Make More Money By Segmenting Your Customers

Several years ago I was talking to a Senior Vice President at a major bank. This guy had been in the business for 30 years and was one of the more successful professionals I’ve worked with; he made a lot of money yet never seemed overworked. When I asked him how it did it, he responded with a single word: segmentation.

In any service business, the most important thing is to segment your clients into two broad groups: those that are making you the most money, and those that are not.

Continue reading Make More Money By Segmenting Your Customers →

Focus on Solving Real Problems: A Dog Food Story

Several decades ago, a dog food company held an internal sales conference. First, the advertising director presented an exciting new media campaign. Then, the director of marketing explained his new go-to-customer strategy that would “change the industry.” Finally, the sales director got up and excitedly talked about how their sales team was the best in the business.

The President listened patiently through all of these presentations. At the end, he got up and said. “Look, I only have one question. If everything we do is so great – our sales, marketing, advertising – then why do we sell less dog food than everyone else in the industry?

The room went silent. No one knew what to say. Finally, someone offered a thought: Maybe it’s because the dogs HATE our product.

The point of the story is that it’s important to focus on the real problems. We often get distracted by stuff that doesn’t really matter. In this case, the company had been focusing on sales, marketing, and advertising. While those are important areas, they should have spent more of their time discovering, defining, and addressing the real problem: a lousy product.

So how do you solve a real problem? How do you create a product that people actually want to buy?

It’s a good question. There’s no secret sauce or magic recipe that guarantees success. But there is one concept that will 100% steer you in the right direction.

It’s simple: make something you’d buy yourself

Sounds obvious? It is! And it makes sense: if you are looking for something to buy, chances are there are others who want to buy it as well.

If you are creating dog food, take a moment to think about whether your dog would actually eat it. If not, you should rework your product. End of story.

This applies to any product. Whenever you create something new, ask yourself one question:

“Would you (or someone who know) actually use this?”

If the answer is no, then think about what you can do differently to turn that “no” into a “yes.”

Be honest with yourself. After all, you don’t want to waste your time and money on something that is doomed to fail.

Over the last few months, I’ve actually been hard at work at developing/expanding some of my own products. I’m not quite ready to share all the details, but needless to say, I’ve been doing a ton of research on what it takes to create a kicka$$ product that will make me lots of money. Here are some of the best writeups I’ve stumbled on:

The No Fail Approach To Product Creation. Pat Flynn over at Smart Passive Income always an amazing job, and this post is no exception. Pat lives by a simple rule – don't create anything you wouldn't use yourself – and it has served him well.

7 Things You Must To Do Make Your Product Launch Easier – Dave Navarro at the Launch Coach has a whole ton of articles on how to conceptualize and market an outstanding product. This is easily one of the best, definitely a must-read.

Don't Just Roll The Dice: This is actually a free e-book about how to set the right price for your product. Very well written, and a good read for anyone who wants to launch something new.

What are some products that you think would solve a real problem?

The Great Fundraising Racket

Happy Halloween! This year, I'd like to scare you all with a terrifying tale about money and mayhem…

Several years ago, a former government employee named Alfred Villalobos quietly left his job to start up a new company called Arvco Financial Ventures. This new business focused on helping large investment funds (such as private equity groups and hedge funds) to raise money from Villalobos’ former employer, the CalPERS pension fund for California State Employees.

A few years later, news broke that Villalobos and his new company had collected more than $58 million in fees.

People were shocked. How could a former government employee be making so much so quickly?

The truth is that it actually made a lot of sense. The CalPERS fund managed more than $200 billion, and Villalobos was strongly connected to the CalPERS board of trustees. When a private equity fund wanted to raise money, Villalobos could pull the right strings…

…for the right price, of course.

Today, the California State Government is actively reviewing this process. However, similar deals have been going on for years. These fundraisers, known as “placement agents,” have been skimming money off the top for decades.

But surely these “placement agents” are doing something right? After all, they must be reviewing the funds to select only the best ones for the shareholders.

Sadly, this is not the case. Placement agents want to see the deal go through…at any cost. They get paid upfront, so they have no incentive to see the fund get returns for the shareholders.

In short, Alfred Villalobos gets to keep his $58 million whether or not CalPERS makes any money.

The amazing thing is that this is only the tip of the iceberg. Take a look at this diagram, which shows how many fees and payments are collected before investors make any money:

Remember that most of these fees are collected regardless of performance. Pension fund managers get paid high annual salaries and bonuses. Private equity investors collect millions of dollars in management fees. Corporate executives get hefty stock option and cash compensation as well.

