Great visualization of the process, courtesy of SurePayroll.com
If you’ve been following our posts on buying an existing business, especially an Internet-based opportunity, you know we put a lot of emphasis on both pre-acquisition due diligence and ongoing competitive analysis. You will get a snapshot of how your proposed ecommerce site ranks against its primary competitors in the due diligence phase. After the purchase, a more detailed analysis will provide a great deal of insight on how you can enhance your competitive position.
Now of course we’re not talking about corporate espionage, but nonetheless it is important to understand that rigorous competition is a foundational concept of the free enterprise system. Your efforts to acquire all the information you can from public sources using legal methods is not only ethical, it is expected. In fact, you can be sure your more successful competitors will look as closely at your company as you do at theirs.
While your competitors are not actually enemies, many entrepreneurs find a worthy insight in the oft-quoted wisdom of Sun Tzu in his Art of War. This master advises victory only comes when you know your enemies - and yourself. This context for competitive analysis is a good starting point to look at both the tools and methods to use for evaluating how your marketing, products, website and positioning stack up against the rest.
Establishing Your Competitive Analysis Process
While you’ll probably find your digital agency to be a great source of advice on how to approach your analysis and set up an ongoing program, you can start on your own. There are a number of great tools you can use for your own evaluations and marketing efforts (some free, some not) that are equally valuable in learning about your others in your space. For example, most companies will spend a lot of time evaluating their keywords and traffic-building tools, such as PPC and other paid-search initiatives.
SpyFu Kombat is an online tool designed to provide you with detailed information especially geared towards what keywords your competitors are buying for ads. Also of importance are the negative keywords you should account for and analysis of how the two can help you identify organic keyword opportunities as well. Your paid-search team, or a qualified member of your staff can help you interpret this raw data and show how “the other guys” are getting clicks and what sources are proving to be the most effective. Attribution models help determine the relative value of efforts with local search, social media, and other traffic-building endeavors.
Expanding on that, you’ll want to start collecting information about key metrics related to your competitors’ websites to establish benchmarks and identify ways of exploiting what they’ve missed. Set up a spreadsheet that helps you organize the information you find for further analysis. This can include the likes of:
o Digg submissions/total with more than 100 Diggs
o Bookmarks on Delicious
o Influence on Twitter and others relevant to the niche
o And about a thousand other social media metrics to consider
We recommend you install the SEO Quake Toolbar, Moz’s free toolbar, or even better subscribe to some of the Moz paid tools (they fall under the “not free” category) as they provide a consolidated way to get immediate information on the sites you review. These tools have a number of customizable options, allowing you to track the details most important to you. Some information is important in your initial analysis, but then doesn’t require ongoing tracking.
While there are a number of other tools and methods you’ll want to explore, there is an important principle to understand about competitive analysis: it is not the data you gather that is important, it is what you do with it. For example, if your competitor’s domain age is 10 years or more, they will have generally have an advantage against you when it comes to search rankings. Knowing this, you will have the incentive to work on specific techniques to counter this specific issue. If you find high-quality backlinks that now 404 because your competitor moved the page they were pointing to – ding, ding, ding jackpot! – how are you going to capture them?? Knowing ain’t doing.
We put a good bit of focus into Competitive Analysis in our website audit, so for the price of a one month subscription to a couple of your favorite tools, we do all the work for you of gathering up that key information and putting some strategic direction behind it all.
Whatever route you go, also take the time to understand what your prospective customers are experiencing in terms of UX, engagement with their current providers, and ensure your site stands up well against the competition. Get yourself on the competitions’ email lists – note what you like about their customer service and where you feel opportunities exist to do better.
Especially for New Acquisitions
And if you’re just acquiring a website, there’s no better way to wow your own customers than by using all the competitive analysis you’ve gathered and putting it to work to create an improved experience for your current base. Retention should be just as important, if not more so, than new customer acquisition after all.
What did we miss? If you’ve got some ideas you’d like to see us expand upon in future posts please let us know in the comments!
