“The way
to
make something
valuable is to
make it
hard to obtain.”“The way to make something valuable is to make it hard to obtain.” - Mr Profound Marketer

I did some analysis to track the end-to-end conversion process for one of my Internet projects to identify the bottlenecks (and subsequently improve on them). As one would expect, the conversion from opt-ins to sales is usually the lowest (as this is the ’steepest’ step that a customer would take in the whole process from start till the end).

My analysis showed up some really surprising results - the sales conversion rates were well above normal, but the signup CONFIRMATION rates weren’t.

I drive my traffic almost exclusively to squeeze pages - I still subscribe to the ‘old school’ thinking that before any selling can be done, a consistent & repeated contact process with the customer will need to first be established. The effectiveness of squeeze pages has somehow gone down the drain during recent years but as of now it still works for me, at least from a marketing ROI standpoint. (It is interesting to note that the ‘grand-daddy’ of squeeze pages - Double Your Dating - has since changed into more of an information portal).

To comply to CAN-SPAM, my list is built via double opt-in. My confirmation rates stood at 76%, which is slightly lower than industry standard of 78.1% (AWeber - Oct 2007). Did some digging and found that the verification lead times are frustratingly slow - passing the 80% mark only in 3 hours.

I subsequently introduced a “countdown timer” in the signup Thank You page in order to create some urgency in the confirmation process. On the page, the optin ‘bribe’ would expire if no confirmation in five minutes. The result - 80% in 15 minutes! (See chart below)

Scarcity As A Motivator

The biggest challenge in introducing scarcity in an online business is that it is not ‘built-in’. The resource (the freebie for the opt-in, or the product that you’re selling) is not ‘depleted’ in any real way - unlike a set of CDs which could be limited since they are physical products.

In addition to scarcity, “social proof” is another strong marketing lever which will boost sales in any business, offline or online. I will blog more on how to use social proof together with scarcity to create strong ‘pull’ for your products.

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It has been awhile now since I last blogged. July was a hectic month for me - I had three projects that I needed to close by the end of the month. Yesterday I spent a whole day at a seminar - and managed to jot a few thoughts to write on the blog during breaks.

In the span of 30 days, I had rolled out a new information product and started a new blog in my niche as part of my direct response ‘pet’ experiment. It was a simple minisite with a short sales letter. I drove some test traffic to it and saw a conversion of ~2%, which is at par with industry average. Nothing spectacular really, but good enough for the first iteration.

My other product (which is coincidentally my very first) is now converting healthily at 6.6%. I remembered back when I first rolled it out (2 years ago) I had ZERO sales, which absolutely stumped me. Since then the copy has been revamped (much of it swiped from Paul Myer’s  - still one of the copywriters that I look up to), the tacky graphics removed (words sell, not pictures!) and the offer improved (reduced the front-end price, but introduced an upsell).

The conversion rates have since taken off. Currently the ROI has hit 1:30, which is fairly typical of a fairly successful online direct response copy. I am still grappling on how to scale this up (Hire a link builder? Drive cheap placement-targeted PPC traffic?), and at the low price point (since it’s a front-end product) it’s not suited for an affiliate campaign.

On the ‘offline’ front, I am going on to do some work for a dotcom based here in Malaysia. A market leader in its niche, it has been one of the (very) few success stories here from the ashes of the dotcom bust back in 1999. What attracted me to this company is its database which runs into the millions (I could profitably monetize a list as small as 1,000, so imagine the possibilities of a 1,000,000 list size). With the right slicing and dicing of the database, there is much contextual marketing that could be done.

Meanwhile, Liferati has been put on the backburner as Kenny and myself are busy with our own projects (Kenny is leading the revamping of a lifestyle portal of a major telco here in Malaysia). Last weekend we managed to spend some time at our office in downtown Damansara to brainstorm about the Contextualizer engine (more here) - picture of me above doing just that.

Our partners at Urekalabs (brothers Razlan and Roni) have embarked on an exciting new project dubbed the ‘Google Killer’ on a novel way to monetize video traffic which is gaining prominence with the likes of YouTube and DailyMotion. Without divulging much of the details, I think it’s a  brilliant idea and the commercial upside is simply enormous. They absolutely deserve all the venture capitalist cash they could get.

