This was a question someone asked me earlier this month – and to me the answer was so ‘obvious’ that I was astounded by the question.
But lets set the scene first so we can understand the context of the question. This chap has a small engineering works that manufacturers bespoke aluminium components – and he is only interested in orders greater than R 80 000 (Eighty Thousand Rand) – no he isn’t greedy but the cost of setup and tooling to manufacture “to-order” components makes jobs of lower value unprofitable – or do they?
Will getting my business online provide me with valuable information?
So let’s look at the question again through his lense and then let me tell you what I advised him:
1) What is the nature of the customer? Is this a once-off sale or can he reasonably be expected to buy from you again – and if so with what frequency, over what time period and what would the average sale value be?
You see, without determining the answers to this question you cannot begin to guage the lifetime value of your customer – which is of vital importance. Lets say this customer would order R 20 000 worth of product every 60 days, but in the absence of poor service or a sub-standard product (which the owner has 100% influence over) this customer could be expected to purchase from you for the next 3 years.
That makes the lifetime value of this customer significant!
6 Sales a year averaging R 20 000 = R 120 000 / year over 3 years that’s sales of R 360 000! Through this lense the once-off costs of tooling may well pale into insignificance and make this a very worthwhile customer – even though the intial order was only R 20 000 – and possible loss-making.
But does this yet answer the question ‘Should my business be on the internet?” No yet.
The following questions also need to be asked – and the answers established. If you were to put a website up for your business what purposes would it serve? What do you want or expect it to do for you?
A tremendous amount of websites (possibly 7 out of 10) are, in my opinion, not fit for purposes. That is a topic to be covered at a later time.
Back to this small business owners question. Let’s look at what it would cost him to get a website up on the internet. Realistically, if he got someone to do a basic design for him, it would likely cost between R 3500 – R 5000 once off. If he shopped around (or had the technical skills to do it himself) he could get it done for a lot less.
Nevertheless let us assume that he decides that the purpose of the website is twofold:
- To market his business;&
- To canvass leads.
This second goal “to canvass leads” is the critical one in my opinion, certainly in the early stages. You see by structuring his website in such a way that it gathers leads (regardless if these ask the visitor to complete an online form, or ask them to call the company etc) he begins to tap a wealth of information!
He gets to guage interest in his products and services!
He gets to asks these leads meaningful questions and their answers will provide invaluable information to help shape his future strategy.
Getting this information will provide him with an answer, based on results rather than conjecture, gut-feel or personal bias. He will soon know whether being online does or doesn’t have merit for his business. (Personally I cannot think of any business that wouldn’t benefit from being online – but this business owner needs his own measurable answer)
What benefits could we expect from getting our small business online?
So lets look at the likely outcomes of his online test. If he receives no interest, no leads and no data from having launched his website (launching an effective website and gathering leads is another topic for later discussion) then his initial thoughts that he would not reap real rewards from being online may be confirmed. He gets to answer his question definitively – although he would be well advised to re-test these assumptions at regular intervals as the market forces and internet penetration evolve rapidly so what might be valid today may no longer be valid 12 or 24 months from now).
If visitors to his website take the desired action – to call or complete a form etc – then he has the opportunity to engage with them and to establish inter-alia
- The value and frequency of his prospects purchases.
- What unique requirements his prospects may have – would they make larger purchases if they were incentivized to do so? Consider a discount or credit terms or preferably a value-added service (like a site survey or reduced-fee consulation)
- Do they have unique requirements that others in the field have not been able to offer? Would this offer a unique opportunity? Could you charge more for solving these unique problems?
- How many people are interested in products or services related to his core product that he could incorporate as value-adds or even a second revenue stream?
As you can see there is always value in getting your business online – provided you are clear on what you expect of your website and that your website is fit for purpose.
This exercise, executed for a small amount of money, will reveal a mountain of valuable information and will help definitively answer his question “should my business be on the internet?”
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