The watchwords were discipline, efficiency, and eliminating waste.

Sinegal explained the Costco model to Bezos: it was all about customer loyalty. There are some four thousand products in the average Costco warehouse, including limited-quantity seasonal or trendy products called treasure-hunt items that are spread out around the building. Though the selection of products in individual categories is limited, there are copious quantities of everything there—and it is all dirt cheap. Costco buys in bulk and marks up everything at a standard,

across-the-board 14 percent, even when it could charge more. It doesn’t advertise at all, and earns most of its gross profit from the annual membership fees. “The membership fee is a onetime pain, but it’s reinforced every time customers walk in and see forty-seven-inch televisions that are two hundred dollars less than anyplace else,” Sinegal said. “It reinforces the value of the concept. Customers know they will find really cheap stuff at Costco.”

Costco’s low prices generated heavy sales volume, and the company then used its significant size to demand the best possible deals from suppliers and raise its per-unit gross profit dollars. Its vendors hadn’t been happy about being squeezed but they eventually came around. “You can fill Safeco Field with the people that don’t want to sell to us,” Sinegal said. “But over a period of time, we generate enough business and prove we are a good customer and pay our bills and keep our promises. Then they say, ‘Why the hell am I not doing business with these guys. I gotta be stupid. They are a great form of distribution.’

“My approach has always been that value trumps everything,” Sinegal continued. “The reason people are prepared to come to our strange places to shop is that we have value. We deliver on that value constantly. There are no annuities in this business.”

The Monday after the meeting with Sinegal, Bezos opened an S Team meeting by saying he was determined to make a change. The company’s pricing strategy, he said, according to several executives who were there, was incoherent. Amazon preached low prices but in some cases its prices were higher than competitors’. Like Walmart and Costco, Bezos said, Amazon should have “everyday low prices.” The company should look at other large retailers and match their lowest prices, all the time. If Amazon could stay competitive on price, it could win the day on unlimited selection and on the convenience.

That July, as a result of the Sinegal meeting, Amazon announced it was cutting prices of books, music, and videos by 20 to 30 percent. “There are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be the second, full-stop,” he said in that month’s quarterly conference call with analysts, coining a new Jeffism to be repeated over and over ad nauseam for years.

Drawing on Collins’s concept of a flywheel, or self-reinforcing loop, Bezos and his lieutenants sketched their own virtuous cycle, which they believed powered their business. It went something like this: Lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop. Amazon executives were elated; according to several members of the S Team at the time, they felt that, after five years, they finally understood their own business. But when Warren Jenson asked Bezos if he should put the flywheel in his presentations to analysts, Bezos asked him not to. For now, he considered it the secret sauce.

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

You’re the primary person responsible for the marketing of your book. Publishers don’t use marketing to cause books to sell well—they help books that are already selling well to sell even better. To use a pyromaniac analogy, publishers are accelerants, not sparks.

However, there are some publishers who are embracing the new electronic realities of publishing. 

O’Reilly Media is one example. Let’s take a look at its approach to publishing: 

Direct sales. O’Reilly sells books directly to people from its website. It doesn’t try to preserve a multi-tiered distribution model that doesn’t necessarily serve customers better. 

Multiple formats. O’Reilly provides ebooks in PDF, EPUB, MOBI, DAISY, and Android APK formats as well as printed-on-paper. 

DRM-free. O’Reilly publishes ebooks that are free of digital rights management (DRM). (More about DRM in chapter 20: “Self-Publishing Issues.”) 

Easy access. Customers can download their O’Reilly books in as many formats as many times for as many devices as they want.

Syncing. People can sync their O’Reilly books to Dropbox (a cloud-based storage service) accounts. (More about Dropbox in chapter 5: “Tools for Writers.”) 

Online subscription. O’Reilly created the Safari Books Online brand, which provides online subscription access to books, videos, and interactive learning tools. 

Community. There is a question-and-answer forum as well as a community forum for O’Reilly customers. Conferences. O’Reilly conducts conferences around the world about the topics in its books. 

Multimedia. O’Reilly offers webcasts by authors as well as online educational courses and certification. O’Reilly is the way of the future: multiple formats, DRM-free, and expanding the definition of publishing to include multimedia learning, community forums, and face-to-face conferences.

APE: Author, Publisher, Entrepreneur-How to Publish a Book by Guy Kawasaki, Shawn Welch

You need to recognize the impact you have on people’s lives in the business you are conducting. What you render, and the way you render it, has changed their lives. It has helped enrich them. It has helped their security.

