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Location-Based Marketing 101

Location-Based Marketing 101

Location-based marketing is one of the newer marketing strategies, but it’s also one of the most effective for small businesses. With the use of online platforms and minimal investment, a simple startup can more accurately target their ideal customer. But since it is a relatively new concept, there’s still confusion around how it works.

 

What is location-based marketing?

Location-based marketing, also known as geo-targeting, is centered around creating personalized marketing strategies based on the target customer’s location. For example, a clothing store may want to show Atlanta-inspired clothing to its customers based in Atlanta. Because the content is more relevant to the customer’s unique experience, they are more likely to make that purchase.

The strategy itself has been around for quite some time (think of billboards that advertise local businesses) but has recently found new life thanks to the major advances in technology. Our mobile phones have become such a crucial source of information that an industry has grown specializing in this kind of marketing.

In order to use this type of strategy, a marketer must use a form of location-based service or LBS. This is a form of software service that uses geographic data and information to provide relevant services or information to users and consumers. An LBS is not necessarily a marketing tool as it is used in a variety of applications such as navigation software or social messaging applications.

One popular example is Pokemon Go, an augmented reality mobile game that became a viral trend in 2016. One of the core mechanics of the game is having the player be in the physical location in the real world to interact with creatures and objects in the game. Malls across the world capitalized on this as it welcomed “trainers” to come and catch virtual creatures in the establishments. Fortunate businesses that became hotspots for players saw a rise in traffic as the game reached its peak.

Location-based services can also be found in social networking sites such as Facebook, Twitter, or Reddit as it allows for targeted advertisements towards users based on their location. It essentially offers relevant information to users by using GPS-based or IP-based location information in order to suggest useful nearby services. This form of advertisement is called geolocation advertising.

 

How does location-based marketing work?

Location-based marketing uses the location data of a customer to provide more relevant product or service offerings.

First, the customer’s location is collected through the GPS system in their phone or mobile device, or in the unique IP address of their computer. In some cases, a service may analyze your browsing habits or Wi-Fi details to track your location, as is the case with Facebook.

The information collected is then parsed and analyzed by a combination of marketers, analysts, and artificial intelligence. Using your location and subjective elements such as your interests or purchase behavior, marketers can then suggest more relevant products, like restaurants near you or limited-time events in your area.

There are two types of approaches to location-based marketing. There is the national approach versus the local approach. The difference between a national marketing strategy versus a local marketing strategy is the intended amount of exposure. A national strategy aims to have a broader reach but will result in a reduced number of interactions. A local marketing strategy is essentially better for smaller businesses targeting customers in the immediate area or city. This obviously has a shorter reach but would result in more customer interactions as customers feel the messaging is more relevant to their lives.

 

Is an app needed to engage with location-based marketing?

Not necessarily. Small businesses with a tight budget can still find inexpensive ways to collect location data for marketing. The simplest and most straightforward way is to just ask, through a sign-up sheet or a survey. The upside is that you are doing it with customer consent, and it doesn’t require much effort.

Another and perhaps more effective way is using geofencing or beacons. Geofencing involves cellular towers and Wi-Fi to determine a person’s location, while beacons use a small Bluetooth device placed by a physical store to detect any smartphones that pass by. To learn more about these methods, visit Clutch’s page here.

Once you have data to work with, it’s time to pick an avenue or channel to reach out to customers. One of the best channels for location-based marketing is Google Ads. It’s arguably the most popular channel for advertisers with 5.6 billion searches on average per day. As customers search for products or topics they are interested in, your brand would pop up in the form of an ad.

Another contender is Waze Local. As a new competitor in the marketing space, this feature of Waze offers users a way to advertise to people based on their current location and destination. The app has enjoyed a growing user base due to its usefulness in navigating traffic which translates to an effective channel for businesses to be discovered by customers, both local and foreign.

Of course, you can’t ignore one of the largest social networking platforms out there. As of 2020, Facebook boasts a user base of over 1.69 billion users. Facebook has numerous ways to reach customers through either suggested ads or by creating pages for your business to interact with customers. Facebook’s advantage over other websites is that it is first and foremost a social networking site. This means that customers can leave comments or reviews and easily share brands through links which drive other users to check you out.

So depending on your audience and your approach, you won’t need an app, but it may make targeting that much easier.

 

The Benefits of Location-Based Marketing

Investing in a location-based marketing strategy brings numerous benefits for you as a business. Since this type of strategy is focused on channels visited daily by almost everyone in the world, marketers will experience increased engagement with their campaigns. Even if you’re not on a social network, you can build an email list and send relevant offers to a filtered list of customers residing in your area.

The first thing you will notice is improved turnaround times. Gone are the days of the need to stand out in the sun handing out flyers or going door-to-door pitching your business. With the power of the internet, you can spend 30 minutes creating a newsletter or generating a coupon code to send them out to a hundred thousand customers with a click of a button. You’ll get a response within minutes.

Brand-awareness is also heavily boosted as the rise of sharing sites like Twitter essentially gives you free advertising. This, in turn, lowers your CAC (Customer Acquisition Cost) as you simply need one satisfied customer in order for them to tweet or post about your brand to share with their friends. Soon, their friends will also share thus creating a sort of sharing cycle where the original customer will occasionally come across your brand again. A promotional post or ad is easily shared with hundreds of people by one person.

As location-based marketing is all about targeting a specific group of people, you will also experience far less competition. You will only be competing with brands within your area, as opposed to national or international brands. By controlling one dimension of the marketing mix (place/location), you can deliver a more coherent and resonant message to your intended audience.

By providing a service that’s easily accessible and relevant to customers, businesses will also experience higher conversion rates for their campaigns. A promotional offer sent out in the morning could bring an influx of customers to your store in the afternoon as your store location could be part of their daily routes. It also circles back to the instant gratification that consumers are used to, wherein they would naturally choose a product that is easier for them to receive, even if its price is a couple of dollars higher. They are essentially paying for the convenience.

 

The Challenges of Location-Based Marketing

An obvious challenge mentioned earlier is the decreased reach this type of strategy faces. As you are targeting a specific group of people, you are only able to reach those within a certain area. You may still attract users or customers from outside your targeted locations, but the message may not have as much of an impact.

Another issue in relevancy is your content. Making your message or content relevant is a must to attract paying customers. That might mean hiring more specialized writers or designers that have a more nuanced understanding of the local culture. Localization can be an additional expense that not all companies have the luxury of spending.

More recently, users have expressed concerns over their location privacy on the Internet. According to HERE technologies, around 80% of consumers do not fully trust services collecting their location data and a further 90% dislike the current privacy practices. If you aren’t upfront about your collection practices and a customer finds out, there’s a chance you could lose their respect forever.

 

Tips for location-based campaigns

Location-based marketing should be used as a starting point, not the ultimate tool. Finding out a user’s location is a major accomplishment, but then what? You must find ways to tailor products and services to people within those locations. That may mean opening new stores, rewording certain copy, or creating special/limited-edition product offerings.

