ImaginativePRO Blog

HOW SMALL BUSINESSES USE SOCIAL MEDIA [INFOGRAPHIC]; 90 PERCENT NOW USE SOCIAL MEDIA TO CONNECT WITH CUSTOMERS

Small and midsize businesses (SMBs) now spend more on social marketing than on any other media category, according to a recent report from BIA/Kelsey.

The survey of 546 SMBs (defined in the report as companies with 1 to 99 employees) found businesses spent 21.4% of their total media budgets on average on social media in the past 12 months.

Three-quarters (74.5%) of SMBs reported using social media to promote their businesses in some way in the past year—again, more than any other category of media.

The report was based on data from the Local Commerce Monitor—an ongoing survey of SMBs in the United States that tracks 35 different channels used for advertising and promotion. The media/platforms examined include online, traditional, mobile, local coupons, social, video, broadcast, local directories, giveaway items, and community sponsorships.

Overall, Facebook dominates SMB social media usage, with 55.1% of businesses surveyed saying they have a Facebook page for business use, and 20% percent reporting they have run a Facebook ad or promoted post.

Other social platforms respondents reported using frequently to promote their businesses include LinkedIn, Pinterest, Instagram, and Twitter.

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About the research: The report was based on data from Wave 18 (3Q14) of the Local Commerce Monitor—an ongoing survey of small and midsize businesses. The survey was conducted in July 2014 and had 546 respondents.

COMMENTARY:    A survey of 600 small business owners across the United States indicates that 90% are actively engaged in social networking sites and 74% perceive social networking as valuable — if not more valuable — than networking in-person.

When 42% of owners say that 25% of new customers discovered them through sites such as Facebook and Foursquare, it is crucial that your business is online and social.

But the news is not all merry, as 58% of surveyed owners said they struggle with promoting their Facebook pages — if they have a page at all.

The takeaway is clear. You need to be where your customers are. Forget what your competitors are doing, as their customers are different from your customers. You also need to integrate internet communications into your normal routine of business networking.

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Courtesy of an article dated September 24, 2014 appearing in MarketingProfs and an article dated September 17, 2012 appearing in Business2Community

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10 QUESTIONS ENTREPRENEURS NEED TO ASK THEMSELVES BEFORE SEEKING VENTURE CAPITAL AND ASSESSING THE DEGREE OF RISK

In the first part of this article, we have seen what is venture capital funding and how it works. It is time now to take up how to get venture capital funding, or whether to go for it at all. What does it take for an entrepreneur to get funded, and what are the circumstances in which he may be better off growing his startup organically?

Here are the 10 basic questions an entrepreneur needs to ask himself before going off in a quest for venture capital funding.

1. Do you have a viable, rapid-growth, highly-scalable idea?

Every entrepreneur believes his startup is a winner, and that his business idea is brilliant. But that’s hardly enough. Other people have to see evidence of it to back the idea. Especially VCs. Your pedigree, academic credentials, and even the idea might get you a meeting with potential investors, but not further.

Sumit Jain, co-founder of CommonFloor, one of India’s leading real estate portals, learned it the hard way when he started his entrepreneurial journey. He and his co-founders were engineers from the prestigious Indian Institute of Technology (IIT), Roorkee.  He recalls.

“We thought getting venture capital funding will be easy. If we won’t find funding, who will? We pitched to so many VCs but nobody was willing to bet on us then. Finally, we decided to bootstrap and make our business work. In a year’s time, investors were coming to us.”

So, if you are comfortable running a small or niche business which you can make profitable, venture capital funding may not be your cup of tea. Bootstrapping with your own savings, or raising money from family and friends, would be a better option. On the other hand, if you have the ambition to launch a high-growth company – and deal with the stress that comes with it – then at some point you will need to go for venture capital financing. The right time for it is when your startup is poised to take off on an accelerated growth path into the big leagues.

2. Does your business suit the venture capital model?

As we have seen in Part 1 of the article, VCs need big winners. You can run a small, profitable business comfortably, but that doesn’t interest a VC. You should go to a VC only if you have ambitions to scale up your business with big infusions of capital. You should also be prepared to get onto a fast growth track, because your venture capital investors will want to sell their stake and reinvest in new startups.