Change the way you think about, deal with, and speak to your clients. Greet them on the phone and in person with the same joy, sincerity, and enthusiasm that you’d show any other valued friend. Respect the importance of their time, their sense of security, and their comfort. Don’t make them wait too long on hold or in your waiting room or at their home. Provide for their comfort. That may mean coffee and beverages and a comfortable, clean setting complete with fresh, interesting reading material. It may mean a pleasing shopping environment and enough help on hand for a client to get the most out of their buying experience with you.

A successful business starts not with just a great idea or product. Rather, it starts with the desire to provide a solution to another’s problem. In doing so you enrich your own life and the lives of those around you, your family and employees or employers, by enriching the lives of your clients. You need to understand that you have a higher purpose for being in business than simply making money. Your purpose must be understanding what you can do to help solve the problems of others, help maximize the options, and finding ways to do it. And unless you understand that higher purpose, you can’t begin to take advantage of your potential.

You must first identify what your client really needs, even if your client doesn’t recognize what it is he or she needs. The client may think that a particular item is what he or she is searching for, but if you probe a bit you might see that an entirely different solution will solve your client’s problem, maybe even a less expensive solution. Now you have become more than a salesperson. You’ve become an adviser. You’ve begun the process of winning trust and, ultimately, additional business from your client.


Getting Everything You Can Out of All You've Got: 21 Ways You Can Out-Think, Out-Perform, and Out-Earn the Competition by Jay Abraham

Fact is, most people greatly prefer to transact business with those they know and like.

The successful often reject proposals where there is a lack of alignment on core business practices or moral differences. Life is too short to compromise. A vital component for achieving success is to establish a Circle of Four that not only encourages you to reach your full potential, but also accurately reflects who you want to become.

Your Circle of Four is made up of the four people you consider cornerstones. It includes both those you admire—such as a mentor whom you seldom see but have access to—and those dearest to you, such as your best friend or closest family member.

The sum of these four people directly reflects your life. For example, the median net worth of your Circle of Four is likely to be very close to yours. If two in your Circle are broke and two have just enough to scrape by, odds are good you’re concerned about where your next meal is coming from. Conversely, if your Circle of Four includes three people who are living their WHAT and one who is on an amazing trajectory, it’s likely you want to continually evolve and are consistently working to attain your objectives.

Be wary of those whose goals do not closely mirror or exceed yours. While it may be comfortable to surround yourself with familiar faces, they must emphatically support your mission or their weight is going to drag you down. Take a few moments to review your current Circle. Be honest about what you see. To flourish, you need accountability partners who both inspire and encourage you. Be conscious of the power your Circle holds. With the right people in your Circle, anything can happen. With the wrong people, little to nothing is more likely. Choose wisely.

The successful first seek to understand and then be understood. This is the polar opposite of how most choose to operate. A core strategy for serving first is to gather ample information to assess how immediate benefit can be provided to one’s partner.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

Category-dominating sites are difficult to create and there’s little doubt why. Creating a formidable entity not only takes time, energy, and resources, but it also takes an in-depth understanding of oneself. There are seven crucial factors for success that must be mastered in order to establish front-runner position. Most would-be industry leaders find it nearly impossible to master one of these areas, let alone all seven. The requisite success factors—in no particular order—are:

• Specific Area of Focus: Identify your core interests and desired target market. In other words, what do you have innate love for and whom do you want to serve? From forensic accountants and third grade teachers to underwater welders and golf coaches, exhaustively providing relevant information and continuously adding beneficial, focused content to one specific subset of the population often equates to long-term success. This is not to say that expansion to other products and services is forever removed from the equation; however, this should only happen after market dominance has been established (think Amazon).

• Professional Website Design: Clearly a no-brainer, but there are so many poorly designed sites it bears repeating. Model competitive and other category-leading sites that receive significant traffic. Customers flock there for a reason.

• Visibility to Target Market: Where do potential customers gather and how can they be reached? One can have the best products and services in the world, but if no one knows about them, their business is irrelevant. Identifying high-return opportunities to spread the word is crucial.

