Issue #2239
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Issue #2238
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After hearing a news report about the Beatles phenomenon in England, 15-year-old Marsha Albert wrote to her local Washington, D.C. radio station and asked, "Why can’t we have music like that here in America?"
Inspired by Marsha’s question, disk jockey Carroll James managed to get a copy of "I Want to Hold Your Hand" from a British flight attendant and introduced the song to his WWDC radio audience on December 17, 1963.
Within minutes, requests for the record flooded the station. Within days, radio stations all across the United States were playing the song. And Capital Records was forced to release it on December 26, three weeks earlier than scheduled.
According to Bruce Spizer, author of The Beatles Are Coming! The Birth of Beatlemania in America, when the band appeared on Ed Sullivan’s TV show on February 9, 1964, 73 million people – an unprecedented 40 percent of the U.S. population at the time – watched.
"There’s no doubt whatsoever that the Beatles would have conquered America anyway," Beatles historian Martin Lewis told USA Today. "But the speed and magnitude of that stratospheric kick-off could not have happened without Marsha Albert. If the record had been released on January 13th, as planned, kids wouldn’t have heard it 20 times a day, as they did during the school break. It would never have sold 1 million copies in three weeks. There wouldn’t have been 10,000 kids at JFK to greet the Beatles. Marsha didn’t start Beatlemania. She jump-started it."
That’s what a single, simple question can do.
Think about the couples who might never have met and gotten married had it not been for that old, reliable question: "Is someone sitting here?"
Think about the chances you might have missed in your own life by failing to ask "Can I?" Or "Would you?" Or "Is he?"
In 1982, I was working at a dead-end journalism job for a small Washington, D.C. publishing house. I knew it was time to get a move on if I didn’t want to end up bored silly and making a meager living for the rest of my life. But I wasn’t sure what to do.
As it happened, K had planned a week’s vacation for us in Key Largo, where her brother worked for a Jet Ski rental business. Since we were going to be in Florida anyway, I figured I’d schedule a few job interviews. Not because I was hopeful of finding a good job there, but because I wanted to write off the travel expenses as a tax deduction.
I had two possible leads. One was a colleague, a high-ranking editor at the Washington Post who, I figured, might know someone in Florida. The other was the name and address of a publisher in Boca Raton, FL who had been sending me promotions for his newsletters.
But to pursue these leads, I would have to ask questions – which is something I’ve always been reluctant to do, especially if the answer could be something I didn’t want to hear.
But I did it.
I asked the Washington Post editor, "Do you know anybody in Florida who might give me a job interview?" And I wrote to the Boca Raton publisher and asked, "Do you have a place in your organization for a person like me?"
As a result, by the time K and I left for our vacation, I had three job interviews lined up. One was with the editor-in-chief of The St. Petersburg Times. Another was with a news editor for the Miami Herald. And the third one was with JSN, the newsletter publisher in Boca Raton.
I met with each one of these guys en route. And by the time we reached Key Largo, I had three job offers. Getting three offers out of three interviews was an astonishing thing. And it left me with a dilemma.
Should I take the high road that might lead to a Pulitzer Prize and everlasting fame as a respected journalist? Or the low road – journalistic obscurity but with the implied promise of a Big Bag of Gold for my efforts?
Which one should I choose?
The only person who could really answer that question was me. But that didn’t stop me from soliciting opinions from even the most unlikely sources, including a 17-year-old pothead whose job in life was to refill the Jet Skis with gasoline.
After I told him my long story, he paused, took a toke on his joint, and said, "Go Boca."
Turns out that, after much soul-searching, I came to the same conclusion. And that decision was the trigger for all of the good things I have since accomplished.
But it all started when I forced myself to ask a few influential people the right questions at the right time.
[Ed. Note: Get Michael Masterson's insights into becoming successful in your business and personal life, achieving financial independence, and accomplishing all your goals on his new website. You'll find updates on all of Michael's books, news on upcoming ETR events, Michael's blog, and room to send in your comments and questions. Check it out today.]
Issue #2237
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You’ve got a big meeting with a potential client. If you can reel in this one for the company, you’ve been promised a corner office and the bump in salary and perks that go with it.
You’ve done your research. You know that this client sees himself as a "Donald Trump." So, during your meeting, you don’t spend much time on the "nuts and bolts" of his project. Instead, you help him imagine what it will be like for him if he chooses your firm to help him bring it to fruition. He’ll be a major player in the industry… possibly even a household name. He’s no fool, so he asks a lot of questions. But you’ve got the right answers. Everyone is smiling and shaking hands as you close the deal.
If you would like to have this kind of influence over the decisions people make, read on. Because I’m going to share the details of a persuasion technique that can make it happen.
Before we dive in, keep in mind that people aren’t always open to being persuaded.
Think about yourself when you go car shopping. You may have an idea of what model you want. You may (in fact, you should) also have an idea of what the car will cost and how much you can afford to pay for it. You might even know what color you want it to be. But despite your genuine interest in buying that car, you are probably wary of being pushed into it. So if the salesman is too aggressive, you’re likely to leave without making the purchase.
The point is, people are leery of being manipulated. If you want to persuade someone to do something, you need to remember just how easy it is to scare them away. That’s why one of the most effective persuasion techniques isn’t at all aggressive.
