The
Profit Systems Report
Internet Profit Systems
In
This Issue:
Why
"Copying Success"
May Bankrupt Your Company
From
Timothy A. Gross, President - Internet Profit Systems
Friends, virtually every
marketing expert seems to give the same advice on how to become
successful on the internet if you're just starting out. They say,
-You've
heard it a thousand times before. There's only one problem with
that advice: IT COULD BANKRUPT YOUR COMPANY!
Here's
the problem: Under normal circumstances, you can never know EVERYTHING
about your competitors' business models. You can look at their websites,
their products offered, and their price points... You can purchase
their products to look them over, get on their mailing lists, and
you'll certainly learn a lot.
-But
if you've been led to believe that ALL you have to do is imitate
your competitors to be successful, you may be in for a rude awakening.
Here are some potential pitfalls:
FIRST
SCENARIO - Modeling Someone Who TELLS You To Model Them
First,
who is most likely to share the "inside secrets" of their
business with you? -People who are SELLING their expertise to you.
They're telling you to "model someone who is already successful"
because they're pointing to themselves as success stories, and want
you to buy their marketing information so they can profit from it.
That's
fine, except:
1)
Their information may be biased in that it may stress "how
easy" it all is, and could give you lowered expectations of
what you're up against. (That doesn't help you - But it's to the
"experts'" advantage to downplay the hard parts of what
they're teaching, for fear of turning you off and having you ask
for a refund of their information product.)
2)
Their information may be outdated. For example if their claim to
fame is how successful they were at selling a book on the internet
years ago, or how they found and exploited a little-known promotional
technique that has since become overused and saturated, those tips
may no longer be as effective as they once were.
SECOND
SCENARIO - Modeling A Competitor Based On Your Observation
The
information you gain by studying your competitors can be invaluable
- but it only tells half the story. I can't tell you how many times
people have come to me after they'd "cloned" what they
believed to be a successful site and were unable to succeed as much
as they'd hoped by imitating them.
Here
are the reasons:
1)
The business that got there first was able to capture a large segment
of the market. By "paving the way", they have already
established themselves in the marketplace.
If you're just imitating their business model in an uncreative
way, you'll most likely only get a small piece of the market share
from them.
Most
"imitators'" solution to this problem is to undercut their
competitors on price, only to find that it may not have increased
their sales but that it DID lower their profit margin... and that
there's always somebody else out there willing to undercut THEIR
price even more.
2)
The existing business you're copying may have hidden advantages
over you that you're not aware of. For example:
a)
If both you and your established competitor are re-selling someone
else's products, your existing competitor may have a special price
arrangement with the wholesaler which gives them a higher profit
margin than you're able to get.
b)
Your competitor may have special advertising rates, or even barter
services for their advertising to save costs. Some of these types
of advantages may be due to their larger purchasing power if they
are a larger, more well-established company.
c)
The competitor you are attempting to model may actually be LOSING
money with each initial sale that they make, and making their profit
with back-end "upsells". If you don't have a back-end
product to offer your customers, imitating their initial sales strategy
could bankrupt your company!
I've
worked with companies who sold lower-priced "lead" products
and didn't mind losing $50 or more for every new customer they could
gain through an initial sale because they knew each new customer
was worth an average of $100+ dollars to them in back-end sales
over the next 3 to 6 months. Imagine going head-to-head with this
company after modeling your business after theirs... but not having
a back-end product!
(If
you're not familiar with the term "back-end", it simply
means a product or service that you are selling to existing customers.
A "front-end" product is what you offer to potential customers
to encourage them to initially do business with you. The front-end
product is what you spend your advertising dollars to promote.)
So
What SHOULD You Do?
Am
I telling you NOT to "model success"? -Absolutely not.
But the "copying" should be used as a springboard to get
STARTED, after which you add your own unique, creative, ground-breaking
twists and ideas that will help you to catapult your business over
your competitors' by approaching your market in new ways.
"Modeling
success" is an effective way to short-cut your learning/growth
curve to come up with a viable business plan, product, and advertising
campaign - But it's ONLY THE BEGINNING. It just gets you into the
batter's box. From there, it's up to you to "hit a home run"
by coming up with new twists, ideas, and innovations to give you
the Home Team advantage. (Pardon the baseball analogy
;-)
Why
Am I Telling You This? -I want to make sure you're looking further
down the road as you build your business...
If
you're in the beginning stages of developing your internet business,
you should *absolutely* use your successful competitors' business
models as signposts to where you're going... But if you latch on
to the idea that your work is done once you've mimicked a competitor's
business, you may be in for a big disappointment.
BOTTOM
LINE:
If
all it took to have a successful online business was to model what
your competitors are doing (or at least what you PERCEIVE they are
doing), life - and business - would be a piece of cake. Don't be
fooled into thinking that success is a "paint by numbers"
process.
Draw
from every source you can to focus on developing your OWN successful
model, then test, test, test. Don't be discouraged if the first
thing you try doesn't work. It can take many changes and improvements
to get your sales process running on all cylinders.
Don't
be so fascinated and impressed by what you think your competitors
are doing that you just fall in line behind them and mirror their
efforts. To get to the head of the line, you've got to try things
that the others haven't thought of - That's where the real breakthroughs
(and bigger profits) are.
This
isn't as much of a "nuts-and-bolts" newsletter issue as
my others have been, but your overall mind-set is crucial to the
success of your business, and you need to have your radar up constantly
scanning for new ideas and twists that you can apply to your business.
Don't be lulled into complacency by thinking all you have to do
is "copy success". You need to make your OWN success story.
To
your success, Tim Gross - President, Internet Profit Systems
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