By: Seth Godin

If you walk into a company-owned cell phone store to sign up for a contract, what are you worth?

Given the huge gross margins at AT&T and Verizon and the standard two-year contract, I think it’s easy to figure on more than $2000 in lifetime value.

If you ran a business where a customer represented an additional $2,000 in profit, how would you staff? How long would you make someone wait? If staff costs $25 an hour, how long would that extra person take to pay off?

Few businesses understand (really understand) just how much a customer is worth. Add to this the additional profit you get from a delighted customer spreading the word–it can easily double or triple the lifetime value.

So, a chiropractor might see a new patient being worth $2,500, easily. And yet… how much is she spending on courting, catering to and seducing that new customer? My guess is that $50 feels like a lot to the doc. Instead of comparing what you invest to the benefit you receive from the first bill, the first visit, the first transaction, it’s important to not only recognize but embrace the true lifetime value of one more customer.

Write it down. Post it on the wall. What would happen if you spent 100% of that amount on each of your next ten new customers? That’s more money than you have to spend right now, I know that, but what would happen? Imagine how fast you would grow, how quickly the word would spread.

Here’s how you’ll know when you’ve really embraced this–a good customer at your podiatry practice (or supermarket or tax firm) walks out the door in a huff and you turn to your partner and say, “There goes $74,000.”

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By Seth Godin

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By Seth Godin

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By: Seth Godin

The either-or world continues to decay, confronted by a shifting economy and the tools of the net.

It used to be easy to tell if someone was a journalist. Either you were or your weren’t. So giving special privileges to journalists was easy. Parking permits, press badges, first amendment protections… no problem, you’re a journalist. Everyone else? No way.

It used to be easy to tell if someone was an entrepreneur. Either you had a full-time job or you ran a business. So we could treat employees the same (health insurance, no moonlighting) and assume that the few that didn’t have jobs were full-time freelancers or entrepreneurs.

It used to be easy to figure out who did the buying at an organization. The purchasing department did. So we knew who to call on.

Now, of course, it’s all jumbled up. Everyone is a journalist, of course, but just a few do it for a living. Everyone is a freelancer, or, at the very least, always looking for the next gig. Everyone with a credit card can do the purchasing, they just expense it.

Society hates this. It means we need to make up new rules, FTC disclosures, legal principles, safety nets and more.

Marketers love this, because it means change and that means opportunity.

If the only reason you’re only wearing one hat is because you’ve always only worn one hat, that’s not a good reason.

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By: Seth Godin

Trolls

Lots of things about work are hard. Dealing with trolls is one of them. Trolls are critics who gain perverse pleasure in relentlessly tearing you and your ideas down. Here’s the thing(s):

1. trolls will always be trolling
2. critics rarely create
3. they live in a tiny echo chamber, ignored by everyone except the trolled and the other trolls
4. professionals (that’s you) get paid to ignore them. It’s part of your job.

“Can’t please everyone,” isn’t just an aphorism, it’s the secret of being remarkable.

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By: Seth Godin

Empathy

I have no idea what it’s like to be pregnant.

And for most of us, we have no idea what it’s like to have $3 to spend on a day’s food, or $4,000,000 to spend on a jet. We have no idea what it feels like to be lost in a big city, no idea how confusing it is to go online for the first time, no idea what it’s like to own four houses.

Marketers and pundits and writers and bloggers and bosses pretend they are empathetic, but we never can be. Sure, we can try, we can be open to cues and sensitive to clues, but no, we don’t really know.

Being certain about how someone else feels or what motivates them is foolish. Don’t declare that you know exactly why someone made a choice or predict what someone is going to do next, and why. It’s a great parlor trick, but you’re probably going to be wrong. (I think the one universal exception is fear. We all know what it means to be afraid, and fear doesn’t change based on income or gender. The causes change, but the fear remains the same.)