Salespeople often use this technique. It’s called "visualization."
Take a car salesman, for example. Once he has determined that you are a serious and qualified buyer, he’s going to want to get you into a car for a test drive. You see, an emotional change takes place when you’re behind the wheel of a car you like. An even bigger change occurs when you drive it. You start to imagine what it would be like if you owned that car. You see yourself driving it to work. You picture other people admiring it. And if the salesman is any good, he’ll give the visualization process a nudge. ("Wouldn’t it be fun to run into an old friend when you pull up to the gas pump in this baby?")
Marketers use visualization all the time. Think about the "big promise" of a good direct-mail piece. Quite often, the headline will evoke an image of how the reader’s life can change. ("Feel Like You Did When You Were 21 in Only 30 Minutes a Day!") Or it could be even subtler: showing a photo of a well-muscled middle-aged man with his arms around an attractive woman, for example.
A good salesperson or marketer doesn’t rely only on visualization to make the sale. They want to make sure you know all about their product’s benefits. For instance, our car salesman would tell you about the technical superiority of the car’s fuel injection system. He’d explain that with this fuel injection system, you’ll be able to tap the gas and be going 60 miles an hour in four seconds. And, as he’d point out, that speed will allow for safer entry onto the highway. That’s a major benefit – and a good, logical reason to buy the car.
But visualization draws out a powerful, primitive emotional response – a desire for the car that’s not based on reason. And you can use it in your personal life as well as in business. If, for example, you want to talk your spouse into going out for dinner, you might say something like, "Fifteen minutes from now, we could be sitting in our favorite booth, sipping wine and waiting for a piping hot steak." While a logic-based argument might work ("We’re both really tired and deserve a break"), visualization is more likely to get an instant, "Let’s do it!"
Here are the basic steps:
This first step is all about knowing your prospect.
Let’s say you want to convince your supervisor to let you buy some new equipment for your office. In this case, you almost certainly understand what makes him tick, so you should have no trouble coming up with an effective image. (Maybe picturing you churning out more work, and, as a result, him posting incredible productivity numbers for his department.)
But let’s say you’re a car salesperson. In this case, you don’t know your prospective buyer at all – and you have only a few minutes to strike up a conversation that will give you some clues. Is she conservative or adventurous? Does she have a large discretionary income or is money tight? Is she concerned about the environment or does she care more about power?
The more accurately you assess the kind of image that will motivate your prospect, the more powerful the visualization tool will be.
If, for example, your prospective car buyer is a "stay at home mom" with three children, asking her to visualize beating a sports car at a stoplight won’t work. Instead, you’d want her to picture her twin babies sitting securely in their car seats, while her nine-year-old enjoys the factory-installed DVD player.
Visualization won’t work if the person you are trying to persuade can’t picture himself in the image you are creating.
If, for example, you’re trying to sell a fitness program to a middle-aged man, you wouldn’t ask him to imagine himself being dropped from a military fighter plane by parachute behind enemy lines and taking out a brigade of combat troops in a hand-to-hand battle. Instead, you would want him to see himself ripping off his shirt at a summer barbecue, and picture his buddies scowl with jealousy as their wives eye him with admiration.
When you know how to create the kind of image that will get an emotional response from your prospect… and you get that prospect to accept the image as a potential reality… you will have no trouble at all persuading him to do what you want.
Visualization is an extraordinary persuasion tool to have in your arsenal.
[Ed. Note: Larry Fredericks is an entrepreneur with a history of successful business dealings in retail, direct mail, the Internet, and real estate. He is also the creator of the Master of Persuasion program.]
Issue #2236
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You can see it just by walking down Main Street, USA: Americans are getting bigger and fatter. According to the National Center for Chronic Disease Prevention, between 1994 and 2004 the average waist size increased from 96 cm (about 38 inches) to 100.4 cm (about 39.5 inches) in men, and from 89 cm (about 35 inches) to 94 cm (about 37 inches) in women. The rate of stomach-fat obesity also increased, from 29.5 percent to 42.4 percent among men and from 47.0 percent to 61.3 percent among women.
More than 50 percent of Americans have to lose their gut in order to improve their health. What’s the solution? Professor Steve Boucher, an Australian expert on interval training, says that "high intensity intermittent exercise may result in greater fat loss in the abdomen."
This is welcome news for all men and women who want to achieve a lean midsection. They can say goodbye to slow cardio or endless crunches.
If you are new to interval training, start conservatively. Begin by doing one-minute rounds at a slightly-harder-than-normal exercise pace. Then spend one minute at a slow pace as a recovery interval. Do up to six intervals per workout, going between the hard exercise and the easy exercise for a total of 12 minutes. Always include a four-minute warm up and four-minute cooldown in each 20-minute session.
As your fitness improves, you can increase your interval intensity. Perform this type of workout three times a week after your resistance-training workout.
[Ed. Note: Fitness expert Craig Ballantyne is the creator of the Turbulence Training for Fat Loss system. If you want a free online source of information, motivation, and social support to help you improve your health, lose weight, and get fit, sign up for ETR's free natural health e-letter.]
Issue #2235
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Issue #2234
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Issue #2233
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Are you a good gift giver? Well, if you are, you just might be a great marketer too.
