Behind the Scenes of a New Business Launch
By Christine OKelly | November 8, 2007
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This week, I am officially launching Hybrid Media Marketing, a new business that I am absolutely thrilled about. This business is the love of my professional life because it solves a tremendous problem that I and other internet marketers have faced for years when it comes to promoting product based businesses online.
In this post, I’ll talk about some of the strategies I used to develop businesses, using the new company to illustrate the concepts. My hope is that you will be able to take the core lessons and adapt them to your own entrepreneurial ventures.
Identifying a Problem in the Market
Anyone who sells a product or has ever tried to market a product online, knows all too well about the pain of promoting products online. Many of the SEO companies that I work with will not even take on clients that sell products because of the difficulties in promoting them:
Exposure: Even if you position yourself on page one of the search engines, potential customers must be actively searching for what you have to offer. For new products, novelty products, and non-need based products, this is a big dilemma. A first page search engine ranking does not mean your phone will ring because many of the people who would like your product aren’t searching for it.
Competition: Many people who sell products are resellers of products – meaning that there are other online companies selling those same products and winning customers becomes a matter of offering the lowest price.
Cost: Pay per click can be EXPENSIVE. One of my clients is paying $7.00 for a single click. Ouch.
It was painful to watch my wonderful clients with amazing products not making the sales they deserved because of these barriers. I went on a quest to find an affordable solution to the problem.
Entrepreneur’s lesson: If you examine your industry, you will likely find that there are problems everywhere that are waiting to be solved. If you can provide that solution, you have found a winning business model. This business is one that was born not from a question of “how can I make money,” but how can I solve this glaring problem in the website marketing industry.
If No Solution Exists, Create One
I knew that if more people could be exposed to my client’s products, they would make more sales. Sales is a numbers game and getting enough exposure is critical. The challenge was finding a way to get their products in front of people who may not have been actively searching for them.
Hybrid Media Marketing uses an already effective method of offline marketing to drive buyers online. I knew that consumer catalogs were massive sales tools for product based companies – but the problem is that my clients could not afford to put together a catalog. Designing, printing, and mailing a consumer catalog can cost upward of $50,000 which was completely out of the spending range of my small business clients.
I was not willing to give up on the idea that catalog marketing was a solution. After all, companies like Lillian Vernon and L.L. Bean built their empires with direct sales catalogs. If done correctly, direct mail catalogs work. Now the challenge to overcome was making catalog marketing affordable.
The solution I came up with was to allow small businesses to buy a page or a part of a page on a high quality catalog that would be distributed to a large audience of targeted people.
Entrepreneur’s lesson: Find creative ways to package solutions that provide more value to more people, therefore reducing the cost per person.
I began sharing the idea with the SEOs, marketing companies, and product-based clients that I had and they loved the concept. That affirmed in my mind that this was something I needed to run with.
Entrepreneur’s lesson: Test your idea before launch to see if the idea is embraced by your target audience.
Create a Model that Allows Buyers to Get More Back Then They Put In
Because my goal was to get entrepreneurs with incredible products to generate sales, I knew that I needed to get this catalog into as many qualified buyer’s hands as possible while still keeping costs affordable.
I decided on a print run and distribution of 50,000 catalogs, giving my clients 50,000 opportunities to make a sale. At this level of exposure, a conversion rate of just 1% equates to 500 sales. For a company whose average internet sale is $50, 500 sales equates to $25,000 in profits. At a conversion rate of 2%, this equates to $50,000 in sales. Not too shabby.
At a distribution quantity of 50,000, the cost per impression is between $0.008 and $0.04 per product, depending on how many products a company chooses to place on a page. With pay per click rates between $0.50 and $7.00+, I probably could have charged more. I probably could have chosen to distribute to fewer than 50,000. But that was not the goal. The goal was to find a solution that small businesses could afford and that had the potential to result in lots of sales.