• Expert, Valuable Content: Nothing breeds credibility and stickiness (the amount of time a visitor stays on the site) as will pertinent, well crafted content from both contributors the clientele knows and up-and-coming game changers. To establish authority, combine cutting-edge, exciting ideas and information with proven industry products and services.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

• Interactive/Social Visitor Experience: Leading sites encourage visitors to contribute content, comment on articles and products, and share thoughts via social networks with their tribe.

From Facebook and Twitter to StumbleUpon and LinkedIn, today’s customers insist upon leveraging social media to disseminate positive and negative feedback while cutting the learning curve down for fellow surfers.

• Free High-Value Products: Like it or not, free is mandatory. To drive traffic, one must offer something of inherent value that pushes beyond articles, helpful resources, and videos. Doing so not only enables site owners to capture leads as the customer typically opts in to receive the free product, it also fulfills the unwritten obligation they have to connect with their audience in a deeper manner than simply posting relevant content.

• Products/Services for Sale: Without products and services to sell, the rest of the equation is moot. Even not-for-profits ask for donations. Why? Because hosting, updating, and maintaining even the simplest of sites has related expenses. Creating for-sale products and services is a necessary part of doing business. the recommended manner for establishing authority is to first gain credibility within one specific aspect of the industry and then, if desired, seek to expand.

Although it may seem counterintuitive, the more narrow your focus, the wider a net you can cast.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

Study your reader first—your product second.

Thousands of articles have been written about the way to use letters to bring you what you want, but the meat of them all can be compressed into two sentences: "What is the bait that will tempt your reader? How can you tie up the thing you have to offer with that bait?" For the ultimate purpose of every business letter simmers down to this: The reader of this letter wants certain things. The desire for them is, consciously or unconsciously, the dominant idea in his mind all the time. You want him to do a certain definite thing for you. How can you tie this up to the thing he wants, in such a way that the doing of it will bring him a step nearer to his goal?

In each case, you want him to do something for you. Why should he? Only because of the hope that the doing of it will bring him nearer his heart's desire, or the fear that his failure to do it will remove that heart's desire farther from him.

Every mail brings your reader letters urging him to buy this or that, to pay a bill, to get behind some movement or to try a new device. Time was when the mere fact that an envelope looked like a personal letter addressed to him would have intrigued his interest. But that time has long since passed. Letters as letters are no longer objects of intense interest. They are bait neither more nor less—and to tempt him, they must look a bit different from bait he has nibbled at and been fooled by before. They must have something about them that stands out from the mass—that catches his eye and arouses his interest—or away they go into the wastebasket. Your problem, then, is to find a point of contact with his interests, his desires, some feature that will flag his attention and make your letter stand out from all others the moment he reads the first line. But it won't do to yell "Fire!" That will get you attention, yes of a kind but as far as your prospects of doing business are concerned, it will be of the kind a drunken miner got in the days when the West wore guns and used them on the slightest provocation. He stuck his head in the window of a crowded saloon and yelled "Fire!"

Study your reader. Find out what interests him. Then study your proposition to see how it can be made to tie in with that interest.

The Robert Collier Letter Book by Robert Collier

There are many factors involved with creating a successful website. Most can be easily and quickly learned so long as one critical ingredient is present: traffic. 


No matter how ugly or poorly designed a website is, if traffic exists, product will be sold.

On the other hand, one might have the world’s best site with copy so compelling it could sell gym memberships to your bed-ridden grandparents, but without visitors, not a dime’s worth of product will sell.

Today, link text and PageRank remain the two most important factors in achieving top rankings. Let’s cut through the clutter and examine why these two elements are so important. Relevancy And Link Text A page that’s highly relevant for a given search has three elements:

• Search keywords that appear in the page title.

• Content that’s pertinent to the query.

• Inbound links pointing to the page.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

Many of the links pointing to a page will stem from other websites. However, links from a site’s own pages count as well. That’s in part why larger sites tend to do far better in search results than smaller sites. Some refer to the latter as “the Wikipedia effect.” Wikipedia is one of the most authoritative sites on the web because it has 

1) an enormous number of pages, and 
2) thousands of links from other sites. With this in mind, let’s examine one of the most powerful SEO “secrets.”

Attaining the highest ranking shouldn’t be your primary goal. A top-ranked page that receives few clicks or fails to convert traffic into leads and sales is a site that requires major modification. Your first goal should be to create products and services that customers want to buy. Only after this core objective is accomplished should you focus on ranking high for the search terms relevant to your target market. Ranking that converts to leads or paying customers is the only sustainable strategy.

