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Another Top Ten List For Small Businesses — But this one is Pretty Good

I’m not sure if David Letterman is to blame, but Top 10 lists exist for almost everything.  They are very similar to the “Idiot’s Guide” series.  They are the gimmick everyone uses to give you/your business advice.  Excuse a tangent for the moment, but I have a real problem with these Idiot’s Guides.  At first, they made sense — if you need to know how to use Microsoft Word, the title seems appropriate.  But now there are Idiot’s Guide to XMLT, or Cold Fusion.  These aren’t “Idiot’s Guides”…they are simply guides.  Sorry for that.

Ok, back to the proliferation of Top 10 lists for almost every piece of advice.  First, I think that ten pieces of advice are really too many to remember.  Just give us the most important 3 — I can remember that and, really, I’ll probably benefit the most from the Top 3.  Secondly, most of these Top 10 don’t actually have ten unique pieces of advice.  They fudge it (e.g. “Tip #8 — Remember Tip #10). 

But I came across a pretty good Top Ten list for Small Businesses — focused on the Top Ten ways a company can cross the divide from start-up to established venture.   I’d repeat them for you, but that feels like copying someone else’s homework.  But I’ll tell you my favorite tip — #2 (see, focus on the top 3 tips).  #2 is “Don’t underestimate the importance of informed intuition and gut feel.”

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Diary of a Tech Start-Up: Funding…Dance with the Devil or Not

One of the ongoing debates going on with our tech start-up is whether to seek outside investment or not.  The first point that is often made by one of us is that it is too early to be thinking about it.  Heck, we just launched the beta version of this site and are now getting our first customers…isn’t it a bit presumptive to think about asking for $$ from a stranger? 

This scenario reminds me of a scene in the greatest movie of all time — Waiting for Guffman.  Corky St. Clair is charged with directing a play about Blaine, Missourri’s history.  Corky approaches the City Council and states that the ONLY thing he needs to throw the play is “one hundred thousand dollars”.  When informed that the City’s annual budget is $100k and that includes swimming, Corky responds “there won’t be swimming in my play.”  How does this tie into our discussion for asking for outside investment?  Well, maybe it doesn’t but it’s a great movie.  No, my point is that we before we seek out investment, we need to clearly establish a need for our services and that we have a competent management team that will know what to do with the money if/when we do get it.  We can’t go in all Corky St. Clair, not having a clue as to what is a reasonable amount of investment and establish what we are going to do with the money will have a strong likelihood of showing a return on investment.  See Corky asking for money

Now comes a more pressing question.  Assuming the time is right (and we don’t ask for the entire City Council’s budget), do we seek out investment at all?  As Raj pointed out in an earlier post, there are now a lot of tools that exist that make starting and running a business very inexpensive.  To date, we’ve been self-funding KikScore and we’re pretty good at stretching a dollar.  While it would be great to have a swank office and have the ability to throw an awesome holiday party with a DJ, it may not be worth the equity and control we’d have to give up (it really depends on how good the DJ is).  We’re not alone in our thinking.  According to a recent posting on www.rockyradar.com — 84% of Inc’s Fastest Growing 500 companies never received venture capital (though many did likely get angel financing). 

Several of us on the KikScore team have been part of venture-backed companies previously.  Some of us had good experiences, some of us did not.  So, as we continue to grow our customer base and improve upon our core product, the debate within KikScore will rage — do we continue to self-fund or do we seek professional investment.  We’ll keep you updated (and we’d love to hear your thoughts about it).

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2009 Online Ratings Survey Synopsis

As dojomike’s previous post alluded to, LexisNexis recently released their 2009 Online Ratings Survey. In that 2009 Survey, LexisNexis revealed some interesting trends that are continuing to develop in the online community.

Trend 1: The vast majority of small businesses and consumers are active users of review and ratings Web sites (90% for small business and 80% for consumers).

Trend 2: Small business owners place a greater value on ratings and review Web sites than consumers.

Trend 3: According to Alfredo Sciascia, a vice president with LexisNexis, “review and ratings Web sites are being used to a greater extent than ever before to inform buying decisions”. Sciascia adds that “ratings offer consumers valuable insight into a wide range of goods and services, and they can be a powerful tool used by business owners to differentiate their goods and services from those offered by competitors.”

