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Front and Center

The very first thing the 2,000+ guests and exhibitors saw when they walked into LA's Largest Mixer VI was Level IV's 10 foot high banner that proudly proclaimed "Level IV is Taking the RISK out of Marketing!" "We Guarantee You'll Have More Business, or You Pay Nothing!!" Well, that and 14 of our staff members greeting them to the mixer.

Having the only marketing team with the confidence to guarantee its work drew quite a crowd, as you can see from the picture. It also left the business owners in attendance wondering how we can do that and why doesn't anybody else do that?
Well, you can find out exactly how we do that by setting up a one on one assessment of your current marketing plan, or by coming to our seminar this month called "Taking the RISK out of Marketing."

As to "why doesn't anybody else do that?" Well, we can't answer that. Because anybody that really knows marketing, knows that it doesn't take a rocket scientist to generate predictable results from marketing. But it does require you to follow a few simple steps. If you do, it's a no brainer, so to speak. Give us a call, We'll be happy to discuss your particular needs with you in person.

When is an Expensive Ad Not?

People say it all the time: "This advertising costs too much!" They practically go into cardiac arrest when they see how much the advertising for certain media in Los Angeles is going to cost them. It is pretty easy to get sticker shock when you see that a 60-second radio commercial on a popular station could cost you a thousand bucks - each. Or when you realize that all the dot.com businesses in Silicon Valley have made radio spots on top stations in the San Francisco market cost as much as $2,500 - a MINUTE. Or when you realize that a newspaper ad in a city barely bigger than a Hershey bar will cost a couple thousands dollars. It's easy to automatically think that's a lot of money. Now here's the important question for you, the advertiser: does the ad really cost too much?

So what's the answer? The savvy advertiser will tell you that the cost of the ad is not the issue. What's important is the return that the ad will bring. If you were charged even as much as $40,000 for a 60-second radio commercial that generated enough sales to make you a profit of $50,000, then would the $40,000 be A LOT? The answer is NO! Of course not! You'd be a fool not to beg, borrow or steal the $40,000 so you could make the $50,000 profit! Try getting that kind of return in the stock market! How do you think that these big companies can afford to spend two million dollars for a 30-second TV commercial during the Super Bowl? They know that an enormous amount of people will see it - enough to make the return on investment a good deal.

The point is simple: you've got to figure out how much money an ad will make you before you draw a conclusion of whether or not it costs too much. So how do you do that? It's actually pretty easy. Start with calculating your breakeven point. Then you'll be able to gauge the potential for a Return on Investment, or ROI, of an ad.

Step one: figure out how much profit you make on each sale. For instance, if you buy it for $60 and sell it for $100, your gross profit is $40.

Step two: figure out what your closing ratio is. If, on average, you close one sale for every four people who inquire, that's a 25% closing ratio. If 9 out of 10 end up buying, then your closing ratio would be 90%. This is simple math.

Step three: calculating your break even. Do this by taking the cost of the advertisement and dividing it by the amount of gross profit per sale. Remember, we already figured out what your gross profit is a second ago. So how much do the ads cost? If the ads cost $1,000 and your average gross profit is $40, that means you've got to make 25 sales to make back the $1,000 - that's your break even point - in this example, it's 25 sales. Equally important is figuring out the number of leads you need to generate from the ad if you are to break even. To do this, you've got to know your closing ratio, which we just figured out also. Let's say it's 25%, or in other words, you close one out of four people who inquire. So if you close 25%, and you need 25 sales to break even, that indicates that your $1,000 worth of advertising needs to generate 100 leads to break even.

Step four: calculating your ROI. Now I know all this can seem complicated, but it's actually pretty simple. We just calculated in the example that if the $1,000 ads can generate 100 leads you would break even. That's a return on investment of 0. I'm not saying that your goal is to break even. I realize that you are in business to make a profit. But let's start with breaking even; that's the bare minimum you can accept when running an ad. At least you didn't come up with a NEGATIVE return on investment! So let's say your goal was to double your money. What would have to happen to your numbers? That's right, you'd have to double your lead flow, or in this case, generate 200 leads instead of just 100. That means that if you generated 200 leads, you would generate a profit of $1,000 - again, on $1,000 spent. In other words, you've doubled your money. Your return on investment is 100%. That's pretty easy to follow, isn't it? By way of review, what we're trying to do is calculate your return on investment for your advertising. Here are the steps again. Think about the numbers in your business.

