Social media for the complex sale: Where should you start?

Andy DeBrunner is social media manager at Godfrey and has worked with Fortune 100 companies to tackle their social media needs. He was also a contributor to Godfrey’s e-book “Jumpstart Your B2B Marketing.” Follow him @adebrunner or follow Godfrey @GodfreyB2B.

Your customers are using social media. That’s no surprise. So is it appropriate for you to join in on the fun and get your business on board? I know what some of you are thinking. “Sure, I know everyone’s using social media, but my company sells products that cost a ton of money and sales can take years to close. I can’t generate a sale, or even a lead, for any of my products using Facebook or Twitter.” If you just said some version of that to yourself, let me reframe the way you might want to think about social media for your business.

All too often, Facebook and Twitter dominate marketing meetings and boardroom conversations about social media, both in B2B and B2C. But social media is far more expansive than just these two behemoth sites. There is almost certainly another platform that will suit your company’s specific needs if neither of “the big two” fit. To shift your social media paradigm, consider the following types of social media outlets and how they might benefit a company with a long or complex sales cycle:

• Photo-sharing sites. Is your product visual or design-related? Help inspire your customers early in the sales cycle with a photo stream on Flickr or Instagram, a Tumblr blog or maybe even a board on Pinterest.
• Video-sharing sites. Does your product have killer demonstrations? Would side-by-side product comparisons help close the deal? If so, video sites such as YouTube or Vimeo could be your golden ticket to capture interest early.
• Message boards. There are message boards for nearly every industry under the sun. If you don’t believe me, check out coffin-talk.net. All you need to do is find out where your target customer goes to ask questions about his/her job and help answer them. This is frequently overlooked, but can be unbelievably successful in finding customers who are ready to buy. The key is to understand the message board’s particular tone before jumping in with a sales pitch.
• Industry blogs. You are probably already reading a few of these to stay on top of industry trends. Why not reach out to them to see if you can write a guest post as a representative of your company? This is a great way to get exposure to new audiences and another effective tactic for early in the buying cycle. If you’re skeptical, consider that you’re reading an example of this right now. Of course, if there are no great industry blogs, perhaps you could create your own. Nothing says “thought leadership” like creating the best content in your industry.
• Professional-networking sites. There’s nothing wrong with cold calling or e-mail campaigns, but a sales team who isn’t engaged on a professional networking site (let’s be honest, we’re talking about LinkedIn) is missing out on a potentially huge opportunity. There is a right way to use LinkedIn, so be sure your sales team knows what they’re doing before they let loose on their own. If done correctly, LinkedIn can be used to generate leads and nurture them all the way through the sale.
• Social-networking sites. I can’t just ignore this. After all, sites like Facebook and Twitter are quite useful for a lot of companies with long sales cycles, but you need to be smart about how you decide to use your account. Using Facebook and Twitter for customer service or simply as a platform to answer customers’ questions is often a great way to get started, though there are countless other ways to use social networks effectively to hit customers at all points during the sales cycle. Before moving on, I need to mention Google+ too. Recent changes to Google search have made it all but necessary for companies to create a G+ page. As always, research is key, so make sure you go in with a plan if you decide to create a page.
• Location-based games. If you have trade shows in your marketing mix, location-based games are a great way to engage an audience and capture early leads. Perhaps you could offer deals or contests for people who check in at your booth.
• Group buying/couponing sites. Group couponing sites have struggled to find their way into B2B, particularly for a complex, expensive sale, so if you have a great idea on how to apply it, I’d love to hear about it!
• Podcasting. Allured by the idea of owning their own radio show to brand their company, many businesses jumped into podcasting without realizing how difficult it is to create and manage a radio show and quickly gave up. But there are more ways to get involved with podcasting than creating your own show. For example, sponsoring a podcast or volunteering to be a guest interviewee on a popular industry podcast are two “early cycle” ways to take advantage of podcasting without the commitment.
• Slide-sharing sites. Do you sell to a target who needs to get approvals from an endless line of executives before he/she can sign on the dotted line? Why not create a sharable slide show (or several) that help your customers sell your product up the chain of command. That way, they have the tools they need to make your case when your salespeople can’t be in the room. Done correctly, slide shows can help you generate leads, then help you again to close the business at the end of the cycle.