I’ve always enjoyed the holidays. It’s my chance to show the important people in my life how much I care about them. And I take pride in giving good gifts. There’s nothing that feels better than seeing someone’s smile light up the room as they unwrap my present.
Last Christmas, I decided to get my little sister her very first cellphone. (I think she was the last 16-year-old in all of Florida without one.) And it wasn’t just any cellphone. I splurged and bought the hottest Motorola on the market at the time.
I knew the gift was going to be a winner, but I wanted it to be a big surprise. So I also bought her a pair of jeans from her favorite store in the mall and put the cellphone in the pocket.
On Christmas day, I presented her with my gift, and she quickly opened it. She seemed really excited. After all, the box was from her favorite store. But before she could pull out the jeans, I reached into my pocket and called her cellphone. When her jeans started ringing, she grabbed her new phone and gave me the biggest hug imaginable.
Recently, I was on a teleconference call with Bob Cox as part of ETR’s Total Success Achievement program. During the call, we talked about gift giving and the holidays, including what makes someone a good gift giver. And it occurred to me that there are a bunch of similarities between good gift givers and good marketers.
After thinking about it for a while, I came up with two rules that you can follow to not only become a better gift giver, but also sell more products to your customers.
Rule #1: Understand Your Prospect
Making sales and giving gifts that people love both start with the number one rule in marketing: Understand your prospect. So the first question you need to ask yourself – as a gift giver or as a marketer – is: "Who am I buying for / selling to?"
If your little niece Anne is a tomboy, you don’t want to get her a Barbie doll in a pink dress. And your coach potato uncle Tom won’t get much use out of a mountain bike.
This is an important rule that most marketers know but still ignore. They confuse "popular" with "wanted by everyone." That Barbie doll might be the hottest toy of the season, but that won’t make Anne want to play with it. And though that tax preparation guide is your colleague’s best-selling product, it’s not going to interest your e-mail list of dog lovers.
Understanding your prospect is the key to getting her a good gift or offering him a product he’ll jump to buy.
The best way to find out what your prospects want is to ask them. What are their hobbies, interests, likes, and dislikes? It’s easy to get on the phone with your niece… or shoot an e-mail to your customer.
Often, your prospects will tell you exactly what they want. ("I want a new baseball glove." "I want a product that helps me train my new puppy not to bark.") But even if they don’t tell you, you’ll still get an idea of what they might be interested in. You just have to listen to what they say… and maybe do a little reading between the lines. ("I really love baseball, and the Little League season starts in two months." "I got an adorable new dachshund… but his yipping is starting to annoy our neighbors.")
From this information, you can start to understand your prospects’ wants. Then you can put yourself in their shoes. ("If I were an 11-year-old girl who loves to play baseball, what would I want?" "If I had a new puppy that wouldn’t shut up, what would I want?") By doing this, I can guarantee you won’t buy your niece that Barbie doll or offer your dog-loving customer a tax preparation guide.
At Early to Rise, we often survey our customers before we begin to create a new product. Our Internet Money Club, for example, came out of a survey we had sent to ETR readers about their interest in Internet marketing. From the survey results, we found that they wanted a comprehensive Internet marketing program that would cover all the details of starting an online business. Many of them told us that though they’d found good ideas in some of our other programs, that didn’t solve their main problem: not knowing how to start an online business from the very beginning.
Because we took the time to listen to our prospective customers and come up with a product that would solve that problem, it’s no surprise that the Internet Money Club sold out in a matter of weeks.
Rule #2: Focus on Wants Instead of Needs
Even if you do a good job of getting to know your prospect, you can fall into a big trap. In fact, it’s one of the biggest mistakes both marketers and gift givers make. And it happens when you focus more on what your prospects need, and not on what they want.
Now, this can seem counterintuitive. You may think that if Jimmy needs new underwear and tube socks, he must surely want them. But I can guarantee that what he wants is that new Xbox game. Likewise, you might think, "If this product is something my customers need, surely they must want it… or at least see the benefit in it."
We’ve fallen into this trap ourselves. Take, for example, the marketing campaign we created for a program called The Instant Entrepreneur. Everyone in the office thought the concept was great – giving start-up entrepreneurs all the forms, tax information, legal requirements, etc. they would need to start a business.
But we released the marketing campaign… and it fell flat on its face. It was probably our single worst product launch EVER in terms of sales.
When we evaluated the campaign, we realized we had made the "wants vs. needs" mistake. What our prospects wanted was a quick and easy way to get a business going so they could supplement their income. Sure, they needed the information in our Instant Entrepreneur program… but it wasn’t what they wanted.
Are you making this mistake in your business? And are you falling into the "wants vs. needs" trap in your gift giving?
Fixing this problem is fairly simple. And it goes back to Rule #1. Understand your prospects. Listen to them. Get to know them. Find out as much as you can about them. And then give them what they want. Don’t presume that you know better. What you think is good for them is not always going to be something they’ll want as a gift… and it’s not always going to be something they’ll pay for.
