Are you creating or stealing customers?

(Editor’s note: Michael Greenberg is COO of Loyalty Lab. He submitted this story to VentureBeat.)

It’s easy to think that your start-up is centered in a green field or blue ocean, but typically, that’s not the case. Only the lucky few are truly creating new customers out of thin air. Most have to steal them from someone else.hamburglar

This is a fact that few entrepreneurs want to hear.  But smart start-up owners know when to face reality and focus on luring customers to their side of the fence. The most important consideration before doing so is determining whether they’re chasing a regular expenditure or one that only occurs once.

Regular expenditures are the easiest and potentially most lucrative to attack.  There is long-term recurring revenue available, plus customers are more likely to try a new option when it’s just one in a series of purchases - think home DVD delivery (like Netflix), SaaS software, anything retail or ad networks.  In these cases, purchasers spend money regularly and are more open to trying something new. The downside risk for them is low, as they can always revert to their current provider.

Winning these customers entails two tasks – trial and retention.

Sales and marketing have to work together to generate the first purchase, convincing customers to shift their spending, at least temporarily, away from the current choice.  Your operations team then has to deliver on marketing’s promise, ideally exceeding customer expectations.  Customer relationship management and social marketing are crucial to support and engage customers throughout this period.

Irregular expenditures – for products such as laptops, enterprise software, car tires, or tuxedo rentals - don’t have a regular purchase cycle.  Customers generally have a brand or provider they trust and fall back on them when they’re looking to buy – or they go through a short, intense research period to find the appropriate source.

Winning these customers is a much harder process – and primarily comes down to trial and error. It’s critical to be in front of the buyer when she is ready to buy. The time between original intent to buy and choice can be very short, meaning all of your resources need to be in front of her when she needs to make a choice.

You’ll have plenty of ways to do this, but things like search engine marketing, positioning on Yelp, good word of mouth, SEO, thought leadership, strategic locations and good reviews from independent editorial sources can be crucial.

Whether you’re targeting regular or irregular customers, you can drive business by creating alternate products with vastly superior price or quality attributes. Without this, in fact, there isn’t much point to launching a new enterprise.  Good examples of this include Craigslist for classifieds and job postings, (when it was competing solely with bookstores), Southwest Airlines or for sales force automation.

The rarer, more difficult - and potentially more lucrative - scenario is when a company creates demand for a product or service that didn’t previously exist, such as iTunes, eBay, Bazaarvoice, Google AdWords or Facebook. When these launched, there were few, if any, alternatives. It’s an entrepreneurial dream – owning a market completely.

Customers, in these cases, create a new mental category for spending.  And while they do need to reallocate spending in one sense, they’re not taking that money from something similar.

Instead, something else less useful goes away.  Because there isn’t an explicit trade off to try these products or services, uptake can be much faster.  The advantage is the product pulls business away from the least useful expenditure in the mix, which is a really, really easy win.

Early position, fast uptake and minimal competition usually mean superior margins and early adopters, both of which allow faster iteration and improvement.  Play your cards right and you can end up with vocal supporters who both act as advocates and provide you with valuable feedback.

Uptake is sometimes slower than normal, due to higher prices or barriers to adoption, but you still have a time and learning curve advantage over new entrants.  Free trials are particularly effective here, since there isn’t allocated budget just yet for your product, and you may need to stick around for a while and wait for money to be freed up elsewhere.

It’s important to be sensitive to where your customer’s money will come from.  Never lose sight of the fact that every buyer has a finite budget.  Align your strategy with the source of funds and revenue growth will follow.

Why Posterous Is a Smart Tool For Informal Government Blogging

For a few weeks, I've been testing a tool called Posterous, and I've come to like it a lot. You can see my account here. If you're not familiar with Posterous, it is essentially a very simple blogging platform. It may in fact be the most simple one; yet it is very feature-laden. And it has one relatively unique feature that could make it the most powerful tool for informal blogging by government employees.

That simple, amazing, singular feature is email as a primary interface. In other words, you can post blogs simply by emailing or a similar address - you don't even need an "account" or a "login" or a "password." Even in the private sector, this is considered a cool feature. But for government employees, it could be a breath of life in an otherwise locked-down state of cybersecurity affairs.

You see, many government computer systems block domains like,,, and so forth. There's a current debate about the degree to which government employees can access such sites because of cybersecurity and other reasonable concerns - after all, there have been some very recent instances of bad things being passed through these social media tools and onto your computer. But when you can interact with a blogging platform through email - and in principle even through your official government email account accessed through a traditional program like Microsoft Outlook - you can get the functionality without the risk, and without needing permission from the IT shop.