Trend 4: Despite the increased use of review and ratings sites (as dojomike indicated in his previous post), the reliability of many of these review and ratings Web sites are in question.

Lexis-Nexis Recommendation Based on Trends: According to Sciascia, “the survey indicates that in order to offer a trustworthy, complete resource that provides significant value to business owners and consumers, providers of ratings will need to incorporate a combination of qualitative and quantitative evaluations”.

Lexis-Nexis’ recommendation was derived from the fact that when asked what kind of evaluation would be most valuable, nearly 80 percent of small business owners and consumers find that a blend of both numerical scores (overall ratings score) and written feedback (verbatim comments/testimonials) would be the most valuable type of evaluation from review and ratings Web sites.

Accordingly, do not only listen to me or dojomike as you continue to purchase and/or sell online, also listen to the experts at LexisNexis who commissioned a survey to obtain information that me or dojomike would have gladly provided to them for free.

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Increasing Online Sales by Increasing Trust: Part 2

This is the second part of a 2 part posting about increasing online sales by increasing trust.

As we discussed yesterday, the lack of trust is costing online retailers billions of dollars in lost revenue. Today we will talk about trust marks and the statistics that support the notion that online shoppers are more likely to purchase from a merchant that prominently displays a trust mark, and as a result, the display of a third party trust mark is one of the more effective solutions for building trust with a merchant’s prospective customer.

Market research has shown that third party trust marks alleviate the security concerns of online shoppers. A recent study investigated the security concerns of online shoppers and the value trust marks hold in the minds of consumers. The following statistics are from an August 2006 study conducted by TNS, an independent research firm:

The overwhelming majority of consumers feel it is important for sites to include a trust mark.

● 86% of U.S. online shoppers say it is important for an E-commerce site to include a trust mark of some kind on their site.

● 89% of online shoppers expect to see a trust mark displayed on a Web site’s home page. 85% also expect to see trust marks displayed on the page where personal information is entered and where the final transaction is completed.

● 65% of online consumers shop only at sites they know and trust, while 42% of online shoppers prefer to make purchases through sites that include a trust mark.

Shoppers not only recognize and value third party trust marks, but the presence of a trust mark can also persuade them to complete the purchase.

● 65% of online shoppers have terminated an online order because they did not “trust” the transaction. 53% of these shoppers indicate that the presence of a seal would have likely prevented the termination.

Finally, these concerns are translating into lost revenue for merchants. According to a survey of 10,000 households by the Conference Board in 2006, 41% of those households are purchasing less online than they did a year before. And with good reason, in 2005, identity theft cost consumers alone $680 million.

In a recent article published by eMarketer titled “Few Convert at Retail E-commerce Sites: Many Shop. Few Buy”, published on April 9, 2007, Jeffrey Grau, an eMarketer Senior Analyst, reported that online merchants convert an average of 2%-3% of their site visitors into buyers. However, he observed that retailers with industry-leading conversion rates are doing more than just looking at numbers. Mr. Grau adds that “online retailers who go beyond using traditional Web analytics data to truly understand their customers’ intentions, perceptions and concerns will be rewarded with higher conversion rates [i.e., increased sales].”

>It has been my experience, and as evidenced by some of the industry numbers provided above, that the lack of trust and the perception of insecurity are major inhibitors precluding online commerce from reaching its full potential. General concerns surrounding trust, security and performance affect all online merchants (large and small); however, smaller and lesser known merchants are plagued more so by these genuine consumer concerns. Accordingly, a merchant looking to increase their online sales should think long and hard about addressing the trust and security concerns of their customers by providing more of information that will help their prospective customers know that they [the merchant] can be trusted.

NOTE: If you are interested in reviewing the data sources for some of the numbers/statistics quoted in these postings, please send an email to support@kikscore.com and we will be more than happy to provide the data sources.

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Increasing Online Sales by Increasing Trust: Part 1

More Information.  More Trust.  More Sales.

–>Lack of Trust

We’ve all have read or heard about the reports of the phenomenal growth of e-commerce; however, what we do not hear about as much is that its full growth potential is being restrained and inhibited by feelings of insecurity and lack of trust. I don’t want to throw a bunch of numbers at you, but you will notice that this particular blog posts has more numbers/statistics than usual because I think it’s important to see the numbers to really drive home the message of how important it is develop trust with your customers. I can’t help but think about a Gartner Group report that stated that consumer jitters over security cost online retailers nearly $2 billion in lost sales in 2006.