Empathy is a hugely powerful marketing tool if we use it gently, being sure to leave lots of room for error. When we say, “oh, you did that to make a quick buck or you did that because you hate that guy or you did that because you’re a man…” we’ve closed the door to actually allowing people to write their own story and you make it difficult to learn what actually makes them tick.

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By: Seth Godin

The platform vs. the eyeballs

This might be the most subtle yet important shift that marketers face as they deal with the reality of new media. Marketers aren’t renters, now they own.

For generations, marketers were trained to buy (actually rent) eyeballs.

A media company assembled a large amount of attention. A TV network or a magazine or even a billboard company found a place you can put an ad, and they sold you a shot at reaching their audience.

You, the marketer, don’t care about the long-term value of this audience. It’s like a rental car. You want it to be clean and shiny when you get it, you want to avoid getting in trouble when you return it, but hey, it’s a rental.

And so when we buy ads, we ask, “how big an audience” and then we design an ad with our brand in mind, not with the well-being of the media company or its audience in mind. And if we get a .1% or even a 1% response rate, we celebrate.

A trade show booth is an example of eyeball thinking. The trade show organizer assembles attendees and your job at the booth is to grab as many as you can.

Old media was not the same as old branding. Media companies built audiences and then brands rented those audiences.

Suddenly the new media comes along and the rules are different. You’re not renting an audience, you’re building one. You’re not exhibiting at a trade show, you’re starting your own trade show.

If you still ask, “how much traffic is there,” or “what’s the CPM?” you’re not getting it. Are you buying momentary attention or are you investing in a long term asset?

Now, when you buy something (that thing you used to call ‘media’), you’re not paying for eyeballs, you’re paying for a platform. A platform you can use to build your own audience, one that you can nurture, educate and ultimately convert. You’ll take care of this audience differently, measure them differently and have a different sales cycle. This isn’t natural, but it works.

Two steps: buy a platform and then fill it with people. Some examples:

Authors have traditionally relied on publishers to bring them readers. The author gives up the majority of the income and the publisher brings them the readers. But then you see someone like Frank at Post Secret who builds his own audience for his (sometimes nsfw) content. He owns a platform, it’s not something he rents. Now, using a publisher is a choice, not a necessity. Just about every successful author going forward (except for the lucky exceptions like Dan Brown) will own her own media channel. Not just authors, of course…

Consider the local real estate agent. She can spend to run ads every week in the local paper, or she can use the same money to start a legitimate media channel, a digital magazine, say, one that cheers on the school and gives the local paper a run for its money. And oh yes, the only houses listed for sale are hers. It might take a lot of work and even some money. But what does she get? A platform forever.

Traditionally, a clothing brand has to give up income and control to a retailer, since the retailer has the eyeballs. The web allows a brand like Little Miss Matched to build their own platform, their own audience and thus bypass all those gatekeepers. They invested in a product that told a story instead of investing in giving Walmart a cut. Boring products can’t do this.

Or consider the local chiropractor. He can spend money on a yellow pages ad or he can invest in a platform, creating a local running club and doing coaching for its members.

(Compare these examples with McDonald’s, a company that continues to rent eyeballs for a high price and has no real platform to speak of.)

Or consider the acquisition of Omniture by Adobe. What did Adobe pay for? I’d argue it was direct access to the right people at the leading advertisers and websites around the world. Technology isn’t so hard to copy. Permission to connect is almost impossible to achieve.

Compared to the cost of renting eyeballs, buying a platform is cheap. Filling it with people eager to hear from you… that’s the expensive part. But if you don’t invest in the platform, you’ll be at a disadvantage, now and forever. The smart way to build a brand today is to invest in the elements of the platform… the product, the technology, the websites (plural) and the systems you need to make it easy for people to show up at your very own trade show. And then embrace these people and shoot for 90% conversion, not .5%.

Like most good investments, it’s expensive and worth more than it costs.

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 By: Seth Godin

“Hop in, I’ll drive.”

Just because someone offers you a lift, doesn’t mean you have to take it.