As information is more decentralized and as more computing is done on mobile devices, quickly communicating information will be more commonplace - and more in demand by consumers of it. So to citizens, government content will still be king, but the speed at which it travels to them may be queen. And being able to blog on-the-go can increase that speed. Recently I've experimented with blogging while walking eight blocks to a date, blogging incredibly fast in reaction to breaking news, and blogging during a conference and posting my "journalism-style" article precisely at the end of a talk. There are innumerable other tactical applications of this tool.

Posterous has a lot of great features that I like. Perhaps most important among them is that links to the content you post can be instantly pushed to other social services like Twitter and Facebook - even if they're blocked in your office. Another great feature is that if you attach photos, videos, or documents to your email, Posterous automatically embeds them in your blog - and will also push them to services like Flickr, YouTube, and Scribd (which may also be blocked in your government office). Still another great feature is that multiple people from multiple email addresses can contribute to one Posterous page (say, for an office), and conversely one email can be associated with multiple Posterous pages (say, a formal public affairs page, and an informal tech thoughts page). In brief, you can be very powerful from your BlackBerry.

Posterous has been described by a Mashable writer as "unremarkable," but frankly, that's what a lot of government employees are interested in. The government has a lot of outstanding content, and their primary mission in many cases is to get it out; customizing the blog theme is definitely secondary. A standardized, simple blog platform controlled through email sounds like just what the doctor ordered, and it offers numerous advantages over something more complicated like WordPress; for example, it's easier to teach people how to use! Oh, and did I mention it's free?

Posterous would probably love it if people in the government wanted to jump on this bandwagon in a more official manner, too. If I understand the numbers correctly, Posterous currently only has about one million unique visitors a month - total. The U.S. Government has more employees than that. I'm not picking on Posterous - it's only been available since June 2008 and has some tough competition in the blog platform world - but my guess is that they'd be very willing to work with the General Services Administration and other appropriate people (as have companies like YouTube) to make Posterous work with official government interests and missions. And the same goes for local and state government employees too, who often deal with IT situations similar to those of their Fed counterparts.

Many agencies are working on social media policies and guidelines for employees, and education and training are no doubt part of successful use of tools like blogs by government employees. But assuming that people are trained and empowered to create online content, can you imagine if even 5% of Postal Service or FEMA or Army employees had a Posterous blog, and citizens and journalists could mine that information about what was happening in the country, or the world? It would be amazing.

So, for the 99% of government employees that can blog in their private lives and informally talk about their careers and more generally about their lives, I recommend getting a personal Posterous account. And because many of the things I said about the government also apply to large corporations, I think there's a huge opportunity there, too. Everyone's workplace has different rules about what you can and cannot use your computer and mobile devices for, and you shouldn't break them. But if you can interface with Posterous via email and help to achieve workplace goals by mobile live-blogging of conferences you attend, or posting photos of critical emergency situations, or provoking discussion over the issue-of-the-day, I say: Go for it.

(If you work in government or closely with it and use Posterous, I'd especially like to listen to your feedback as I help prepare content for the upcoming Gov 2.0 Expo in May 2010.)

How to make friends and influence people (and convert them)

(Editor’s note: Adam Toren is co-founder of He contributed this story to VentureBeat.)

You’ve heard, time and again, how critical engaging in social media is to your start up – but you probably haven’t heard it laid out this succinctly: “[Social media] represents a powerful and additional channel to first listen to customers… and in turn, build two-way paths of conversations…. we also earn a place within their network as a trustworthy resource.”twitter

The thoughts come from Brian Solis of PR 2.0 – and he really strikes at the heart of the matter - establishing your business as the trustworthy resource.

To the entrepreneur, a successful conversion rate is everything, which is why so much is written about measuring the success of marketing initiatives. With social media, though, it’s nearly impossible to track how well things are working.

While it’s possible to track traffic using things like Google Analytics, that doesn’t present the full picture – not even close.

Social media is primarily a public relations tool and is most beneficial in building brand and company awareness. To succeed, you need regular interaction with the general public.

That said, there are some tangible effects you can tweak. Use these sites to drive links to your website (though not in an overbearing manner, which could turn away members of that social media network’s community). These links, in turn, will boost your website’s ranking and Google “page rank” status. As your primary site gains authority in relevance to its primary keywords it will attract more organic traffic and qualified visitors to spur conversions.

There are several projects underway at several development hours to analyze the impact and conversion potential of social media sites. For example, Buzz Logic indexes millions of tweets and posts to identify trends and influences, including factors such as linking activity, blog popularity and author credibility. The company offers complex reports detailing the impact of various strategies and discussed subjects.

You might be used to click through rates and conventional advertising methods establishing conversion rates. As the market changes, social media is a helpful tool to augment an overall marketing campaign.