While there may be a select few who are indeed, looking for a Bikram yoga studio in Chicago, 99.999% are not. They could be searching for yoga apparel, yoga poses, a yoga studio in Tokyo, or one of millions of other possibilities and simply need to be more specific with their query. As a result, your page will receive minimal traffic regardless of its prominent position. Now suppose you narrowed your focus and searched for the term “Bikram Yoga in Chicago.” This returns around one million pages, of which 105f.com is number one. While the odds have dramatically shifted in your favor for achieving page one status (one million pages versus 400 million), major competition for traffic remains, as does the possibility that a great deal of those entering the query may still be seeking something other than what you offer. So, what to do? Identify what makes your business unique. Looking closer at your studio, you recognize that you offer classes for beginners, classes for advanced practitioners, daytime classes for moms and tots, senior classes, and a kids-only class on Saturday. Related search queries for these might include:

• Bikram yoga classes for beginners in Chicago
• Advanced Bikram yoga training in Chicago
• Daytime Bikram yoga classes for moms and tots in Chicago
• Senior citizen Bikram yoga classes in Chicago
• Saturday kids only Bikram yoga classes in Chicago

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

Creating content requires time, of course, but nothing achieves higher rankings faster. There’s a direct correlation between the number of pages your site has and the amount of traffic it receives. 

Driving traffic through SEO requires you to be in the publishing business. 

While this may not be what you had in mind when you opened shop, there’s no way around it. Every time you publish a new webpage, you increase your site’s authority and the chances of a web user finding your business. And if your content is engaging, that visitor may become a long-term paying customer.

You now possess the modern-day recipe for search:

• Target search queries directly relating to your specific business.

• Create pages that provide detailed answers to popular queries.

• Include the search query for which you’d like to rank high in every page’s title.

• Create attractive, engaging pages with pertinent content.

• Use links between pages to help visitors find what they need. •

Create link text that includes targeted keywords and phrases.

• More webpages on your site will result in greater authority.

• Secure inbound links from related sites to increase authority.

• Cultivating traffic is mandatory for online success—SEO-generated traffic is ideal. 

• Well designed SEO strategies lead to higher rankings.

• Good page titles, accurate link text, and establishing PageRank are key factors for achieving top ranking.

• Search is a “conversation.” Therefore, think about your prospect’s queries and create pages that answer their questions.

• Short-tail queries may have a higher volume, however, they convert poorly and require high authority to attain prominent ranking.

• Long-tail queries are significantly more targeted, easier to rank well for, generate less traffic, but convert exceptionally well.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

But you should think of fear as an acronym: Forget Everything About Reality. 

The truth is you can seldom predict what will happen when you embark on a new path. No matter how many scenarios you envision, chances are things won’t go as well as hoped for or as poorly as feared.

The question is: Do you want to exclusively consume the creations of others, or will you dare to become a creator?

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

Mike did everything in his power to build wealth while freeing up time to enjoy it. He developed a powerful mantra upon which he bases his career and lifestyle choices. In a word, his philosophy can be summed up as F.A.S.T.: 

•   F = Fun: Without fun and excitement, work quickly becomes stale. People tend to spend more time at work than anywhere else. Mike insists on creating not only profitable endeavors, but also an environment where both he and his employees relish working because it gives them satisfaction, fulfillment, contentment, and happiness.

•   A = Automation: Technology has made it much easier to create products and deliver them to customers. Mike is a huge proponent of taking full advantage of available tools, ranging from automated webinars and teleseminars to pre-loaded social media messages and press releases. If your business isn’t structured to churn cash while you sleep, you’re doing yourself and your company a disservice. 

•   S = Scalability: You want to create products and services that have the ability to serve the masses without needing to engage in customization. Mike develops each new offer with this in mind. Doing so enables him to sell the same item to thousands of people. This is one of the key tenets the successful use to create wealth.

•   T = Time-Freeing Ability: One of the tremendous strengths of the Internet is its ability to make things happen in the blink of an eye. If a product is downloadable, it can be provided within seconds of a customer ordering it. And if the product is physical, the confirmation and details of the order can be delivered to the customer within moments…and the automated process of fulfilling an order may begin just as quickly.

Internet Prophets: The World's Leading Experts Reveal How to Profit Online by Steve Olsher

A guy I met a while back used to be a drug dealer in another country, a long time ago, back when he was a young man, (He as since gone into IT which makes a twisted sense).