To have a more profitable business… and to see pure joy on the faces of the people you give gifts to… just follow these two rules:
1. Understand your prospects.
2. Focus on their wants instead of their needs
[Ed. Note: Patrick Coffey is ETR’s Director of Internet Marketing. Discover one of the most profitable "hidden" Internet income opportunities around in the Secrets of Easy Internet MoneyCD series.]
Issue #2232
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Issue #2231
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Issue #2230
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Reducing the risk of prostate cancer may be as easy as making smarter seafood choices, new research suggests.
A recent study published in the journal Environmental Research examined the effects of polychlorinated biphenyls (PCBs) – harmful compounds found mostly in farm-raised fish – and their role in prostate cancer. Serum samples were taken from healthy men and men with prostate cancer, and were evaluated for 30 PCBs. The researchers found that the odds of prostate cancer in men with the highest concentrations of PCBs were over two times higher than in the men with the lowest concentration of PCBs.
Catch the benefits without reeling in health-harming PCBs by going for wild-caught fish. Because most seafood in restaurants is "farm-raised," your best bet is to buy fresh, frozen, or canned seafood labeled "wild."
[Ed. Note: Kelley Herring is the founder and CEO of Healing Gourmet and the author of the new e-book, Guilt-Free Desserts: 20 All-Natural, Fail-Proof, Low-Glycemic Desserts Just in Time for the Holidays
Discover how simple lifestyle choices can improve your health by reading ETR's free natural health e-letter.]
Issue #2229
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There are a lot of high-energy terms in real estate: flip, leverage, cash out, cash in, boom, bubble, and bust. Then there’s the sensible sister: amortization. Very few investors talk about it. Most don’t understand it. Yet it is the one aspect of property investment that can guarantee to make you substantial money over time.
In the short term, amortization won’t make you rich. Yet it can help ensure discipline in your investing. And that means it can help you avoid the costly, short-term mistakes that are so often caused by greed and impatience.
But its greatest value lies in the long term. In 10 to 15 years,it can make you a multimillionaire and create a six-figure passive income – even in a flat market! Let me show you how this overlooked wealth-building phenomenon works – and how even a single deal can help create a comfortable retirement.
Amortization: Kill That Debt
"Amortization" comes from the Latin mors, or "death." It literally means "kill off the debt." You do that by paying down the amount you owe on a loan (the principal). If more people had taken amortization into account during the bubble a few years ago, they would not have paid peak prices for cash-flow-negative properties. And now they could be killing off their debt… instead of being killed by it.
The reason amortization gets so little respect is that it works very slowly in traditional residential real estate loans. Take a 6 percent, 30-year, fixed-rate loan, for instance. On a $100,000 mortgage, your payment will be $600 a month. Yet only about $100 of your first payment goes to principal. A full $500 – or 83 percent of it – goes to interest.
So you accrue equity very slowly through amortization. In fact, in the first five years of this loan, you’d reduce your loan balance on average by only about $1,400 a year. It’s only after about 18 years that half your mortgage payment would be going to principal. And toward the end of the loan, say in years 26 and 27, over 80 percent of each payment would be going toward paying off the little principal that remained.
The debt is being paid off, however slowly. And every dollar reduction in debt is a dollar in equity creation for you. Over time, this can create substantial wealth.
How to Pocket Over a Quarter-Million Dollars a Year Through Amortization, Regardless of the Market
Take, for instance, the case of an investor who has amassed an $8 million property portfolio, with half comprised of equity and half comprised of mortgage debt. Let’s also assume that, on average, the mortgages are 10 years old, with an average interest rate of 7 percent and an average amortization period of 20 years.
This investor will now accrue $287,425 in the coming year just from amortization. And he’ll go on to gain over a quarter of a million dollars in equity every year for the next 10 years… regardless of whether the market is flat, falling, or rising. It all happens from the systematic and progressive reduction of his loan balance.
Here’s another example. This one shows how, thanks to amortization, you could retire a multimillionaire with a six-figure passive income from a single commercial property.
Let’s say you buy a $2 million income property with a 9 percent cap rate. The cap rate is the net operating income (NOI) of the property as a percentage of the purchase price. It is a figure that is calculated before and apart from any debt service or mortgage payments. In this case, the 9 percent cap rate means the property produces $180,000 in NOI.
It’s important to remember that NOI is defined as the income left over after paying all expenses and budgeting for vacancy and maintenance. So if you bought the property for all cash, that $180,000 would be mostly spendable income.
Of course, you don’t have $2 million in cash. In fact, let’s say you don’t have any money at all. So you bring in equity investors to fund the cash portion of the investment.
You arrange for 80 percent financing (a $1.6 million mortgage loan), and you get $500,000 from your equity investors. That’s $400,000 for the down payment and $100,000 for closing costs, reserves, and some minor fix-up work. In exchange for their investment, your equity investors will get half the profits from the deal.
So what happens?
Well, let’s say nothing happens. The market doesn’t go up in value by a single dollar. The property simply generates its income, pays its expenses, and pays the debt service and a little more. Well, in this case, you’d still become a millionaire and end up with a six-figure passive net income in 15 years… all from this one investment… and thanks in good part to amortization. Here’s how it could happen…
Making Millions in a Flat Market
Let’s say you get a 6.5 percent loan that amortizes in 15 years. Your annual debt service on $1.6 million for this kind of loan will be $167,277. That’s covered by your $180,000 in NOI. You don’t have a lot of cash flow, but you already budgeted for reserves, you have a little extra income, and net rents tend to rise over time. You’re not flush, but you’re okay.