In the end, social media may or may not be right for your organization for a lot of reasons, but if you think creatively it can often prove to be a valuable part of your overall B2B marketing mix.

Can Failure Be a Good Thing?

I failed at something today. In fact, I fail at something almost every day. It seems strange to admit that. I usually like to hide my weaknesses, but failure is common to the human experience. So why hide it?

Failure is especially common to the entrepreneurial experience. Being an entrepreneur is all about blazing new trails—something that simply cannot be done without its share of disappointments, embarrassments, and, yes, failures. Here’s the question though: Can failure be a good thing? I believe so.

The way we respond to our failures has the power to shape us. If we sulk, falter, and permanently fail, we risk being shaped in a damaging way. If we take specific steps to overcome our failures, learn from them, and improve as a result, they will make us stronger. But, of course, everyone knows that. The challenge lies in actually doing it. As businesspeople, we must find the motivation to respond in a positive way even when the odds are stacked against us. How can we succeed in doing so?

As a young entrepreneur, I can personally attest to this fact. My first attempt at starting a business failed completely. After 14 months and a net income of negative $800, I closed the doors. Right on the heels of that fiasco, my second venture found itself in a six-figure hole before it even got off the ground. Three months after my original projected start date, my website was unfinished and I was out of money. My developers walked out on me. I had wasted money on things I didn’t need, and I didn’t have money for things that were really important. By some accounts, this would make me an epic failure.

When I realized that I was out of money and out of time, I had three choices: scrap the project, find more money, or launch a partially completed product. Highlighting another lesson I learned from failing in business, I chose the third option. Many entrepreneurs tend toward the idea that if they can't do something right, they would rather not do it at all. When it comes to business though, few things are perfect, and nothing is ever complete. Smart companies start small and gradually increase the complexity of their offerings at a sustainable rate. Failure presents the perfect opportunity to realign priorities and establish clear direction.

If you’ve failed at something colossally, it probably happened because you were reaching outside of your comfort zone. In the process, you surpassed many of those around you who refused to extend themselves; which is why they didn't fail. To fail big, you have to think big and try big. At the point where you fail, there is a good chance you've already surpassed your competition.

Looking back, I’m so thankful that I didn't give up. Within six months, my fledgling company was debt-free and had enough cash on hand to reach our development goals. Within 12 months, we were on track to make seven-figure annual earnings and experienced exponential growth. To echo the words of American businessman and writer Dale Carnegie, "discouragement and failure are two of the surest stepping stones to success."

So the next time you are facing failure, embrace it. You're probably closer to success than you think!

Robert Sofia is a nationally recognized author, award winning public speaker, and practice management thought leader. He has developed marketing strategies for Fortune 500® companies, personally coaches hundreds of financial advisers nationwide, and is the C.O.O and co-founder of Platinum Advisor Marketing Strategies. He is a member of The Young Entrepreneur Council (YEC), an invite-only nonprofit organization comprised of the country's most promising young entrepreneurs. The YEC promotes entrepreneurship as a solution to youth unemployment and underemployment and provides its members with access to tools, mentorship, and resources that support each stage of a business's development and growth.

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Startup Professionals Musings: Great Startups Can Hook an Investor in 60 Seconds

Great Startups Can Hook an Investor in 60 Seconds

An "elevator pitch" is a concise, well-practiced description of your startup and your plan, delivered with conviction and enthusiasm, that your mother should be able to understand in the time it would take to ride up an elevator. Everybody knows about these, but few people seem to deliver a good one.