3. What is the size of the market that your startup is targeting?

Some businesses are just too niche to be fundable. A US$20 million market size may be good enough to run a business, but remember that institutional investors are looking for a rapid scaling up – and for that, a market size in hundreds of millions of dollars is more like it, because if a startup manages to capture even a small share of that market, it will be large enough to give a venture capital fund the quantum of returns it needs for its investors.

4. Deep down, what is your reason for starting up?

Some people start up because they want to be their own boss. Others do it because they like the status of being an entrepreneur. A third kind of startup founder is driven by a passion to disrupt the status quo. Probably in most startup founders you will find shades of all three, but it’s the third characteristic that appeals the most to a VC. They are the ones who will not be satisfied with making a good living from their business; they want to change the world. Some introspection at the very outset can point to the road ahead that is most suitable for you. 

5. Are you ready to share control of your startup?

A VC-funded startup will go through several rounds of funding, and the founders will have to part with large chunks of stock in the process. Venture capital funds invest large sums of money, and in order to generate returns on those, they need to own significant percentages of their winning startups. For a founder, this means getting used to the idea that he can’t call all the shots in the quest to make the company grow large. Of course, that doesn’t mean the founder won’t become rich – even a small stake in a high-growth startup can be worth millions.

6. Which venture capital fund is right for you?

A multitude of factors come into play here, but the most important of them relate to the value that a venture capital fund can add to your startup, beyond the capital. The guidance of an experienced venture capitalist can prevent mistakes and turn errors into valuable lessons. They are well-connected with potential customers, investors, and acquirers, which is invaluable to a fledgling startup. Ideally, they should have experience in your field, but at the same time not have another startup in their portfolio that would be your rival. And finally, it’s always best to catch a fund in its initial investment phase, so that there will be more opportunities for follow-up funding.

7. Do you have the boldness and perseverance to cross the dark valley?

“When an entrepreneur succeeds, there is so much glamor and halo attached to them. What is forgotten or undervalued is the walk through the dark valley entrepreneurs go through.” Vani Kola, managing director of Kalaari Capital, shared that with me some time ago, and those words have stayed with me because we see it in so many successful startups we profile at Tech in Asia. Having been an entrepreneur herself, it is that elusive quality of perseverance that Kola the venture capitalist looks for in startup founders.   She says.  

“On the days when things don’t go great, this quality will see the entrepreneur through.” 

8. Do you have the team and leadership to grow your startup into a viable business?

However good your idea may be, or however strong your tech credentials are as a founder, if you don’t have a strong team or you can’t persuade a venture capital fund manager that you have the leadership traits and connections to build a great team, then he will be inclined to walk away from it. Getting from seed stage to the next levels before ultimately reaching the big exit point that investors are looking for requires organization and collaboration. That’s why a VC will try to figure out if an entrepreneur has the makings to be a good team leader.

9. How should you approach a venture capital fund?

You have identified a pain-point in the world, you have an idea to resolve that pain-point, and you have worked out a business proposition for it. You know how the business will grow, where the revenue will come from, who your customers will be. You have markets and their sizes in mind, as well as competitors and obstacles. Now, how do you take all that to a VC?

One way is to be selective, studying the past behavior of venture capital funds to see which ones may go for your startup. The problem is that the past is not always a reliable guide to how a venture capital fund will invest going forward, because it is in a constant state of flux.

The other way is to use a scatter-shot – that is, to fire off proposals to a multitude of venture capital funds in the hope that you strike upon one looking for a startup like yours.

There is a third way too, and that is to first find an incubator, accelerator, or a tech evangelist to back your idea. Screening startups and deals is a complex and time-consuming process. So it helps to have your idea vetted by somebody the VC respects. Pre-screened business opportunities save time for VCs, and have a better chance of being funded. The caveat is to look for a genuine backer with VC connections.

10. And finally, can you get a VC excited about your startup?

Venture capital investing is an inexact science – even more so than investing in stocks. Even after various checkboxes have been ticked and business models analyzed, the GP will take the final call from the gut. That is something to keep in mind.

