It’s possible to make money the wrong way. You would think that money that goes from my wallet to your wallet would be a good thing. But sometimes you need to make the tough decision to cut bait and start over.
Let me give you an example. The TV infomercial world isn’t easy. You spend oodles of money building a product, fashioning the brand, creating a show and paying money to get on TV. And that’s long before you make $1 from those efforts. When you finally get to the point that you’re spending money on advertising, the pressure is on. The show has got to work or you lose thousands (sometimes hundreds of thousands) before you can retool.
That pressure affects decisions. For instance a couple tweaks there and a couple tweaks here could mean the difference between a profitable show and bankruptcy. With money on the line, any evidence that revenue is increasing is met with cheers. Since shows are taped with on-air talent, tweaking a show is difficult to say the least so changing the offer is often the first test. The good news is once a show works and sales pay for the marketing, you can effectively market forever.
That’s when the mistake can happen. That’s when you can start making money the wrong way.
Segue. . . Online
Let’s go to the web. Web owners put a ton of time and effort into their content just hoping that Google will find their content and serve it back on Page 1 of the search results. After lots of posts, studying strategy, SEO, link building, guest posts, social media and all that other stuff finally getting traffic is pretty exciting. But what happens when you write a post about marketing mistakes, mention hula-hoops in an example (like I just did) and you get traffic from people searching for hula-hoops? What if you get a bunch of traffic, make some money on the Adsense ads in the sidebar and decide to write a follow-up article just to bolster your position in the ‘hula-hoop’ world?
That’s when the mistake happens. You start making money the wrong way.
Money is alluring, intoxicating, needed. Money does buy happiness, but it doesn’t necessarily build an empire. The mistake happens when you sacrifice even twenty minutes of time chasing the money losing sight of the empire.
Identifying the Mistake
So when did the mistake rear its head for our antioxidant infomercial-marketed product? (Yeah, this is a true story.) Unfortunately we didn’t know for many, many months. When we tweaked the offer on the show our income increased almost immediately and the show became profitable. I say the “show” became profitable, not the business. The show was able to sustain itself because the money coming in paid for the media and the product.
A few months down the line we decided to check our “stick rate”. The “stick rate” is the number of months a buyer continues to use the product. With a daily ingestible we expect the user to take the supplement daily and to continue buying it when their stock runs out. How many months the buyer continues to take new product determines the profitability of the company. In this case we determined that the “stick rate” for this particular show was just under 2 months. That means for a “buy one month, get one month free” product, they were canceling before the next shipment ever left the warehouse.
We noticed that was in stark contrast to a long-form radio informercial that produced a much, much longer stick rate. People who bought through the radio kept buying the product for more months. And you know what the difference was? The messaging. Not only did we speak a bit deeper about the product but we didn’t offer a free trial or a Buy One Get One deal. The buyers on the radio were better sold and were willing to put their money on the line from Day 1. That was our customer.
The freebie seeker may have paid a few of the bills, but paled in comparison to the lifetime value of the radio buyer.
The Gold
In making the tweaks to turn a partially profitable show into a profitable one we spent time attracting the wrong audience. How much good could we have done with the time we spent making the tweaks if we had focused on the empire not the sale? And that goes for the hula-hoop post. Even if it takes you only 8 minutes to get a new post up and make some more money on the random hula-hoops keyword, you have already sacrificed the goal for the dollar. How much time accrues when you sacrifice the goal for the dollar 100 times? 1000 times? Every time?
Always keep your goals in front of you. Don’t let convenience cash cover the road to the gold.