How To Get From Biz to Buzz: Part 2 – Drowning In “Success”

Disclaimer:  This post has been whacked, hacked, condensed, and finally freeze-dried to fit in less than 40 screen heights.  There is not a whole lot of detail left, but this should at least give the mozzers a “gist” of the process.  It just may cause more questions than it answers, but that is probably a good thing.

Now for the first of 2 case studies in the “How to Go from Biz to Buzz” series. This particular case involves a very successful Multi-Level Marketing business that was trying to establish an Internet presence to expand its business opportunities. In essence, it is a study in how one business model does not translate seamlessly into the New Media paradigm. This owner learned the hard way that “getting on the net” is not just a matter of setting up a web site, getting found by the search engines, and getting some PPC ads.

He had entered a business environment that functioned quite differently than the face-to-face environment that he was used to, yet there was nothing that explicitly indicated this was not the case. The SEO and web design firm offered no indication that his way of thinking, selling, and operating were going to have to change to take full advantage of New Media, and the work they did seemed “successful.” That was the problem…it seemed “successful” by the metrics provided by the SEO firm. He had just about come to the conclusion that if this was “successful” he was not impressed and should just shut the whole New Media thing down.

Now let’s take a look at how this business owner and the SEO firm got into this predicament. To do this we need to look at where the business was before the New Media campaign, how the New Media project was implemented, then how the business and New Media campaign were re-engineered.

Background

Some may find the following quite interesting, and many will be bored to tears and wondering what this has to do with New Media. I ask that you have patience and understand this background information, as it is the heart of understanding how to structure a New Media strategy to work for a particular business model.

1. Product: Managed Prescription Assistance Program – Company provides a service that performs pre-qualification for Prescription Assistance Programs offered by FDA licensed Pharmaceutical companies that provide certain high-cost pharmaceuticals free to qualified individuals. The application process is complicated, cumbersome, and must be constantly monitored by the recipient to continue participation in the plan. The company performs the application process for their clients, tracks the process from beginning to end to ensure inclusion in the program, and shipment of medications to client’s physician. The company performs monthly reapplication on behalf of the client and monitors when medications are added or removed from the programs by the pharmaceutical companies . While the medications are technically free of charge from the pharmaceutical companies, the company charges a one-time program enrollment fee and monthly service fee of $20 to remain in their program.
2. Compensation Structure: Multi-Level Marketing – The business owner is a top-tier member of the Company’s MLM program and functions as a separate business entity. The top-tier organizations are responsible for any advertising, marketing, and related costs, and must adhere to company guidelines for ad content and applicable regulatory requirements. The business owner has recruited 12 representatives directly under him (tier-2) and there were 7 tier-3 representatives recruited by the tier-2 reps. Half of the sign-up and monthly residuals go to the company, with the remainder split “down the tiers” depending on which tier initiated the application (made the sale).
3. Sales Model: Authoritative Referral of Qualified Leads – Due to regulatory requirements and constant changes in the application process by the participating pharmaceutical companies, the application process had to be initiated by the authorized representatives. The business owner developed sales support materials and processes that enlisted doctors, pharmacies, community outreach organizations, and social service organizations as a source of qualified leads. This provided a sales lead generation environment that relied on individuals and organization that potential clients saw as authoritative, and there was no exposure to competitive services or products at these points of presentation. The lead sources had also been involved in submitting applications to various PAPs on and knew how burdensome the process was. Very few had any success in managing the PAPs themselves for any extended period of time. These lead generation sources also performed any qualification of potential clients (net income levels, lack of prescription drug coverage, etc.) and explained the fee structure of the program before referral, thus making the close-rate nearly 97% with average Customer Capture Costs of $0.37 (time, fuel, insurance, printing costs, etc.).
4. Regulatory Environment: Health Insurance Portability and Accountability Act (HIPAA) – Any electronically transmitted and/or stored Personal Identifying Information (PII) that includes medical treatment and diagnostic information (such as prescription information) must be encrypted if outside the control of the participating entity. All PII with associated medical diagnostic or treatment information within the control of the entity must be controlled so as not to allow access to anyone not needing access to that information in the direct performance of their duties on behalf of the owner of that information (need to know access control model).

Pre-New Media Operations

Actually, the non-New Media operations and sales efforts continue. The New Media foray is an additional sales mechanism. This way of thinking may have been the start of the problem with the New Media “experiment.”

1. Typical Sales Cycle: Owner and sub-tier representatives spend much of their time recruiting, training, and supplying Authoritative Referral Sources and new representatives. Potential client referrals called into the representative’s voice mail to leave call back information for follow-up if the representative was not immediately available. Representatives would follow up in the evenings and whenever they were not managing and recruiting referral sources.

