The 4-Hour Workweek (21 page)

… On Monday I got a yes when I asked my boss to work two days remotely per week. I start next week.

On Monday I also booked the most stunning apartment in Paris for the month of September, at a cost of half of the rent I pay in Southern California. I plan to increase my remote time now through August so that September will be an easy ask to leave for remote work. If the answer happens to be no (which I now doubt), I will be prepared to quit my job.

Now at work on my Income Autopilot project.

Tim: amazing. My life has changed in three days. (Plus, your book was funny as hell.) Thank you!!!     —CINDY FRANKEY

21. There are a few limited exceptions, such as online membership sites that don’t require content generation, but as a general rule, products require much less maintenance and will get you to your TMI faster.

22. Muses will provide the time and financial freedom to realize your dreamlines in record time, after which one can (and often does) start additional companies to change the world or sell.

23. Distributors are sometimes also referred to as “wholesalers,” depending on the industry.

24. It is illegal to control how much someone sells your product for, but you can dictate how much they advertise it for. This is done by including a Minimum Advertised Pricing (MAP) policy in your General Terms and Conditions (GTC), which are agreed to automatically when a written wholesale order is placed. Sample GTC and order forms are available at www.fourhourblog.com.

25. The Wall Street Journal, July 18, 2005 (http://www.technologyinvestor.com/login/2004/Jul18–05.php).

26. This was a new product category that I created to eliminate and preempt the competition. Strive to be the largest, best, or first in a precise category. I prefer being first.

27. If you decide to resell someone else’s higher-end products like Doug, especially with drop-shipping, the risk is lower and smaller margins can suffice.

28. “Back-end” products are products sold to customers once the sale of a primary product has been made. iPod covers and car GPS systems are two examples. These products can have lower margins, because there is no advertising cost to acquire the customer.

29. “Cross-selling” is selling a related product to a customer while they’re still on the phone or in an online shopping cart after the sale of a primary product has been made. For a full marketing and direct response (DR) glossary, visit www.fourhourblog.com.

30. This also refers to owners of copyrights or trademarks.

31. Said casually and with confidence, this alone will get you through surprisingly often. “I’d like to speak with Mr./Ms. X, please” is a dead giveaway that you don’t know them. If you want to up the chances of getting though but risk looking foolish if they call the bluff, ask for the target mentor by first name only.

32. I use this type of lead-in whenever making off-the-wall requests. It softens it and makes the person curious enough to listen before spitting out an automatic “no.”

33. This answers the questions they’ll have in their head: “Who are you and why are you calling now?” I like to be a “first-time” something to play the sympathy card, and I find a recent media feature online to cite as the trigger for calling.

34. I call people I’m familiar with. If you can’t call yourself a longtime fan, tell them that you have followed the mentor’s career or business exploits for a certain number of years.

35. Don’t pretend to be strong. Make it clear you’re nervous and they’ll lower their guard. I often do this even if I’m not nervous.

36. The wording here is critical. Ask them to “help” you do something.

37. Just rework the gatekeeper paragraph for this, and don’t dillydally—get to the point quickly and ask for permission to pull the trigger.

38. End the conversation by opening the door for future contact. Start with e-mail and let the mentoring relationship develop from there.

TESTING THE MUSE

Many of these theories have been killed off only when some decisive experiment exposed their incorrectness…. Thus the yeoman work in any science … is done by the experimentalist, who must keep the theoreticians honest.

—MICHIO KAKU, theoretical physicist and cocreator of String Field Theory, Hyperspace

Fewer than 5% of the 195,000 books published each year sell more than 5,000 copies. Teams of publishers and editors with decades of combined experience fail more times than not. The founder of Border’s Books lost $375 million of investor funding with WebVan,39 a nationwide grocery delivery service. The problem? No one wanted it.

The moral is that intuition and experience are poor predictors of which products and businesses will be profitable. Focus groups are equally misleading. Ask ten people if they would buy your product. Then tell those who said “yes” that you have ten units in your car and ask them to buy. The initial positive responses, given by people who want to be liked and aim to please, become polite refusals as soon as real money is at stake.