Learn to track local trends and reviews. This complements the need to stay relevant within your space or industry. You’ll be able to create dynamic campaigns that stay relevant depending on what is happening around your city. Tracking reviews left by customers is already a free feedback tool provided by having a page on Google or Facebook. Use this free information given by customers to improve your business. Being able to communicate and interact with your community is key.

Most importantly, always be upfront with your clients and customers about location tracking. You may see a few drop-offs in terms of numbers, but that’s a minor pain compared to the stress of a public backlash or even legal action. Be honest and your customers may be more willing to give you the information you seek.

 

Examples of Location-Based Marketing

The biggest video sharing platform on the Internet offers geo-targeted ads. If you noticed, Youtube tends to play ads every 10 minutes or so of watch time. These ads are different for each Youtube account, and they take into consideration the location of the user to play more relevant ads.

Another service by Google is Google My Business campaigns. These campaigns are useful when users are searching with Google Maps. By having a campaign with Google My Business, you are legitimizing your business in the eyes of Google as well as having your business information pop up on one of the most popular map apps in the world.

Networking and local conferences are also a great way to conduct a location-based campaign without relying too much on the Internet. Being able to connect the old fashioned way not only gets your brand across to customers but also to potential business partners as well. You’ll be able to form local partnerships from other businesses where you can share customer information and revenue.

Location-based marketing is still in its infancy, but it will only grow more important as the Internet becomes increasingly expansive and noisy. Geo-targeting is just one of the ways marketers are staying relevant in the minds of their customers. But remember, it’s only a method. It’s what you do with the information you find that matters.

The Four Most Important Business Growth Strategies

The Four Most Important Business Growth Strategies

In our latest blog series, we’ve covered the basic concepts of startup growth, the importance of pivoting and persevering, and the real-life consequences of failing to adapt to the market. In this guide, we want to focus on realistic strategies used by companies around the world that can help take your business to the next level.

 

Analyzing risk using the Ansoff Matrix

Definition: “[A] strategic marketing planning tool that links a firm’s marketing strategy with its general strategic direction and presents four alternative growth strategies as a table (matrix)” (Business Dictionary).

Developed and named after H. Igor Ansoff, the father of strategic management, the matrix presents the level of risk involved with various strategies. The four strategies are:

1. Market development – Building on the success of an existing product but introducing it to a new market or market segment.
2. Market penetration – Building on the success of an existing product and further engaging an existing market.
3. Product development – Introducing a new product to an existing market.
4. Diversification – Creating a new product and introducing it to a new market or market segment.

The Ansoff Matrix, an example of risk analysis in market and product expansion

Source: MindTools

The Ansoff Matrix is useful in strategic planning because it simplifies the concept of risk as it relates to a company’s target markets, product lines, and industry experience. Market penetration is generally accepted as the safest strategy since it builds on a company’s existing knowledge of their target market and products.

As a company transitions to product or market development, there are significantly more risks involved. For product development, this includes the risk of faulty parts, distribution concerns, or lack of production experience. In terms of market development, it may involve risks of cultural misunderstanding/appropriation, translation issues, or a lack of general interest.

Entrepreneurs would do well to use the matrix any time they introduce a new strategy, from bringing a product to a new country, to adding an update to an existing product line. Doing so can help mitigate overall risk.

 

Market penetration strategy

Market penetration strategy is one of the most common and reliable ways for a company to grow. Since the product and market have already been “proven,” there is far less risk involved.

Instead of reaching out to a new market or introducing a new product, the risk comes from capturing a larger share of the market. Usually, this means taking away customers from other companies.

A common tactic to gain a larger market share is through market penetration pricing. Companies will offer their product at a far lower price than their competitors, sometimes at a loss, so that they can capture the market in the long term. Walmart, for example, is notorious for using penetration pricing to attract customers away from K-mart and Sears. Today, 90% of Americans live within 15 miles of a Walmart.

 

Market penetration calculation

With a simple equation, any business can calculate its market penetration rate. First, you need to know your total addressable market (TAM). This is the maximum amount of money you can make from selling your product or service. In other words, it’s the total amount of demand that exists in the market for your particular offering.

Once you have your total addressable market, you can use the following formula:

Market penetration rate = (number of customers ÷ target market size) x 100

This equation may seem daunting, but by segmenting the market into smaller, more manageable niches, you can more accurately and effectively predict the success of your efforts.

It’s important also to understand that the market penetration rate by industry varies significantly. Pricing strategy author Marlene Jensen suggests that the normal penetration for a consumer product is between 2 and 6%, while a business product can have a rate between 10 and 40%. In terms of the smartphone industry, Apple has a 19.2% market share, Samsung has 18.4%, Huawei has 10.2%, while smaller brand names make up the remainder.

 

Market penetration examples

Under Armour is known for creating some of the highest quality performance gear for athletes. In recent years, Under Armour has even captured second place for biggest athletic wear provider in the U.S., overtaking Adidas.

In 2014, Under Armour was able to increase its market share through increased promotion and distribution. Their ads focused on self-improvement and discipline, as seen in “Rule Yourself” featuring Golden State Warriors player Stephen Curry, and “I Will What I Want” featuring American Ballet Theatre Dancer, Misty Copeland.


 

 

Market development strategy

When companies are ready to bring their products to a new market or a new segment of the market, they employ a market development strategy.

The risk in a market development strategy is with the company’s lack of experience with the new audience. Companies may fail to understand each market’s particular needs, desires, pain points, and cultural or socioeconomic traits without first conducting the necessary research.

Two questions must be answered before a company enters a new market: first, will the new customers want the product in the first place? Second, does the company have the production and distribution capabilities to expand to a new market?

It’s not uncommon for businesses to expand to new markets to also double down on talent acquisition. An app development company wanting to introduce its app to the Latin American market may want to consider hiring a Spanish-speaking developer or translator. Or if they are targeting the millennial market, they may consider hiring younger team members to gain their feedback.

 

Market development examples

Americans may be surprised to learn that Red Bull is not an American company at all— it’s Austrian. But across the world, people develop such a strong connection with the Red Bull brand.

One big reason is through its event marketing. Red Bull features a number of extreme sports events in various countries; these include the Indianapolis Grand Prix, Soapbox Race in Jordan, and the Air Race in the U.K. The brand has become synonymous with high-energy and extreme sports. Instead of merely having the same event around the world, it tailors events to the audience.

Another example comes from Pixar, the famous animation studio behind Toy Story, Finding Nemo, Up, and many more. These films already have a personal and handcrafted touch, but Pixar goes above and beyond by localizing even the smallest props or movie details. For example, the U.S. trailer of Inside Out shows a character watching a hockey game, while in the U.K., they are watching a soccer game. These small touches add up to make Pixar feel more local to international markets, despite it being an American production.

 

Product development strategy

If a company is comfortable with its existing market but instead wants to introduce a new product, then it must go with a product development strategy.

With a product development strategy, the challenge stems from building a solid product or service that is in line or surpasses your brand’s existing reputation. This applies to both a product introduction and product evolution.