With so many startups clamoring for venture capital funding, it’s the ones that get VCs to respond emotionally, and not just analytically, that are more likely to make the cut. It may come down to how well a GP connects with the founder or team, or whether he can relate to the problems the startup is trying to solve. Parag Dhol, managing director of Inventus (India) Advisors, is candid about it:

“One of the key reasons we choose an entrepreneur is if he has the passion. If he bores you, there is no point funding it.”

Karthik Reddy, managing partner of Blume Ventures, seconds it. “The investors who eventually end up cutting the cheque are those who become equally passionate about solving those problems. They see that spark in the entrepreneur. They see that market opportunity, just as the entrepreneur sees it. And at the seed stage, it is probably an extreme version of that shared passion and faith.”

The startup journey can be as exciting as it is fraught with risk. Paying attention to what goes on there can prevent sleepless nights and take you soaring into your dreamland.

COMMENTARY:    You have probably heard plenty of times that being an entrepreneur is a risky business, and investors talk all the time about reducing the risk. Yet everyone seems to have their own view of key risk drivers for startups.  Like bankers who rely on credit scores, financial ratios to assess the degree of risk associated with granting a loan, and the experence of the founders and management team, the first priority is to avoid startups without successful business models, look for an experienced management team with a proven trackrecord in the industry, solving a real need in the marketplace, a very compelling value proposition, a scalable business model, knowing and targeting the right target customers, and competing in the right market, not just a large one.  

Here is a priority list of key risk drivers that both entrepreneurs and venture capitalists should evaluate and minimize in starting a business: 

1. Team experience and depth risk. Here I’m talking about both the experience and track record of the founders in starting a business, as well as their experience and knowledge of the business domain. Like most professionals, when I get a business plan, I flip first to the founders section to see if it is a balanced team who has been there and done that.
2. Market and opportunity risk. There is always less risk with a well-defined problem in a large and growing market. All the people in China is a large and growing market, but all the people with cancer is much more well-defined. It’s hard to make money in a shrinking market, or with a solution that is “nice to have” versus painfully needed.
3. Competitive risk. Think seriously about the number and clout of your competitors. Having none is a red flag (may mean no market), but having more than a couple of large ones may mean this is a crowded space. Even in an open space, you need intellectual property, like patents, to keep potential competitors from overrunning you.
4. Financial risk. Very few businesses can be started without money. You as the founder will be expected to put your own “skin in the game.” The business plan should be realistic about how much cash will be required to break-even, and how big the return will be for investors in the first five-year timeframe.
5. Market entry strategy risk. The selection of an inappropriate pricing, marketing, or distribution strategy is a large potential risk. For example, many new social websites proclaim that they will offer a free service, and live on ad revenues (not likely in the first year without a huge marketing investment).
6. Political and economic risk. Sometimes founders are just in the wrong place at the wrong time. Recessions are a tough time to sell luxury goods. Under-developed countries may have a strong need for your product, but are often unstable and dangerous. Four specifics include tax rates, tariffs, expropriation of assets, and repatriation of profits.
7. Technology risk. New technologies, especially those characterized as “paradigm shifts” or “disruptive” may have long and costly acceptance cycles, or may run into unpredictable performance or manufacturing problems. Medical technologies have costly legal testing requirements, approval processes, and insurance validation.
8. Businesses with high attrition rate risk. Certain business sectors have historical high failure rates and are routinely avoided by investors and many founders. These include food service, retail, consulting, work at home, and telemarketing. On the Internet, I would add new social networking sites, and new matchmaking sites.
9. Operational risk. Some businesses require huge support or administrative infrastructures. For example, vehicle fuel improvements require service stations and maintenance shops nationwide, before they are viable. Even small operations can have breakdowns of specialized equipment and complex support processes.
10. Environmental risk. A nuclear reactor built on an earthquake fault line is a huge risk. Evaluate your business and location for sensitivity to floods, hurricanes, and catastrophic pollution problems, like an oil spill in the Gulf of Mexico.

The biggest risk of all is starting a company, any company, for the wrong reasons.    If your startup is clean on both of these lists, you will most likely build a successful business, get the funding you need, and have fun at the same time. What more could a budding entrepreneur want?