A good elevator pitch is not just for an elevator discussion. Use it in every networking situation and business conference introduction. The elevator pitch should be the first few paragraphs of your business plan, your executive summary, your investor presentation, and the first page of your web site. A different message everywhere is no message.

An elevator pitch should always contain the following key elements:

• Problem-solution "hook." Open your pitch by getting the investor's attention with a hook. This is a statement or question that piques their interest to want to hear more. Good hooks succinctly define a real problem, and suggest the solution. For example, “I just patented a new cell-phone technology that will double battery life for half the cost. I need your help in getting it to market.”

• About 150-225 words. Your pitch should be about 30-60 seconds (average elevator ride). Don’t think that you can just talk fast to cram 500 words into that time. It won’t work.

• Obvious passion. Investors expect energy, conviction, and commitment from entrepreneurs. How do you expect them to get excited, if your startup sounds like a dull subject to you?

• A request. At the end of your pitch, you must ask for something. Ask for time to give a full presentation, or ask for a referral to someone who can help.

My friend, Dave Bittner, offers a simple template to get started that will work for most products and services: “We sell [product/service deliverable] to [market niche] who want [unmet market need]. Unlike [competition], we [differentiation].” All you have to do is fill in the brackets and you have the essence of an elevator pitch.

Here are some additional recommendations to increase the impact:

1. Describe your product or service. Provide a one-paragraph description of what you sell. Focus on customer benefits rather than features, indicating real pain, rather than just nice to have.

2. Quantify the market. Make sure you clarify how large the market is, how much money they have to spend, and a positive level of growth. A product may be great, but if won’t make a business if you don’t hit customers with money to spend.

3. Outline the revenue model. Giving the product away, or selling below cost may make it attractive to customers, but your business won’t be attractive.

4. Highlight people strengths. "Bet on the jockey, not the horse" is a familiar saying among investors. Tell them the high points about you and your team's background and achievements.

5. Present a sustainable competitive advantage. You need to effectively communicate how your company is different and why you have an advantage over the competition. This could be a patent, key partners, domain expertise, or a better distribution channel.

Most importantly, avoid the most common mistake of turning this into a sales pitch for your product or service. The investor is "buying" the business, not the product. Tell him why and how you will run a winning business.

Consistency and redundancy are the keys to communicating any message. Another key to effective communication is practice, practice, practice early. Remember, you only have one chance to make a great first impression.

Marty Zwilling

Great Startups Can Hook an Investor in 60 Seconds

Posted by MartinZwilling at 6:30 AM

Labels: elevator pitch, entrepreneur, investor, startup

via blog.startupprofessionals.com

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In a recent article, I noted that the so-called 4% rule for retirement portfolio withdrawals is a reasonable starting point for calibrating an in-retirement spending rate. It's easy to understand and implement, and it allows for a fairly stable stream of income during retirement--a predictability that's desirable for most retirees.

For example, say a retiree with a $1.5 million portfolio has decided to use the 4% rule for her in-retirement withdrawals, combined with an annual adjustment to help her withdrawals keep up with inflation. That rule doesn't mean that she withdraws 4% of her portfolio in each year of retirement, which could result in wildly differing annual withdrawals, depending on her asset allocation and market performance. Rather, the 4% rule stipulates that she takes 4% of her portfolio in year one of her retirement, then inflation-adjusts that initial dollar amount each year thereafter. Assuming a 4% distribution rate and a $1.5 million portfolio, she would withdraw $60,000 in year one, and that amount would jump up to $61,800 in year two ($60,000, adjusted for a 3% inflation rate).

But sticking with a fixed withdrawal amount, as the 4% rule dictates, can also have some perverse effects in both very good and very bad market environments. The originator of the 4% rule, Bill Bengen, discussed the downside of underwithdrawing in buoyant market environments in this paper. Such a scenario is clearly better than running out of money during retirement. However, the net effect of ignoring the strong market performance and sticking with the original 4% withdrawal amount, adjusted for inflation, could be that the retiree lives more frugally than she actually needed to, passing money to heirs that she might've preferred to spend during her own lifetime.