And remember, in this example, the market is flat. Yet, after 15 years, you will have paid off the $1.6 million loan. So the equity is equal to the original $2 million purchase price. At this point, you could also easily have $100,000 in the property bank account from accumulated net rents, which tend to grow over time. So the total equity for the partnership is $2.1 million: $2 million in the property and $100,000 in cash.
That represents a $1.6 million equity gain. Half belongs to your partners. You have an $800,000 equity gain and your partners have their original $500,000 in equity plus an $800,000 gain. Not bad, considering this investment didn’t work out.(The market was flat.) Nonetheless, you each gained $800,000.
And now, you no longer have debt service to pay. So you can split the NOI.
The NOI was $180,000 when you started. If we assume it hasn’t risen at all, it’s still $90,000 apiece. If it’s gone up by just a 3 percent average inflation rate, the NOI is now just over $272,000, or more than $136,000 to each of you in passive income.
And if market values went up just by the long-term average of 5 percent a year, your $2 million property is now worth almost $4.2 million. Add in cash in the bank from accumulated net rents, and you could easily be at $4.3 million. Subtract the $500,000 original equity investment, and your gain is $3.8 million. That’s $1.9 million for your partners and $1.9 million for you. And that’s on top of the six figures in free cash flow each year.
Amortization plays a big part in making this possible, taking a long-term ho-hum investment and creating equity by using the rents to pay off the loan. And while its benefits are most apparent over the long term and with larger properties and larger portfolios… it can serve you well even in the short term and even with a single-family home or a triplex. Especially in a hot market.
If you insist on buying only cash-flow properties with fixed-rate amortizing loans, you’ll avoid the time-bomb, interest-only, adjustable, and often even negative-amortization loans that can create huge negative cash flows. By insisting on using amortizing loans for your long-term holds, you will automatically rule out a lot of speculatively priced properties that are affordable only temporarily by using the "creative financing" that is now exploding in so many investors’ faces.
Even on your flips – where you may be using higher-interest, short-term credit lines or private money – make sure the numbers work out so that, if you had to hold the property, it would cash flow if you put competitive-rate amortizing financing in place. That will help you be more selective, take less risk, and ultimately make more money with less worry.
Amortization: It’s not sexy. But with the right income-producing properties, it can become a sure and even significant source of wealth creation in an uncertain world.
A "euphemism" (YOO-fuh-miz-um) is a nice way of saying something that is not nice. The word is from the Greek for "to use auspicious words."
Example (as used by Jeff Giles in a New York Times review of Legends of the Chelsea Hotel by Ed Hamilton): "The Chelsea Hotel describes itself as ‘a rest stop for rare individuals,’ a euphemism that still manages to pass the truth-in-advertising test if you take ‘rare individuals’ to mean artists and addicts, and ‘rest stop’ to mean possible death."
Issue #2228
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"If I had more time, I’d have more fun," we tell ourselves. Or, "If I had more time, I’d knit/ paint/ write a novel/ [fill in the blank]."
Time is an equal opportunity provider. Every one of us, regardless of age, sex, race, or religion, has the same 24 hours a day. How we use those hours determines our success.
On the one hand, we know that working long, hard hours is a characteristic of most successful people. On the other hand, we understand that working that way gives us little pleasure and less time to pay attention to family, friendship, intellectual stimulation, etc.
"Workaholism is an addiction," Julia Cameron says in The Artist’s Way, "and like all addictions, it blocks creative energy." Cameron’s concern in the book is to find time for creative writing. But her advice is useful for anyone who is fighting his or her workaholic streak.
You can be successful in business without sacrificing personal relationships. You can make money and art too. You can accomplish your major goals in all of life’s four most important dimensions:
To do so, you’ve got to follow a productivity plan that recognizes (1) achieving any important goal takes time, (2) at any specific period of time in your life you must establish priorities and give primary attention to your top goals, (3) many of the problems prioritizing may cause can be limited by respectful scheduling and thoughtful communication, and (4) as opportunities change, so must your objectives.
You must also recognize that the way you work right now may be working against you. A workaholic pattern might help you accomplish your primary goal, but will usually leave your other goals in a shattered heap.
Begin, today, with this self-administered evaluation – from Julia Cameron – to help you figure out if you have workaholic habits. Answer "seldom," "often," or "never" to the following:
"There is a difference between zestful work toward a cherished goal and workaholism," says Cameron. "That difference lies less in the hours than it does in the emotional quality of the hours spent. There is a treadmill quality to workaholism. We depend on our addiction and we resent it. For a workaholic, work is synonymous with worth, and so we are hesitant to jettison any part of it."
Your answers to Julia Cameron’s self-evaluation questions will give you a quick sense of whether you have a problem with workaholism. But don’t just test yourself. Do what I did. Ask a few members of your family, or a few friends, to answer those questions for you. You may be surprised by what you find out.
It can be hard to make time for your personal life when you’re trying to prove to your boss that you deserve a raise… when you’re busy building your business… or when you just plain love what you do. But don’t work so hard or so long that you neglect your family and friends. If you do that, you will eventually regret it.