Courtesy of an article dated September 22, 2014 appearing in TechInAsia and an article dated April 10, 2013 appearing in Startup Professionals Blog

SHAPCHAT: A MOBILE APP THAT ALLOWS USERS TO SHARE MESSAGES AND SHORT VIDEOS WITH FRIENDS, MAKES GAINS WITH MILLENNIALS

Half of adults age 18-24 in the United States who own smartphones have installed the Snapchat app, according to recent data from comScore.

That's a significant increase in usage compared with the same time last year, when just 30% of 18-24-year-olds were using Snapchat.

Use of the mobile messaging app has also spiked with older Millennials, age 25-34, with 20% now using it—up from around 8% last year.

Usage among non-Millennials, adults age 35+, has not increased at the same rate, remaining under 10% for the past year.

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Snapchat's combined penetration for both Millennial segments (18-24 years old and 25-34 years old) is now at 32.9%, making it one of the most used social apps with the age group, the analysis found.

Only Facebook (75.6% penetration) and Instagram (43.1%) have more Millennial smartphone users than Snapchat.

The rest of the major social apps now all have fewer Millennial users than Snapchat, including:

• Twitter (23.8%)
• Pinterest (17.9%)
• Google+ (18%)
• Vine (10.7%)
• Tumblr (6.3%).

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COMMENTARY:  Snapchat is a mobile social app designed for smartphones and tablets that allow users to chat and share short videos of moments in their everyday lives with their friends. Users control how long their friends can view their message.   Users can set a timer up to ten seconds and then send their message.  Their friends have that long to view a users message and then it disappears forever.  Snapchat lets the recipients take a screenshot, and notifies the user if they did so.   Because Snapchat is a mobile social app, users can use it to build relationships, collect points, and view their best friends. Snapchat is instantly fun and insanely addictive. Checkout these videos of Snapchat:

 

 

Courtesy of an article dated August 22, 2014 appearing in MarketingProfs

HOW TO USE BUYER PERSONAS TO CLOSE THE GAP BETWEEN SALES AND MARKETING

In my days as vice-president of marketing at several technology companies, I distinctly remember how difficult it was for my team of marketing professionals to command the respect of the salespeople in the company.

We were finally successful in doing so, but only by becoming the company experts on the buyers.

The salespeople didn't care about the brochures we produced or the websites we built. They rarely commented on the email newsletter or the tradeshows we spoke at. But by effectively understanding and defining our buyer personas, we shortened the sales cycle for the reps who followed our strategies. Only then did the salespeople offer respect and kudos.

But most sales teams and marketing teams continue to operate out of alignment. The marketers and salespeople question one another's skills and their commitment to the job. They fight over the quality of the leads. I remember hearing of a sales team that snidely referred to the marketing department as the "T-shirt department" because they said all the marketers had accomplished was the production of T-shirts imprinted with the company logo. Others call the marketing department the "branding police."

Marketers, in turn, complain about how the materials they produce fail to be used by the salespeople. They bitch and moan because the sales leads they generate are left untouched, claiming that sales staffers are too lazy to pick up the telephone.

Think about your own organization's latest launch event. Were the salespeople hanging on every word as the marketers described the features of the latest product, service, or product marketing plans? If you're like most people I speak with (if they are honest), the salespeople were bored, probably poking at their smartphones instead of paying attention.

How Sales and Marketing Differ

Since Web content drives both sales and marketing success, it is essential that we take just a little time to look at how the two functions differ. By making certain we understand the difference, we can close the gap between marketing and sales and grow business faster.

It is the job of marketers to understand buyer personas—essentially, groups of buyers—and communicate to these groups in a one-to-many approach. Marketers are experts at communicating to many people, and typically the potential customers they reach are not yet ready to have a sales discussion.

The marketing team captures the attention of a group of buyers and drives those people into and through the sales process. The content generated by the marketers—blogs, YouTube videos, infographics, e-books, webinars, and the like—can influence large numbers of people. Done well, with a deep understanding of buyer personas based on research, this content generates sales leads and culminates in the buying process.

The role of salespeople is completely different: They influence one buyer at a time when the buyers are much closer to making the buying decision. Whereas marketers need to be experts in persuading an audience of many, salespeople excel in persuading the individual buyers. They add context to the company's expertise, products, and services. Through them, the marketers' content fulfills its potential at the precise moment the buyer needs it.