   Analysis:

   This model worked perfectly, with a close-rate averaging 97% and Customer Capture Costs averaging $0.37. That represents a per customer ROI that is near instantaneous. This worked because of the high quality of the leads and lack of potential client exposure to competing products and services. The potential client had such high levels of trust in the referral sources that they did not “shop around” and were willing to leave call back messages if the representative was not immediately available.

2. Gross Monthly Income: The business owner, at top-tier, realized a gross monthly income averaging $29,400 with a growth rate of 19% per year using this model.

The New Media “Experiment.”

To make a long story short, the rather conservative business owner decided it was time to get into the New Media arena. He had been looking into it for over a year and getting word of mouth referrals for web design companies. He was even quite aware of SEO, organic search, paid search, social networking, and most of the buzz. He settled on a local Denver firm specializing in SEO and the like. This is a reputable firm that has a fine reputation. They do great things, drive lots of traffic to sites, and have very successful PPC and social networking campaigns.

1. New SEO website created with keywords related to Prescription Assistance Program, Free Prescriptions, Discount Prescriptions, etc. The business owner indicated all the buzz words of the industry according to his current model and way of thinking. There was heavy competition with large multi-national pharmaceutical companies with similar pages and programs, discount web-based pharmacies, etc. It was going to take a lot of work to get the site ranking high in this environment. The website is used to generate leads, basically supplanting the Authoritative Referrals sources used in the old model.
2. Paid Advertising campaign (AdWords, etc.). Monthly budget of $4000 allocated. After a few experiments the SEO firm and business owner settled on Free Medications and Free Prescriptions, etc. because click-through rates were high and would spend the entire allocated budget within the alloted time (playing the numbers game). Average CPC was $1.57. Click to Contact (potential customer called the number on the web site) rates were 12% , which averaged to $13.08 per call. This was measured by Caller ID hits, since many calls turned out to be abandons. Of the calls only 42% left call back information, with 12% of those closing (converting) due to non-qualification for the PAP’s or having already found another source. This resulted in a Customer Capture Cost of $259.59. The per customer ROI had just hit 1 year just for the PPC part of the campaign. Add the SEO firms costs and we are starting to hit a 2-year ROI! After two months of tweaking and staying in the office to answer the phone, the business owner got the Customer Capture Costs to $109.00, with ROI for the entire New Media experiment coming in at a little over a year and ROI on the recurring PPC investments at around 5 months per captured customer.
3. Business Owner Freaks. He is looking at ROIs that should apply to heavy machinery and commercial aircraft. His income stream growth rate has plummeted from 19% per year to 3% per year because he is in the office answering the phone all the time with close rates of 12%, and does not have the time to service his authoritative referral network or recruit new referral sources or new sub-tier representatives. The SEO firm is talking about starting up a blogging campaign, for a fee of course, so more 12% calls can come flooding in (still playing the numbers game).
4. SEO Firm Declares “Success.” The PPC campaign is bringing in over 2500 hits per month. Closing the sales is not really their job. They just need to work with the business owner to further tweak everything to bring in more hits. “Obviously” the copywriting needs work to further capture the ones that do get there, or there is something wrong with the business, or whatever…but we are getting people to the site. Just wait till the site starts to rank higher with the search engines!
5. Business Owner Declares He Is “Drowning in Success!”

Re-engineering the Biz and the Buzz

I met this business owner at a dinner party hosted by a common friend. During the course of the meal the conversation turned to what we all did for a living. When it got around to me this gentleman started mentioning “tar and feathers” and “boiling in oil.” He then related his foray into the world of New Media, and how he was pulling the plug on it the very next day. His business model intrigued me, and I was wondering how things had gotten to where they were with him. I arranged to have a sit-down with him the next day and see if I could salvage his experiment.

When I got there he had a stack of reports, recommendations, and plans all piled up on the coffee table waiting for me. As he was getting ready to show me what the SEO firm has produced for him I took the pile, pushed it aside, and asked him to tell me about himself. This is a common technique of mine, whether it is a small business owner, or the Chairman of the Board for Burlington Northern Railroad. After 4 hours, several pots of coffee, and a quick grilled burger on his very large back deck with a view of the Rockies, I laid out my plan to save his experiment. To make another long story short, it took one month the get things re-engineered on both the business side and the New Media side.

1.  Rethink his assumptions about how his own business actually works.

• He had drank the company Kool-Aid and was trapped in the mindset of “Free Prescriptions.” His referral network was not really using that term, though that is the term he used with them. From the customer’s point of view, they were not free. There was a one time membership fee per household to join the program and a monthly maintenance fee per prescription. True, the pharmaceutical companies provided the medications for free, but the patient still had some out of pocket in the end. While this may seem like a small thing, it has significant repercussions on his understanding how his potential customers think and how he has to create advertising.