Entrepreneur’s lesson: Stay true to your goal, not money. Remain passionate about solving or meeting the needs of your target audience. Don’t cut corners when it comes to quality, instead, find a way to offset the cost.
Seek Out the Advice of Professionals Rather than Attempt to Learn Everything Yourself
I consulted with a catalog designer who gave me incredible insight about print runs, catalog size, and mailing lists that would have taken me months to learn on my own. More than likely, if I had not consulted with him, I would have based all of my numbers on a less cost effective model.
Entrepreneur’s lesson: Seek out experts in respective industries for their consultation. The knowledge you receive can easily save you more money than it would cost to hire them as a consultant. Many professionals will offer consulting at no cost if you also hire them for their professional services.
Growing the Business
You can have the greatest idea in the world, but if no one knows about it, it doesn’t matter. The challenge now that I had a good idea, was “how do I get enough people to know about it?”
Here are some challenges that all businesses face:
- A single person or company often does not have the bandwidth to reach out to enough potential clients one at a time
- People are more likely to try something if it is recommended by someone they trust.
- People are more likely to recommend something if there is some benefit in it for them.
Because of these key points, I knew I needed a network of people who already had clients experiencing this problem to recommend the solution. When setting pricing, I built in enough to provide referrers with a generous referral fee that will create passive income for them.
I am a big believer in passive income and one of my lifetime goals is to help others create passive income. I could have made the referral fee less, but I really do love rewarding people well when they send business my way.
A marketer or a web designer who recommends this solution to just 10 of their clients can generate as much as $10,000 per year in passive income. If you are an SEO, marketing company, or web designer with clients that need this type of exposure, contact me to talk about the partner program.
Entrepreneur’s lesson: Be kind to those that send business your way. When more people have a vested interest in your success, the more successful you will become.
Joining me on this venture is Tara Geissinger. Tara has 10+ years experience in Ad Agencies both in PR and advertising, working with client budgets in excess of $5M, writing marketing plans, event planning, press releases and general client service.
Tara is also a mother of 4 year old triplets. Readers of this blog are probably aware that I am a big believer in empowering home-based entrepreneurs – particularly parents that choose to venture into business for themselves in order to be more available to their children.
In the past, I’ve taken the solo approach with my businesses. This time I knew that I wanted to bring other talented people in who were just as passionate about the idea as I was.
Neither of us is working for a paycheck right now. We are working for a dream that we both believe which is empowering small business owners to make it big. In return, I hope to provide her with a generous income for doing what she loves to do while being able to devote time to her family.
Entrepreneur’s lesson: Build a team of talented, passionate people. If you don’t have the funds to pay people out of pocket during start up time, be willing to compensate for it later with a greater stake in the success of the company. Again, when more people have a vested interest in your success, the more successful you will become.
Topics: Business Development, Business Opportunities |
20 Comments »
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I wish you the best on this venture Christine! It sounds like the potential that is already there is almost unbelievable. Please keep us all posted on how this goes for you. I would deffinatly like to see a follow up post in the future!
By the way, I love your entrepreneural spirit.
Thanks Bunk! I will definitely keep you updated on this. Even in the pre-launch period there has been so much positive feedback both from marketers and product based companies and ecommerce companies that it is really exciting.
BTW - I love the look and direction of your “new” blog!
Very interesting concept. The site looks great.
Thanks Steven! I have had very positive feedback from designers who want to offer this to their clients. Designers and developers often have the problem of clients saying ‘ok, I paid for the website - now where are my sales!’
Even though that’s not the designer’s job, a lot of times the client believes ‘if you build it they will come.’ This might be a great thing for you to recommend for your ecommerce clients since part of utilizing this marketing method is having a functional, appealing website. I’ve built in a nice referral bonus for designers, SEO’s and web developers who refer ecommerce clients for which this would be a good fit
I thoroughly enjoyed your “self-conversation” and analysis of your new business launch and ideas. Very impressive! I wish you the very best in a fulfilling and eventually profitable venture Christine.