To avoid the potential losses from a failed or faulty product launch, companies invest heavily in research and development, or R&D. Customer needs, competitor landscapes, emerging technology, and macroeconomic factors—these are just a few of the elements that the people in R&D must investigate to inform the product development strategy. In 2018 alone, US-based companies spent a total of 329 billion in R&D, according to PricewaterhouseCoopers LLP. Amazon accounted for $22.6 billion of the investment, while Google parent Alphabet spent $16.2 billion. In the end, a product development roadmap will help align the R&D and strategic divisions of a company with the production and distribution divisions.

To learn more about building a product development roadmap, check out ProductCoalition.com’s guide.

 

Product development examples

In recent years, automobile manufacturers have begun to introduce more eco-friendly updates to their product lines. A decade ago, the market was a lot less uncertain, but brands such as Tesla and Nissan have demonstrated a strong desire for a fully-electric vehicle. From luxury models such as Ford Mach-E, the BMW i3, and the Porche Taycan, to family options such as the Hyundai Kona EV and the Kia Nero EV, it seems almost every car brand is designing their own electric auto.

After years of highlighting images and short videos on their platform, Instagram introduced IGTV, a place for content creators to publish long-form content. Instagram took the novel approach of introducing IGTV as both a standalone app and a feature within the existing Instagram app, so as not to alienate their audience. Finally, the company partnered with various influencers and creators to promote the launch of IGTV as a live event, including Fortnite streamer Ninja, Susie Shu, Katie Austin, Bryce Xavier, Lauren Riihimaki, and Lele Pons.

 

Diversification strategy

The last and riskiest strategy for business growth is diversification, sometimes known as corporate diversification, which involves introducing a new product for a new market. With so many unknowns and a company’s lack of prior experience in the space, there is bound a greater probability of failure. Not only must the product be developed and distributed according to the brand’s standards, but it must also be embraced and adopted by the target market.

 

Diversification strategy examples

Depending on how you approach diversification, you can also mitigate the amount of risk through strategic planning. There are 5 different types worth understanding:

1. Concentric diversification – Perhaps the safest and also the closest to market development, concentric diversification refers to creating similar products or services using existing assets and infrastructure. For example, a sandwich shop adding burgers and salads to the menu.
2. Conglomerate diversification – As the name suggests, this is when a company enters an entirely new market after being bought out in a merger or acquisition. Marvel, the superhero media franchise, has entered more movie and TV show deals in recent years due to its acquisition by Disney.
3. Horizontal diversification – When a company introduces commercially or technologically unrelated products to customers with similar needs. For example, a GPS company that creates commercial GPS systems may offer a new kind of system to use in vehicles.
4. Vertical diversification – When a company introduces new products to a new market by acquiring either its suppliers or distributors. For example, a furniture company buying its supplier of fabrics (backward vertical integration) or the stores where it distributes its products (forward vertical integration).
5. Internal diversification – Technically referring to product or market strategy, not diversification. “Internal” refers to products or markets that are already within the company’s existing plans and operations.

From its very inception, every company should strive to grow. Of course, this is much easier said than done. With such fierce competition and ever-changing consumer behavior, it seems that any new product or market strategy can be a shot in the dark. Yet entrepreneurs know best that the higher the risk, the higher the reward. As long as company strategies are rooted in research, and as long as the research is based on real customer interactions, the most daring business initiatives may prove to be the ones that have the most significant impact.

Growing a Business 101

Growing a Business 101

Last week, we presented one of our most comprehensive guides yet on how to expand your business sustainably. This week, we are taking it back to the basics: research, resources, and creating value.

 

Conducting research

In an analysis of the top 20 reasons why startups fail, the number one cause was “no market need.” In other words, despite the lofty visions, mythical investments, and a reliable product, startups continually fail to understand their intended markets.

Why is this? How is it that major companies continue to create promising ideas but fail to attract a long-term customer? According to entrepreneur and consultant, Nick Freiling, it’s all because of market research or lack thereof.

“I’ve worked in market research for years. If there’s one thing I’ve learned,” Freiling wrote in a Medium post, “it’s that market research often makes or breaks a product launch.”

Freiling advocates starting with defining your company’s niche. Before selling anything, you need to understand who is not your target audience. Then you can concentrate on the people who are interested in paying for your product and avoid chasing after the wrong customers.

The competitive analysis may help you narrow down your ideal customer. Analyze existing companies and the audience they serve. What are they doing right and how could they improve? More importantly, how will you stand apart from your competitors?

Entrepreneurs must learn the answer themselves. This involves conducting primary research through the following methods:

Interviews – Ask people on the street if they would buy your product. Ask users in Facebook groups or Slack channels. The more you ask people you don’t know, the more honest the feedback you receive.
Surveys – If you need a larger sample size, then you may want to put out an online survey. Not only do places like Google Forms and SurveyMonkey make this a simple step, but you can analyze data in ways you couldn’t before.
Online analytics – These days, you don’t even need to pay anybody to yield actionable data. With a Google Analytics or Facebook account, you can develop personas of entire audiences just by observing users’ online interactions.

There are many other ways you can collect relevant data on your customers, but these three represent the most simple yet effective way to get inside their heads: listening to them directly.

In the past, businesses determined their success based on sales projections— how much money they will make based on past performance. Today, sales projections alone cannot guarantee the growth of a startup. Entrepreneurs must learn to understand their customers first and the intentions behind their purchasing decisions.

 

Utilizing business resources

Fortunately, entrepreneurs have a multitude of tools at their disposal to streamline production and deliver a quality experience. These are known as business or organizational resources, and there are four main types:

Human resources – the employees within a company
Capital resources – the machinery and equipment used to produce products
Financial resources – the money used to purchase raw materials or compensate workers
Raw materials – the most basic elements needed to create a product or service

 

Human resources

Human resources describe the employees who work for a company, as well as the department that manages resources related to the employees. Originally, the term caught on as a way to describe humans as living, social beings—deserving of respect and dignity within the workplace. But today, some believe HR, by design, propagates beliefs that humans are merely resources to be managed. The field’s language and literature continue to evolve as executives and laborers seek to understand the other party’s perspective.

 

Capital resources

Capital resources refer to the physical assets of a company—land, buildings, tools, equipment, and machinery. They are goods that help produce other products and services. Capital resources are different from factors of production, in that capital resources are man-made only, while factors of production can refer to both man-made and natural resources.

 

Financial resources

Financial resources refer to the money that can be used by a business in the form of cash, liquid securities, and credit lines. Companies need to maintain a steady stream of money, whether by cutting costs, increasing market share, or consulting investors.

 

Raw materials

Every product is merely a collection of inputs. Trace these inputs back far enough, and you’ll understand the most basic elements that form a product. This includes the wood used for reams of paper, and the silicon for computer chips— anything that is an ingredient in the primary production of goods.

Entrepreneurs and other stakeholders in business must carefully balance these four elements to create a long-term, successful business.

 

Value creation

After carefully researching and identifying your target market, the next question becomes, “how can your business provide customers with true value?”

Keep in mind that this is not the same as offering products or services for low prices (like major retailers that brag about “great value”). Instead, value is a quality, feature, or experience that your brand can provide that no one else can.