1. What's your gross profit per sale?

2. What's your closing ratio?

3. What's your break even - in terms of number of sales needed? How many leads does your ad need to generate for enough sales to break even?

4. What's your return on investment on any given number of leads that you generate?

Now realize something important here. What we've just done in this exercise is figure out how many leads you need to generate to break even on the cost of the advertisement and then calculate the ROI for how ever many leads your ads end up generating. That's a good piece of information to have, but now I want to take it a step further. Let's figure out what's known as the Lifetime Value of a Customer. What if your average customer brings you a $40 gross profit per sale like in the example we just went through? Is that the only time that customer will ever buy anything from you? How many times does that average customer come back in the course of a month or a year? If your average customer shops with you one time a month and makes you $40 gross profit every time, that customer is now worth $480 a year - in profit. And if you know that your average customer stays with you for 3 years, now that $40 a month client is worth a tidy $1,440. So now how much would you be willing to spend to accrue that client? What if those were your average numbers, $40 a month for 3 years.

Then in the example earlier, remember where we broke even with 100 leads and just 25 sales? Now those 25 customers would be worth an astounding $36,000 over the next three years. And it only cost you a thousand dollars worth of advertising. Now your break even looks a lot better, doesn't it! If you could accrue a $36,000 annuity every time you ran a thousand dollars' worth of ads, you should mortgage your house and spend as much money as possible on advertising!!

Note: When figuring your return on investment for advertising, always estimate your numbers conservatively, or in other words, on the low side. Always figure on getting a lower number of leads than you're hoping for and expecting. Always count on a lower closing ratio than you're used to. If you calculate your numbers using conservative figures, then you'll do fine if your results are actually lower than projections and in the event that you do as well as you had initially hoped, you'll just make more money than you expected.

Let me give you a real life example to better illustrate ROI. There is a company that was promoting seminars where they would attempt to sell a service that cost $8,000. When they were starting to do advertising to promote these seminars, the question of how much budget should they allot came up. They wanted to start filling seminars within about a week after starting advertising, so they decided that fax broadcasting would be the best way for them to quickly get the message out about the seminars. Faxing can be done for as little as 7 cents per page in some major metropolitan areas, so they came back and said they thought they would want to send out about 25,000 faxes a week for the 5 weeks they would be doing seminars. When asked how many sales were they planning on generating, they said because of a unique financing plan that allowed them to sell their package on a low monthly payment basis, they thought they could sell at least 100 packages in that 5 week time period.

Well, 100 packages is a lot and they were told that they would have to do at least 100,000 faxes a week for the 5-week period to get the number of leads required to sell that many packages. The man got his calculator out and did some quick math and realized that he had to spend $35,000! 7 cents times 100,000 faxes times 5 weeks! That number - $35,000 - sounded so huge it caught him off guard. His idea was to spend just under 2 grand a week or a total of less than $9,000. Big difference. That's called "sticker shock."

So what he did was figure out the ROI, according to the steps previously explained. Again, first figure out your gross profit per sale. His was about $3,250. Second, figure out the closing ratio. He thought his would be about 20%. So then, how many sales would he need to break even on a $35,000 advertising expenditure? Well, 35 thousand divided by $3,250 gross profit per sale is about 11 sales. Just 11 sales to break even. So if his closing ratio were just 10%, he'd have to generate about 110 leads to break even. 110 leads on 500,000 faxes? Easily attainable. The last thing to do would be to figure out how many leads he'd have to get to reach his goal. His goal is 100 sales and his closing ratio is 10%. That means he'd have to generate about 1,000 leads. On 500,000 faxes sent out, that's like a two-one-thousandths of a percent response. That is very reasonable. He'd generate a total gross profit on the deal of $325,000 and if you subtract the $35,000 advertising cost, that's still a healthy gross profit. His attitude toward the $35,000 changed instantly.