Here’s how I keep myself from falling into that trap:
When I follow these rules, I am happier twice – at work and at home. I recommend that you do the same.
[Ed. Note: If you’re a workaholic, you could benefit from learning how to break your goals into smaller, more manageable objectives. ETR’s Total Success Achievement program can teach you how to accomplish all your goals - without neglecting your health, social life, or family. We’re putting the finishing touches on our 2008 Total Success Achievement Program right now. So keep reading ETR for more details about how to make 2008 the year you accomplish all your dreams.]
Issue #2227
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One of the best ways to build your online business is to build your house list of potential customers. But you can also do it by changing the way you market to your existing customers. Today, I want to show you how breaking up your existing customer database can boost your sales.
Data mining, or database marketing, is basically the art of slicing and dicing your own in-house list of names. You do this to help increase the response to your online sales promotions.
You see, once you divide your list of names into smaller groups ("segmentation"), you can specialize your product offers. Then, by targeting your offer based on customer needs, you’ll be promoting products to people who are more likely to buy them. You increase your customers’ satisfaction as well as your potential conversion rates. (The conversion rate is the number of people who not only read your offer but actually purchase the product.) And higher conversion rates means more money for your company.
One proven model is the RFM method. It’s practiced by direct-response marketers all over the world, and is a marketing method we use here at ETR.
"R" stands for Recency, how recently a customer has made a purchase. "F" stands for Frequency, how often the customer makes a purchase. And "M" stands for Monetary, how much the customer spends.
Here’s how you can use the RFM method to help lift your sales.
Whether your house list is made up of people who signed up to receive your free e-zine or people who paid for a subscription, you can segment your database according to how long your customers have been with you. Let’s say, 0-3 months, 3-6 months, 6-12 months, and 12+ months.
You would look at these groups as your hot subs (newest subscribers), warm subs (mid-point subscribers), and cool subs (those who have been subscribing to your e-zine the longest).
Let’s say your list is made up of subscribers to your free e-zine. Here’s how you use that information…
Because your "cool subs" may have lost their initial enthusiasm for your e-zine, you should cross-reference them with your open rates. If most of them haven’t been opening your e-zine in six, nine, or 12 months, you should consider sending them a special message asking if they still want to receive your e-zine.
But that doesn’t mean you ignore them. These inactive subscribers are a great group on which to test new marketing approaches, new prices, new subject lines, and so on. After all, you have nothing to lose. Your goal for this group is to re-engage them. And since they aren’t responding to your current e-mails, why not use this platform to test?
Your "hot subs" are your newest, most enthusiastic subscribers. They are ripe to learn more about you, your products, and your services. If you handle this group properly, you can cultivate them into paying customers. So you may want to send them targeted offers and messages.
For example, you could send them a special introductory series of e-mails. This special series would introduce them to your e-zine’s contributors and philosophy. It could also tempt them with specially priced offers. Sending an introductory series like this can not only increase the number of subscribers who convert to paying customers, it also increases their lifetime value (LTV) – the amount they spend with you over their lifetime as your customer.
If, instead of subscribers to a free e-zine, your house list is made up of people who paid for their subscription, the same segmentation process applies. You break your active subscribers into hot subs, warm subs, and cool subs. You also break out expirers (those who allowed their subscription to run out) and cancels (those who cancelled their subscription).
Cross-marketing to these lists is usually effective. The expirers often just forgot to renew and simply need a reminder. And just because someone cancelled one subscription doesn’t mean they may not be ideal for another service or product that you provide. If they’re still willing to receive e-mail messages from you, add these folks to your promotional lists.
Once you’ve gotten these otherwise inactive subscribers to open your messages, turning them into paying customers is just a matter of time. Most Internet marketers would have written these people off. So any revenues you get from them are "extra."
"It may seem counter-intuitive," says Michael Masterson, "but in the direct-mail world, the best names you can mail to are people who have recently bought products and/or services very similar to what you are selling. The closer you can get to mailing to those who have bought similar products/services, the greater your response rate will be."
This connects to another important way to break down your house list: by how frequently customers have bought from you. So once you’ve divided your list based on recency, you look at it in terms of your customers’ purchase behavior. First, you identify your multi-buyers – customers who’ve purchased more than one product from you. You then split this list further, segmenting out two-time, three-time, four-time (and more) buyers.
Those who have bought from you most often have proven their loyalty and obviously like the products and service they’ve been getting from you. So if, for example, you’re considering launching a new product with a high price point, these would be your best prospects.
Finally, you look at your list in terms of money.
One way to do this is to divide your list by the amount of money each customer has spent with you. You might, for example, assign a benchmark dollar amount, such as $5,000, $10,000, or more. Customers at that level make up your "premium buyers." This is the group that has the most favorable LTV for your company. These are your "VIPs."
Once you discover who your VIPs are, you can design products or offers specifically for them. Let’s say you have some kind of exclusive – and expensive – lifetime membership club. You would market this to multi-buyers who also fall into your "premium buyer" category.
If you offer payment options to your customers, another monetary way to divide your list is according to the payment options they have chosen: monthly, quarterly, yearly, etc. This will help you determine the initial purchase tolerance of each group of customers and which ones may respond best to future price points.
