"While the work or play is on ... don't constantly feel you ought to be doing the other." -Franklin P. Adams
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Improve Your Online Small Business Profits
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In the last issue, I have a feeling I may have overwhelmed you with questions. However, you’ve probably found from reading this series that starting a small business is all about making decisions.
If you’re just tuning in and wondering what series I’m speaking of, here’s a quick recap. My partner and I are starting a new futures and forex site. As we go through the development process, I am sharing the steps with you . You are getting an inside look at how online veterans start an Internet business.
To read the previous articles of the series see the DEMC issue archive:
Starting a Business
I expect you’re curious to learn more about the marketing plan we’ve designed for our new site. Well today, I won’t disappoint you, I have some great strategies to share.
Step 8 - Part a: The Marketing Plan – The Offer
In order to sell you have to have a good offer. Yes, a pretty basic point.
However, when creating an online offer you have to consider the online marketplace. The online world is all about “Free” this and “Free” that. You can find web site after web site loaded with free information or providing free tools or giving away free software.
So when everything online seems to be free, how do you sell a product / service, particularly if that product / service is information based?
You need to make sure your offer eliminates risk to your buyer. Your customer has to feel assured that there is no cost to check out your product / service. And only if he/she likes what you're offering will there be a cost.
How did my partner and I structure the offer at our futures and forex site to meet this criteria.
First we considered 3 offer models:
1) A 30 day money back guarantee and then a pro-rated refund after 30 days.
With a money-back guarantee, a customer can test out your product / service. And the customer when buying knows that only if he is satisfied with his purchase will he have to pay for it.
Most products sold online use this money back guarantee approach.
2) A free trial period with an automatic charge at the end of the trial unless cancelled.
With a free trial period a customer can use your product / service to see if he likes what you provide. There is no cost up front to check out the goods and the customer knows if he doesn’t like what he’s found he can simply cancel.
You probably have seen this type of offer online with subscription services. One big promoter of a free trial is NetFlix.
3) A free version with limited functionality and no automatic charge.
With a free version of your product / service the customer can gain some benefits. The customer will appreciate the free tool he has received and he can see the other functionality available with a paid version. The customer can upgrade only if he chooses, knowing he wants the added features of the paid version.
A lot of software is sold using the free version approach. A good example, I in fact have on my computer, is the firewall software provided by ZoneAlarm.
My partner and I discussed the 3 models above and the pro’s and con’s of each. Finally we settled on the third option. Our new futures and forex site will offer a free version with limited functionality and no automatic charge.
Why did we select this choice?
1) A free version of the service allows users to become familiar with the functionality available. It demonstrates the value of the service which we anticipate will convert more prospects into buyers.
Our concern with offering a straight purchase of the service was in explaining the capabilities. A free version allows users to explore all the various features and understand them. We thought being able to test the functions would do a better job of selling the service than explaining all the functionality in our copy.
2) A free version makes a great promotional tool. In our advertising and PR we can offer a free version of our service. Offering something for “free” always draws traffic and interest. Prospects come just to check out what the freebie is. Plus when your freebie is a valuable service, you get people talking about it and recommending it to others.
Word-of-mouth marketing is a great source of traffic. If you can develop a product / service that people will talk about and share with their friends and associates you will give your business a large advantage online.
3) A free version with no credit card or payment information required increases the number of people who will sign-up. If you’re looking to generate as much traffic and usage as possible eliminating the need for payment information is your best course of action.
The decision to not require payment information to test out the free version was a difficult one for us. The advantage to collecting a credit card and offering your service as a limited free trial is that you make the sales process easier.
When a person signs-up for a trial, they’re entering payment information and checking off that they acknowledge they’ll be charged at the end of the trial period. Thus when the free trial is up, they are charged. You make the sale without having to get the prospect to return to your site and input payment details. It’s easier for you and easier for the customers.
What’s more studies we have read indicate when you require a credit card for a free trial, rather than no credit card for a trial, you make more sales. And we have found this to be the case with our SendFree autoresponder service, where we offer both a free trial account with full functionality as well as a free basic account that has limited functions. We make more sales from prospects converting off of a free trial than from those who upgrade their free version.
Theoretically, therefore, we could be making the incorrect decision to require no credit card for a free version of the service.
So why are we not requiring a credit card?
We evaluated the fact that when you require a credit card you get fewer sign-ups. In fact a lot fewer. (From our SendFree autoresponder service we see 90% sign up for our completely free version vs. 10% who sign-up for a free trial which requires a credit card.)
Our goal for the launch of the futures and forex service and for its first year, is to get as many sign-ups and traffic as possible. Having no credit card, thus no strings attached to a free version accomplishes this goal. We know a completely free version, that does not require payment information, will lead to more people talking about the service, recommending the service, checking out the site and signing-up to test out the free version.
4) A free version of your product / service will build your in-house list quickly and easily.
We’ll capture the contact information of each person who signs-up for our free service and we’ll develop a highly targeted list of prospects interested in the futures and forex markets. Our list will be the back bone of our profits. Because as you know from reading DEMC, we are big believers in email communication and follow-up.
In today’s online environment with so much email and so many ezines, an offer to sign-up for just an ezine is a hard sell. People think, ahh just another ezine, and say I already get so much email, I won’t bother. Thus to build your in-house list and get prospects to give you their email, your offer has to be great.
A free version of your product / service with no costs or strings – is a great offer. It will generate sign-ups.
As we consider the first year of our new futures and forex site a building year, we want to grow as large an in-house list as possible. The free version tactic meets this goal.
There you have it. Now you know how we intend to package our new futures and forex site offering and why we’ve chosen the model we have.
Consider your own offer applying some of the logic we’ve discussed. Which type of offer makes the most sense for your business?
In our next issue I’ll continue reviewing our Marketing Plan. Find out how we intend to price, upgrade, include incentives for purchasing our offer and more.
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Abbie Drew
DEMC Editor
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