In December we posted a discussion about making the decision between building your own e-commerce site and starting one from scratch. Based on comments from a number of readers, we thought it would be worthwhile to provide some more insights into buying and developing an existing web business.
An Old Technique in New Clothes
We provide a number of basic tips in our original post about buying a business. While the Internet is a newer market, professionals have been strategically buying and selling brick-and-mortar businesses for decades. Important factors to consider when you start to get serious about buying a business apply to the web as well as the traditional business buying process.
As a quick recap, you should:
As we noted in our earlier comment, each of these items is a post unto itself, so take the time to carefully choosing your e-commerce venture and do your homework when selecting your final candidate. This is a substantial investment whether you’re buying a distressed business or one flush with cash, so don’t hesitate to pull in seasoned pros for your team. This will help you make the wisest decisions and avoid future headaches.
Making the Most of Your Purchase
Once you've signed on the dotted line, the real work begins. If you've never bought a business before, you’ll experience a range of emotions over your first venture. These include a sense of excitement and pride, as well as some fear and maybe a little feeling of being overwhelmed. This is normal, but you want to get down to the real meat of operations as soon as possible. Here are a few things to consider.
What to Keep, What to Change
One of the added values of thorough due diligence in the pre-purchase phase is how much information the process provides about your company’s strengths and weaknesses. There will be some things you want to protect and nurture, such as your customer database. There will also be some areas you know need immediate attention, perhaps such as changing your hosting service to get better response times. Also, you will want to focus on adding capabilities and applying techniques that will help build your e-commerce site and ensure its future growth.
Here are some general categories to focus on during the first weeks of taking over. Again, many of these items will simply provide a more in-depth look at what you found in your initial due diligence.
Of course, this is just the start, but these early points will serve you well as you start to build your business and put your own personality into the brand. We’ll explore these and other pieces of the process in future posts. Welcome to the world of e-commerce!
Open to everyone: business buyers, brokers, CMO's, and those just looking for a comprehensive website analysis to provide direction for more targeted digital marketing efforts.
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Enter here by just filling out the Contact form, adding the word "Contest" in the comment box.
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You’ve seen these ads before, even if you didn’t realize what was happening at the time. You were scoping out a refrigerator on Sears’ website but then moved on to check the weather on your favorite local news site. Magically – you were then served an ad for that very same fridge! There are no coincidences in online advertising – you were being stalked.
Remarketing or retargeting allows you to reach people who have visited your website in the past. Maybe someone browsed a bunch of product pages but never engaged with other aspects of the site. Or it could be that another person filled up his online shopping cart but then didn't complete the purchase. It is easy to write off this behavior as disinterest. While some people are never going to buy a product or sign up for one of your services, many people just need a little more convincing, or at least, reminding.
But does this ad type really work? Do these targeted ads convert more customers? In 2013, 60 percent of marketers dedicated upward of 10 percent of their digital ad budgets to remarketing with 7 percent spending over half of their budgets on it. In 2014, 71 percent dedicated at least 10 percent with a notable 14 percent spending over half of their budgets on it. The figure is even higher for large companies. Nearly half of firms with more than 1,000 employees spend half or more of their online ad budgets on remarketing.
How do these companies measure their success? The top two metrics that B2B and B2C marketers are looking at are total conversions and insights into customer behavior. Ideally these figures should be above 50 percent. High return on investment (ROI) is also a key metric. As such, many companies aim to keep it above 40 percent. Other metrics that B2B and B2C marketers track for retargeting campaigns include low CPA (cost per acquisition), CPC (cost per click), CTC (click to conversion), and CTR (click through rate).
There are two primary resources that small to mid-size companies use for remarketing: Google AdWords and Facebook Exchange. If you already use Google Analytics to track site metrics and you have a Facebook business page, you're set up to add one or both of these resources to your remarketing campaign. While you will pay for the ads that you run, it doesn't cost anything to sign up for these services, learn how they work, and create the ads themselves.