Now we have two choices. We can sit and complain about it, and hope that someone does something to fix the problem, or…

We can take control of the situation and focus on earning more money so we don’t have to worry about this ever affecting us.

The second choice is definitely the harder path. It takes a lot of work, and a little bit of luck as well. But stories like this are a good way of reminding us that the only way to guarantee financial security is to build it for ourselves.

Happy Halloween everyone!

How to Go From Unknown to Authority Figure in Three Easy Steps

We all want to be the best at something. It’s human nature to desire respect and admiration. It’s also important for succeeding in business and in life.

The big rewards go to the best of the best. This is because when you are the best at something, you instantly become an “expert.” People will pay you for this expertise, and you can make a fine living doing something you are great at and hopefully enjoy.

Fifty years ago, only a few people could be the best at anything. Today, there are so many markets, so many unique niches – there are more opportunities for individuals to be “world class” than ever before.

Step 1: Figure out your passion

As a general rule, it’s a lot easier to excel if you truly believe in something. This requires introspection. Take some time to figure out who you are and what makes you “tick.”

One great example of a new authority is Ramit Sethi, author of the bestselling “I Will Teach You To Be Rich.” Ramit had been passionate about personal finance ever since his high school days, when he lost $1,000 in bad investments. Back in 2004, Ramit had a vision: top notch personal finance information targeted at a younger audience. Most personal finance books were really dull; why couldn’t the same information be presented in a more entertaining way? This passion is what drove him to long-term success.

Today, Ramit's making a ton of money off of his personal brand: here's a post I wrote on how he's achieving it.

Step 2: Figure out a unique market for your passion:

Who is your audience? How can you earn money doing what you do? Take time to evaluate the different options and conduct a few experiments if necessary. You don’t want to invest in becoming the world’s best ice fisher only to realize that there’s no market for your skills.

One of the best ways to find a market is to identify a “pain point.” A pain point is a problem that needs to be solved. Find these problems, and find out the market that suffers from them. Then, come up with a unique solution.

This was the exact principle that helped David DeAngelo become a “guru” on the art of dating. Over the last decade, David DeAngelo has dated some of the most eligible women in the world…even though he’s pretty average guy. He quickly realized that there was a large market of “average guys” who wanted to know how to date better.

DeAngelo capitalized on this by launching Double Your Dating, a series of information products designed to help men interact better with women. It was a huge success and quickly made DeAngelo a multimillionaire.

Step 3: Build Credibility

There are so many so-called “experts” out there that people have become very skeptical about who’s real and who is not. You need to let people know why they should bother listening to you.

The best way to achieve this is by letting them know your successes. Dean Graziosi is a successful real estate investor who has made a second fortune by selling information products on how to make money through real estate. In all of his promotional materials, he does a clear job of explaining his humble origins, his successes as a self-made millionaire, and the value of his secret to success. Potential customers are much more likely to buy his materials when they see him driving a Mercedes to and from his many properties.

How do you plan to become an authority? Please share in the comments.

Earn More Money by Becoming More Interesting

One of the best ways to increase your earning power is to become more interesting as a person. This is because interesting people are generally more exciting to be around. This allows them to expand their network, build their personal brand, and more effectively sell products and services.

So how do you become more interesting? Here are some tips:

Admit You Were Wrong: The world is filled with people who are obsessed with being correct all the time. If you have the courage to admit that you were wrong, you’ll definitely be remembered. Better yet, people will view you as someone who’s willing to step back and admit his or her mistakes, which is always a positive personality trait.

Continue reading Earn More Money by Becoming More Interesting →

What Is Your “F%&* You” Number?

A few weeks ago, I was having dinner with a good buddy of mine who's also in the process of starting a business. Like most dedicated entrepreneurs, he's working night and day to make this a reality, investing lots of time and money in the process.

Now, I know from personal experience that entrepreneurship isn't easy. It's tough to keep yourself motivated. So I asked him what he did to push himself along when things got tough.

My friend looked me straight in the eye, and said:

"My goal is to make five million dollars. If I had that much money, I'd just invest it, sit back, and say "F#$% you" to anyone who tried to tell me what to do."

I thought this was hilarious at the time. But later that night, I started thinking about the conversation. I realized that I wasn't that different. Like my friend (and many other people), I desperately seek complete financial independence.

That's when the idea of a "F$%# You" number hit me. This is that magic figure, the dollar amount at which we'll be comfortable living with for the rest of our lives.

Building up your earning power is tough. It's easy to lose motivation and start questioning ourselves. "Why do I really need to make that much money. Can't I learn to just live with less?"