• Stop thinking in technical program terms. Yes, you are a Managed Prescription Assistance Program. A single mom looking for some alternative to the $480 a month epilepsy medication her son needs is thinking “Discount Lamictal” or “Discount Epilepsy Medication.” Think specific medications or conditions. This line of thinking needs to go across all your business operations. Go through your medication database and start looking for the most expensive drugs and the conditions associated with them. Target those areas in your online advertising and specialists in those areas as referral candidates. Pick the low hanging fruit first.
• At what sales volume will you “let go?” If your phones are ringing off the hook, why not have the overflow transfer to your sub-tier reps? Making half of a sale is better than making nothing, is it not? If the close-rate were 40-50% on the New Media inbound calls and the call volume was high, would you not make more at your tier than you currently are by transferring the overflow? Would it not be easier to entice new reps with that kind of set-up? Implement a virtual PBX service, have your reps “sign-in” to it when they are ready to take calls, and let the calls rotor around the reps. This allows you to schedule coverage on the phones while the reps take turns rotating out to the field to handle your authoritative referral network, signing up new referral sources and new reps.
• Cut the chatter during the calls. A successful close should take 10-15 minutes. Use the virtual PBX to record calls, both long chatty ones and short sweet ones. Use these recordings in your new rep training to bring them on board faster and handle more calls in the same amount of time. Your sales organization needs to be able to scale quickly.

2.  Re-engineer the New Media resources and campaigns.

• Redesign the website, adding pages that target the specific drugs and conditions that your research has uncovered. Pick that low hanging fruit with the website. Use these pages as landing pages for narrowly targeted ad campaigns. This differentiation can also serve as a framework for blogging campaigns. It is easier to find a group associated with Cancer, Epilepsy, Parkinsons Support, etc. than a general industry focused topic like Prescription Assistance Program.
• Change the SEO focus to keywords associated with the specific drugs and conditions, don’t go after the highly competitive keywords and phrases. Have the SEO reflect your change of focus.
• Recognize how potential customers using New Media behave. They will have instant access to competitive products and services on the same search pages your ad is on. If you don’t service them then and there, they are off to the next one. They will usually be accessing the Internet from work, so don’t depend on video presentations or anything with much sound to get your pitch out. They don’t want anyone catching them sitting through a 10 minute sales presentation while at work. Don’t do anything that attracts attention to your potential customer. If you do have video our sound, do not “autostart” it. That will have them closing the page quickly to avoid being noticed “surfing the net” at work.
• Engage the potential customer. Have them invest time and effort. Add an application page to the site and have them indicate the basic information your will need to process the application. This will require you invest in the time and resources it will take to implement https for the page with the input form, an encrypted email module and certificate store to comply with HIPAA.
• Do not use “Free” on your ad copy if there is no way to actually get it for free. Yes, it drives traffic, but they will consider it a bait and switch scam and leave while you pay. If they do contact you, there will be most likely not be a close and you will waste time on a useless call explaining that it is not really free.
• Rework your ads to provide a higher degree of lead qualification. Use ad copy with phrases such as “No Prescription Coverage” and “drugname $20/mo” to weed out unqualified surfers. There may be fewer responses, but they will be better qualified and you will realize higher close rates.
• Target your ads using keywords and phrases more appropriate to your target audience, like “Lamictal” and “Epilepsy Treatment”, which are much less competitive.
• Get a better hosting arrangement.

The Results:

After a month the re-engineering of the business and New Media is basically complete. The only major component left is the online application form. The original SEO firm was let go due to some issues with “attitude.” The new SEO firm should have the encryption work done in a few days.

1.  The Business Owner Declares Success!

• His refocused business venture has expanded its face-to-face Authoritative Referral Network to specialists in the fields with the highest drug costs, netting 20% more customer referrals over the general practice network.
• He has increased his sub-tier representatives by 7, implemented a virtual PBX and on-call schedule rotation that is capable of handling twice the call volume per representative, and his onboard time for new reps has been cut to 4 days instead of two weeks. He can scale like a blade server now.
• His average New Media CPC is $0.57 with a close-rate of 29%, yielding him a Customer Capture Cost of $1.97 and an ROI on the PPC campaigns that is near instantaneous again. The ROI on the entire New Media investment is down to 8 months.
• His monthly gross income is at $34,800 with a yearly growth rate of 28%.
• He is about to increase his monthly PPC budget from $4000 to $7500.

2.  The new SEO Firm Declares Success!

• They billed $8500 for the New Media campaign redesign.
• They expect to bill another $10,000 for work in the next year for linking and blogging efforts.
• They are managing the customers PPC campaigns that should reach $10,000/mo by the end of the year.

Summary:

No one did anything wrong to cause the situation related in this case study. The first SEO firm did a great technical job with what they were given by the business owner. The business owner had a profitable business before getting into the New Media realm, so he saw no reason to change anything. What happened here is that neither side had enough experience in the others area to bridge the gap. You don’t know what you don’t know, as the old saying goes. The foray into New Media can be a good reason to examine current business practices and make adjustments. In this case it was necessary for the New Media piece to work.