On the flip side, employing the 4% rule during a very weak market environment can also lead to unintended consequences, particularly if the bear market hits early on in one's retirement years. To use a simplified example, say the aforementioned retiree encounters a bear market in year three of her retirement, nudging her original $1.5 million portfolio down to $1 million. Her withdrawal would be $63,654 in year three (arrived at by inflation-adjusting her year-two withdrawal amount of $61,800), pushing her total portfolio value down to $936,346 and below $900,000 in year four. What started as a 4% withdrawal rate in year one would grow to more than 7% by year four. Sticking with fixed dollar withdrawals during a sustained bear market also limits the pool of assets that can appreciate when the market improves.

Is there a better way to do it? That question has been the subject of much research during the past few decades, with many studies converging around the idea that withdrawal rates should fluctuate during a retiree's lifetime. Some of these studies, such as this one from financial planner Jonathan Guyton, are complicated and probably best employed by financial advisors. But there is a unifying message that retirees who are managing their own distribution streams should take to heart: As comforting as it might seem to rely on a straight inflation-adjusted withdrawal amount, for best results retirees should adjust withdrawals up or down as circumstances dictate. That means staying attuned to what's going on with the market and attempting to reduce withdrawals during periods of extreme market duress. It also means being realistic about the fact that your own income needs during retirement are apt to fluctuate, as I explored in this article.

Here's a roundup of some of the methods that lead to variable-dollar-amount withdrawals per year as well as some of their pros and cons.

Fixed-Percentage Withdrawals
At first blush, withdrawing a fixed percentage amount from a portfolio per year would seem to elegantly address some of the shortcomings of the 4% rule, which calls for withdrawing inflation-adjusted dollar amounts. Because the retiree's withdrawals are limited to a percentage of the portfolio, there's no risk of running out of money. Moreover, sticking with a fixed-percentage-withdrawal amount prompts the retiree to withdraw more in good markets and less in lean ones.

The big downside to taking a fixed percentage from a portfolio, however, is that volatile markets can mean big swings in the retiree's payout, which in turn can have a big impact on quality of life. A fixed percentage drawn on too small a portfolio might not result in a livable income stream.

The Income-Only Approach
Using this approach, retirees would simply live on whatever bond or dividend income their portfolios kick off. This is the most intuitively appealing strategy, in that a retiree wouldn't need to invade principal to fund living expenses, so there's no chance of outliving his or her portfolio.

Investors have experienced the downside of this strategy during the past several years, however, as bond yields have sunk ever lower and dividend payouts remain quite low by historical standards. For individuals without very large portfolios or income from other sources, such as pensions, this strategy doesn't deliver a livable income stream unless they heavily emphasize risky asset classes such as high-yield bonds or companies with very high dividend yields, which are often distressed. Moreover, income-focused portfolios can skew heavily to certain dividend-rich equity sectors such as financials, thereby jacking up their risk levels. 

via news.morningstar.com

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Some critics, notably William Sharpe and a team of researchers from Stanford, have since assailed the 4% rule as being too simplistic; others have asserted that Bengen's assumptions about asset allocation were too aggressive for many retirees. Financial planner Michael Kitces has argued in favor of a withdrawal rate that's sensitive to market valuations, an approach that he discusses in this video. More recently, critics have called the 4% rule as too ambitious given the feeble return expectations for the bond market as foretold by today's tiny yields.  

Although the debate about safe withdrawal rates is alive and well, I'd argue that the 4% rule isn't an unreasonable starting point for retirees and soon-to-be retirees attempting to gauge whether their spending is sustainable. Importantly, the rule is intuitive--you don't have to be a pocket-protector-wearing owner of a financial calculator to see if your nest egg and spending rate are close to where they need to be. And, to the extent that 4% is a fairly conservative withdrawal rate, it helps shield against the biggest of all risks that retirees face: running out of money during their lifetimes.