We were talking about pricing strategies, and he told me that he had back in the day, the best way to know when his pricing is right where it should be and he knew that he was cutting the best deal when selling.

First off, we all agree that pricing is not an easy thing to do for most of us.

People have all kinds of theories about how to set pricing, and how they know when they have the right price to still sell yet make the most profit. Every system feels like guess work, and no one ever says they had it perfect, but this system made sense.

Some people just care to match what others are charging, basically match the market, but that is dangerous, because you don't have a system or a methodology, and what is the difference between you and the competitor? If he has better margins than you, your business is in trouble.

You need to know what the customer is willing pay, and to do that, you have to know and think like your customer.

Other businesses price just below others in the market, again, dangerous, as it just gets you those customers that care only about price, which means that you will lose them easily when someone else has a lower price.

This is not a long term strategy.

Works if your margins are better than everyone else's margins, but I wouldn't bank on it, as there is always someone out there who will compete. Any time your strategy is to be smarter than everyone else, you have a problem. There is always someone smarter than you out there.

Trust me, someone is always willing to give them a lower price. You just end up in a price war that no one wins.

There are theories of how to price, but the key to remember is that price is fluid, and that what you are selling on changes in value depending on who you sell to and their situation.

How your customer views the product and how he uses it, and your customer's individual situation determines that customer's price. The cookie cutter one price fits all model doesn't work, and it just leaves money on the table.

Which leads us back to the drug dealer.

My friend told me that he always asked questions about his customers, and he knows their history, their likes and dislikes, which considering what he was doing was illegal back then, was a smart play.

You only do business with other people you know well and trust, and he told me that when he discussed price, he asked them what was going on, what they were doing, and by that, got an idea where their mind was at, and then gave them a price, always slightly higher than what he felt was the market.

He would sell the convenience factor, remind them of the trust between them, as the customer didn't want to keep looking, and the customer sure didn't want to have to find a new source, which is a time consuming process, and in this case, also might possibly be something that could get you put in jail.

My friend said when he gave a price, if they took it right then, he knew he had priced too low.

He was really happy when they hesitate and then say they have to think about it, and then they hang up.

I ask him, you are happy you lost them?

He said, I didn't lose that, I am happy because that is what you want, to know that the price you quote to them is close enough to make them want to buy right then, but just over what they wanted to pay, so that they say they have to think about it.

Then they call up twenty minutes later and take the deal.

When that happens, you know you got the most money you could out of that transaction.

PS.

Another point of the story, there are business lessons everywhere, listen to everyone. I do.

Drop me a note, say hello.

D

I believe that entrepreneurship requires a managerial discipline to harness the entrepreneurial opportunity we have been given.

There are more entrepreneurs operating today than at any previous time in history. This has been made possible by dramatic changes in the global economy. To cite but one example, one often hears commentators lament the loss of manufacturing jobs in the United States over the previous two decades, but one rarely hears about a corresponding loss of manufacturing capability. That’s because total manufacturing output in the United States is increasing (by 15 percent in the last decade) even as jobs continue to be lost (see the charts below). In effect, the huge productivity increases made possible by modern management and technology have created more productive capacity than firms know what to do with.

We are living through an unprecedented worldwide entrepreneurial renaissance, but this opportunity is laced with peril. Because we lack a coherent management paradigm for new innovative ventures, we’re throwing our excess capacity around with wild abandon. Despite this lack of rigor, we are finding some ways to make money, but for every success there are far too many failures: products pulled from shelves mere weeks after being launched, high-profile startups lauded in the press and forgotten a few months later, and new products that wind up being used by nobody. What makes these failures particularly painful is not just the economic damage done to individual employees, companies, and investors; they are also a colossal waste of our civilization’s most precious resource: the time, passion, and skill of its people. The Lean Startup movement is dedicated to preventing these failures.

Lean thinking is radically altering the way supply chains and production systems are run. Among its tenets are drawing on the knowledge and creativity of individual workers, the shrinking of batch sizes, just-in-time production and inventory control, and an acceleration of cycle times. It taught the world the difference between value-creating activities and waste and showed how to build quality into products from the inside out.

Progress in manufacturing is measured by the production of high-quality physical goods....the Lean Startup uses a different unit of progress, called validated learning.

With scientific learning as our yardstick, we can discover and eliminate the sources of waste that are plaguing entrepreneurship.

The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries