Company of One Page 16

  Our friends at Ugmonk, whose story I told in Chapter 7, enjoy a great deal of word of mouth built on the quality of their products — Ugmonk shirts are so stylish that people want to share them on social media — as well as on the human touch in their customer service (they provide a replacement shirt, when necessary, without even asking the customer to return the original shirt). Founder Jeff Sheldon has seen the built-in virality of having a product that draws attention: the last time he was at an airport, three people stopped him to ask where he got the Ugmonk shirt he was wearing, with its distinctive designs. By focusing on slowly making his products better and more stylish for his niche audience, he’s created a sustainable method of growth simply through referrals.

  Referrals are also useful beyond the realm of products. Services and service-based companies of one (from consultants to freelancers to client-focused agencies) can greatly benefit from word of mouth. In fact, a survey done by Drip (an email service provider like MailChimp) found that 50 percent of new customers for service-based companies came from word of mouth. That survey result is definitely worth keeping in mind.

  Where a service-based business can really capitalize on making word of mouth happen is by simply following up. Talking to clients a few weeks after a project is finished can yield two massive benefits. The first is being able to collect a testimonial or success story based on the real results the client is seeing. If you ask for a testimonial as soon as a project is finished, the client has rarely had enough time to collect any results-based data. By following up a few weeks or a few months later (depending on how long it will take to measure results), you can garner far better stories from clients to use in your marketing efforts. Second, by creating a schedule for following up with clients, you can then ask them (assuming the project went well) if they know of other businesses that could benefit from your services the way they have — or if they’re interested in arranging another project with you. By creating a schedule for following up with contented clients, you can turn referrals into a real strategy instead of simply refreshing your inbox and hoping each day that one will come in.

  Word of mouth can also be incentivized through the scalable system of segmented automation (as we saw in the previous chapter). For example, a week after a customer buys your product, you can generate an email asking them how much they’re enjoying what they purchased from you on a scale of 1 to 10. Then a second email, which you would send only to people who rated their enjoyment above a 7, could pitch an incentive program, with a double-sided incentive and prewritten text to share on customers’ social media feeds or in their own newsletters. For companies of one, focusing on existing and loyal customers as brand advocates — instead of trying to build an affiliate program of anyone who wants to make a quick buck referring you — creates a much greater trust, because those promoting your product already have a direct relationship with it. These are the customers who can tell the story of how they benefited from purchasing your product or service.

  SEGMENTING TRUST

  Unfortunately, a lot of people, especially creative people, look upon marketing in a negative way.

  The truth is, they really shouldn’t. Marketing is simply building a sense of trust and empathy with a specific group of people by consistently communicating with them. Trust has to be developed before anyone will buy anything. This is why ad-mail and cold-calling have such a tiny success rate and rely on massive volume — and conversely, why highly targeted cross-sell emails have a high success rate at a much smaller scale. For someone to want to buy your product, they have to feel that you understand their needs and have a solution for them. This isn’t done through selling aimed at all people, but through consistent dialogue with a small and specific group of people. No company or product is too good to not have to consider and utilize marketing. No matter how great your product is, if you aren’t reaching the right audience, you won’t sustain your business.

  Marketing is also no longer a silo job function within a larger organization — it’s embedded in every role and aspect of a business, from customer support to product design. It’s also not a single event — focused on a launch, for example. It’s the sum total of everything your company does that a potential or actual customer sees or interacts with, from emails to casual conversations to tweets.

  Where companies of one can use their focus on betterment over growth in marketing is by focusing on a specific niche instead of a massive market. Trust is more easily established within a smaller customer base because it’s easier to stand out as an expert or to gather referrals that hold weight from other industry experts in that niche.

  In recent years, large corporate business has focused its marketing and promotion efforts on collecting “vanity metrics” — like social media followers, subscribers, or clicks. But those metrics don’t always correlate with sales, profit, or reputation. That is, they don’t measure engagement or trust — they simply show how many people took some form of marketing bait. By considering “collecting” over “connecting” (with customers), these companies are becoming too caught up in collecting page likers and followers and have forgotten to build relationships with those individual customers who are already listening, following, or buying. Having 100 passionate fans of your business who are eager to buy anything you release is exponentially more effective than having 100,000 followers who simply follow your business to win something like a free iPad.

  Making money is often easier than earning trust, because money can be lost and won back without judgment, whereas trust is hard to regain once it’s lost. Your word and your company’s word have to be a contract with your customers. This is how many companies of one stand out in competitive industries: by simply doing the work they say they’ll do and then honoring social contracts with their customers. Even a big company like Amazon has services built on trust. First it was the promise to deliver in less than seven days. Then they went to two-day delivery. Now, in some places (not in the woods, or on an island), Amazon delivers on the same day. We buy from Amazon because we trust that our order will be delivered quickly, and that, if we aren’t happy, it will be easy to return. So trust happens first. Only then does the commerce follow.