Google AdWords remarketing allows you to add a retargeting tag to your site, create lists (i.e. a list for most popular product category), and build remarketing campaigns that use your list (i.e. a campaign that only displays for the popular product category list). Facebook Exchange gives you the opportunity to reach the active Facebook user base, which consists of over one billion users, through targeted campaigns. You get high quality, relevant reach with all of the features that you would expect from a real-time bidding exchange. It is an ideal tool to use for remarketing alongside standard social media practices to increase your online conversions.
Whether you're integrating your first remarketing campaign into your overall strategy or looking for ways to tweak your existing campaigns, there are a few key points to keep in mind. The biggest reason that consumers don't respond to remarketing tactics is that the ads are stale. If they keep seeing the same ads displaying products from last season every time they log onto Facebook, they aren't likely to click them. Even if the ads performed well initially, they have a limited lifespan. There are several simple ways to keep your retargeting ads fresh and engaging.
What has your experience been with remarketing campaigns? Do the budget stats cited above hold true in your situation?
Yes! We're going to give away for free our comprehensive website analysis with marketing recommendations to one lucky winner this week!
This contest is open to all, not just business buyers or brokers. Anyone looking for detailed help for marketing a business website is welcome.
In digital marketing, any business that fails to incorporate public relations into its overall strategy does so at its own loss. It's a crucial element to successful online promotion and a company should have an effective if not altogether unique PR strategy worked out. But first we need to understand what exactly constitutes public relations and how you can use modern techniques to boost the reach and amplification of your content.
What is involved in PR?
Every brand approaches public relations differently but there are a few essential elements to include. Most importantly, it's about content development. Whether you are planning an online or offline strategy, preparing your content is the first step to your success. You need to decide on your message and strategy before writing good, compelling content for your audience. Remember that the web is constantly flooded with press releases, many of which contain little actual “news”. One would do well to really consider what the target audience would finding interesting. So, your office just received new chairs in the cafeteria – keep that to yourself, nobody cares – however the launch of new product, your sponsorship of industry, community, and charitable events might actually get more traction. The more compelling and bookmark/favorite/link-worthy your news, the better.
Some of the areas you may choose to involve in your online and offline PR strategy could include press tours, journalist outreach, appearances on local TV and radio shows, social media marketing, and trade show activity (beyond just standing behind the booth!).
Understanding the potential for all methods will help you to develop a creative and effective public relations strategy to build your brand and help you communicate with your audience. Keep in mind that traditional PR has changed over the years and in the modern landscape you now have more opportunities and platforms on which to promote your message.
Modern PR Methods
We’d argue that traditional PR should not be completely overlooked in your quest to tackle New Media opportunities. For example, the value of your appearing as a panelist on a business news program will bode well with a B2B audience, should that be your demo.
Consumer behavior continues to evolve however and people are looking to the internet first for anything and everything they may need. In addition to SEO and ensuring overall site health, consider incorporating some of the following into your digital marketing efforts in an effort to capitalize on the expanded reach of modern PR:
It’s about credibility
An important goal of effective PR is to develop credibility for your brand by including voices other than your own. The fact is that people are more inclined to support a business that has positive reviews and favorable press coverage. Developing credibility will also help coax leads through the sales funnel, by adding those extra layers of assurance that your brand is “for real”, respected as an authority, and multidimensional.
By developing a thorough public relations strategy you can help to effectively position your brand as a market leader and stand out from your competitors. Always consider your specific marketing goals and focus budget, time, and effort on those PR methods with a high probability of propelling your business to new levels of success.
Public relations is not just for Fortune 500 companies. Every online business should work some aspect of it into the overall digital marketing plan.
So this is the year, right? Now's the time when many career managers, startup dreamers, and plain old freedom seekers resolve to intensify their consideration of starting their own business. Dozens of questions will bombard these pilgrims as they set out to test their ideas further, but one of the most prevalent will be whether to build or buy their company.