Well, do you see how that works now? Just run through your numbers and you'll know how much money is a lot of money when it comes to advertising.

Then all you have to do is separate yourself from your competition in such a way as to leave your prospects knowing that you are the only game in town. You can learn how to do that at our Taking the Risk out of Marketing seminar.

Level IV Is Taking The Risk Out Of Marketing.

I want to invite you to consider all the money you are planning to risk on marketing and advertising in the coming months… and then ask yourself, "What guarantee do I have that the money I risk will pay off in more business?"

Over the years, we've learned that it costs just as much to execute a really bad marketing campaign as it does a really good one.

Level IV is now taking the risk out of marketing. How do we do this? Quite simply, we guarantee that our marketing team will help you get more new business for less money. If we don't, you pay nothing. Isn't that simple?

So the next time you're thinking about risking any money on marketing, you owe it to yourself to call us. We'll give you a free assessment of your current plan and let you know how to get more bang for your buck.

So call your friendly design firm, marketing firm, or ad salesman and ask them if they'll guarantee their work… then call us… Level IV.

Save the Date!

Three weeks from today on the evening of August 24th, for the first time ever Level IV will be sharing with business owners the secrets of Taking the Risk Out of Marketing!!No other seminar offers a more complete road map of how to bank on getting predictable results from your marketing dollars. Level IV has the only marketing team that guarantees you get more from your marketing dollars or you pay nothing! And now, you can learn how we do that and how you can do that for your own business!Look for an announcement in your email Inbox in the next few days for more details!

Plagiarism for Productivity
Plagiarism for Productivity is an old marketing axiom that basically means "borrow their strategy and do it better." Or, put another way, innovation doesn't always pay. Now we're not suggesting that you go out and plagiarize some other company's property. But sometimes, it's best to borrow a winning practice from the competition. Small businesses and entrepreneurial enterprises often pride themselves on originality and ingenuity, but it's a mistake to think that every idea needs to be born within your company.

Large corporations know this lesson well. In fact, many have substantial budgets and entire departments dedicated to competitive intelligence-the legal and ethical collection and analysis of information regarding the strategic capabilities, vulnerabilities and intentions of business competitors.

Benchmarking, a related tactical activity, involves auditing your competition for the purpose of adopting and adapting procedures and policies to improve your company. For the last decade, companies have used benchmarking to measure themselves against top-performing firms. "Benchmarking is a management process by which you navigate to superior performance and productivity," explains Chris Bogan, president and CEO of Best Practices LLC, in Chapel Hill, N.C., and co-author of Benchmarking for Best Practices: Winning through Innovative Adaptation. "Just as the pilot of an aircraft or ship navigates by continuously checking outside references, a business owner has to be externally focused to make adjustments that drive better performance. Benchmarking is the elixir of life for small businesses, because they often have a smaller margin for error and less capital."

Small businesses can benefit from monitoring-and mimicking-the best practices of the giants in their industries as well as the smaller firms that may represent their greatest competition. Using a service such as the Business Advisor ProfitGaugeSM service at businessadvisorprofitgauge.com is a quick and easy way to see where your company stands against the competition. Borrowed ideas can be directly related to a particular field, or can be general practices that improve human resources, customer service or management.

Here are three companies that have learned a thing or two from their competitors-and became more competitive in the process.

Mystery Revealed
In 1991, Dale Crownover took over as president of his family's Dallas-based label company, Texas Nameplate Co. Inc. (TNC). In less than a decade, he turned the outdated enterprise into the recipient of the Malcolm Baldrige National Quality Award, the nation's premier award for performance excellence and quality achievement. He credits part of his success to competitive analysis and benchmarking.

"I don't know how you're going to do better than your competitors if you don't know what they're doing," Crownover says. "It's essential to gather comparative data and to do it in a very, very highly ethical manner. Then, you can make a decision on how to use the data based on what your customers want and expect."