  In trust marketing, a group of people trusts you enough to invest their personal attention, email address, or dollars with your company. This kind of marketing requires that you always keep the promises you make and engage in a consistent dialogue with them.

  While it may seem counterintuitive to focus your marketing and trust-building efforts on a small and specific group of people, there are benefits to doing so. The more specific you are with who your products or services are for, the more you can build trust with that particular audience. The paradox of focusing on a niche is that the more specific you are, the easier it is to sell to that group and the more likely it is that you can charge a premium for being that focused. With that kind of focus in mind, you can get to know the specifics of your niche better, learn how to serve customers more effectively, and build a reputation for yourself in that smaller niche.

  Kurt Elster, instead of spending his time building an audience for general ecommerce consulting services, focuses entirely on Shopify store owners. (More than 400,000 businesses use Shopify as an ecommerce platform.) By using this niche to build trust in a smaller and more specific audience, Kurt has grown his revenue eightfold and made a name for himself as an authority in Shopify consulting; he was even featured on Shopify’s website. His reputation for helping Shopify store owners has, in turn, brought him more leads, allowed him to set higher prices for his services, and helped him land speaking gigs around the world. If you had a Shopify store, whom would you trust with your business — a general ecommerce consultant or someone like Kurt who focuses only on Shopify?

  TRUST DOESN’T REQUIRE A BIG BUDGET

  By making customer happiness your top priority over new customer acquisition and then incentivizing customers to share the word about your business, less of your money needs to be spent o
n promotion. With a company of one, which can be profitable at any size, such slow but sustainable growth makes sense. You start with the idea of creating a trust-centric business, build products that customers love, make sure they’re educated and happy with what they’ve purchased from you, and then give them systematic ways to share their success with others.

  This doesn’t require huge billboards, massive ad spends, or paid acquisitions. In treating trust as a primary factor in running your business, you’ll amass an army of loyal fans — and not just a huge customer base of people who bought from you and then forgot about you.

  The truth is, you don’t need Super Bowl ads. Instead, as a company of one, you can be more effective by writing guest articles for websites and blogs, creating incentive programs for existing clients, or appearing in podcasts that cover your industry.

  Alex Beauchamp, former head of content at Airbnb, said that she never wants any content she works on to “go viral.” She doesn’t want to ever be on the hook for making that happen. Moreover, going viral is often what happens with a business that, not understanding who its intended audience is, tries to appeal to pretty much everyone. If you want a piece of content for your business to generate a billion views, you probably don’t understand the purpose of that content or whom it was really created for. Engagement and connection with your niche are more important and far less costly to generate.

  Alex, in her current role as director of content at Edmonds.com, knows that trust is more important than virality when it comes to content. As an objective third-party review website for cars, Edmonds.com can’t appear partial to any one car brand by taking ads or sponsored content. That would immediately ruin trust with its specific audience. So instead, Alex and her team create impartial reviews, based on the merits of each vehicle, that are intended for the specific audience of engaged car-buyers. She says that the best platform is the one you’ve already got — by catering to people who are already listening and focusing on them, you can draw in others as well.

  As noted earlier, education is a better and cheaper way to build your customer base. When you teach customers about how products like yours can be used or can benefit their own businesses or lives, trust is the natural outcome. BoatUS, a company that provides insurance and tows for water vehicles, uses education for customers and noncustomers alike with its mobile phone app that features water hazard warnings and tide charts — for free. If your business becomes a source of information, you’re giving your customers what they need to make their own informed decision (even if they decide not to buy from your business). This type of education, like a free resource page on your website or a small but free mobile app, can be a cost-effective way to promote both your products and customers’ trust in them.

  Jason Fried told me that Basecamp recently flirted with paid acquisition by spending around $1 million on social media ads. They quickly stopped because they found that these ads weren’t as effective as what they were doing already: creating and sharing educational content. For instance, in the absence of any acquisition or paid ads, over 4,400 people signed up for their software in one week alone. They decided to focus on a great product, amazing customer service, and incentivizing existing customers with referral bonuses. Jason said that he would rather give money to his happy customers to bring in more customers through incentives than buy ads from big businesses like Facebook or Google. It costs them a lot less money as well.

  There’s no reason to compete with highly expensive ad spends to gain customers; moreover, such campaigns are especially difficult for a company of one, because of the scale that’s required and, of course, the cost. Let me give you a perfect example that is close to home for me.