The following infographic illustrates the differences between traditional marketing (mostly offline) and today's marketing activities which are increasingly online or digital in nature:

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Closing the Gap

Closing the gap between Marketing and Sales means the marketing staff needs to be the buyer expert, not just the product expert. They need to focus on buyer personas based on real data from interviews with buyers. It's not about posters or pretty slides. It's about having deep and factual clarity about how markets full of buyers think about doing business with the company. That's when Marketing is ready to deliver tremendous value to the sales process.

Buyer persona research yields surprising information, and when you are tuned in to a problem that people will spend money to solve and you build a product that solves it, you are on the road to success.

Buyer personas also make it much easier to market your products. Rather than Web content that is simply an egotistical reiteration of gobbledygook-laden corporate drivel, you create content that people actually want to consume and are eager to share.

This approach is utterly different from what most organizations do. Either they fail to segment the market, and instead create nonspecific marketing for everyone, or they create approaches to segments based on their own product-centric view of the world.

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Understanding the Buyer

So how, exactly, do we interview buyers to develop buyer persona profiles? These interviews are best conducted by Marketing, because they learn much by having conversations with real buyers.

Whatever you do, don't give this responsibility to the salespeople or have them listen in. You want candid feedback about what worked and what didn't when the buyers evaluated their options. Buyers won't open up when the salesperson is present.

If possible, either record the interview or have a colleague take notes. You want your undivided attention focused on the conversation, and you want to capture verbatim quotes to use in the final buyer persona document, as that's the best way to communicate exactly how buyers talk about a particular point.

If you want to interview buyers about a brand-new idea that isn't yet available, you need to get them talking about the problem you plan to solve. You might start with a very general question, such as "How's business?" Then, once they get talking, you can segue to "We're hearing that buyers are struggling to [insert problem here]. What are your thoughts?" Spend about 10 minutes or so with open-ended questions about what they tell you. After that, you can tell them about your proposed solution and ask them for feedback. But the most valuable insights come before you've biased the conversation with your own ideas.

Which brings us back to those dysfunctional discussions between Sales and Marketing, the name-calling and finger-pointing that go on in so many companies.

If you have responsibility for both Sales and Marketing, you need to make certain that Marketing is focused on buyer personas. If the marketers work in a different part of the organization, you need to be an agent of change. Figure out how to get them the opportunity and skills they need to interview buyers and become buyer experts. Talk to the head of Sales or the CEO if need be.

Marketing can deliver incredible value, but only if marketers have a full understanding of their buyers' needs and perceptions.

COMMENTARY:  

What the Heck is a Buyer Persona?

A buyer persona is a vibrant profile of your company’s ideal customer. This should capture the type of person with an incredible need for your product and a love for your company; who will remain a loyal client for years, and tell all of their friends about how remarkable you are. More technically, in the words of Adele Revella, a leading expert on the topic, says: 

“They're an example of the real person you need to influence, crafted from specialized interviews you conduct with actual buyers,”  

When correctly prepared and applied, a buyer persona can help you identify the forms of messaging which will convert the right website visitors into leads, and leads into customers.

Great marketers rely on demographics and consumer insights to target their marketing. Major companies may leverage focus groups to determine consumer reactions to their marketing messages, and spend significant time and budget compiling demographic insights. A buyer persona profile is the great equalizer, because it allows companies of all sizes to improve their targeting. The following elements should make an appearance in your persona profile:

1. Demographics or Firmographics

What are the basic facts about your ideal customer, including age, gender, and geographic location? If you’re a B2B company, how big are the companies you’re trying to acquire? What industries are they in? As HubSpot’s Corey Eridon points out, demographics are the perfect starting point for profiling, because they’re relatively easy to obtain from your existing marketing database or customer relationship management software (CRM).

2. Pain Points

Why does your buyer persona need your solution in the first place? A pain point is exactly what it sounds like: a problem or need that’s so unpleasant, an individual has to begin searching for branded products or services and spend money in order to solve it. Whether customers are driven to your company by a major life event or a need to prove a point to their peers, you should know how your company is used to solve problems.

3. Priorities

Do your customers tend to be budget shoppers, or do they worry deeply about impressing their social circle? Do you tend to sell to executive assistants with a need to please a particularly choosy boss? Ordering priorities can allow you to create marketing materials that cut to the chase: if budget isn’t an issue, you can focus on value or other things that matter most.