As you can see, by looking at your customers’ purchasing habits – recency, frequency, and monetary – you can identify the best customers for certain products. And by offering a product to customers who are likely to want it, you can improve your conversion rates.
By using the RFM model and other data-mining techniques, I’ve seen conversion rates double and triple. I’ve also seen inactive subscribers’ open rates surge from 0 percent to more than 30 percent. That’s quite an accomplishment, considering that the average open rate for the industry is about 20 percent.
I’ll go into more details on how to leverage the power of your own in-house list through segmentation in future issues of Early to Rise. In the meantime, if you’d like to learn more about data mining and how to get the most out of your current customer database, I highly recommend an excellent book titled Strategic Database Marketing by Arthur Hughes.
[Ed. Note: Wendy Montes de Oca is ETR's Vice President of Marketing & Business Development. Enjoy the success you've always wanted with ETR's Direct Marketing Quick-Start Kit. This 4-CD program is the most effective, quickest, and least expensive way to move you toward financial independence.]
Issue #2226
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Issue #2225
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Issue #2224
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Imagine this scenario…
Your favorite baseball team has the opportunity to hire GR. Now a free agent, GR is one of the league’s best hitters. He hits more home runs than 90 percent of all other players… and has an impressive .300 batting average.
The team manager and GR meet. The manager tells GR: "Step up to the plate, and our best pitcher will throw to you. Hit a home run and you’re part of the team. Strike out or pop out and you’re history."
Does that make sense? No. I mean, with a .300 average, GR fails to get a hit seven out of every 10 times he steps up to the plate.
But that doesn’t stop otherwise savvy business owners from thinking like this manager every day.
They hire an employee and start to put him to work. If he doesn’t generate home-run results the first time at bat, they fire him or move him to a marginal business operation.
The TV commercial doesn’t win a Clio? Start looking for a new agency. Sales letter didn’t beat the control? The copywriter is history. Website not getting a million hits a day? The designer and webmaster are fired.
So what’s the problem?
Unreasonable expectations… and an unwillingness to experiment and test things until you find what works.
Thomas Edison failed to invent the light bulb with a thousand experimental models that didn’t work. In experiment #1,001, he finally tested a tungsten filament that burned brightly without burning out.
What makes a small business profitable and competitive over the long haul is a lot of small, sensible tests… trials and errors… and meticulously planned roll-outs. Unfortunately, you don’t hear much about them.
If you want to produce marketing campaigns in 2008 that make you money, you have to keep two things in mind.
First, most marketing tests don’t make money.
Second, even one winner out of every 10 tests can make you rich.
Of course, I hope you do better than that. But as long as you keep your tests small and modest, and watch every penny, you can afford to be wrong a lot – as long as you are occasionally right.
This is one area where the Internet can give you an edge that we didn’t have in the old days.
At the 2007 AWAI Bootcamp, entrepreneur Gary Scott noted that "the Internet is very forgiving of mistakes." You no longer have to risk $10,000 to $50,000 on printing and postage for a mailing… or buying ad space in the newspaper… to test a new marketing idea. On the Internet, you can buy a domain name for $10… host the site for a month for $20… put up a website featuring your new product for $200… and drive traffic to your website with a limited Google AdWords test for $1,000.
Another advantage of Internet marketing is that you know in just a few days whether your campaign is going to fly. But with offline marketing, it takes weeks (for ads) or even months (for mail) before you know whether your test is a hit or a flop.
One other piece of advice…
Lots of people are obsessed with finding the next million-dollar idea. For instance, they want to make a million dollars a year on the Internet. So they work like the devil on some big mega-project which… they hope… will be that million-dollar business.
I’m not discouraging their efforts or disparaging such ambition. In fact, I wish I had it myself.
But I’m lazy. And for the average lazy person who wants to make a million dollars online, I find it’s much easier to have 100 working websites making you $10,000 a year each… than to try to build one site to $1 million a year.
Others may feel differently, but that’s the approach I’m using to build toward that million dollars a year. And, so far, it is working for me.
A million-dollar site requires constant innovation, attention, fresh content, and a lot of administration and management. My little "micro sites" need minimal time and attention. Once they’re up, you pretty much don’t have to touch them, as long as you know how to drive traffic to them.
That way, you can earn a full-time income on the Internet "working" part-time – as little as a few hours a week – as if you were retired.
Issue #2223
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Former Fed Chairman Alan Greenspan has gone from genius to goat in recent months. Pundits wonder whether his ultra-easy-money policies were responsible for the meltdown in sub-prime mortgages and the collapse of formerly hot real estate markets.
The answer is yes, he is responsible. But he’s not alone.
Greenspan kept the bar open, but Americans drank themselves silly. They ran negative personal savings rates, turned the equity in their homes into ATM machines, borrowed on all sorts of "time-bomb" terms – from adjustable to negative-amortization, interest-only, short balloons, and more.
Then they used this cheap and seemingly endless supply of money to buy properties – pushing prices to points that simply no longer made any fundamental sense.
That’s what this article is about. The fundamentals. The kind that can save you a lot of pain and make you a lot of money – in any kind of real estate market.