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I have blogged about the life cycle segmentation model at my pet project Liferati.com here -

http://liferati.com/blog/2008/06/segmentation-model/

The basis of Liferati is the ability to segmentize users in ‘real time’ using website analytics in order to deliver contextualized content as well as recommended affiliate products.

I have worked on a life cycle model when I was in Procter & Gamble where we developed a direct response strategy for one of the consumer products. Reapplying this to another business (in B2B setting), we crafted a direct mailer strategy to build customer loyalty which reported double digit ROI.

In the case of Liferati, I am banking on the ‘portability’ of the model into the Internet realm, based on the underlying belief that humans use the same purchase decision-making process - online or offline. This remains an untested hypothesis, which I hope to validate by building and testing the prototype.

I have designed the diagram to be self-explanatory, but I will blog about this in later posts. This is also the first in the series of Marketing Mindmaps that I intend to publish.

DOWNLOAD HERE: Life Cycle Segmentation Model - PDF | JPG

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Finally, got around to watch Derren Brown’s Something Wicked This Way Comes video. Filmed at Hammersmith in 2005, he performed his mentalism ‘tricks’ which were centered around one premise - that you can subconsciously plant ideas into people’s minds through your words.

I have always wondered about the effectiveness of the persuasion tactic of “covert suggestion”, having first stumbled upon it when someone sent me some materials by Ross Jeffries called “Speed Seduction”.

While I found certain techniques to be useful (for example, anchoring), I have doubted the usage of some verbal ‘trickery’ which plants ideas in the target’s minds.

One of the more famous Ross Jeffries ’speed seduction’ lines have been “Standing on the bridge, I looked at the river below me“. The operative phrase here is “below me”, which suggests the idea of oral sex in the mind of the target.

I have known people who claimed massive success with women using this ‘technology’. A particular technique, called the October Man Sequence surfaced a couple of years back and caused a minor stir in the “seduction” community. Ross Jeffries himself said that using this technique was akin to “bringing a nuclear bomb to a gunfight“.

The question of ethics come into play when you use tricks like these to influence your target to unknowingly make certain decisions which are in your favour.

Now, morals aside, mentalism techniques such as these could well be the next ‘frontier’ as far as marketing is concerned.

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The concept of customer segmentation really is a simple one - group your customers together according to a set of defining characteristics.

What the marketer wants to achieve from the segmentation exercise is to develop plans (or product features) that best appeal to the different segments.

Therefore, it makes good sense to first segmentize your customers before developing plans. As we marketers all know, segmentation often comes as an afterthought…especially when our plans are not working as we expect them to

You don’t need Bain to tell you how to segmentize your customers…

The simplest (and most common) way to segmentize customers is via demographics (age, sex, income, race, hair color…).

Often, demographic-based segmentation would lead to rather simplistic marketing plans which are relatively easier to execute (especially when the plan revolves around placing ads on TV. In such a case, all the marketer needs to do is to book the time slots corresponding to the appropriate TV programs watched by the target demographic).

The slightly more complicated method would be to cluster customers via their needs (or in marketing jargon, ‘psychographics’).

For example, in some Asian countries, lighter skin is a desirable trait for many women, and hence the need for ’skin whitening’ facial cleansers and moisturizers.

Here, marketing plans tend to get trickier to execute. Unlike demographics and physical traits, “needs” are not immediately obvious to the marketer.

Needs-based segmentation is perhaps the reason behind the multi-billion dollar industry that is market research. Multinationals are paying companies like Nielsen, Synovate and TNS to find out what their customer needs, and to check if their products fulfill those.

The Archimedes heel of this method is the fact that people buy what they WANT and not what they NEED. Big difference.

The third method - the most advanced of the lot - is paradoxically easiest to perform, as long as you’ve got some basic marketing analytical tools in place.