In a joint venture or possible business arrangement, it’s reassuring when the other person offers to drive. “Leave it to me,” they might say, or, “I’m socializing this through the organization… be patient, I’ve done this before and we need to do it this way.”

Often, this is true. It’s the honest appraisal of a generous insider, someone who wants both of you to succeed.

But, just as you should never get in a car with a drunk driver, understand that the minute you let the other person drive, you’ve bought into their process. Spending three months or three years following someone off a cliff is nuts.

I’d rather disappoint you today and refuse your offer of a lift than end up with both of us having wasted hours and hours of time somewhere further down the road. No, you can’t pitch this to your husband, that’s my job. No, I won’t stand by and watch you mangle this before the board. No, we’re not going to interact with customers your way merely because it’s the only way you know.

Thanks, but I’ll drive this time.

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By: Seth Godin

I was talking with a senior marketer at one of the most famous brands in the world last week. She said, “executives keep coming to me with stuff they find on the internet, stuff they find on YouTube about us, and say, ‘take it down!’ Of course, I have to explain that I can’t take it down. No one can.”

If your brand has any traction at all, people are talking about you. Of course, they’ve always talked about you, but now they’re doing it in writing, in video and in public.

Today, Squidoo (a company I founded) is launching Brands in Public. It’s a neat idea and I wanted to give you an overview and a first look.

You can’t control what people are saying about you. What you can do is organize that speech. You can organize it by highlighting the good stuff and rationally responding to the not-so-good stuff. You can organize it by embracing the people who love your brand and challenging them to speak up and share the good word. And you can respond to it in a thoughtful way, leaving a trail that stands up over time.

But how?

Over the last few months, we’ve seen big brands (like Amazon and Maytag) get caught in a twitterstorm. An idea (one that’s negative to the brand) starts and spreads, and absent a response, it just spirals. Of course, Amazon can’t respond on their home page (they’re busy running a store) and they don’t have an active corporate blog that I could find, so where? How?

Enter Brands In Public.

[see update at the bottom] Squidoo has built several hundred pages, each one about a major brand. More are on the way. We’ll keep going until we have thousands of important brands, each on its own page (and we’ll happily add one for you if you like). Each page collects tweets, blog posts, news stories, images, videos and comments about a brand. All of these feeds are algorithmic… the good and the bad show up, all collated and easy to find.

Of course, these comments and conversations are already going on, all over the web. What we’ve done is bring them together in one place. And then we’ve made it easy for the brand to chime in.

If your brand wants to be in charge of developing this page, it will cost you $400 a month. And once [we build] the page, the left hand column belongs to you. You can post responses, highlight blog posts, run contests or quizzes. You can publicly have your say right next to the constant stream of information about your brand (information that’s currently all over the web–and information you can’t “take down” or censor). You can respond, lead and organize. If a crisis hits, your page will be there, ready for you to speak up. If your fans are delighted, your page makes it easy for them to chime in and speak up on sites around the web.

If you have the tools and wherewithal to build a page like this on your own site, you should consider that. The challenge is getting it done, regardless of where the page lives.

There are already monitoring tools online (like Radian6) that allow big brands to watch from behind the scenes. That’s great, but what are you doing in front of your audience? Is there a low-cost, easy way to let one of your non-technical marketing people lead and engage with people who are already in the conversation?

We have beta-testers like Allstate and Molson and Home Depot that see the value of showing up where the conversation is happening. My guess is that other significant brands will discover that they can’t just rely on a static home page, nor is it sufficient to post an ephemeral response in a feed somewhere. Brands in Public isn’t the first, nor will it be the last place brands need to be to coordinate and organize the conversation. People (your customers) will find these pages, point to them, link to them and talk about them, creating a new circle of interest online. If you know a brand that needs to hear about this, there’s a short ebook (download) about the project.