More importantly, value is also a matter of perspective—the best way to think about it is through the lenses of real value and perceived value. Real value refers to the actual cost of production or service—total labor hours, capital, financial investments, and other assets. Perceived value is the worth of a product or service assigned by a customer.

Perceived value is an abstraction. Depending on the product, brand, and even country, one value may be higher than another. One of the keys to a successful business is to create a higher perceived value than real value.

For example, fast fashion companies like H&M, Zara, and Fashion Nova produce clothing using cheap labor and materials. These brands rely on the brand name and the design of these clothes to appeal to customers. This is a case of perceived value being much higher than real value.

Perceived value can increase through added features and benefits, including:

Convenience – Restaurants and stores that offer online delivery have an added layer of convenience (and therefore, additional value) to their dine-in competitors.
Customer service – According to Salesforce, a customer is four times more likely to buy from a competitor if a problem is service-related rather than price or product-related.
Craftsmanship – Brands like Mercedes-Benz and Rolex have become synonymous with quality and attention to detail, which is why customers will pay exponentially higher for their products than their competitors’.
Exclusive features – While voice assistant speakers are made by Google, Apple, and Amazon these days, customers will flock to certain speakers because of their unique features, like HomePod’s integration with iOS, or Alexa’s ability to order from Amazon.

Creating and providing value to customers is one of those tenets extolled by entrepreneurs everywhere, but only a handful put it in practice. Brainstorm the ways your product or service can add greater value to your customers, starting with minimal resources if your company is a startup. You may find that these elements end up being the main selling points of your brand.

 

Business concepts to understand

As your business continues to expand, you’ll become more familiar with certain concepts in entrepreneurship, even if you don’t refer to them daily.

We’ve discussed the importance of value creation when building a startup. Still, some entrepreneurs believe that it’s more accurate or useful to refer to value as a USP or unique selling proposition. While value indicates something of worth to a customer, a USP suggests a feature or quality about your brand that they cannot get anywhere else. This exclusivity is what keeps new customers flowing in, and past customers coming back for more.

For a business to pinpoint its USP, first, it must analyze its competitive landscape. Perhaps the most commonly taught model is the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

How to Conduct a SWOT Analysis for your Small Business

Source: The Balance

 
This tool allows business owners and entrepreneurs to identify which aspects of a business to focus on internally and externally. For example, an app development company may fill out the SWOT analysis as follows:

Strengths: Experienced team members, prestigious clients using product, talented leadership.
Weaknesses: Lack of long-term engagement (high-drop off rates), poor app learnability, small team size.
Opportunities: Early access to the newest iOS and Android updates, growing audiences in the European market.
Threats: Similar startups copying previously successful apps.

Simply listing out the pros and cons of business in this manner will allow one to better prioritize current tasks and avoid the pitfalls of wasted work.

Perhaps the most critical concept to understand is ROI or Return on Investment. How much did your business gain or lose from a financial investment? This is usually calculated as a ratio, as seen below.

Formula for calculating ROI

Source: The Online Advertising Guide

 
Business owners and entrepreneurs tend to place the most emphasis on ROI. After all, businesses must turn a profit to survive.

But it’s easy to get too fixated on the amount gained, and not enough on the actual costs. That is why businesses must divide their costs into fixed and variable costs. Fixed costs are a set amount each time, such as monthly rent, software subscription fees, and salaries. Variable costs change over time, depending on factors like labor or customer traffic; these include supply costs, taxes, and contracted work.

Understanding which costs can be cut without sacrificing the overall quality of the business can lead to a higher ROI and a leaner production or service. Continue to explore these concepts in further detail—how do they apply to your own business?

 

Tapping into business partnerships

The true beauty of a company is in working with others to accomplish a common goal. Even businesses listed as sole proprietors have found value in partnering with vendors and suppliers.

Among the benefits of partnerships include:

– Cheaper supplies, raw materials, and cost of production
– Increased efficiency (such as delegating design work to a partner agency)
– More business leads and referrals
– Increased brand awareness and prestige
– Greater reach
– Faster distribution

There are three main types of partnerships: general partnerships, limited partnerships, limited liability partnerships. Let’s break down what each one entails.

 

General Partnership

General partnership, also known as a joint venture, typically involves two or more owners united by a single business goal. The partners share equal rights and responsibilities when it comes to management. Each partner then assumes full responsibility for all business debt. Fortunately, general partnership businesses are not taxed to the company but pass through the partners themselves as gains on their tax return.

 

Limited Partnership

Limited partnerships restrict liability to the amount of their business investment. This also necessitates one participant to accept general partnership status, which in turn means they take on more responsibility. Both partners benefit from company profits, but only the general partner has managing control, while the limited partner has no say in top-level business matters.

 

Limited Liability Partnership

Limited liability partnerships (LLP) benefit from the tax advantages of a general partnership, but the participants also gain personal liability protection. This means that if a partner or a business were to act wrongfully, the other partners are not personally responsible. Some states also offer non-partnership tax legislation.

The nature of your partnership depends on the relationship of your business with the partnering company. Sometimes strategic partnerships may involve an international campaign to align all teams under one system, while product-specific partnerships can focus on joint ventures in a more specific capacity. Visit the Small Business Administration to learn more about what each type of partnership entails.

Growing a business can be a monumental undertaking—even all the content in this post may only act as an intro to a greater adventure. Use these ideas as starting points, not principles set in stone. Business leaders must be flexible and adapt to the changing needs of the market and the marketplace. As your business makes small steps and learns from customer feedback, you can begin to make micro-adjustments towards a faster-growing business model.

Developing a Business Growth Strategy

Developing a Business Growth Strategy

Only about two-thirds of businesses with employees survive two years, and only 56% survive five years, based on figures from the Small Business Administration. The causes run the gamut: from poor financing to lack of market research. Ultimately, these reasons boil down to one underlying problem: the lack of a solid growth strategy.
 
BLS Startup Success Rate
 

Don’t let these statistics scare you. Instead, let them be a cautionary tale. Without the proper planning, investment, and understanding of your business and its market conditions, your bold new idea may end up by the wayside like so many other would-be innovations.

This week, we want to share a guide full of resources and information that will ensure your business grows sustainably.
 

Growing a business

 

Prioritize your research

Far too often, entrepreneurs have started ventures without any inkling of a plan. It’s a myth we’ve propagated for years— lacking any experience or financial security, a brazen college student sets out and turns his dorm room idea into a million-dollar business.

Except the reality is much messier. In fact, the lack of proper research is the number one cause for most failed startups. They either didn’t understand the competitive landscape or the customer enough to impact the market. Before reaching out to investors for funding, even before hiring your first employee, you need to do your homework.

There are two kinds of research: primary and secondary. Primary research involves gathering data first-hand, while secondary research involves using data found by a third-party.