Sure, you can. But remember, having more money isn't necessarily about buying more stuff. To me, the value of money is the freedom it can bring.

Once you have financial security, you are free to pursue your own passions. This may be starting another company or earning more money, but it can also include charitable work, hobbies, and spending time with your loved ones.

Essentially, the money is giving you the ability to say "F^%# you" to doing things that you really don't want to do. Because of the money, you don't have to.

When I think of  money, I don't think about material goods. Instead, I see it as a gateway to a dream, a more ideal lifestyle.

Someday, I hope to open a small recording studio in San Francisco. I want to work with talented artists to record, produce, and commercialize their music for millions of people to hear.

I want to come home and spend the evenings with my family, not hunched over a computer trying to make some numbers add up. I want to go hiking on the weekends, and exercise every day.

And I don't want money to get in the way.

What is your "F#$^ You" number? What would you do with it?

Three Ways You Can Make $5,000 Per Hour (or more!)

$5,000 per hour.

It sounds crazy. Almost too good to be true, really. But when you think about it, there are actually a lot of people earning this much.

Here’s the secret: it’s not like they are actually billing clients at $5,000 per hour. Instead, they are using their time in a way that yields huge payoffs at some point in the future. Eventually, the cash starts piling up, and their “relative income” goes through the roof.

Here are the three things you can do to increase your income…if not to $5,000, then certainly to higher than where it is right now:

1. Build (And Own) Something Of Value

This is clearly the best and most common way to make a lot of money. Almost every super-rich person (from Bill Gates at Microsoft to Sam Walton with Wal-Mart) has made their money by building a large, profitable business.

Of course, you don’t need to build an empire to increase your income. For every billionaire, there are thousands of millionaires who do the same thing on a smaller scale. One businessman I met makes millions of dollars every year by shipping equipment supplies to miners in the Sierra Mountains. He purchases the supplies at a discounted bulk rate and provides a service that allows him to sell them at a much higher price. He has a trusted relationship with his buyers and has outsourced most of the actual work, so his time commitment is low. But he keeps the majority of the profits because he is the owner.

2. Earn Some Big Commissions

Being a middleman isn’t as profitable as owning your own lucrative business, but the good news is that you take a lot less risk. After all, you’re just taking a commission from a sale. You don’t have to put any of your own money into something that might go under in the future.

This is how investment bankers make all of their money. They find large corporations that want to acquire smaller companies. Then, they negotiate a transaction and take a nice chunk of the final sale price. When you’re selling a billion dollar company, even a small percentage can add up to tens of millions of dollars.

Now, I know that you can’t just start conducting billion dollar transactions overnight. Instead, a more immediate way to boost your hourly rate is to become a passive middleman.

Here’s an example: one guy I know recently bought an outsourcing company based in the Phillippines, where he pays people between $8-$11 per hour to do data entry and basic accounting tasks. He then charges companies in the states $30+ per hour to do the same work for him. All he has to do is negotiate the initial contracts, and then he just keeps collecting checks every month.

3. Become An Authority

In 1985, Robert Kiyosaki was living out of his car. Through a bad series of investments, he had ended up completely broke and was a step away from being out on the street.

Today, Kiyosaki is a best-selling author who has turned his “Rich Dad, Poor Dad,” books into an iconic brand, complete with seminars and a lucrative line of information products.

A pretty impressive turnaround in 25 years, so how did he do it?

In the late 1980s, Kiyosaki realized that things needed to change. He started investing more wisely and soon had amassed a sizable real estate portfolio. In 2000, he wrote the bestselling Rich Dad, Poor Dad, which focused on his upbringing in Hawaii and the many mistakes he had made over his career. His rags-to-riches story had lots of appeal and quickly established Kiyosaki as an authority on personal finance and investing.

Most of the information in the book is common sense, but it has more weight coming from Kiyosaki. This is the power of being an authority.

Have you managed to increase your income using these techniques? Please share in the comments.

Make More Money By Creating Awesome Viral Content

Viral content is powerful stuff. If you have an army of people promoting your offering, you don’t have to spend nearly as much money on marketing. You get free awareness, which in turn boosts your profit margin.

But creating viral content isn’t easy. After all, there’s so much good quality material available, so your content is bound to get lost if you don’t make it stand out somehow. Here are four steps you can take to increase the viral potential of your content.

Step 1: Have a Killer Headline

I simply can’t overemphasize the importance of this. The headline is the first impression that people have of your product. Sure, you need great content later on, but none of it matters if people don’t click through.