User life cycle segmentation - this is Marketing 2.0, folks…

User (not product) life cycle is the mapping of the ’stage’ at which the user is at as he uses a product. The basic premise behind this method is that at different life cycle stage, the user will have correspondingly different needs.

An example would be a credit card holder fresh out of college. It would be a fallacy to assume that his needs would remain unchanged as the user enters different life cycle stages). The effective marketer would track the evolution of his customers over time, and therefore craft plans that would pinpoint their specific needs based on their behaviors at each of the life cycle stage.

The idea of “pinpointing user needs based on life cycle stage” is the cornerstone of one of my web-based projects - LifeRati.com. Given the inherent ability of the Internet to capture user and usage data, it makes analyzing and clustering users in real time possible. This is real time segmentation we are talking about here, folks!

User life cycle is probably one of the most underdeveloped concepts in marketing, and very surprisingly so.  Much of my work over the last two years were based on life cycle marketing strategies, and given the dearth of information on the topic, much of the effort was wasted on trial and error.

I will talk more about life cycle segmentation strategies in my next blog post - and some of my personal learnings and mistakes so you can avoid making the same - so stay tuned!

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For the uninitiated, Frank Kern was one of the heavy hitters in the Internet marketing field, having masterminded multi-million launches such as Stompernet, Pipeline Profits and Serializer. Frank was also the brain behind Neil Strauss‘ Annihilation Method which netted $1million within 15 minutes of its launch.

In this particular video, he outlined a covert persuasion method that plants the desire in your customers to buy your product using metaphors and storytelling.

Instead of blatant, in-your-face selling, the covert marketer tells a seemingly unrelated story which identifies the desired results or benefits, overcome objections, and then transfer the desired results from the metaphor to the product you want to market.

Frank Kern has marketed in the dating (or seduction) niche, and I suspected that he derived this concept from the storytelling and ‘indirect’ techniques commonly used by those in that niche.

This man’s a marketing genius. I wonder how he managed to stay ‘underground’ for so long. All the Unilevers, P&Gs and Coca Cola’s in the world should hunt him down and install him as their marketing head honcho if they know what’s good for them.

If you who haven’t heard of Frank Kern (and other names such as Eben Pagan, Jay Abraham and Gary Halbert) - go do a Google - their stuff will make you rethink your marketing in a big way.

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The highlight of the day was definitely meeting Guy Kawasaki - the ex Apple evangelist and currently a venture capitalist. A very natural speaker who connected well with the audience. Also, got one of his really funky namecards - his name in silver font on a black background on the front, and his email and cell on the back.

Way cool!

Other speakers in the event were Colin Wong (ex-Googler and currently a VC), Terry Thoren (he used to head the animation firm which producted The Simpsons) and Mahmoud Bouneb (GM of Al Jazeera).

The attendance was probably too small for a star-studded speaker list (200 people at most), but some of the who’s who of the Malaysia ICT world was there. I shared the table with the CEO of Skali (Tengku Farith), MD of Friedchillies.com (Adly Rizal) and my good friend Razlan Mustapha, the COO of Urekalabs (picture on the left here). Also spotted were Josh Lim (Advertlets.com), Dato’ Ghazi Sheikh Ramli (former senator and now president of MAKRI), Roni Mustapha (CEO of Urekalabs) and Ashran Ghazi (CEO of Asiastream Group and President of NEF).

Also bumped into a couple of old acquaintances - John Lim, ex-Cyber Village who is currently the CEO of Beauty Impress, as well as Hamdi Mokhtar, CEO of Innovasia. John was one of my earlier mentors who inspired me to start marketing online. Hamdi, on the other hand, was an ex Telekom scholar just like me. Together with another ex Telekom scholar, Nik Shazwan Azam (the entrepreneur behind CeriaTone), they started off in the IT solutions space before parting ways.

Will blog about the content of the talks later - right now I am still starstruck!

Addendum: Guy has blogged about his trip to Malaysia - complete with pictures of Batu Caves and Thien Hou Temple. Here’s the link - http://blog.guykawasaki.com/2008/05/forty-five-hour.html

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We all wrote marketing plans which all look but the same initiative after initiative. They all invariably have these components -

• Bombard the television networks with thirty-second advertisements.
• Sponsor some TV shows.
• Get some celebrity endorsements.
• Do some events.
• Distribute samples at the stores.
• Throw in some heavy discounts to ‘drive trial’, ad infinitum.