Here are a few examples of primary research sources:

– SWOT and PEST analysis
– MVPs (minimum viable product) and prototype designs
– Focus groups
– One-on-one interviews
– Surveys/questionnaires
– Social media data

Here are examples of secondary research sources:

– Industry data and reports
– News articles
– Press releases
– Sales figures
– Third-party studies and surveys

Each method has its advantages and disadvantages, but some experts do stress the importance of primary research for startups or businesses looking to innovate, as it can yield more relevant data.
 
thefacebook early version of Facebook

An early prototype of Facebook, back when it was called Thefacebook and only served college students.

 
As entrepreneur and author Eric Ries puts it, “an experiment is more than just a theoretical inquiry; it is also a ‘first product.’ What percentage of people in the target market actually perform the behavior you expect of them? The extrapolation won’t be perfect, but it will establish a baseline behavior that will be far more accurate than market research.”

Your market research should help to answer four important questions:

  1. Who are your customers?
  2. What do they buy now?
  3. Why do they buy?
  4. What will make them buy from you?

 

Hone in on your value proposition

After making progress in learning about your customers, you need to be able to properly describe and demonstrate the value you can provide to them. Note, this isn’t the same as being able to describe your product or service. Value proposition (also known as USP or Unique Selling Proposition) is about answering “what do customers get out of it?”

The value proposition begins with value creation. It’s not enough to say you make the best guitars in the industry; you have to demonstrate it—through craftsmanship, design, sound, and customer service. How does your business solve a customer problem in a way that other competitors don’t address?

Here’s how you can craft a killer value proposition:

1. Clear – Write in plain language for anybody to understand. The proposition is about communication, not extravagance.
2. Convincing – Think deeply about what makes your products unique and valuable. Is it a different way of doing things in the industry? Is it a new standard of quality? Whatever it is, you have to believe it yourself, if you want customers to, as well.
3. Concise – Value propositions are no longer than a sentence or two. This helps keep the focus on the actual value, not on the details.

Examples of successful value propositions:

Lyft – “Rides in Minutes”
Apple Macbook – “Light. Years Ahead.”
DuckDuckGo – “The search engine that doesn’t track you.”
Pinterest – “A few (million) of your favorite things.”
Skype – “Skype makes it easy to stay in touch.”
Spotify – “Soundtrack your life.”
 
Skype value proposition
 
So while writing a value proposition is essential, it acts as a guiding principle, not a slogan in which to brand all your products. Your value proposition should inform your tasks and your highest priorities within your business.
 

Set your success metrics

Startups are like science, and every experiment has to be measured empirically. Otherwise, how could you know if your actions are making a positive impact on your business?

Unfortunately, so many people rely on “vanity metrics” — numbers that seem to indicate progress but, in reality, only create the illusion of progress. For example, a restaurant with thousands of followers on social media may still struggle with gaining foot traffic.

Observe your business’s sales funnel from start to finish. How can you more accurately measure the success of your business’s efforts? Taking the restaurant example once more, it may look like this:

1. Awareness stage – Grabbing attention with press releases, social media posts, direct mail, or online advertising. Metrics may include views, page visits, likes.
2. Consideration stage – Pushing customers to learn more, by visiting a website, social media account, or physically in-store. Metrics may include direct messages, calls, or even incomplete online orders.
3. Decision stage – Encouraging the customer to make a transaction with the business. Metrics may include online orders, in-store dining, pick-ups, drive-throughs.
4. Retention stage – Inviting the customer back for repeat business. Metrics may include reviews, surveys, repeat visits, or referrals.

As you can see, each stage carries a unique objective and accompanying metric for success. Instead of focusing solely on ROI, you can judge the success of each effort in the funnel by breaking it up. Note that other funnels have even more stages, depending on which model you choose.

 

Pivot or persevere

There comes a major point in every entrepreneur’s journey where they have to evaluate their progress and choose between pivoting to a new idea or persevering.

Netflix has one of the most famous examples of a pivot. Originally a movie rental service delivered via mail, Netflix gradually transitioned to online streaming. In 2019, Netflix had 60 million online subscribers, but only 2.7 million mail-delivery subscribers.

In contrast, Facebook is an excellent example of a company that persevered during its toughest times. Early on, Facebook refused to do advertising while it built its initial audience. Despite the ire of investors, the social media company continued to grow exponentially and has almost 2.45 billion users today. While it has explored video, location marketing, live streaming, and other new features, networking through private and public messages continues to be its main draw.

Should a company choose to pivot, they must pick a path that has been proven potentially successful in their primary research experiments. But if a company must persevere, then it must find ways to better utilize its business resources and partnerships to deliver a more enticing product.

 

Types of growth strategies

Entrepreneurs understand that growth comes in a multitude of ways. So how can one know which growth strategy is right for their business?

One reliable tool is known as the Ansoff Matrix, sometimes referred to as the product market expansion grid. Developed 1957 by H. Igor Ansoff, the Ansoff Matrix offers a simple yet intuitive visual for depicting the risks involved with growth.

The Ansoff Matrix, an example of risk analysis in market and product expansion

Source: MindTools.com

 
Let’s dive into each strategy to better understand them:

Market penetration strategy

Out of the four strategies, market penetration is considered the safest because it involves focusing on your existing customers and existing offerings. There’s no need for additional market research or R&D of new products. Common market penetration strategies include new retargeting campaigns, loyalty/rewards programs, sales promotions, or product updates.

E.g. Apple releasing a new iPhone, Nike releasing new sneakers

 

Market development strategy

With a market development strategy, the goal is to sell your existing products to new markets or new segments of your existing market. Companies using this strategy must invest their time and resources into better understanding their new market, and adapting existing products based on their findings. Common market development strategies include launches in different countries, the use of alternative channels (online, direct mail, cold-calling), and targeting specific segments in your audience (such as by age or location).

E.g. McDonald’s adapting its ads to the Japanese market, international movies with localized subtitles/dubs

 

Product development strategy

Conversely, a product development strategy is about offering a new or different product to your existing market. Product development strategies include bundling, developing complementary products and services, or improving the customer experience.

E.g. Instagram adding its live streaming feature, Popeyes introducing its chicken sandwich

 

Diversification strategy

Finally, diversification represents the riskiest strategy because of the unknowns involved with a new market and a new product. Previous experience and research will not be as useful. Common diversification strategies include new product lines or pivoting to a new business model.

E.g. Apple’s iPod announcement, Uber’s introduction of Uber Eats.

The first iPod commercial. Up until 2001, Apple was known for its computers.

 
No one strategy is superior to the rest. It is generally recommended to begin with a market penetration strategy. From there, companies can more closely analyze opportunities to grow without alienating their core audience.

 

Developing a customer-centric culture

“The customer is always right,” entrepreneurs and managers love to say. Except when it actually comes down to providing a customer-centric experience, businesses continually fall short. PwC reported that only 38% of U.S. consumers believe that the employees they interact with understand their needs.

No matter your growth strategy, your business will invariably count on its experiences with real customers. At the end of the day, all market research and competitive analyses are incomparable to the lessons learned from one-on-one interactions with customers. Customer-centric cultures like Apple and Disney have found ways to grow based on listening to their customer feedback.

Here are a few essential ingredients for building a customer-centric culture.