According to RJMetrics.com, there are now over 110,000 e-commerce sites online generating significant revenue, and this stat could be both encouraging and concerning to would-be webpreneurs thinking of breaking into the space. The fact that so many are doing well lends to the hope that one doesn’t have to be a Silicon Valley genius with a one-of-a-kind product in order to find success online. But then a budding entrepreneur must also consider what barriers exist in starting from scratch, including how to compete with well-established competitors who are currently splashed all over Page 1 of Google.
Let’s take a look at just a few of the considerations for both buying an internet business, and building one from scratch.
Build - The Innovator
Being “first to market” with a new product, a new idea, or even with an old one repackaged for a different demographic can obviously put a startup in a good position to capture a particular market. The first downfall to this is that often your “market” doesn’t know it is the market. You may be stuck with having to define the need for people or businesses that they never knew they had before, and this comes with its own set of objections to overcome.
So you’re going to have to spend time and budget on education and awareness first. If you then get as far as making your target audience aware that they do in fact need what you’re selling, then you have the task of convincing them that they need it from you.
It certainly can be done, and gets done, by many. The size of investment needed and your time horizon will be major determinants in seeing if this is the right route to go. It’s important to do some testing of your ideas before you get too far into the process though, and that’s why so many Lean Startup people advocate producing just a minimum viable product (MVP) that can be tweaked and redirected as you learn what your customer base is willing to pay for.
Build - Filling a Void
Another option when starting from zero is jumping into an already established marketplace and finding your niche. Here you are not inventing anything new per se, and may not even be selling your own version of a product – many in ecommerce solely exist by drop-shipping, or otherwise selling other companies’ goods. This type of startup will be heavily focused on developing a competitive advantage like being cheaper/better/faster than others, or by providing an exceptional customer experience that’s hard to rival.
But then you have a few other competitor-related questions to address. If you’re relying on Google AdWords for driving customers to your brand-spanking-new-and-otherwise-unknown site, how much are those clicks going to cost you? If there is already a fairly saturated pool of competitors with account age and quality score on their sides, it may be expensive, and you may need to find a less-trodden path of advertising in your space.
On the organic front, your new site may look beautiful and function better than those of the big boys, but with no inbound links, no site authority, and no buzz yet it’s going to be a long climb to get to the top of search rankings for terms valuable to your business. Are you going to design and execute the strategy yourself, or hire the pros?
Forget all that, I’m going to Buy instead!
Many find that buying an established internet business makes more sense for their situation. Indeed there are even flippers of business websites that routinely pick up new acquisitions, make them better, and then sell them for a nice multiple of cash flow. If you find yourself not ready to leave that day job yet, and therefore having less time to dedicate to building/running an online business, the decision to buy might be a better fit.
If you’ve at least narrowed it down to buying instead of building, that’s good, and now you have another set of questions to wrangle with.
When it comes to exploring the technical particulars and designing a post-acquisition marketing plan for a website you want to buy, or just bought, of course we’re happy to help in that regard!
Obviously the up-front investment is going to be greater in a “buy” situation since you’re purchasing an asset that’s already generating revenue. However, you may be able to work out some financing from the seller. Without going to deeply into the subject now, here’s a little on pricing and valuation. There’s no set of rules on how to value a business, and many brokers/sellers will use a multiple of the cash flows to the owner, and that will range from 1.25 x OCF to 3.5 x OCF in many cases.
If you see a business selling for less than the annual cash flow to owner, run. Or at least dig a lot deeper. You may find that the entire business is not being sold, or that equipment and inventory are being held back. Not deal killers per se, but worth scrutinizing.
As a buyer you likely won’t need a broker, but instead enlist the services of a good CPA and lawyer to guide you through the process, and for insights into the website itself get a real analysis from qualified experts – not your nephew in college who’s “a whiz with all this inter-stuffs”.
So who is planning on either building or buying in 2015? We’d love to get your thoughts in the comments!