(If you are not familiar with this piece of jargon, ‘driving trial’ means getting your customers to buy your product for the first time - if the product is good enough, then there will be repeat buys, and thus ensuring the sustainability of your business)

I called it “Brute Force Marketing” because all we needed to do were to get these generic plans off-the-shelf, and and then put in lots of resources (a ridiculous amount of cash and an even more insane amount of manhours) behind them.

Not much original thinking needed, really. Understandably, the stuff that we were selling were pretty basic (shampoos, detergents, disposable napkins) - so creativity wasn’t really that essential.

Growing tired of cookie cutter marketing, I went online where I discovered direct response marketing. It totally blown my mind away.

Through direct response marketing, I learned about copywriting, list building and perhaps most importantly, testing. And by extension, psychological triggers (tipping points of purchase), influence factors (social proof, reciprocity and opinion leadership), marketing analytics (testing and tracking).

Sadly, many (offline) marketers totally overlook these, and having executed many a plain vanilla marketing plans, they do not fully comprehend the very foundational understanding on what makes customers buy.

At worst, most seem to rely on the “magic bullet” of launching TV advertisements in order to generate demand for their products.

As Mark Joyner so eloquently puts it, “marketing is mass persuasion“. If you think that the best way to “mass persuade” is to put out a 30-second advertisement tooting your own horn on how great your product is, then more power to you.

But for me, I’d rather “go guerilla” by sending out contextualized direct response letters to my customers, addressing their individual needs and recommending individualized solutions.

Any marketing message not explicitly requested by your customers is spam. By this definition, TV advertising is spam. Same goes for advertising on radio, newspapers, billboards.

Get permission to market to your customers, and then send them information only relevant to them.

Spam marketing is out. Smart, contextualized marketing is in.

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“Deric, how do I get started on Internet Marketing?”

 My answer often baffles people as it is as simple as it gets. Internet marketing really are these two things -

1. TRAFFIC. How your customers find your site. Referrals? Search engines? Backlinks?

2. CONVERSION. Once you get your prospective customers on your site, how you get them do to what you want them to do. Opt in? Comment on your blog post? Make a purchase?

These are what I call the “twin pillars of Internet marketing”. Get these two right, and you’ll do well. And no, you don’t need all those Clickbank ebooks peddled by gurus who make money teaching people how to make money.

I’ll blog more on the specifics on driving traffic and increasing conversion, but if you are already marketing online, think about the things you are currently doing and how the fall into these two buckets.

For example, are you spending most of your time tweaking the conversion of your sales page and nothing on your AdWords campaign? Or conversely, frantically writing and submitting articles which give you backlinks to your site, but your copy sucks?

Something to think about there.

By the way, don’t mistake Internet marketing for what it is NOT. Building a list is marketing. Developing a free report for a squeeze page is marketing. Split-testing your offer is marketing.

If you spend your time building “Made For Adsense” sites, freelancing as a blog writer or researching keywords for traffic arbitrage, you are not building a business, and therefore not a marketer.

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As you could probably tell, this is my very first post at this blog. This is not, however, my first blog as I have written a couple in other niches in my career as an Internet marketer.

In this blog, I will be writing about some of my learnings from both my online and offline marketing endeavors. My background is in offline marketing, having spent some time marketing to both consumers (facial cleansers and anti-dandruff shampoos) and businesses (express packages). I have also experimented in online direct response marketing, resulting in a couple of very successful projects in some of the fiercest niches on the Internet today.

It is my goal to reapply the learnings from the best practices of offline marketing (brand building, awareness generation, market segmentation) to online marketing (direct response, list building, analytics) and vice versa. I will share findings from my crazy experiments here at the blog, and hopefully they will be useful to you marketers out there.

Be sure to visit this blog often!

P/s: Sign up for updates and a free ebook here - http://dericfok.com/free-book/

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