Customer empathy

Before any major initiative or overarching plan, empathy must be at the root of every interaction. Companies must understand that customers are just like them; they are human. They have basic needs and wants. By listening to their main pain points and their aspirations, companies can pivot from products they think customers want, to products that customers genuinely desire.

A great example of a company putting this in action is Facebook and its Empathy Lab. Whenever the company releases a new product or adds a new feature, the Empathy Lab works with blind, deaf, and disabled users to get their feedback. The goal is to learn about how to make services more accessible to everyone, regardless of the differences in their experiences.

 

Customer orientation

Once empathy is instilled in the psyche of a company, employees must be trained in customer orientation. This is the process of understanding and catering to a customer’s long term wants and needs. Not merely leadership lip-service, this is a business-wide initiative involving everyone from the bottom to the top.

Eddie Bauer demonstrates customer orientation with its lifetime guarantee and returns policy. If you buy clothing or footwear from the company and it doesn’t function as designed, you can send it back for a free replacement. Few companies take on the risk of a lifetime guarantee, but Eddie Bauer makes it a core aspect of their product offerings and service.

 

Customer insights

Every business decision must be based on actionable data, ideally from customer interactions. Any other strategy may as well be a shot in the dark. Today, businesses are finding more creative and nuanced manners of uncovering the intent behind customer behavior. From social media engagement to AI-powered analysis, there is an option for every business, small or large.

Streaming services like Hulu analyze each viewer’s behavior to create a personalized list of recommendations. Everything from watch history to time spent watching, have influenced how users discover new content, and how the company produces new shows. Insights can lead to an unprecedented level of personalization.

 

Customer interaction

Companies tend to have expectations of what customers like but are blindsided by how customers behave in reality. That’s why both employees and leaders must test their assumptions by engaging with real customers— through interviews, focus groups, or other forms of direct communication. Feedback is vital for improvement, and the tighter the feedback loops, the quicker you can respond.

Even today, the world runs on online shopping and delivery, but companies continue to provide in-person demos. Take a stroll through a local Best Buy or Sprint store, and you’ll see employees enthused to greet you. They’ll answer technical questions you may have, or demonstrate the latest product. These direct, physical interactions are something that simply can’t be replaced by a website.

 

Customer service

Last but by no means least, companies must deliver exceptional customer service from the first touchpoint to the last. This involves observing and checking in on the customer at every stage to ensure their expectations are met, if not surpassed. Customer service is what can transform a first-time buyer into a long-term customer.

Perhaps no better example exists than that of the hotel industry, specifically Ritz-Carlton. In one story, customer experience expert and author John DiJulius shared his experience at a Ritz-Carlton hotel, where he ended up leaving his laptop charger. Not only did the hotel ship it to him the next day, but they also left this note with the package: “Mr. DiJulius, I wanted to make sure we got this to you right away. I am sure you need it, and, just in case, I sent you an extra charger for your laptop.” By going the extra mile, Ritz-Carlton not only helped someone but secured a lifetime customer.

 

Customer retention strategies

Harvard Business Review believes that acquiring a new customer is anywhere between 5 to 25 times more expensive than retaining an existing one. If you want your company to grow, you have to prioritize your existing customers over potential customers. When done right, your most loyal patrons will spread the word of your customer-centric reputation.

But even customer retention must be measured using the proper success metrics, or Customer Success KPIs. These include:

Churn rate – the rate at which customers stop subscribing or purchasing from a company.
NPS (Net Promoter Score) – the likelihood of a customer to recommend the product to a friend or relative.
Activity level – the frequency a customer uses a service or product. It can also reveal signs of bottlenecks or poor design choices.
Product utilization – a measure of how often a customer uses certain features. It can also refer to the number of product features a customer uses.

With that in mind, let’s explore some of the common ways a company can continue to engage their customers past the initial sale:

Loyalty programs

You may have seen this with credit cards, cafes, and restaurants before: the more times you return to a particular store, the more points you earn, which can then be redeemed for free meals, discounted service, and other rewards. It’s a simple concept but one that encourages repeat orders.
 

Social media

Get your customers involved in your brand’s community. Set up hashtag challenges, ask people to send in photos with their product, or simply respond to feedback and criticism. Companies can learn a lot from observing and interacting with customers on social media.
 

CRM

Far too many businesses use a single spreadsheet to store all their customer information, or worse, they keep it in their heads. Any larger business will tell you that CRM can determine the difference between a lead and a loyal customer. Not only will they keep track of who’s who, but they’ll also allow you to analyze their entire experience, so you can better tailor your communications to them.
 
Salesforce

Salesforce, one of the most popular CRM applications available.

 

Blogs and newsletters

Content is still king in 2020. Blogs and newsletters offer your company an outlet to demonstrate expertise, share important information, and connect with audiences across the world. The key is to provide something valuable and relevant, something your customers will seek out.

Customer-focused growth strategies are dense topics, something we can write books about. Even the resources here are mere starting points for a lifetime’s journey of discovery. The most important takeaway is that for your business to grow, you must continually learn about your customer’s actual behavior. That requires time, investments, and patience to observe their habits and ask honest questions. In some cases, it may involve admitting shortcomings and pivoting to something new. But after all is said and done, no one can tell you more about your business than your customer.

Best Books on Branding in 2020

Best Books on Branding in 2020

Whether you’re starting your own agency or freelance career, competition is fierce. You’re either facing a giant in the space or a thousand other hopeful entrepreneurs or freelancers like yourself.

How do you stand out? Through carefully-executed branding.

Brands help to create a relatable identity and personality for the collective efforts of an organization. Without a brand, businesses seem inhuman, without values or purpose. That’s why it is crucial for businesses to nail down their brand— then ensure that it’s consistently communicated on all channels.

Branding can be notoriously difficult. It is, after all, mostly subjective. Thankfully, there are a few books you can read to follow the golden rules of branding, for your business or for yourself.

 

Best book on branding for entrepreneurs and business owners

Building a StoryBrand: Clarify Your Message So Customers Will Listen by Donald Miller

All branding is ultimately based on a company’s ability to tell a story. Ask yourself, “why was this brand created? What separates it from other brands? What value can we provide to customers?” The answers, you will find, won’t always come easily.

In New York Times best-selling author Donald Miller’s book, you will learn about the StoryBrand process, allowing you to better tell your story and brand message. Miller covers the main points of a story that customers pay the most attention, as well as some tricks for clearly communicating your brand across all channels.

 

Best branding book based on a true story

Shoe Dog: A Memoir by the Creator of Nike by Phil Knight

In the early 60s, business school graduate Phil Knight borrowed fifty dollars from his father to start a shoe company, importing cheap but high quality from Japan. He made $8000 in his first year. Now, Nike is a multibillion-dollar company, endorsed by the world’s leading athletes, musicians, entrepreneurs, while still having an everyman appeal.

In his memoir, Knight shares his story of how he built one of the most recognizable brands in history. Whether you’re a startup or a decades-old business, you can learn a thing or two about Knight’s legacy with the world-renown sneaker brand.