Five years ago, Crownover implemented a mystery-shopper program. Through this program, a third-party company purchases nameplates from four to eight TNC competitors each year, thereby obtaining information about the products and pricing on the market. More importantly, Crownover learns about bid response times and delivery dependability. He also analyzes competitors' customer service by rejecting perfect plates and gauging the response.

As a direct result of the program, Crownover discovered that his competitors generally took one to five days to provide quotes to customers. Consequently, he implemented a sales department service standard of same-day quotes, and that policy has increased revenues dramatically.

"The real story is not how you get the information, but how you use it," Crownover insists. "We monitor some companies of similar size and some that are within our area, but we tend to benchmark companies that are driven by long-term stability. Then we have to figure out how to integrate what we find into our organization and deploy it within our strategic plan according to the core values of our organization."

Battling Both Sides
Shauna Bona says her Salt Lake City-based firm, McKinnon-Mulherin, doesn't have a lot of direct competition. She and her business partner, Kate Reddy, have built a small corporate communication and information design firm that fills the gap between consultants-who usually don't implement their solutions-and implementers-who usually don't deal with the big picture. Still, McKinnon-Mulherin had to find a way to compete with both kinds of companies.

"This is a marketplace with two ends of the spectrum, and we wanted to position ourselves somewhere in between the consulting experts and the staffing companies," Bona explains. "But we had to figure out how to articulate what we could offer."Bona soon realized that staffing companies won implementation projects by providing quick bids in easy-to-understand language.

"Staffing firms knew off the top of their heads how much they had to charge to make a profit on a particular project, so they were able to give a very quick response," Bona says. "Now, when we're up against a staffing firm, we still talk about communications goals, but we are very specific about what clients are getting for their money. We present clear numbers, so clients can compare apples to apples because if a staffing firm is talking about man hours, and we're talking about business objectives, we will lose."

Bona and her team also found another mimic-worthy idea. They saw that consulting firms often wowed clients with in-house return-on-investment studies based on former clients. So, they began incorporating such studies into their own practices.

"Originality in business is good if it serves a purpose, but it doesn't help our clients if we're always starting from scratch," Bona says. "We learn from our partners and competitors and even our clients."

Learning from the Competition
Despite the hardships hitting the technology sector, Jel Productions in Sacramento, Calif., is flourishing. Although president Jon Lee admits that competition for his Internet consulting and development firm is thinning, the company spends just as much time evaluating the remaining rivals.

"We can get a good understanding of our competitors' offerings and message from their Web sites," Lee says. "We can look at the kind of work they put out and how well they deliver on other people's sites."

Thanks to comments from clients and prospects, Lee and his employees can size up their sales presentations and find out the competitiveness of their company's pricing. "You can learn a lot from bidding on a job even if you don't win," Lee says. "When the economy turned down, we were able to drop our rates in comparison to our competition, and that was a direct effect of learning about the other prices on the market."

To earn more clients, the Jel Productions staff also followed competitors in creating an attractive proposal booklet. Lee says that his company used to refer potential clients to its Web site for further information and design possibilities. However, when he learned that other project contenders impressed prospects with fancy, colorful brochures, Jel Productions quickly followed suit.

"Our field is so new that there aren't a lot of best practices out there yet, so you have to make sure you're reviewing your competitors and seeing how they're doing things," Lee says. "That's Business 101. Otherwise, you may be losing jobs, and you'll always be doing things the hard way."

How to Track the Competition
Large firms have considerable dollars and staffing resources available to gather information about their competitors. These low-cost ideas, however, can help you keep an eye on all the players in your industry.

  • Seek out competitors' marketing and collateral materials. Don't forget to check out their Web sites.

  • If you're providing a product, order comparable goods. If you're providing a service, try to get a demonstration of similar services, perhaps at a trade show.

  • Encourage every employee to join a professional organization and to attend meetings with the goal of finding ideas that could be replicated in your own company.

  • Subscribe to trade journals and read them thoroughly.