To get an accurate indicator of commercial viability, don’t ask people if they would buy—ask them to buy. The response to the second is the only one that matters. The approach of the NR reflects this.

Step Three: Micro-Test Your Products

Micro-testing involves using inexpensive advertisements to test consumer response to a product prior to manufacturing.40

In the pre-Internet era, this was done using small classified ads in newspapers or magazines that led prospects to call a prerecorded sales message. Prospects would leave their contact information, and based on the number of callers or response to a follow-up sales letter, the product would be abandoned or manufactured.

In the Internet era, there are better tools that are both cheaper and faster. We’ll test the product ideas from the last chapter on Google Adwords—the largest and most sophisticated Pay-Per-Click (PPC) engine—in five days for $500 or less. PPC here refers to the highlighted search results that are listed above and to the right of normal search results on Google. Advertisers pay to have these ads displayed when people search for a certain term related to the advertisers’ product, such as “cognitive supplement,” and are charged a small fee from $.05 to over $1 each time someone clicks through to their site. For a good introduction to Google Adwords and PPC, visit www.google.com/onlinebusiness. For expanded examples of the following PPC strategies, visit www.fourhourblog.com and search “PPC.”

The basic test process consists of three parts, each of which is covered in this chapter.

Best: Look at the competition and create a more-compelling offer on a basic one-to-three-page website (one to three hours).

Test: Test the offer using short Google Adwords advertising campaigns (three hours to set up and five days of passive observation).

Divest or Invest: Cut losses with losers and manufacture the winner(s) for sales rollout.

Let’s use two people, Sherwood and Johanna, and their two product ideas—French sailor shirts and a how-to yoga DVD for rock climbers—as case studies of what the testing steps look like and how you can do the same.

Sherwood bought a striped sailing shirt in France while traveling last summer, and upon returning to NYC has been continually approached by 20–30-year-old males on the street who want to know where to get their own. Sensing an opportunity, he requests back issues of NYC-based weekly magazines aimed at this demographic and calls the manufacturer in France for pricing. He learns that he can purchase shirts at a wholesale price of $20 that sell for $100 retail. He adds $5 per shirt to account for shipping to the U.S. and arrives at a per-shirt cost of $25. It’s not quite our ideal markup (4x vs. 8–10x), but he wants to test the product regardless.

Johanna is a yoga instructor who has noticed her growing client base of rock climbers. She is also a rock climber and is considering creating a yoga instructional DVD tailored to that sport, which would include a 20-page spiral-bound manual and be priced at $80. She predicts that production of a low-budget first edition of the DVD would cost nothing more than a borrowed digital camera and a friend’s iMac for simple editing. She can burn small quantities of this first-edition DVD—no menus, just straight footage and titles—on the laptop and create labels with freeware from www.download.com. She has contacted a duplication house and learned that more-professional DVDs will cost $3–5 apiece to duplicate in small quantities (minimum of 250), including cases.

Now that they have ideas and estimates of start-up costs, what next?

Besting the Competition

First and foremost, each product must pass a competitive litmus test. How can Sherwood and Johanna beat the competition and offer a superior product or guarantee?

1. Sherwood and Johanna Google the top terms each would use to try and find their respective products. To come up with related terms and derivative terms, both use search term suggestion tools.

Google Adwords Keyword Tool (http://adwords.google.com/select/KeywordToolExternal) Enter the potential search terms to find search volume and alternative terms with more search traffic. Click on the “Approx Avg Search Volume” column to sort results from most to least searched.

SEOBook Keyword Tool, SEO for Firefox Extension (http://tools.seobook.com/) This is an outstanding resource page with searches powered by Wordtracker (www.wordtracker.com).

Both then visit the three websites that consistently appear in top search and PPC positions. How can Sherwood and Johanna differentiate themselves?

Use more credibility indicators? (media, academia, associations, and testimonials)

Create a better guarantee?

Offer better selection?41

Free or faster shipping?

