It’s been a while since my last post. I’ve been very busy with a combination of work and travel, but things should slow down for a while now and I’ll have more time to post more frequently again. I picked up a Time magazine in an airport a few days ago, with a few interesting interviews. One was with Apple’s new CEO, Tim Cook. In it he said:
I’ve never thought going the way of the herd was a particularly good strategy. You can be assured to be at best middle of the pack if you do that. And that’s at best.
Outstanding advice. It’s advice that all of us should keep in mind. And it applies to both business and life.
I’ve been pretty good about not following the herd. But when I started working online back in 2005, knowing very little about making websites, selling online, and building traffic, I initially copied what everyone else was doing. It was a costly mistake, and I quickly learned my lesson. I started putting it this way: Just because everyone else is doing something doesn’t mean it’s worth doing. That may be obvious to most people reading this blog…in life…but it’s sometimes harder to see in business. It’s tempting to think that if the competition has been doing something for months or years, it must be working. However that’s not always the case, strange as it may be.
When I first started my e-commerce site, like every site when it’s new, I had no traffic. SEO was going to take some time, but I needed to make money. So I went to PPC. I looked at the terms my competitors were bidding on…the terms that nearly all of them were bidding on…and figured those must be the good terms. So I chose those terms and wrote similar ads. And I started losing money.
It was near the busiest time of the year for my industry, so I figured it’s got to pick up. The fact that I was spending more than I was making with PPC (on a credit card of course), was going to reverse itself. Otherwise, why would everyone else who has been around for years be doing it? So I kept it up. As traffic picked up, my losses started increasing too. I was spending near $2,000/day on PPC. Sometimes I’d make about that much in pre-PPC profits…and break even. But most days I’d loose a couple hundred dollars. I just kept thinking…everyone else is doing it…these visitors are going to come back and buy. It will work!
But it didn’t. At the end of my first busy season I had lost $10,000. And that was a lot of money to me. Soon after I found out one of our competitors, a wholesaler who decided to go online and sell retail, went out of business because they had outsourced their PPC management and the company drove them into the ground.
Just because everyone else was doing it didn’t mean it was a good thing. In the last 8 years I’ve adjusted my PPC campaign so it is profitable. But I don’t bid on the same terms most of my competition still bids on. Occasionally I do give them a go again, just to make sure I’m not missing something. And every time I try it, I lose money on those terms. Yet, my competition is still doing it month after month, year after year.
Free shipping is another great example in my niche. Everyone offers it. A number of people have told us we need to be offering it. But it’s a losing proposition. I know, because I’ve tested it several times. Free shipping increases the number of orders we receive by a little bit. But the increase in orders is more than offset by the decrease in profits due to the cost of shipping. I’ve tried adding average shipping costs to the price of products…and that just decreases orders due to the higher prices.
So many people think free shipping is a necessity. But a customer first sees the price of a product. In my experience, if you’ve got the better price (since you don’t have to add shipping to the cost of an item) you’re going to get more sales than if you had a higher price + free shipping.
It may be different in different niches and for different product types. But the point is, you should never just run with the herd. You should at least test what you’re doing to make sure it works for you.
Get Away From The Herd
Tim Cook said the best you can do if you run with the herd is to end up in the middle of the pack. If there’s an existing herd before you get in the game, then you’re not the leader…by default. If you don’t end up running behind, eating a combination of dust and crumbs, you’ll likely end up getting trampled, or spend half your time fighting in a crowded, unpleasant place.
The key is to get away from the herd. Blaze your own path. Do something different. If it’s valuable and useful to enough people, and you do a good job promoting it, your chances are far higher than attempting to run with the herd.