Top 10 Reasons Why Online Businesses Fail
- Field of
Dreams" Marketing Strategy
If you build it, they won't come -- until they
hear about it. A new business, especially,
will need to devote at roughly half of it's resources -- be it time,
labor, or dollars -- to building a customer base. It is still
all too common for new online initiatives to spend all their
resources on building the product -- leading to a collapse at the
"second-round funding" stage.
-
Segmentation and Targeting
The online world is all about targeting
well-defined, niche audiences. However, some niches are easier to
target than others. Companies need to know how to define their
potential customers with precision.
-
Weak Offer
What benefits will a customer receive from your
business? Are they unique benefits? Do the benefits of
doing business with you justify the risk of trying your products or
services? It is a amazing how many companies have difficulty
articulating the reasons why anyone should become a customer.
Give your customers an "offer they can't refuse".
-
Complicated Offer
Just as common a mistake as the Weak Offer is the
Complicated Offer. Many companies go overboard in creating a
virtual "courtroom brief" as to why customers should do
business with their company. Offers need to be as simple as
they are strong.
-
Pricing &
Packaging
Most often,
pricing and packaging are two sides of the same coin.
Companies often ask buyers to buy too much, or too comprehensive a
package. Less often, but also quite common, many companies
actually undersell themselves. Successful companies identify
their sweet spot.
-
No Metrics
There are
more ways to measure the dynamics and performance of an online
business than any other kind. Yet, it is still amazing how
many companies do not collect and track this data -- and even more
common is a lack of proper interpretation.
-
Metrics Run-Amok
The flip side of the the metrics issue, is that many companies base
all their decisions on the numbers. In nearly every case, this
leads to "analysis paralysis". Creativity,
imagination, contrarian thinking are all necessary for success.
-
Speed
Kills
Online businesses love to proclaim how fast they move, especially
compared to landed businesses. However, speed is not a virtue
unto itself, but part of an interrelated set of business
dynamics. Best described by the sign on the wall of the
mechanic's shop:
"Good, Fast, Cheap -- Pick Any
Two".
- Inside-Out
Thinking
The big
trap common to all businesses is the failure to understand and
listen to customers. The most important voice at any company
meeting is the voice of the people not present -- your customers.
- Fear of Testing
Many companies equate testing with weakness. People
like to believe that strong, successful companies know all the
answers in advance. The truth is that every successful company
continually tests itself and its assumptions. In marketing,
this means that at least 10-20% of the budget should be continuously
spent on testing.
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