According to that same Gartner Group report, just over 46% of the 155 million U.S. adults who go online admitted that misgivings about information theft, data breaches, or Web-based attacks have affected their purchasing, online transaction, or e-mail behavior. and 85% are concerned that they could become victims of identity theft. Accordingly, one of the problems the internet and the e-commerce industry faces overall, and small to medium sized businesses in particular, is the need to provide customers with a sufficient amount of information transparency to enable potential customers of a merchant to make an informed trust decision about that merchant’s performance capabilities. Ultimately, each prospective customer either objectively or subjectively asks and answers the following questions when they visit an online merchant’s store: (i) “Do I trust this merchant with my personally identifiable and financial information?” (ii) “Will this merchant keep my information secure?” and (iii) “Will this merchant perform appropriately?” If the answers are “No”, it really does not matter how cheap the merchant’s product is relative to its competitors, the transaction stops there. As a result, a genuine customer need has arisen for indications of trust and security. Consequently, a whole industry has developed around messaging security and trust to customers via trust marks and seals.

Tomorrow Part 2 of this post will discuss these trust marks and seals.

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WSJ Article — Online Reviews Suffer From Grade Inflation

A recent Wall Street Journal Article examined a troubling trend with online shopping reviews — that these reviews benefit from higher grade inflation than a star power forward at Duke.  As Geoffrey Fowler and Joesph De Avila write, the average review given is 4.3/5 stars.  There are a handful of explanations offered for this trend, including  psychological — people are more likely to remember positive experiences.  But the most interesting reason offered is that critical reviews are removed from the calculation and reviewers are repeatedly critical are barred from some sites.  While this practice definitely skews the reliability of these reviews, I’m sure it’s similar to the corrective action taken when a rogue Spanish professor tries to fail that same Duke power forward for skipping language lab.  It’s simply not going to happen — or if it does happen, that Spanish professor will not be teaching at Duke very long.

Back to the point.  While shopper/user reviews can be very helpful, if the grade inflation persists, they will just become an empty marketing tool.  Continuing the academia analogy, using these inflated reviews to make shopping decisions (and who to share your personal information with) will be like getting a medical referral from the hacky-sack playing hippie who is in the 7th year of his Pre-Med undergrad.  I’ll go easy on our product pitch, but the ability for these reviews to be marked up (or less than objective) was a big motivation to create KikScore.  More on that later.  Until then, let’s all start providing realistic shopper reviews.

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Creating a Website, Easy Creating a Brand, Not So Much

You have a product/service, a cool domain name (though not as cool as KiKscore), a website, some way to charge people and electricity. But do you have a business? Well, you probably do, but is it successful? I guess it depends upon your definition of success. Some philosophers believe that success can be found in the mere attempt of an activity, regardless of the outcome. But those philosophers are probably the ones that didn’t finish high school and have no money, so why listen to them.

I may have digressed. Ok, the point is just having a site doesn’t mean you have a customer base. How do you get one? Easy. Just buy my new 13 step program (available only on LaserDisk) “Getting a Customer Base the Dojo Master Mike Way”. Or, instead you could start building up your brand in the marketplace (though I think the LaserDisk purchase is a smarter way to go).

The biggest obstacle that small/new businesses face is that they are competing against established/well known competitors. You have to create a known brand if your company is going to have staying power. And there are a lot of different thoughts on brand. The one I like the best is that a brand denotes a certain type of customer experience. Any Starbucks that you go to you can expect the same type of drinks, pastries and horrible folk music. No matter what you think of Starbucks, you know that there brand relates to a certain type of experience. That’s what every small business hopes to aspire – creating a customer expectation with their business (as long as it is a positive experience).

To create your brand and your positive customer expectation, the focus has to be on consistency. Wild differences in your service level will discourage repeat business or referrals. Also be open to customer feedback…making changes to your service/product that incorporates those suggestions.

What about getting the word out about your business? Most small/new businesses don’t have a large advertising budget. But as everyone knows, there are many ways to create attention these days. I think the best way to create buzz is through a hunger strike or some type of large-scale arson attack. But others prefer optimizing their website, sponsored links on search engines, referral links from other websites, and gaining attention on social media sites. To each their own, I guess. Whatever you do, make sure to keep in mind your brand and what you want the excepted experience to be.