Thanks Daniel - I always like to know the thought process behind how something ‘came to be’ so wanted to try and share that.
Congratulations on your new book - I just bought it online at Amazon!
Christine, I have a feeling this will be a hit! Wish you best of luck!
(got your e-mail will reply tomorrow, 4am now, sleep)
Thank you Jon! This is a custom solution, created to solve a specific problem for some of my own clients that has been scaled up so that multiple small businesses can benefit.
Get some sleep! You are one of the hardest working people I know
Great blog Christine,
As you know, I am really excited about starting this project!! I really believe that we are going to be able to help small business owners — many of them stay-at-home-moms — take their businesses to the next level. It is so difficult for them to get product awareness and the visibility they will gain from our catalog will be priceless!
Thanks so much for including me.
Tara
Tara, I agree - the most exciting part of this is being able to help small businesses solve a serious problem in growing their companies. It is GREAT to have you on board!
Christine
this is fantastic. i’m glad i got a sneak peak earlier this week:) this is totally going to work for you. what a great idea with a specific execution plan. i really appreciate how you added the ‘lesson’s you learned, too. congrats!!!
Thanks so much Erin! Glad you liked the behind the scenes look & execution plan. Your blog does an excellent job at this - I have thoroughly enjoyed watching Durtbagz unfold from concept to launch (well - ALMOST launch - as soon as that web development team gets moving!!)
Way to go and good luck, wish you well with this venture.
Thanks Collin - I enjoyed your recent series on ‘How Well Do You Know the Product, Yourself’” - Congrats to you on setting a goal to grow your blog and achieving it!
[…] we go on with this weeks’ links, my friends Christine O’Kelly from SelfMadeChick just started a new business: Hybrid Media Marketing. Check it […]
This comment really has nothing to do with the article itself, as I haven’t read it yet, but I just wanted to mention that I JUST stumbled upon your site and your web design is gorgeous! I will read your blog for that alone.
Thank you Andrea! It’s great to have you as a new reader!
Excellent idea. I know a couple of people who have done something similar on a smaller scale - put together those coupon booklets (instead of entire catalogs).
Asking out of curiosity - how are you distributing the catalogs? Renting a mailing list?
Do you collect and process orders too? Or do people buy directly from the merchants websites / phone numbers? (Is there an upsell opportunity?)
A couple of ideas for you:
1. Give discounts to merchants if they make their client list available to you.
2. Pick a good niche and you can even sell your catalogs. (For eg: I’d read that someone in Frisco sold “Green” catalogs - which included nature friendly products only.) Your niches already look good enough though.
Best of luck with this new venture.
EXCELLENT questions Ankesh. I’m spending a lot of money on a top notch mailing list. The recipients will have a household income of $75,000 or more, be women with children (for the women’s catalog), and will have made purchase online. The mailing list is scrubbed every single month against the post office’s address change database and I will buy the mailing list about 1 week before the catalog goes to print. I want to provide those that feature their products in the catalog with the best odds possible of making a sale.
I agree, the niche is critical. We are selective about the products that are featured to ensure that they are a good fit for the target audience.
About processing orders: this is one of the most exciting aspects. We do not process the orders - we encourage shoppers to go straight to the merchant’s ecommerce site where the merchant can then cross sell and upsell products.
This way a small business e-tailer can feature 5 of their best selling items in the catalog to generate interest in the products, but still have the freedom bulk up their total order with product that are not listed in the catalog.
Other catalog placement companies ask the merchant to sell x amount of their goods to the catalog company at a 50% discount and then the catalog company makes the real profit. Since our goal is to help small businesses drive traffic to their sites and boost their sales, this was not an acceptable option. We want the retailer to make as much money as possible.
Thanks for your wonderful questions!
Christine
[…] a good article over at {Self Made Chick} about building a business model around the concept of filling a need and providing value rather […]