Sherwood notices that the shirts are often hard to find on the competitive sites, all of which feature dozens of products, and the shirts are either made in the U.S. (inauthentic) or shipped from France (customers must wait two to four weeks). Johanna cannot find a “yoga for rock climbing” DVD, so she is starting from a blank slate.

2. Sherwood and Johanna now need to create a one-page (300–600 words) testimonial-rich advertisement that emphasizes their differentiators and product benefits using text and either personal photos or stock photos from stock photo websites. Both have spent two weeks collecting advertisements that have prompted them to make purchases or that have caught their attention in print or online—these will serve as models.42 Johanna asks her clients for testimonials and Sherwood lets his friends try on the shirts to get several for his page. Sherwood also asks the manufacturer for photos and advertising samples.

See www.pxmethod.com for a good example of how I have created a test page using testimonials from seminar attendees. Please note that it’s just a template for readers and not a live sales page. Free how-to seminars as recommended in the Expert Builder are ideal for identifying popular selling points and securing testimonials.

Testing the Advertisement

Sherwood and Johanna now need to test actual customer response to their advertisements. Sherwood first tests his concept with a 72-hour eBay auction that includes his advertising text. He sets the “reserve” (the lowest price he’ll accept) for one shirt at $50 and cancels the auction last minute to avoid legal issues since he doesn’t have product to ship. He has received bids up to $75 and decides to move to the next phase of testing. Johanna doesn’t feel comfortable with the apparent deception and skips this preliminary testing.

Sherwood’s cost: <$5.

Both register domain names for their soon-to-be one-page sites using the cheap domain registrar www.domainsinseconds.com. Sherwood chooses www.shirtsfromfrance.com and Johanna chooses www.yogaclimber.com. For additional domain names, Johanna uses www.domainsinseconds.com.

Cost to both: <$20.

Sherwood uses www.weebly.com to create his one-page site advertisement and then creates two additional pages using the form builder www.wufoo.com. If someone clicks on the “purchase” button at the bottom of the first page, it takes them to a second page with pricing, shipping and handling,43 and basic contact fields to fill out (including e-mail and phone). If the visitor presses “continue with order,” it takes them to a page that states, “Unfortunately, we are currently on back order but will contact you as soon as we have product in stock. Thank you for your patience.” This structure allows him to test the first-page ad and his pricing separately. If someone gets to the last page, it is considered an order.

Johanna is not comfortable with “dry testing,” as Sherwood’s approach is known, even though it is legal if the billing data isn’t captured. She instead uses the same two services to create a single webpage with the content of her one-page ad and an e-mail sign-up for a free “top 10 tips” list for using yoga for rock climbing. She will consider 60% of the sign-ups as hypothetical orders.

Cost to both: <$0.

Both set up simple Google Adwords campaigns with 50–100 search terms to simultaneously test headlines while driving traffic to their pages. Their daily budget limits are set at $50 per day. (At this segue into PPC testing, I recommend you first visit www.adwords/google.com/onlinebusiness and then follow along by creating your own account, which should take about 10 minutes. It would be a waste of rain forests to use ten pages to explain terms that can be understood at a glance online.)

Sherwood and Johanna decide on the best search terms by using the search term suggestion tools mentioned earlier. Both aim for specific terms when possible (“french sailor shirts” vs. “french shirts;” “yoga for sports” vs. “yoga”) for higher conversion rates (the percentage of visitors that purchase) and lower cost-per-click (CPC). They aim also for second through fourth positioning, but no more than $.20 CPC.

Sherwood will use Google’s free analytical tools to track “orders” and page abandonment rates—what percentage of visitors leave the site from which pages. Johanna will use www.wufoo.com to track e-mail sign-ups on this small testing scale.44

Cost to both: $0.

Both Johanna and Sherwood design Adwords ads that focus on their differentiators. Each Google Adwords ad consists of a headline and then two lines of description, neither of which can exceed 35 characters. In Sherwood’s case, he creates five groups of 10 search terms each. The following are two of his ads.