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3 Hallmarks of a Good Online Shopping Experience

If you purchased a product recently (whether online or offline), there are 3 general things that had to happen for you to have a good shopping experience. Aside from your happiness or unhappiness with the particular product you purchased, your experience with the merchant that sold you the product had to have certain characteristics for it to be a good shopping experience for you. The success of your online shopping experience depends completely on the occurrence of all 3—without any given one and, I believe it is safe to say, you would be one unhappy customer.

No Fraud. For starters, in the online world, a good experience begins with your product being delivered (i.e., you did not order your product from a fraudster who took your money, but failed to deliver your product). Nothing is worse than learning that the special gift that you purchased for that special someone is never going to arrive because you have been defrauded.

Good Customer Service Experience. There are 3 hallmarks to a good online shopping experience, so just because you were not defrauded doesn’t mean you get to pass Go and Collect your $200. So, you didn’t buy from a fraudster, something told you that since every other word on the merchant’s website was misspelled that this particular merchant would only fool the unsuspecting. As a result, you find a reputable merchant that has your product in stock and doesn’t plan to take your money and run with it. However, while your selected merchant is not fraudster, they are not the most punctual or responsive merchants around. Nothing is worse than waiting forever for a product that was promised to be delivered next business day or getting the product, but only to discover that the merchant failed to package that special someone’s Christmas gift and now that special present has been shattered into hundreds of small pieces. It would have been invaluable information if you only knew that 30 out of the merchant’s last 100 customers had similar purchase experiences.

No Misuse or Misappropriate of Your Personal Information. Ok, so let’s say you were fortunate enough to get your product delivered on Christmas Eve and in perfect condition. You wrap the present, place it under the tree and anxiously await to see the surprised look on that special someone’s face when they open your present on Christmas day.

The only problem is that your merchant (the one that delivered the exact product you order on time and in perfect condition) failed to use an SSL certificate when they were collecting your information, or worse, they used an e-commerce provider that did not properly secure and encrypt your personally identifiable information. Imagine the surprised look that will be on your face when you discover that some fraudster (unbeknownst to your merchant) gained access to your personally identifiable information and now they are using your credit card and personal information to assume your identity and be Santa Claus to the whole world.

Know Your Merchant. In this age of fraud and identity theft, it is extremely important to not only research WHO you are doing business, but also HOW they conduct their business. Please take the extra time it may take to do the necessary research and analysis to ensure that all of your online experiences meet and pass the 3 hallmarks.

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KikScore.com – Online businesses check us out!

Welcome to the first post for Kikscore.com. This is the inaugural post.

If you read this blog……..all of your dreams will come true. This is the first post for the KikScore blog. Here is a brief introduction of the people, the company and the product.

People

We are 8 of us from Virginia to Washington DC to Denver that have come together to launch KikScore. This entire product was launched on nights and weekend work while working our day job so we are all pretty darn proud of pulling this product launch off. We have different skills sets from product development, business development, engineering and technology, scoring model development, legal, operations, watching movies, rooting for football teams that perpetually let us down and wanting desperately to act in a Jean Claude Van Damme-Karate movie. Watch out for our video ads….the last skill/wish may just come true!

Company

The people mentioned above make up the company the Interactive Security Group. ISG owns KikScore.com. The official movie of the company is SuperBad and Blades of Glory. For the science fiction lovers on our team, ok they get to say Star Trek is an officially movie of our Legal department.

Product

Online merchants have always had a trust problem with online shoppers. Which merchant should a shopper trust? Which merchant is a lying, stealing, mustachioed, tank-top wearing, jack booted thug that is going to steal a shoppers identity or ruin the shoppers credit. This perception of shopping in the dark has cost online merchants billions of dollars a year in lost sales.

Merchants now have the solution to the problem of showing that they are trustworthy. They also get to use public information about themselves to demonstrate that they are trustworthy to shoppers. KikScore takes a vast amount of information from multiple sources and provides it in one place for a merchant to show their shoppers that they are trustworthy. Even better, the merchant will have all of this information scored into a trust score or the KikScore. In one place, merchants will be able to demonstrate trust so that they can increase their sales!

People.Company.Product = KikScore.com

Tell us what you think……because we are here to stay.

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