One word of warning: It’s not a quick fix. In fact, it’s quite the contrary. Establishing this trust is as hard, if not harder, than establishing your company’s your credibility in the business world. You need excellent customer relations and customer service, over delivery and quality product.guest-post-box-adam-toren

Before the days of the Internet, commerce was driven by complex human interaction and by relationship with past and potential clients. Social media presents this to us once again, virtually.

Four short links: 5 October 2009

  1. Brown Cloud Marketing -- advertorial "interviewing" GM of a company offering "DNS in the cloud". This might be a worthwhile service, but the way he markets it (by saying open source is "freeware" and the market leader is "legacy") reveals a rich vein of bozo. Freeware legacy DNS is the internet's dirty little secret (actually, it's the reason we have a functioning DNS), Nominum software was written 100 percent from the ground up, and by having software with source code that is not open for everybody to look at, it is inherently more secure. (security through obscurity is equating clothing with being naked yet blind). The Internet kindly did the poor man's homework: screenshot of a cross-site scripting vulnerability in their customer portal, a Nominum security advisory from 2008, and the Nominum web server is running Linux, Apache, and PHP (all legacy freeware yet apparently not the Internet's dirty little secret). (via Bert Hubert and Securosis)
  2. Public Annotations on Healthcare Bill -- using technology from SharedBook, Congressman Culberson hoped to get citizens marking up the healthcare bill. They're using the software but many are just commenting on page 1--turning the hosted annotation platform into a forum with an odd user interface. It's a UI challenge: designing a way to let focused people comment on specific things, while also permitting impatient unfocused people to comment on the general topic. It's like asking for a SmartCar that seats 80. See also OpenCongress and their annotation system which also has hundreds of comments on the first few lines of the bill (including 39 on the one line "111th Congress"--apparently more contentious than you'd think!).
  3. MyConnPy -- pure-Python MySQL client library, useful because it requires no C compilation to install (and thus can work on systems without C compilers installed, e.g. mobile). (via Simon Willison)
  4. The Infinite Book -- design concept for an ebook reader (not a product you can buy yet). Sexy. (via Gizmodo)

White paper guidelines – less glory, more story

(Editor’s note: Serial entrepreneur Scott Olson is president of MindLink Marketing. He contributed this column to VentureBeat.)

Every good marketing professional knows when it comes to Internet marketing; success depends upon high quality, original content. It’s critical to any number of goals, including search engine optimization (SEO), pay per click (PPC), sponsored links, newsletters, drip marketing and web click through and

Of all the web content available, white papers are the strongest in terms of conversion rates and value to the company. So how can you create a compelling marketing tool, that not only generates downloads, but engages the individual to read it and investigate what you have to offer? Simple: Make it narrative.

Far too often, corporate white papers read like boring technical manuals or patent applications. Though technology may be an important element of your company’s success, it’s not the key to a readable white paper.

Successful white papers depend upon telling a compelling story to your intended audience; a story that is uniquely relevant to the problems and obstacles they face in their business and how your product can uniquely solve it.

Marketers could learn a lot about crafting a compelling document by looking at guidelines for writing a novel. Camy Tang, an award-winning author, describes the five basic story elements for a successful novel in an article for

These elements are just as applicable to a successful white paper.

Introduce the main character – Remember, the main character in your white paper should be your prospect, not your company. This is one of the most frequent mistakes. You white paper needs to describe a scenario that your prospects can identify with personally. Your title and opening paragraphs need to reflect this.

Establish the situation of danger – If you don’t have any trouble, you don’t have a story. What compelling need is your product addressing? What problems are currently occurring and what are they costing the potential customer’s business? And what happens if this need isn’t met? This is usually the baseline for ROI analysis. I do a lot of work with security companies, so the danger is often very real. If you have a hard time with this part, it could be a good indicator that you have a technology in search of a market need.

Define the character’s external goal - What do your customers want to accomplish? Of course you want to address their goals, but you also need to paint a picture of their requirements. Do they need to do it without adding headcount? Are they lacking in time or a particular expertise? Is there a budget constraint that they must deal with?

Introduce the opponent - Your paper should address the situation that is working against your character/customer and should describe why this need hasn’t been met. Whether it’s a legacy technology or an internal process, something simply isn’t addressing the need and goals of your customer. In this area, the opponent may be an external factor - like a security threat or intense competition - or an internal reality like shrinking budgets, time, and staff.

Build to a specific climax - Here you make your case for your technology offering. Explain the key elements of your approach that allow this need to be met in a way that was not previously possible. This is a good place to lay competitive traps without naming competition. Explain the strengths and weaknesses of various approaches in achieving success with the approach you advocate in the spotlight.

These guidelines are applicable whether your audience is technical or business oriented. For most businesses, your white paper is about building credibility and influence with your potential customers. Ensure that you are writing for them and you will be on the path toward a happy ending.