  • Solicit honest feedback from clients and vendors in your field.

  • Foster friendly relationships with your competitors and get information right from the source.

In Advertising, Is It Better To Be One Of The Pack or The Lone Dog?

There are many ways to evaluate the advertising medium you're thinking about. Here's another one. When considering placing your ad, check to see if there are any businesses that are similar to yours currently advertising there. If not, be wary - there's probably a reason. Don't ever assume that all your competitors must be stupid to not have figured out to advertise where you're about to advertise. It rarely works that way. It usually works this way instead: Many people have tried ahead of you unsuccessfully and quit before they lost all their money. Don't think, "Wow, great, I'll get all the business because I'm the only one!"

Here's a story about a stamp manufacturer that was running a very small business. He had been looking for some other media outlets that would drive in more business. And then the floodgates opened and media salespeople started showing up on his doorstep by the droves. One of them in the early days was the salesperson for the Thomas Registry of Manufacturers. If you're not familiar with that publication, it's simply a directory of manufacturers of every product imaginable from all around the country that is primarily used by industrial buyers to source products and parts. It's a wonderful place to advertise for lots of kinds of manufacturers - but not for this guy in the rubber stamp business.

Apparently, the salesperson had been persistent: "You're a manufacturer, you really ought to be in there. Heck, the ad that's 5 inches tall by 1 inch wide is only $3,200 for the whole year...and besides, you'd be the only one with a space ad in the whole section. Everyone else in the whole section just has a measly line listing. Anytime anyone went there to find a stamp manufacturer, you'd be sure to get all of the business - for a lousy $3,200 investment. That's only $266.67 a month!"

Don't bite on that hook unless you want to end up like a dead fish on the wall of that salesman's trophy room. There's a reason that nobody else's ad is there. Well, the stamp guy bought the ad and, sure enough, NOBODY called. And since he was the only one with an ad in the book, it's probably a pretty safe bet that approximately ZERO people had looked there for their rubber stamp needs. But that's not even the worst part. He renewed the ad for the next year. This time though, he wrote the ad better and he managed 1 call. On a positive note, that's a pretty good increase, percentage-wise. What was the main problem? People who buy rubber stamps, for the most part, work in an office and have never even heard of the Thomas Registry! They either call their office supply company or look in the yellow pages under "Office Supplies". Well, in this case, the customer told him that they wouldn't look in the Thomas Registry of Manufacturers for stamps. You see, they voted with their dollars. But he didn't figure it out until over $6,000 had been wasted over the course of two years. Again, when it comes to advertising...being one of the pack is often better than being the lone dog.

Car dealerships understand this principle, don't they? For all the goofy, weird stuff they do, they do understand the principle of being one of the pack. They clump all of their advertisements together in one section of the newspaper because they know that this method is more likely to increase the overall number of people that see any given ad. They get the entire car buying public directed to one section of the paper. Then the dealerships will often be located right next to one another. They figure that if they can attract all the possible car buyers to one specific part of town, they might create a synergy that will sell more cars overall. Now I'm all for this because it keeps all the ticked off guys concentrated in one place, I guess. But they understand the principle - become one of the pack.

So what about you? Do a quick search of the media you're considering buying and see if anyone else has already walked down that path - generally speaking, the more footprints, the better. If the medium you're considering buying has no other businesses like yours anywhere to be found, be wary.

Now all you have to do is elevate yourself above the crowd, i.e. distinguish yourself from your competition, and you're in business! So to speak. You can learn how to do that at our
Taking the Risk out of Marketing seminar.

Open Forum

Entrepreneur: Wading through the piles of junk email (spam) everyday looking for important messages is taking me forever. And sometimes messages I meant to respond to get forgotten with all the others. What is the best way to deal with email overload?

Level IV: Internet-connected employees are receiving an average of 30 e-mails a day, with many fielding a hundred or more, as electronic mail becomes a primary means of communication in the workplace.

The influx into our inboxes can mean critical messages get forgotten amid the information overload. It also illustrates the growing need to learn how to manage e-mail.