It’s worth saying that we care a lot about keeping this simple for your organization.  A Brands in Public page for your brand requires no development team, no ad buys and no deep pockets. While you control the left-hand column and can pepper it with good stuff, it’s still part of a larger site, not “your” page. That means that the number of meetings you need to go to for approvals and permissions is going to decrease. It means that it’s not behind your firewall and not something that has to fit into the larger über-corporate strategy. More like a tradeshow and less like your home page. It’s in public. It’s simply a place for your brand to see and be seen, to organize and to respond.

I’m guessing that big brands are going to need to be in dozens of places like this going forward, because media has shifted from top down, “here’s what we say, we’re putting on a show, watch us!” to, “oh, you’re here, you’re talking, hi.”

The first 100 brands that sign up will benefit from a share of the $500,000 in house ads Squidoo will run across the site promoting the service and the first partnering brands. Sales are handled by BzzAgent, so you’ll be in good hands–please give them a call if you have any questions about the service. If you’ve got a brand that people are talking about, I hope you’ll give it a try.

[UPDATE: We're now offering free pages to chosen charities. If your non-profit organization is interested, please fill out this form. We'll choose a bunch each month, set them up and then the page belongs to you.]

[UPDATE: Our intent in building sample pages and letting brands see them in action was misunderstood by many people, and I can understand why. As a result, to clear the air, we're going to be taking these 200 sample pages down today. The only pages that we'll be posting are those from our sponsors, we won't be building any others. Thanks to those that let me know about their concerns, and I'm sorry for the confusion.]

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By: Seth Godin

Business Development is a mysterious title for a little discussed function or department in most larger companies. It’s also a great way for an entrepreneur or small business to have fun, create value and make money.

Good business development allows businesses to profit by doing something that is tangential to their core mission. Sometimes the profit is so good, it becomes part of their core mission, other times it supports the brand and sometimes it just makes money. And often it’s a little guy who can be flexible enough to make things happen.

Examples:

• Starbucks licenses their name to a maker of ice cream and generates millions in royalties.
• A rack jobber like Handleman does a deal with a mass marketer like K Mart. K Mart gives them room in the store to sell records and gets a cut, Handleman does all the work.
• AOL buys AIM instant messaging software and integrates it into their service.
• Years ago, I licensed the rights to Isaac Asimov’s Robot novels from a business development person at his publisher and turned the books into a VCR murder mystery game which I licensed to a business development person at Kodak, a company that was experimenting with becoming a publisher. (Isaac made more from this project than he did from many of his books).
• Best Buy offers extended warranties on appliances you buy. They don’t provide the warranty, of course, a business development person did a deal with an insurance/service company to do it and they share the profit.
• The Princeton Review built a huge test prep business, but only by licensing their brand to a series of books which did the lion’s share of their marketing for them.

You don’t see business development from the outside, particularly all the potential deals that fail along the way. Many companies, though, spend millions of dollars a year looking for deals and then discovering that they pay off many times over. Others, particularly smaller competitors, are so focused on their core business that it never occurs to them to consider partnerships, licensing, publishing, acquisition and other arrangements that might change everything. Harley Davidson probably makes more money on business development than they make on motorcycles.

The thing that makes business development fascinating is that the best deals have never been done before. There’s no template, no cookie cutter grind it out approach to making it work. This is why most organizations are so astonishingly bad at it. They don’t have the confidence to make decisions or believe they have the ability to make mistakes.

Think about the Apple Nike partnership on making a device that integrates your iPod with your sneakers. This took years and cost millions of dollars to develop. Most companies would just flee, giving up long before a deal was done and a product was shipped.