There are simple rules of logic that can steer you away from trouble in bubble markets and toward profits in value and growth markets. Learn these, and you can spot the next bubbles as they develop. Better yet, you can use the same rules to identify some of the strongest investment opportunities in today’s real estate markets.
Even Kids Can Identify a Bubble
In testimony before Congress a few years ago, Greenspan said you can’t identify a bubble until after it bursts. Baloney!
Public companies typically sell for about one times sales and 15 times earnings. You might pay 30 to 40 percent more or less, depending on the industry, the company, how fast it’s growing, and where you are in the economic cycle. Yet, eight years ago, we had hundreds of companies sell for dozens, even hundreds of times sales… and hundreds and thousands of times earnings. Many of the fastest rising stocks, in fact, had negative earnings!
And behind it all, savings were falling while personal and corporate debt was skyrocketing. Cheap money was chasing tech and spec stocks, and pushing prices far beyond the economic fundamentals of sales and earnings.
That was a bubble. Stock prices no longer had any fundamental connection to sales or earnings.
In residential real estate, it’s even easier to identify a bubble. One big telltale sign is that homeowners can no longer afford to buy their own homes.
I know a mechanic, for instance, who bought his home for $150,000 10 years ago. Today, it’s worth $500,000. His house has gone up by 233 percent, yet his income is up only about 40 percent. He could not afford to buy the same house today.
In fact, even if he sold his house and went to buy another house for the same $500,000, he’d still have a tough time doing it because his new taxes and insurance would be based on $500,000 instead of being anchored to $150,000.
My friend is no longer a potential buyer for the same kind of home he bought 10 years ago. And most of his longtime neighbors are in the same boat.
Fact is, large groups of people are being priced out of their own neighborhoods. If, for example, you’re trying to sell a typical median-priced home in
You didn’t have to be a genius or have a crystal ball or wait till "after the bubble burst" to recognize that bubble. When the median-priced home is not even remotely affordable to the median-income household, something’s gotta give.
That something has been prices. And prices are likely to continue to give way in the bubble markets until properties or money or both become cheap enough that the median-priced home is once again affordable to people earning the median income.
Investors Can Get Priced Out of a Market Too
Another irrefutable sign of a bubble is when investors can’t find properties at prices that cash flow. When people pay $350,000 for triplexes that generate $25,000 a year in gross rents, they’re no longer "investing"… they’re speculating.
The rents are not enough to cover a traditional mortgage and expenses. The only reason people pay those prices is they expect someone else to come along and pay an even higher price. Why? Simply because… well, because that’s what’s been happening so far.
So you end up with a market where homeowners no longer provide buying support because they’ve been priced out. Investors no longer provide buying support because they’ve been priced out. And only a few last speculators, armed with self-detonating loans, push prices up the last few dollars until the cheap money stops. And "pop" goes the bubble!
The Flip Side of Bubble Markets: Great Opportunities in Value & Growth Markets
The same criteria used to identify bubble markets can be used to spot value markets. And to find strong investment opportunities, you only need to look for value markets that also are showing strong signs of growth.
First, let’s take a look at the value criteria…
For the last two years, I’ve had my research staff pull together data on over 130
I’ve formed limited partnerships and have invested in some of these markets myself. This has allowed us to continue to make significant profits even though many of my passive investors and I live in
For value, we consider how the typical house is priced relative to rents and relative to household income. Here are some examples:
In the
We’ve put together a Bubble Index that shows key value and growth criteria for some of the most overvalued markets – from
So, in most markets, to get cash flow in small residential properties, you have to (1) focus on special situations and find motivated sellers so you an buy deeply under value; (2) buy small multi-unit properties (2 to 4 units); (3) buy in a market outside your home area where properties do cash flow; or (4) some combination of these things.
Another key value criterion is the price of the typical house compared to the typical household income. Nationally, the median-priced home tends to sell for just over four times the median household income in the area. Historically, this is a little high, but still affordable. But not in the bubble markets…
In
By contrast,
But don’t forget the growth factor. Value alone is not enough.
Growth Counts Too
If you just looked at value, you might conclude that
So to look for the best investment opportunities, you want to look for value and growth. You also want to look at markets with diversified economies. They shouldn’t be overly dependent on one industry, as
My favorite value and growth markets tend to have the following characteristics:
Once you find your new target market, focus on buying undervalued, cash-flow properties in that market. Then fix your interest rate and make sure you have the right management in place.
Investing is a forward-looking process, and no one can claim to know the future. Yet you can get a pretty good look at the present. So don’t believe Alan Greenspan and bubble-boosting brokers. The fact is, yes, you can identify bubbles.
Likewise, you can identify value and growth markets. And when you consistently put your money to work in undervalued properties in these markets, you can make a fortune.
It ain’t rocket science. It’s common sense. But that’s a commodity that is rarer than cash flow in today’s marketplace.
[Ed. Note: Justin Ford is an active real estate investor, the author of Main Street Millionaire, and the editor of the recently updated Secret Value & Growth Cities: How to Make 6- and 7-Figure Profits From the Flood of Money Away From Overvalued Bubble Markets and Into America’s Best Priced Growth Cities. To learn more about the best real estate markets in the country, click here.]
Issue #2222
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Issue #2221
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