"What people end up with if they don't clear out their inbox is hundreds, thousands, even tens of thousands of e-mails going back years," said Mark Hurst, founder of Creative Good, a New York-based Internet-strategy consulting firm. "We hear it all the time, people saying 'I can't find this file. I'm so overloaded. I'm so stressed.'"

The growing spam scourge is making inbox management all the more frustrating. Unsolicited mailings will comprise half of all e-mail messages by year-end, estimates Brightmail, a company specializing in spam filtering.

"Increasing numbers of e-mail users tell us spam makes it harder and harder for them" to get to legitimate messages, said Lee Rainie, director of the Pew Internet and American Life Project.

Americans received an average of 11 emails to their personal addresses in 2002 along with their daily workload, according to Ferris Research, a market and technology research firm. That's 300 messages in personal inboxes and 600 in work inboxes each month -- and higher still for those in information technology or research-related jobs. How you dispense with the e-mail you receive is key to surviving the mounting volume.

Clean-up tips

  1. Empty your inbox every day, Hurst recommended. Rather than using the inbox as a to-do list, a filing system and a calendar, take action on each and every e-mail message. "The main thing they have to do is commit to keeping the inbox empty," Hurst said. "The tool simply is not designed to do all of those jobs at once, especially in the form of one long list of e-mails. If you use it in that way it's horribly inefficient," he said.
  2. Each time you receive a message, enter the item on your calendar, copy-and-paste the information to the relevant project file elsewhere on your desktop, move the message to a specially-labeled e-mail folder, or add the information to your handwritten or word-processed to-do list. Then delete the message, Hurst said.
  3. Get it done with immediately, says Hurst, who suggests a two-minute rule -- If the item can be dealt with in two minutes or less, deal with it then and there, then delete the message.
  4. At a minimum, organize what remains in your inbox. "I like to have everything in one box," said Marcel Nienhuis, an analyst with market-research firm The Radicati Group. If he can't dispense with the message immediately, he uses Microsoft Outlook to mark the message as unread to remind him he still needs to deal with it.
  5. Take advantage of tools. Most e-mail programs offer options for highlighting all messages from a particular sender in blue or red. Also, users can set up a rule to automatically route messages from certain senders to a different e-mail folder rather than your inbox. "Anytime you sign up for a regularly delivered e-mail" such as a newsletter, create a rule for diverting it out of your inbox, said Enrique Salem, chief executive at Brightmail. That limits clutter in your inbox, but allows you to go to that folder when you have time, he said.

Reducing Spam

While it's impossible to entirely eliminate spam, there are ways to reduce the glut. Brightmail's Salem suggested the following three tips for individuals to cut down on spam:

  • Set up a separate e-mail address to use online, such as at shopping sites or to sign up for a newsletter. Yahoo offers free email accounts, which you can use for anything that you must register an email address for. When the spam becomes overbearing, simply discard the address and get a new one.
  • If at all possible, don't put your email address on your web site. Spammers can often scrape e-mail addresses posted on the Web.
  • Don't unsubscribe unless it's a reputable company. Clicking on the unsubscribe feature will tell a spammer that yours is a working e-mail address with an active user.
  • Sign up with an Internet Service Provider that has strict policies regarding spammers. Most ISPs will terminate the e-mail addresses of people who send out, say, more than 1,000 messages a day from an address.

Most e-mail programs also offer filters that allow you to have all messages with a particular subject line or sender to be deleted or sent to a spam folder. (In Outlook, this tool is called the Rules Wizard.) When using a filter, don't be too liberal in your choice of words or you risk eliminating legitimate messages. For instance, enter "make money fast" in the filter, but not just "money," Hurst said. Only filter out messages that occur repeatedly, rather than wasting your time filtering out a one-time-only message. Also, remember you'll need to regularly update your filters to address the changes spammers make, Hurst said. For instance, "make money fast" may have to change to "make money now."
Hurst's report on managing e-mail contains additional information on filtering spam, and is available for free at Goodexperience.com.