In December a panel of internet entrepreneurs shared their stories and their keys to success with my BYU marketing and Provo Labs Academy students.
One young woman told how she had teamed up a few years ago with her brother to start an ecommerce site, selling a very unusual niche product. They did almost $1 million in revenue last year.
One student asked her how long it took for her sales to take off initially. Her answer surprised me: she worked for an entire week before she had her first sale.
How many people would work a full week, generate one sale (probably under $30) and still be willing to stick with it? Yes she worked for a full year before generating enough sales were to pay her a living wage.
Now, after many years of hard work, she and her brother are doing very well.
Her story reminds me how important it is to be patient and persistent with your online business. Online businesses almost always start with a small trickle of visitors, a few sales, and then over time turn into a stream of traffic and a river of repeat customers — but only if the founding team keeps at it.
Even eBay started this way. When the auction site was first launched, a small number of checks started coming in. The stream of checks turned into a torrent, all while Pierre Omidyar was working at General Magic in his cubicle. EBay was profitable from the beginning, because there was really no overhead and the site was incredibly viral and revenue ramped quickly.
But most of the ecommerce sites listed in the Internet Retailer Top 500 (it takes more than $3 million in annual sales to make that list) probably started much more slowly than eBay. But their teams kept promoting their products, they kept at it, until revenue reached the millions.
The most important book I had when starting all of Ancestry.com and MyFamily.com’s marketing efforts was Guerrilla Marketing Online Weapons: 100 Low-cost High Impact Weapons for Online Prosperity.
A lot of the tactics are now obsolete, but it is the mindset that matters the most. It’s a rare mindset but a really valuable one.
As my World Vital Records team watches our small stream of visitors grow, I want to remind them how important it is to market our company’s products at every opportunity, in every possible channel, using every possible tactic.
As our marketing team grows, I want every one of them to understand the power of guerrilla marketing compounded over time.
Let’s do the math.
Suppose you hire a marketing employee at $10 per hour, and assign her to do guerrilla marketing and PR using dozens of online marketing tactics. There are literally hundreds of legitimate tactics.
Let’s say that her first day she gets a link from another site that will consistently deliver 3 visitors per day from now on. This could be a link on a blog roll, or an entry in a web directory, or a link on any other site.
Not a very successful day, right. In eight hours, she cost $80, and delivered 3 visitors and no sales.
With an average conversion rate of 2% and an average sale price of $50, the marketing employee failed on day one. Result: loss of $80.
But imagine that she works every day using guerrilla tactics such as posting answers to questions on Yahoo Answers, appropriately advertising on Craigslist, submitting her site to search engines and directories, commenting on blogs and participating in message boards, putting offers up on freebie sites, publishing press releases, syndicating articles, and asking bloggers to review her site or link to her. Let’s say her efforts bring an additional 3 visitors per day from links that are semi-permanent and will consistently generate 3 visitors per day from now on. (Many links have a long life span and therefore individually have a long tail.)
So after 30 days her links are now bringing in 90 visitors per day and generating 2 sales a day, or $100 in daily revenue.
Now all of a sudden the economics start looking really good. She’s generating $100 in sales with labor costs of $80. Depending on the cost of goods, she will soon be a profit center for the company, if she can continue focusing on these online marketing tactics and overcome boredom, and the lack of management understanding about what she is up to.
If she is creative enough to keep finding new ways to get permanent links from other sites that will consistently deliver 3 new visitors per day, then within a year, her efforts will be bringing about 1000 visitors per day or 20 sales per day, which would be $1000 per day, or $30,000 per month. The second year, her results would be double.
This is how internet companies actually succeed. Ask the founders of Backcountry.com to tell you how they spent the first few years basically getting as many links from other sites as they could (even before it mattered for SEO purposes) and how over the years the cumulative impact of all these links (including from their paid affiliates) yielded tens of millions in annual revenues.
This is how it works. There are employees in every successful internet company (usually under-appreciated) who are in the trenches every day, gutting it out, getting a link here and a mention here, and an affiliate here, finding webmasters or bloggers or journalists anywhere who might take an interest in their products, writing new content, finding new keywords to market around, generating some sales and some positive word of mouth, until the cumulative impact of all their efforts is generating a consistent daily stream of sales.
Since most corporate executives (unless they were there from the start) have no idea how this stuff actually happens, they don’t give much credit to the trench workers (such as when Ancestry.com laid off its only affiliate manager back in 2000 when she was merely responsible for personally recruiting 9 of the top 10 affiliates, and generating, at one point, a very significant percentage of the companies new daily sales), and they stop investing in the daily guerrilla and online marketing tactics that have this cumulative impact.
When their businesses seem to plateau or peak, they panic and spend more and more dollars on paid marketing, and the guerrilla stuff goes by the way side.
You can still be profitable when you are spending money to get every visitor to your web site, but not nearly as profitable as when you use a nice combination of paid marketing, guerrilla and viral.
For me and my team at World Vital Records (and genealogy is extremely diverse and viral, so we have a lot of opportunities to spread the word in creative ways) the question is this: how many employees like the one I described above can we find, train, and support, before they are duplicating efforts and stepping on each other’s toes.
If our market can handle one such employee, and she can generate links every day that will bring us 3 clicks per day from now on, then in a year, we’ll have one employee generating the $1,000 per day that I described above.
But if there are enough tactics involving enough web sites from enough countries and we can have 10 employees doing this guerrilla marketing stuff, then at the end of a year, this team will be generating $10,000 per day in revenue. That would be better: a $3.65 million annual revenue stream from our guerrilla marketing/affiliate marketing team. But what if we could support 20 such employees, or eventually 50. The numbers start looking very good.
And it all starts with just 3 visitors a day.
PS. I just thought of a new metric for guerrilla marketing. We all use unique visitors, unique visits, page views, and sales. But what about this: unique daily referring domains. I wonder if anyone has ever used that.
A guerrilla marketer or a team of them could keep track (this would be an easy report in Omniture) of the number of unique domains or unique URLs that brought at least one visitor each day. If the team is doing their job and getting enough attention and links from other sites, this number would grow every day. This would indicate how horizontal their efforts.
Of course a good online or guerrilla marketer will try to get prominent links on high traffic web sites that will generate hundreds or thousands of visitors per day; but my point is that you don’t have to have huge wins like this to succeed–you can do it with small wins every day over a long period of time.