Here are some tactical tips on how to do business development better:

1. Process first, ideas second. If you’re going to be bringing new partners and new ideas into your organization, you need a process to do it. Professionals don’t, “know it when I see it.” Instead, professionals think about the abilities of their company and strategies necessary to bring ideas in, refine them and launch them. Great business development people don’t waste time in endless meetings with random vendors or hassle about tiny details up front. Instead, they have an agenda and a project manager’s understanding of what it means to get things done. They don’t keep the process a secret, either. They share it with anyone who wants to know. Someone needs to say, “here’s how we do things around here,” and then they have to tell the truth.
2. Who decides? Because every great business development project is different, it’s incredibly easy to get stuck on who can say yes (of course, everyone can say no). Professional business development people intentionally limit the number of people who are allowed to weigh in and are clear to themselves and their potential partners about exactly who can (and must) give the go ahead. Don’t bother starting a business development deal unless you know in advance who must say yes.
3. Courtship, negotiation and marriage. Every deal has three parts, and keeping them straight is essential. During the courtship phase, you win when you are respectful, diligent, enthusiastic, engaging, outgoing, and relentless in your search to make a connection. Do your homework, research people’s backgrounds, learn about their kids, visit them–don’t make them visit you. Look people in the eye, ask hard but engaging questions, you know the drill. Basically, treat people as you’d like to be treated, because the people you most want to work with have a choice, and they may just not pick you. Hint: if you skip the courtship part, the other two stages probably won’t come up.
4. Buyer and seller. If you’ve ever pitched a product or service to a business, you know how soul-deadening it can be. The buyer works hard to make it clear that she’s doing you a favor, and you need every dog and every pony available at all times (and you better be the cheapest). But business development doesn’t have this dichotomy. Both sides are buying, both sides are selling, right? So talented business development people never act like jaded buyers, arms folded, demanding this and that. Instead, from the start, they seek out partners.
5. Enthusiasm is underrated. Business development people are exploring the unknown. That means that there’s more than cash on the table, there’s bravery and initiative and excitement. The best business development people I’ve ever worked with are able to capture the energy in the room and amplify it. They’ll build on the ideas being presented, not make them smaller.
6. Close the open door. I regularly hear from readers who are frustrated because a big company wasn’t willing to hear a great idea they mailed in. Here’s the thing: there isn’t a shortage of ideas. There’s a shortage of execution. That means that successful business development teams look for proven partners and organizations with momentum. A key part of that is the decision to say no early and quickly and respectfully to people who don’t meet that threshold.
7. Call the lawyers later. A business development deal that never happens is one that’s sure to cause no problems. While the legal clarity you need is important, there’s plenty of data that shows that ten page NDA agreements and onerous contracts early in the process don’t protect you, they merely waste your time and energy.
8. Cast a wider net. The Allen and Co. annual gathering is a dumb place to choose a merger partner. Limiting the number of potential partners to people you’ve met at a trade show is also silly. Business development (when it works) creates huge value for both sides, so better to be proactive in searching out and soliciting the organizations that can make a difference. Here’s a simple way to widen your net: start a blog and go to conferences to speak. Describe your successful business development projects to date and let the world know you’re looking for more of them. How many amazing partnerships could the Apple store launch? How many great books could Starbucks highlight? Not only don’t they do this, they hide. Don’t hide.
9. Talk to the receptionist. This is huge, and so important. When a great partner shows up at your doorstep, do you know? Here’s a test: call your organization (pretending to be from some respected organization), describe a business development opportunity and ask who can help. If you’re not immediately transferred to your office, you’ve failed, right? Make it easy for the right people to know that you’re the right guy.
10. Hire better. How do you decide who to put in this job? I’d argue that glibness and charisma aren’t as important as strategic thinking, project management and humility.
11. Structure deals with the expectation of success. The only real reason to do business development deals is because when they work they’re so powerful. Andrew Tobias put his name on a piece of software that ended up earning him millions of dollars. It’s easy to get hung up on all the bad things that could happen, but keep your focus on how the world looks when you get it right.
12. End well. Most of the time, even good business development deals fall down before the end of the negotiation process. If a deal doesn’t come together, say so. Acknowledge what went wrong, thank the other party and end well. If it does come together, track the integration and stay involved enough to learn from what works and what doesn’t. I’m still waiting to hear from people who said they’d get back to me “tomorrow” fifteen years ago, but I’m losing hope… Ending well not only teaches you how to do better next time, but it keeps doors open for when you need to come back to someone who you should have done a deal with in the first place.

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