Headings are especially important in the context of social media. When someone “retweets” or “likes” your content, their social network will only see the headline. They are far more likely to click through if they see something interesting. Here are three ways you can make your headline stand out:

Say something new or controversial: A very common mistake is for headlines to contain common information. For example, a headline like “why you should eat better” isn’t particularly unique or new information…everyone already knows this! Instead, if you challenge someone’s beliefs, you’re more likely to elicit a response. (example)

Offer something that they won’t find anywhere else: Words like “secret” or “keys to success” or “unlocking” makes it sound like you’re describing a unique and valuable process, rather than just listing a few facts. This makes the reader much more curious and gives them the desire to learn more.

Ask a Question: When people see a question as a headline, they’ll assume that the post will provide them with the answer. If they are interested in this answer, they are much more likely to click through. Simple idea, great results.

Looking for inspiration? Here’s a resource featuring 100 of the greatest headlines of all time.For more information and examples of killer headlines, check out my free guide to article marketing (just sign up below).

Step 2: Capture Their Attention Within The First 30 Seconds

It is trivially easy for someone to leave a website. There’s a reason that most people stay for less than thirty seconds on any one page. Therefore, you need to give them some compelling value within the first few seconds of their experience. This can be anything from a great introduction to a blog post, to a cool infographic, to compelling ad copy, to a powerful video. The point is that you need to reel in your users from the first minute or they’ll move on with their lives. Here are a few ideas to grab your user’s attention quickly:

Ask a question that you plan to answer later: I mentioned this in the last section as well, but it really does help. Of course, the question needs to be relevant to the topic at hand, but it creates some suspense that helps the user stick around.

List some key points: Summarizing the few major points behind your value proposition will give readers an idea of what they should expect if they choose not to leave.

Use teasers: People want to know what they’re going to get out of using your product or service. A statement like “stick around to find out how you can save $1,000 per year on your mortgage” encourages people to do exactly that. This buys you some time to more thoroughly market your product or service.

Step 3: Add Value All The Way Through

By now, you have the reader’s attention. The next step is to keep demonstrating value so that they will trust you even more.

Add a personal touch: Most people want to understand how they will benefit from something. They don’t care about theories and concepts unless they stand to gain from learning them. Try to emphasize how your product, service, or content will help benefit their lives and/or their family.

Give specific examples: Case studies are a great way of illustrating a complex idea. Walk people through a real-life scenario and they’ll be much more likely to buy into your ideas. Whenever possible, cite cases or research studies that back up your statements.

Include Testimonials: Nothing works better than having someone else say that you or your product is awesome. An authentic testimonial will go a long way towards getting people to talk about you in a positive way.

Keep things simple: Most visitors are only going to remember one to two things from any piece of content. Identify what you want them to remember and focus on drilling these points home.

This brings us to…

Step 4: The Call To Action

This is the final step: asking people to do something that provides you with value. It can be anything from buying a product, to getting an e-mail address, to sharing content via social media. If you’ve done everything right up to this point, you’ll have a good chance of getting your visitors to help you out. Here are a few ways you can ask your visitors to take action:

Summarize Your Key Points: Remind people of your value proposition and emphasize the main things you want them to remember. This makes it much more likely that they’ll buy something, or, at minimum, talk about your product with others.

Encourage Discussion: Many people are interested in giving feedback or would like to ask a question, but they aren’t sure how to do it (do I fill out a form, call a phone number, etc). Give them a clear way to do this and you’ll get more leads than you can handle.

Provide A Time-Sensitive Offer: People are much more likely to act if they think that there’s a limited window of opportunity. You want to draw them in while you can; if they leave your site without doing something, it’s very unlikely that they’ll come back. They’re also more likely to tell their friends to act fast on the opportunity.

A final thought…

At the end of the day, just put the best stuff out that you can. Be authentic, and show some patience. With a little luck and a consistent effort, you'll be on your way to building the audience you've always dreamed about.

Why Reflection is Important

Several weeks ago I met up with a close friend for coffee. My friend is a hyper-competitive person; she works in the finance industry and puts in a lot of hours every week. We started talking about the concept of time for reflection and immediately got into an argument.

My friend claimed that reflecting on things was “not a good use of time because just thinking about life isn’t going to solve anything. Instead, you should be focused on solving your problems and achieving your goals.”

If you’ve read my blog at all, you’ll know that I strongly disagree with this. I’ve always been a fairly reflective person. Reflection usually helps me take steps forward. I didn’t understand how reflection got in the way of problem-solving and goal-setting.

But as I started talking to more people, I realized that my friend wasn’t alone in feeling this way. Many people seem to think that reflection and introspection to be a waste of time.