4. Values

Are your ideal customers environmentally-conscious activists? Do they aspire to grow their company quickly? It’s critical to address values separately from priorities, because they affect how your company should define the bigger picture. Being able to clearly define how your company will help your consumers achieve their dreams, whether that’s saving money on their monthly grocery budget or performing their job more efficiently, should guide your company’s entire online presentation.

5. Research Habits

Are your customers engaged with the web every waking moment, or are they just starting to warm up to the idea of social media and search engines? The best way to determine research habits is through quantitative website metrics, specifically referral traffic sources and the keywords  driving the highest volume of search to your website. Ideally, this research should be performed with the help of closed-loop analytics, which track how website visitors who become customers find you 

What makes your buyer persona different from any other 27 year-old female event planner who aspires to own her own business? It’s probably difficult to tell why some customers who fit your demographics profiles purchase, and other’s don’t, but one of the best ways to determine this factor is likely through interviews with your sales team. Inquire about the factors they used to distinguish hot leads, which could include anything from the questions asked during the research stage to a company’s organizational chart.

7. Psychographic Characteristics

Would your ideal customers rather spend their weekend camping, or exploring urban coffee shops? Do they identify primarily as an early-adopter, or are they apathetic toward technology? Simply defined, psychographic characteristics are the collision of psychology and advertising, formally “attitudes, opinions, and personality traits.” They’re inherently abstract, as AdZerk points out, but that doesn’t mean they’re optional. By developing an understanding of how your product fits into the larger identity of your buyer persona, your content marketing can become significantly more vibrant.

For established companies, making the move to schedule interviews with your existing customer base should be the first step towards creating a buyer persona. Startups and companies in the earliest planning phases don’t get a free pass from interviewing, though – Ellie Mirman of HubSpot recommends using Craigslist or a similar service to find appropriate members of the public to interview.

Sources Of Information For Developing Buyer Personas (Click Image To Enlarge)

How to Create a Buyer Persona Profile

Extend the invitation to chat to both your best and worst customers, in order to gain a more comprehensive understanding of the factors that make your buyer persona different. Engaging with customers who’ve had a negative or mediocre experience with your product or service can salvage damaged relationships, but it can also help you gain a better understanding of how your product is perceived from the outside. Dissatisfied customers may feel that your product was harder-to-use than your content marketing let on, that you’re not using sufficiently sustainable packaging, or any other number of factors that can change your direction. Interviewing customers of all satisfaction levels will help you pinpoint your buyer persona more effectively.

Offer clear incentive for customers to participate in your research, which can range from a discount to a small, useful gift. Explain the estimated length of the session, define the fact you’re trying to gain better insight of your customers, and assure your interview participants that you won’t be releasing their personal information. Try your best to keep the session to 20 minutes or less, and choose the most relevant options from the sample questions below:

• How do you research products and services? Do you trust online reviews?
• Do you use social media? What is your favorite network?
• How much time do you spend online? Do you use smartphones and tablets?
• What is your job title and career goals?
• What skills, knowledge, and tools are required to succeed at your job?
• What are the biggest challenges you face in life or work?
• What blogs, news sources, or media do you consume on a regular basis?
• What is your educational background?
• What are some of your favorite brands and products?
• Do you prefer to communicate via email, phone, or in-person?
• Do you like learning through videos and webinars, or eBooks better?
• How do you search for information online?
• What are your long-term goals?

While this list is just a sampling of the questions you could choose to ask in order to build a buyer persona, it’s critical to focus on acquiring the insights that are difficult to track through web analytics. It’s important to use your time with customers to gain a bigger picture of attitudes, values, and habits. Use these insights, in conjunction with metrics and contributions from your sales and customer service team, to develop a document which details every aspect of how your ideal customer will find and select your company.

HubSpot produced a template titled "A Guide To Creating Buyer Personas," that guides marketers through the process of creating buyer personas in four steps:

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Courtesy of an article dated August 26, 2014 appearing in MarketingProfs, an article dated July 17, 2013 appearing in Business2Community, and an article dated August 23, 2012 appearing in Hubspot Blog