 

Best book on branding for designers

Designing Brand Identity: An Essential Guide for the Whole Team by Alina Wheeler

Designers have to think differently about brands- they’re usually the ones responsible for the aesthetics of a certain brand. At the same time, they must understand the process not just for designing a brand, but for implementing their decisions as well.

Designing Brand Identity is a staple resource for anyone looking for a guide into brand or identity design. The book features 50 case studies of real branding processes and their results, as well as hundreds of diagrams, illustrations, and other visual aids. Perfect for both marketing managers and aspiring design students alike, this book features a comprehensive guide to branding fundamentals that are critical to launching or even re-launching a brand.

 

Best book on branding for freelancers

Creative, Inc.: The Ultimate Guide to Running a Successful Freelance Business by Meg Mateo Ilasco and Joy Deangdeelert Cho

Interested in building brands as a freelance career? It takes a lot more research and hard work, but the reward of having built it yourself makes it all worth it. Meg Mateo Ilasco and Joy Deangdeelert Cho demonstrate how to take a simple hobby into a long-term career.

Creative, Inc. is for illustrators, photographers, designers, animators, and other branding experts struggling to put their work out there. This book is brimming with useful advice on developing a portfolio and business that stands out from the crowd. If you’re just getting started as a freelancer or you’ve been thinking about it for some time, be sure to pick up this great book on branding.

 

Best book on personal branding

Rise of the Youpreneur: The Definitive Guide to Becoming the Go-To Leader in Your Industry and Building a Future-Proof Business by Chris Ducker

Branding doesn’t just apply to businesses and entrepreneurs – in fact, it goes hand-in-hand with how you market yourself. It may be strange to think of one’s self as a brand, but in terms of finding new partnerships and creating business opportunities, it is no different from marketing and branding anything else.

The “Youpreneur” may sound unconventional, but it’s really a way to describe the new kind of entrepreneur- the personal brand entrepreneur. Youpreneurs aren’t bound by the traditional set of rules, but they still manage to stay as leaders within their niche. Regardless of what kind of business industry you may be in, this book will help you learn what it takes to become more successful in your career.

 

Best book on brand engagement

Contagious: Why Things Catch On by Jonah Berger

You built a visually unique brand… now what? Many designers and marketers know how to initiate a brand strategy, but few can adapt their strategy for long-term success. Ultimately, it’s about developing a sense of trust, offering something original, and hooking customers enough to make them your own brand ambassadors.

That’s exactly what Jonah Berger’s Contagious is all about. Why do some viral videos circulate millions of times, while others are quickly forgotten? How come anti-drug ads can actually lead to higher drug use? And what truly makes an idea popular? These are just a few of the questions posed by Berger in his book, and we highly recommend it for anyone seeking prolonged customer connections.

Craving for some more entrepreneurial insight? Check out these must-watch TED talks we discussed in a previous blog post.

Follow Novel Coworking‘s blog for more resources for entrepreneurs, business owners, and freelancers.

8 Steps to Become a Consultant

8 Steps to Become a Consultant

After building enough experience working in a particular field or industry, you may decide to branch out into consulting work. Not only do you have the freedom to choose your clients and set your schedule, but your expertise may influence the trajectory of a company in substantial ways.

So exactly how does one become a consultant? First, we should clarify the very definition of consulting.

 

What is a consultant?

A consultant is a professional who offers their expertise to a company in a specific industry or specialized field. Typically this involves healthcare, media, marketing, and finance companies, although you will see consultants for just about any line of work.

While consultants can also be in-house employees, it’s more common to contract an independent consultant; this is because the consultant will have a broader set of experiences to draw from, and will only charge for the hours he consults.

 

What does a consultant do?

Consultants evaluate a specific company process, such as an accounting method or 3D modeling techniques. They then present their findings in a report or through proprietary, custom software. The company can then choose to take those recommendations and implement them as they see fit.

Watch MConsulting Prep’s video for a detailed explanation of how management consulting works.

 

Who can become a consultant?

Virtually anybody can become a consultant as long as they have the experience. It is worth noting that different types of consultants will require licenses for their consultancy. You can often see licenses in industries with high risk and competition, such as education, healthcare, marketing, and engineering sectors.

In reality, companies will be more interested in seeing a consultant’s previous experience, where they managed to enact some change or positively impact the company.

 

How do consultants add value?

Consultants are like advisors to kings and generals. They notice industry trends before they can happen, identify potential blindspots or roadblocks in a process, and ultimately offer another perspective on any given issue.

Now let’s walk through the steps involved in actually becoming a consultant.

 

8 steps to become a consultant

 

Find a practice to focus on

Maybe you are a spatial thinker and have a natural talent for interior design. Or perhaps you prefer working with numbers and tend to excel with financial or mathematical challenges. Whatever your interest or passion, immerse yourself in it. Read as many books on that topic. Speak with other experts in the field that may lecture at your university. The more you specialize in a particular topic, the more competitive you can be.

 

Build professional experience

The word “professional” is key. No one becomes a consultant in college or even graduate school, because no one will believe they have the track record. Even if that person has been practicing their craft since they were a toddler, it’s far more important to have industry knowledge and experience. Consultants have been working in their field for years, sometimes decades before they decide to consult.

 

Get a certificate or license

While certifications aren’t entirely necessary, they can certainly go a long way in proving your competitiveness.

– If you’re consulting on a business’s management operations, you may consider getting a CMC® (Certified Management Consultant).
– If you’re a graphic artist or visual designer, you may consider getting one of Adobe’s certifications.
– If you’re a programmer, there are a number of certifications you may pursue, depending on the language in which you specialize.
– If you’re in marketing, consider becoming an American Marketing Association Professional Certified Marketer (PCM®).

Be careful in finding certifications online. Always do your research and validate authenticity before signing up.

 

Define a target market

Marketing your services to everyone under the sun is a surefire way to waste time and resources. Instead, think hard about who will use your services. Will you focus on B2C (business to consumer) or B2B (business to business)? Will they be large enterprises, or smaller startups and agencies? Are they in finance, healthcare, entertainment, or some other industry?

These questions will become easier to answer over time. In the beginning, it’s ideal to work with companies in industries that align with your personal experience. Instead of asking others or researching which market is best, ask yourself, “in which market do I have the most knowledge?” When you already know the ins and outs of that particular trade, you tend to have more conviction and sway in providing recommendations.

Find your first client

Just as startups must test their idea with a minimum viable product, consultants must start with one client on a single project. You could read or watch all the material available on consulting, yet nothing will prepare you as much as real-life, hands-on experience.

You don’t need to run any complicated ad campaigns to attract business. Start by looking inside your network. Ask your family, friends, former professors, coworkers and classmates, and other individuals that may be interested. You’ll be surprised by how many leads you can find by simply asking around.

 

Develop your physical and online presence

After your first few consultations, you will want to start building a name for yourself. Physically, that involves securing office space and meeting rooms where you can host and meet clients. Digitally, it means building a website or an online portfolio that showcases your experience.