This bothered me. I knew that reflection was important, but I hadn’t taken the time to analyze why. So I thought it would be helpful to write out all the ways that reflection has helped me.

Avoid repeat mistakes:

A few years ago, I tried to start a company with a close friend. We were both very enthusiastic about the concept and I was excited to work with him.

A few months in, I realized that I’d made a huge mistake. My friend was a great guy, but we just didn’t work well together. The project ended up going nowhere and we moved on to other things.

A year later, my friend called me with a new idea. He was wildly enthusiastic and really wanted me to be a part of the new venture. Against my better judgment, I agreed. Unfortunately, our inability to work well together resulted in another failure.

We all mess up sometime. The important thing is that we don’t fall into the pattern of repeating our mistakes. But how will we know what we’ve done wrong unless we take some time to think about it? Had I reflected for a little while, I could have avoided making another bad decision.

Come up with new ideas:

We’re all so bombarded with information that it often goes in one ear and out the other. Reflection gives you time to make sense of everything going on in your life and develop new ideas on how to approach it.

My first job ever was at a large investment bank. When I started, I had no idea how to manage my time. I constantly felt overwhelmed and didn't know what to do.

I decided to get away for a weekend in order to gather my thoughts. I packed up my gear and camped out in the woods for a weekend. While there, I realized that there were actually a few simple problems that were causing most of my stresses. I just needed to organize my e-mails, prioritize my tasks, and follow up on certain issues.

It wasn't rocket science, but it took some reflection to realized what I needed to change.

Figure out what matters:

Back in college, I was having coffee with a good friend who was having trouble defining what was important in his life. He felt pulled in many directions – his parents wanted him to go into business and his professors wanted him to be a scientist. He also had some desire to explore a professional career in music. He was genuinely interested in many things and felt overwhelmed by the choices in front of him.

I told him that I didn’t have an answer. The best way for him to find out was to reflect. Take time away from everything and just think. He took my advice and ended up realizing that what mattered to him was enjoying his work and making a substantial impact.

When he thought about it this way, a career in scientific research made the most sense. Today, he is a graduate student in neuroscience at a prestigious university and overall, is very happy with his decision.

We’re constantly being pulled in all directions. With all the external pressures, it is easy to over-commit. Taking time to figure out what matters can help us sort out our priorities and goals from the black holes that we want to avoid.

Providing perspective:

It’s easy to get down on ourselves. We are always struggling for things and sometimes the fight can get exhausting. Taking time to think about ourselves in the context of others often helps me put things in perspective. Thinking about this calms me down; things could be better, but they could also be a lot worse.

In April of 2009, I lost my job in banking, and was pretty down for a few weeks. I didn't really have a clear plan about what I was going to do. But after I reflected awhile, I realized that my situation wasn't actually that bad. I had some money in the bank, and a good education, and no matter what happened, I knew that I'd eventually get back on my feet.

This restored my confidence and gave me the energy I needed to push myself forward. Within a few months, I had already started making money as an entrepreneur, and was on a great trajectory.

How has reflection helped you develop as a person?

How To Reinvent Yourself

Rewind to the end of 2000. Vice President Al Gore had just lost the closest Presidential race in history. Afterwards, he reportedly went into a state of depression. The struggle for him was “what now?” After all, when you’ve gotten so close to something so big, what else is there to do? It was really the ultimate identity crisis.

Many people thought he would run again in 2004 – “Al Gore isn’t a quitter” they said. As it turned out “quitting” on the presidency might have been the most personally rewarding decision he ever made.

Gore soon took a faculty position at Columbia University. He grew out a beard, taught a few classes, and generally seemed relaxed and happier in media interviews than he had been during the grueling Presidential Election.

He spent his time testing the waters in a wide variety of interests and potential projects. In late 2002, he announced he wouldn’t run for President in 2004, choosing instead to focus on his increased interest in the environment.

Once Gore had figured out his post-White House passion, he used his considerable media pull to maximize environmental awareness. In 2006, Gore released a documentary – “An Inconvenient Truth” – about the environment, which ultimately won him an Academy Award – and in 2007, Gore was awarded the Nobel Peace Prize for his environmental efforts.

It’s never easy to reinvent yourself – especially if you have spent your entire life doing one thing – but Al Gore figured it out. It would have been easy for him to just retire; instead, he chose to adapt to the new realities of his life – and ended up making a big impact.

Whether you agree with him or not, we can all learn something from this. Being able to adapt and thrive will put in an amazing position to reinvent yourself, build your personal brand, and ultimately make the kind of money you deserve.

Have you ever reinvented yourself? Please share and discuss in the comments below.