  The Pointe Restaurant in Tofino is an award-winning, high-end dining experience (and my favorite place to eat). They greet you with a glass of champagne, and the waitstaff then gets to know you a bit as they bring you five to seven immaculately prepared courses over several hours. The chef tends to make an appearance to see how the night is going. When the bill arrives, the maître d’ asks if you’d like your car brought around to the front. While the food obviously backs up the restaurant’s top-of-the-line status, the personal touches are what set it apart and make it a luxury brand that people talk about. The personal touches may not cost much more to implement (for example, hiring waitstaff who make the effort to get to know people), but surprising and delighting customers can go a long way toward building trust. And with service like this, they can charge a huge premium.

  Trust in business is more than a matter of adopting an internal slogan or making up a mantra to apply to products and services when it suits a marketing campaign. Trust has to be totally baked into every aspect of not only what you sell, but how you sell and support it. For a company of one, even at a tiny scale, maintaining a business worthy of customer trust creates a market differentiator and helps you stand out. Such a business focuses on quality over speed, compassion over profit, and honesty over tricks. And since, as a customer, you certainly prefer to buy from trusted businesses, why change that when you’re the one doing the selling?

  BEGIN TO THINK ABOUT:

  ■ How you embed trust and honesty as a marketing strategy in your company of one

  ■ The relationships you could foster with your customers to incentivize them to share word of your business with others

  ■ How to ensure — whether through email, support, or social media — that you’re always honoring social contracts with your customers

  11

  Launching and Iterating in Tiny Steps

  I know I have talked about Ugmonk a couple of times earlier in the book, but it’s such a fascinating and inspirational story of how a company of one got started that I want to return to it one more time and provide some more detail on how it began. A month after Ugmonk founder and creator Jeff Sheldon graduated from college, in 2008, he married his high school sweetheart and moved to Burlington, Vermont, to start a full-time job at a design agency. He was enamored with minimal design and typography, but couldn’t find clothing that matched this aesthetic. He started with just one idea and four T-shirt designs.

  But instead of planning a large clothing company, with factories, warehouses, and supply chains for large retailers, Jeff began with a $2,000 loan from his father and a plan to be profitable as quickly as possible — by outsourcing production to American T-shirt printers. (He carefully selects every manufacturing company he works with for both quality and alignment with his ethics.)

  Because he started with just four designs and a tiny run of 200 shirts, after paying back the small loan, Jeff was able to be profitable almost instantly. Only when the first, then the second, then the third run of his T-shirts quickly sold out did he increase his costs by ordering more inventory. By working to become profitable as quickly as possible in tiny steps and not waiting for tremendous scale to happen, Jeff got a bonus: scale happened anyway. In short, his profits rose because the increased volume cut his costs. While growing this way wasn’t Jeff’s initial plan, it served him well by letting him figure out how to make money at a small scale first, then grow iteratively, based on customer demand.

  For two years Jeff created clothing and routinely sold it out through Ugmonk and its website while still working in his full-time design job. He worked nights and weekends building Ugmonk, refining designs, organizing logistics, and packing orders. During those first two years he lived off his salary from the full-time job and invested all the profits from Ugmonk back into his company of one until there was enough momentum and scale to pay himself and the other people who worked with him. It wasn’t until his first tiny apartment became too crammed full of inventory that he moved to a larger warehouse and fulfillment center.

  Although Ugmonk was profitable from the beginning, Jeff has been careful not to scale too quickly. He moves slowly, iterating in small steps, slowly increasing production, the number of products, and what the company takes on. Like Need/Want from Chapter 8, Ugmonk still sells dire
ctly to customers, as it requires less staff and resources. And because Ugmonk has always been focused on the quality of both its designs and its products, they routinely get free press from design publications and blogs.

  MINIMUM VIABLE PROFIT

  As a company of one, you need to reach profitability as quickly as possible. Since you’re not relying on massive influxes of cash from investors, every minute you spend getting set up and started is a minute when you aren’t making money. So getting your product or service released as soon as possible, even if it’s small, is both financially wise and educational, since a quick release can also serve as a perfect learning experience. The first version of a product doesn’t need to be huge — it simply needs to solve one problem well and leave your customers feeling better than before they purchased it.

  In determining your minimum viable profit — the point at which your business is operating in the black (we’ll call it MVPr from here on in) — keep in mind that the lower the number, the quicker you can reach it. So it’s important to scale up your timelines and focus on core features only, reduce expenses and overhead, and ensure that your business model works at a small scale first.

  The assumption at work here is that your MVPr — not the number of your customers, not your measured growth, not even your gross revenue — is the most important determinant of the sustainability of your company of one. If you make a profit right from the beginning, then you can figure out everything else. If your expenses are low, profit happens sooner. Decisions should be made with a focus on realized profit, not based on the expectation that profit may happen. This is such a key and main difference in how growth-focused businesses and companies of one operate. Even when a company of one needs to grow, that can happen only if metrics are based on actual profit, not on hopeful profit projections.