selling it to them is only a matter of providing them with competent landing pages and an easy to understand path to purchase.

There is a lot of great information on the web about SEO (check out SEOmoz for more than you can read), and a lot of really bad information. In fact there is such a spectacular preponderance of bad information out there about SEO that the only suggestions that I could offer you is that you should never hire anyone who offers to get you “thousands of backlinks,” and only hire an SEO professional who has been referred to you by someone you trust. When I dive into this framework more deeply in later months, I’ll have a lot more to say on this topic (in the meantime, feel free to email me).

Paid Media. There are two main branches of paid media, display advertising and pay per click. While there are dozens of variations on each, these two will represent 90% of what your average business will deal with in its lifetime. Display advertising is the classic banner ad, you pay for it on a cost per thousand (CPM) basis. That means that for every thousand people who see the ad, you are going to pay X, where X can range from a few cents to several dollars depending on where you purchase the ad from.

Pay per click advertising can be best recognized as Google AdWords, you pay a fee whenever anyone clicks on your ad copy. That means that you only pay when someone both sees your ad and goes to your site from that ad.

For a small business, display advertising is almost always a bad bet, especially when you take into account that many display networks require large upfront commitments before allowing you to run ads. Display advertising is best used as a form of brand building or indirect sales, and best used when the brand you are trying to build has been established by other means before you started running banners. For larger companies my best piece of advice would be to manage your paid media well, it’s very easy to run campaigns that have a negative ROAS (they cost more money than you make back in sales) and if you don’t manage them well and understand what you are buying it will mean huge budgets that you have little means of justifying. In later months, I’m going to talk about attribution modeling and the different ways companies measure the success of paid campaigns but for now it’s best to just email me.

Pay per click is a bit more of a grey area. For some businesses a well designed pay per click campaign can be extremely lucrative, usually these are businesses that have a well differentiated good that cost enough that selling a few extra units will have a large impact on the bottom line. Either that or they sell a good in an industry with a sufficiently small amount of competition that the cost per click is minimal. In general, I would recommend doing a small test of pay per click advertising and see what it produces for you, every few months, Google sends out $100 Adwords coupons so if you are lucky you can run the test for free.

Outside traffic. Both refferal traffic and traffic driven by offline sources usually require either specific public relations or business development activities that are beyond the scope of this article. In general, you should try to get a big chunk of your traffic from referral sources (websites other than yourself that link to you) if possible, not only is it free but since it is often driven by public relations activity it also usually directs customers to you who have a strong intention to buy.

Offline sources like print media, radio, television and all the other forms of traditional marketing can work well for very specific, very specialized brands and with extremely well designed campaigns but for most companies, especially those who have never run an offline campaign before, these are usually spectcular wastes of money and time.

What do you do with them? It’s about time we talked about landing pages and conversions, because having traffic is pretty useless if none of it actually buys anything.

First, let’s touch on landing pages. For our purpose a landing page is any page on the site that is driven by an external channel. The landing page is where you send people after they have engaged with your wonderful email, affiliate and paid media campaigns. To understand how to build a good landing page, you have to think about how a potential customer actually got to the page.

Let’s say you are selling Ornamental Dog Bowls, and you are running pay per click advertising that offers a steep discount on your $10,000 dishes. For 5 days and with coupon code, DIAMONDDOG you can get your most expensive model of bowl for 75% off. This is a fantastic deal in the high end doggie food market. Now let’s imagine I’m interested in one of these beauties and I click on your ad, then I’m immediately sent to your homepage where there is absolutely no mention of the DIAMONDDOG promotion. How likely is it that I’m going to feel tricked and leave your site, running off to one of your other platinum gilded competitors?

When designing a landing page, you need to make sure that you match the intention of the user, with the content that they are seeing. If they come to the site looking for a deal, the landing page you send them to should describe the deal. If they come to the site looking for information, the landing page should provide them with that before trying to sell them. Good landing pages align source with message.

Unfortunately, not every person who lands on your pages will be willing to make a purchase even in the best of cases. Perhaps they are still shopping around or perhaps they are still in the research phase of the buying cycle. What now? When you think about any business you need to look at it in terms of both primary and secondary conversion. A primary conversion is a sale, someone is purchasing whatever it is that your organization is trying to sell. Ultimately, primary conversions are all you really care about. Secondary conversions are opportunities, for example, someone signing up for one of your social media channels or your mailing list. While you have not made a sale, these customers have shown that they might be willing to buy from you in the future and have given you the means to contact that later.

When designing any page for your website, there are a few questions you should always be asking:

• What is this page designed to accomplish?
• What source will drive traffic to this page?
• What is the intention of the person landing on this page?
• How to I convert that intention into a primary or at least secondary conversion?

If you can’t answer one or more of these questions, the page is either poorly designed or superfluous and should be looked at more closely.

How do you get them to come back? A person shows up to your site, looks around and leaves without buying anything. How do you get them back?

Well, that depends entirely on whether or not they cared enough to sign up for your mailing list or social media channel. In that case, your best bet is turn to your analytics and try to figure out where in your path to purchase (the path between your landing page and a sale) people are dropping off. Maybe they look at your price and then turn tail and run, maybe they are getting stuck on an informational page that is a bit too dense, maybe they can’t even find your shopping cart and are leaving in exasperation. In any case, by understanding where in the process users are dropping off, you can start to design email and social media campaigns to re-engage them and you can start fixing your landing pages to prevent this from happening agan.

Now what if they didn’t bother to leave you a forwarding address? At this point your only choice would be to use a retargeting campaign. If you don’t know what a retargeting campaign is, it works like this — let’s say that you go to a car website and start browsing around, but you decide that you are just not in a Lexus sort of mood today. You leave. Suddenly you start noticing that every banner advertising you see for the next month is trying to sell you Lexus’. You assume that this is a sign from the Universe that the Lexus is your fated, driving machine and you immediately hop into the car, drive off to your nearest dealership and buy the most expensive vehicle they will sell you. That’s how retargeting campaigns are supposed to work. They are specialized display advertising campaigns that use a cookie to track consumer behavior and feed them advertising related to the websites that they are visiting. Honestly, like any display campaign your mileage will vary wildly but for low volume, high cost brands with money to spend it could be worth a try.

Bringing it Together

We have arrived at the end of this crash course in a new business framework that I hope I’ve convinced you is the right way to look at your organization. Since we’ve covered a lot of ground, I think it’s time to summarize in a blindingly oversimplified bulleted list that I will call, “5 Tips to Making Better Businesses.”

1. Ask good questions
2. Ensure that your product benefits a consumer by providing them with greater time or resources.
3. Make sure that your team consists of an Architect, a Technician and a Connector.
4. Ensure that your price, product mix and distribution channels align with your organization’s strengths and budgetary requirements.
5. Make certain that your channels lead to appropriate landing pages and that you have secondary conversions that will give you an opportunity to remarket.

There is much more that can be said about almost all of these topics and eventually I will.