That said, successfully employing the 4% rule requires that you understand the assumptions behind it, including the following.

Where Is the Money Coming From?
When it comes to the 4% rule, "withdrawal rate" is something of a misnomer, because you're not necessarily invading your principal to generate the entire 4%. Instead, the 4% can come from bond and dividend income, capital gains distributed by your mutual funds, or selling securities.

Say, for example, you're about to retire with a $1.5 million portfolio, 40% of which is in bonds and the rest in stocks. Using the 4% rule, your initial withdrawal in year one of retirement would be $60,000. Assuming a 3% income distribution from your $600,000 bond portfolio ($18,000) and a 1.5% dividend yield from your $900,000 in stocks ($13,500), that's $31,500 in bond and dividend income that you could tap before touching your principal. The flexibility to draw your money from a variety of sources--and to not take sides in the income versus total return debate--is one reason that a "bucket" approach to retirement income can make sense for so many retirees, as I argued in this article.  

The Role of Asset Allocation
In addition to understanding that the 4% rule doesn't always necessitate selling off assets, investors should also be aware that a 4% withdrawal rate won't automatically be sustainable for each and every asset allocation, particularly ultraconservative stock/bond mixes that generate low real returns. Both Bengen's research and the Trinity study found that portfolios with a mix of both stocks and bonds had the highest probability of long-term sustainability. The reason? Even though retirees may have to tap capital to arrive at their 4% payout, appreciation from the stock component could help offset inflation and periodic invasions of principal, while bonds provide ballast for the equity piece.

Bengen's original research asserted that an optimal starting allocation when applying a 4% withdrawal rate was 50%-75% equity, whereas the Trinity study authors, in an update to their original study, corroborated that a starting asset allocation of 50% or more in large-cap stocks helped retiree portfolios achieve the best probability of not running of money. Making room for a healthy component of equities looks especially important right now, given increased longevity as well as the ultralow yields available from fixed-income securities.

Time Horizon
Like asset allocation, a retiree's time horizon also plays a critical role in the sustainability of a withdrawal rate. Bengen's research looked at the viability of various withdrawal rates and asset allocations over drawdown periods of 30 years, whereas the Trinity study evaluated withdrawal rates over periods of 15, 20, 25, and 30 years. In general, the Trinity study showed that investors with shorter holding periods could employ a higher withdrawal rate than those with longer holding periods. That finding has implications for those who have longevity on their side (they'd want to be more conservative about their withdrawal rates), as well as for those who have reason to believe they have shorter time horizons. (Such individuals could reasonably employ more aggressive withdrawals.) 

See More Articles by Christine Benz

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How Individual Stock Investors Can Save for College

Answer: For better and for worse, the deck has been stacked in favor of 529 plans for college savers. No other college-savings vehicle offers the same combination of extremely generous contribution limits, tax-free compounding, and tax-free withdrawals when you use the money to pay for qualified college expenses; potential state tax breaks on 529 contributions are the icing on the cake. Although there are still some stinkers among 529 plans, in general the plans have been getting better over the years, as Morningstar's Laura Pavlenko Lutton pointed out in her most recent report about the best 529 plans.

However, your question points up the key drawback of 529 plans: Even though many plans offer broad suites of investment options, they don't give you the same latitude to select your investments that you might have within an IRA or brokerage account. Assuming you'd like to exert more control over your investments while also saving for college, you could consider the following options, or possibly some combination of them.

Coverdell Education Savings Account
Think of Coverdell ESAs as Roth IRAs for college savers. You can put a huge array of investments inside of a Coverdell, including individual stocks and mutual funds, thereby addressing your desire to have more control over the investment options. Coverdells also enjoy some of the same tax benefits that 529s do: Although contributions aren't tax-deductible in either type of account, your investments grow tax-deferred and withdrawals aren't taxable if they're used to pay for qualified college expenses such as tuition and room and board. (Note, however, that money withdrawn from a Coverdell may be partially taxable for families who are also taking advantage of other college-tuition tax breaks in the same year, including tax deductions for tuition payments or Hope and Lifetime Learning credits.) Coverdells, like 529s, are also considered assets of the parents and therefore shouldn't be a major impediment to financial-aid eligibility.

