How choose short-term profit margins over long-term customers
10 | INTERNET PROPHETS
Most companies don’t do this. They fail to pay for adequate customer service, choosing short-term profit margins over long-term customer satisfaction. This is a foolish strategy as it costs them word of mouth recommendations and repeat business.
A related issue is that companies rush products to market before putting them through adequate quality analysis. This results in a flood of calls to customer service. Armand tries to anticipate all possible issues before a product is ever sold.
1- And by spending so much time
on the front-end, end-user issues seldom occur. Specifically, Armand’s company has grossed over $85 million, but it typically receives less than 20 customer service-related questions each day. His products are so well designed, vetted, and tested that customers rarely need
Despite best efforts, occasionally a product will slip through the problem is fixed, the new version is offered to product owners for free. Machiavelli said, “A prudent man must always follow in the footsteps of great men and imitate those who have been outstanding.”
3- Consider following Armand’s strategies.
There is much to be learned from a true master of his craft. Great Ideas and Great Execution Keep up with current trends and capitalize on what’s next.
Recognize adversity as opportunity. Every trouble carries the seeds of triumph Create products that make existing tasks easier or automate existing tasks.
4- The bigger the problem, the higher the price tag.
There is a direct correlation between the size of the problem your product solves and the amount you can charge for it The market determines price. Customers don’t care about your costs. They care about how much value you deliver for their investment.
Encourage customers to enter your sales funnel with free and inexpensive products, and then inspire them to purchase higher- priced products and services.
5- Deliver value that far exceeds the price of your products.
Strive for Six Sigma standards. Sell only outstanding products, and provide a level of service that cultivates loyalty and keeps them coming back for life. created.
This process is defined by four distinct phases: Research and Development: New technologies and business practices emerge. Uncertainty is prevalent and adaptation is unclear.
6- Ascent: Awareness and implementation expands.
hreat of over saturation exists. ecline: Demand is met, sales and adaption declines, and new echnologies and business practices emerge.This circle of transition has existed for centuries. To illustrate he power of leveraging the inherent inertia found within this cycle, ignificant promise.
However, bandwidth and related issues were met ith uncertainty as to the Internet’s viability and mainstream appeal.
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New companies emerged to dramatically increase the Internet’s unctionality and both businesses and customers slowly began to take otice. Once stability and utility were in place, usage spiked. (Phase 2)
Today, virtually everyone is connected to the Internet, has a website, urrently in Phase 3) mplosion was in full-swing, dot com millionaires are created every day. arc Ostrofsky—now a bestselling author and multimillionaire—was ne of the first.
7- The Life And Times Of Marc
Ostrofsky ith an entrepreneur’s fire and, at just seven years old, he opened his first usiness: a lemonade stand. After selling countless cups, he graduated o selling “darn near anything he could get his hands on.” During the 980’s and early 90’s, Marc created niche-oriented magazines and trade hows, leveraging the synergy between the businesses.
8- Because he had ccess to customers
and businesses who wanted specific information the magazine subscribers) and vendors who wanted access to them the advertisers), trade shows were a natural next step. Phone calls, ace-to-face meetings, and personalized direct mail were (and still are) ime-consuming and expensive options.
9- Current technologies, such as
teleconferencing and videoconferencing, did not exist at the time. rade shows, however, provided a cost-effective solution for oth buyers and sellers. Marc stood at the precipice of an incredibly ucrative opportunity.
10- Given his business acumen, he took full
advantage. His trade show and magazine businesses exploded, and by he time he sought to acquire Business.com as the domain name for new magazine he sought to launch in 1995 he had already amassed onsiderable wealth. For this reason, the $150,000 price tag did not resent a meaningful barrier.
11- Before buying Business.com,
he asked his father for his thoughts. His ather was a tenured university business professor and Marc often sought
14 | INTERNET PROPHETS
the domain or keeping $150,000 in the bank collecting interest?” Marc ulled the trigger. This turned out to be a brilliant move. In 1999, after heated bidding war ensued between two rival companies, he sold thedomain for $7.5 million.Marc’s
Business.com deal landedhim in the Guinness Book ofWorld Records for the mostmoney received from the sale ofa single domain name.At around the same time he purchased Business.com, he alsosecured the rights to eBusiness.com.
12 - After the sale of Business.com
was finalized, he contacted the other company to see if they had aninterest in the second domain. They did. He then sold eBusiness.comfor $10 million. (Terms of this sale were kept confidential, which iswhy it’s not in Guinness.) Marc grossed $17.5 million on the sale of thetwo domains. Not a bad return on his investment. However, he wasn’t done yet.