Building your physical and online presence is vital to creating a memorable brand. Remember that your consulting firm or service is not the only one in existence— which is why you must find ways to remind customers of your services and differentiators. When customers see an attractive website or a well-maintained office, they also see a reputable business.

YouTuber, kchoi, has developed a following online as she shares her journey of consulting. We recommend watching her video, “A Week in My Life as a Consultant.”

 

Deliver a valuable experience

It’s no secret that consulting is one of the most lucrative businesses, with the industry raking in $250 billion in 2017. The challenge is in finding clients that can see and understand the value your services provide. Your prospects and clients will not be focused on the hours of research required to prepare for a consultation, but rather the results you produce and the prices you charge.

So, how do you provide value? In an article from Harvard Business Review aptly titled “Consulting Is More Than Giving Advice,” Arthur Turner shares a hierarchy of consulting objectives organized from the most common consulting actions to the most ambitious secondary goals.

Consulting hierarchy

Most consultants can agree that the first five actions are essential (although number 5, assisting implementation, might be more contentious). The top three actions are “byproducts” of the first five but contribute to more exceptional consulting services.

Moving up the hierarchy is essential to growing your business but at the risk of increasing your scope. Starting out, you will want to stick to the first few actions while ensuring the work is within your means and ability. Understand where and when you can add value and define rates accordingly. Only then will you gradually build the experience to consult on larger projects.

 

Become selective with clients

Once you establish a robust roster of reliable and valuable clients, you can have greater control over who you work with. Being selective may sound contradictory to the goal of consulting. After all, wouldn’t you want to work with as many businesses as possible?

Ideally, yes, more work means more money. With experience, you will discover which clients to avoid. Don’t be afraid to reject projects that aren’t a good fit. Being picky about projects can also significantly improve your success rate with multiple clients, allowing you to focus your energy and resources on clients who act on and benefit from your recommendations.

 

How to find clients

For your business to survive long-term, you will need to master the art of attracting and closing leads. Fortunately, you are not tied to a single method. Below are some of the more successful methods for generating new business.

 

Networking

Who are you most likely to trust with your business: someone you or your network can vouch for, or a total stranger? Nine times out of ten, you’ll choose the family friend or former coworker over someone on the street. The act of networking demonstrates the value of forming, maintaining, and nourishing your professional relationships.

You’re likely aware of LinkedIn by now, the social network designed for professionals. You may even have an account. But are you using it to your advantage?

A few quick tips on using the LinkedIn platform:

Create a complete and comprehensive profile. Although you may already have one, you might not have included all the important information or details about your professional career. Here are a few steps you can follow to ensure you can create an all-star profile.
Form genuine connections. After you connect with 500 people on LinkedIn, your profile will stop showing an exact amount and simply indicate you have “500+ connections.” While this makes you seem more reputable, it does not guarantee a practical network. You want to connect with people you actually know and build on those relationships.
Post regularly and engage authentically. LinkedIn isn’t just about connecting–it’s about engaging. That means taking the time to share videos and articles you believe your network may find interesting. It means liking, commenting on, or sharing posts from others. The more you interact and create value for your network, the greater your return in the long run.
Join LinkedIn groups. Similar to Facebook, LinkedIn allows people to build groups around specific interests or industries. Once in a group, members can connect with you and see posts you make in the group. Groups offer an effective way to communicate with larger audiences in a more focused manner.

Over time, the connections you make are likely to send referrals your way. Essentially, your clients become brand ambassadors, creating a positive feedback loop that grows as you continue to cultivate relationships.

Read our previous guide on becoming an influencer on LinkedIn.

 

Advertising

Many may not realize that LinkedIn isn’t just a social platform; it’s an advertising platform, as well. With customizable ad controls and an audience of over 630 million, LinkedIn is one of the most effective platforms for online advertising.

Your ad can show up in a few ways. Ads can appear in a user’s feed, similar to an organic post or status update. Alternatively, ads can show on the side of the page with a brief description and a small image. Finally, you can send direct messages to certain people, which is often used by recruiters.

Arguably the best part of LinkedIn ads is the level of control you can use. Choose to pay per click, or 1000 impressions (views). Set a budget, and timing of when an ad shows on someone’s page. If it isn’t working, stop your campaign at any time.

You can find out more about LinkedIn Ads here.

 

Blogging

To reach potential leads organically, start publishing blog posts on LinkedIn. Blogging can be an effective strategy to provide your network with value while demonstrating your expertise in a particular field or topic. Writing about the pros and cons of various pricing strategies or the purchasing habits of the millennial generation might showcase one’s marketing experience.

Some general blogging tips:

Focus on relevant topics. What would your connections like to read? What have they shared in the past? The more value you can provide, the more willing readers will be to share your work.
Write captivating headlines. It’s the first thing people see, and they’ll judge whether or not they read the entire article based on the ideas or questions introduced by your headline. It is best to pair your headline with an equally captivating featured image as well.
Find a post frequency. Whether it’s weekly or bi-weekly, find a rhythm that works for you. You’ll need to strike a balance between giving people the content they want and leaving them wanting more.
Add rich media. Videos, images, podcasts and other media elements can break up giant paragraphs of text and make your post more attractive.

If you don’t want to publish solely on your account, you can also guest blog. This is the practice of writing and publishing a blog on someone else’s channel, typically on topics of the writer’s specialization. Guest posts give others free content while generating free traffic for you too.

Be sure to read Neal Schaffer’s post on writing your first blog post on the LinkedIn Publishing Platform.

 

The importance of defining the scope

As a consultant, it can be easy to over-promise on research and recommendations. After all, you naturally want to impress your clients by showing off your hard work and experience. But then you run into the risk of under-delivering or taking on client requests that ultimately contribute to scope creep. That’s why it’s important to write an SOW (scope of work).

 

Why SOWs are important

SOWs are the terms both of you will agree to, the setting of specific goals, the absolutely necessary components of the agreement, while clarifying what will not be addressed during the engagement. It also demonstrates the importance of tracking progress and learning to measure value creation, so following up with your client becomes a matter of putting your work together.

 

How to define the scope of work

Before starting any work on a project, write up an SOW and have it signed by your client. This will protect you from additional work that you cannot be billed for, or from disagreements over your deliverables. Overall, it’s the best way to set expectations with a client.

SOWs typically include:

– The overarching goal or mission of the project
– The various initiatives and steps involved
– Additional work that will not be performed
– Process for enacting the steps
– Each person’s role or responsibilities
– The timeline of the project
– How success will be measured
– Terms of payment

SOWs can be as detailed or as simple as you want them to be, but the most important thing is that it clarifies the work involved in a project to protect the relationship with your client. So be realistic when it comes to estimating dates or workloads. You’ll naturally want to get their feedback and decide on something that works for both parties.

Business 2 Community’s infographic shows some of the questions that every consultant should be asking themselves when preparing an SOW and initial agreement.

Questions to ask consultants

Consulting is more involved than people expect. It requires patience, planning, and expertise. Finding clients, demonstrating value, and clarifying the scope may all prove to be challenging obstacles. But those that stick around long enough will find a fulfilling way to apply their skills and knowledge to the improvement of an entire organization.