So far so good, right? Well, the Coverdell carries a couple of caveats that could limit its attractiveness, especially for higher-income investors looking to sock a lot away for college. First, you're limited to contributions of $2,000 per year per beneficiary; that limit is set to go even lower--to $500--in 2013, barring congressional action. If you're aiming to buy individual stocks for your daughters' accounts, you might have trouble obtaining adequate diversification given that limit. Second, there are income limitations that govern who can contribute: Individual filers earning more than $110,000 in modified adjusted gross income and married couples filing jointly and earning more than $220,000 cannot contribute to a Coverdell.

Taxable Brokerage Account
One other option is to buy stocks for college within the confines of a taxable brokerage account. You'd have the broadest possible array of investment choices, and you wouldn't confront any income or contribution limits. You could also limit year-to-year taxes by buying and holding non-dividend-paying stocks or index funds and exchange-traded funds, then gradually segueing into a bigger share of municipal bonds as your girls' college days draw near.

The big drawback, obviously, is that you'd owe tax on your investment earnings when it comes time to withdraw the money to pay for college, something you'd be able to circumvent by opting for a 529 or Coverdell.

Roth IRA
Although Roth IRAs are primarily for retirement savings, they can have applications for college savers, too. True, there are a few limitations on what you can put inside an IRA (artwork and antiques are off-limits, for example) but you have broad latitude to invest in securities such as individual stocks, funds, ETFs, and certificates of deposit. You'll also be able to harness some tax benefits. When investing in a Roth, you won't owe taxes from year to year, and you can withdraw your contributions at any time and for any reason--including to pay for college--without owing taxes or a penalty. Moreover, you can also withdraw the investment earnings if you're using the money to pay for college. You'll owe tax on that portion of the distribution, but you can circumvent the 10% early-withdrawal penalty that normally applies to pre-retirement distributions.

However, there are a couple of key drawbacks to this strategy. First, you can only contribute $5,000 per year to a Roth ($6,000 if you're over 50) and you cannot make a direct contribution to a Roth if your income exceeds the levels in this chart and you're covered by a retirement plan at work. (You can make a "backdoor Roth" contribution, as laid out in this article.) An even bigger consideration is that Roth IRAs are particularly valuable when saving for your own retirement because you're able to take tax-free withdrawals; if you save within a Roth but end up spending the money on college, you've foregone a valuable tool in your retirement-planning toolkit.

UGMA/UTMA Account
These vehicles allow you to save on behalf of a minor child, and you can put almost anything you like within a UGMA/UTMA wrapper, including individual stocks.

As attractive as that flexibility is, I wouldn't recommend using these accounts as your chief college-savings vehicle. A big reason is that the assets will legally belong to the child, so these accounts will tend to work against your child when it comes time to apply for financial aid. Second, the assets become the child's property when he or she reaches the age of majority--18 or 21, depending on your state. If your child decides that he or she would rather take the money and run than use it for school, it's the child's prerogative.  

See More Articles by Christine Benz

		30-Minute Money Solutions
		Need help picking up the pieces in this turbulent market? 30-Minute Money Solutions by Morningstar director of personal finance Christine Benz simplifies the daunting task of getting your financial house in order. Written for novice and experienced investors alike, this book offers manageable, step-by-step solutions for tackling money challenges and building a comprehensive financial plan in simple 30-minute increments. Learn more.
		Order Your Copy Today--$16.95

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Forwarded by Robert Fisher

Robert Fisher (robe1221@gmail.com) thought you would be interested in this article on investing from Morningstar.com.
How Individual Stock Investors Can Save for College

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