The 80/20 Rule for Social Media Advertising

So, I'm getting my real estate business ramped up and I'm looking for people on that offer insights and suggestions for real estate agents and I come across an outfit that looks like a possibility.  But I discover that 80-90% of their posts are merely promotional -- Only two days left to sign up..., Here's what you missed at our seminar…, etc. -- so I move on.  Why?  Because I want information, not a stream of sales pitches.  The thing is, there's LOTS of people out there using that very same approach.

Here's a tip for those who want to use social media to promote their business: Don't use it for direct promotion.  Instead, use it as a platform to display expertise and insight.  Instead of 80/20 promotion/insight, do 80/20 insight/promotion.

Social media is not supposed to be the online equivalent of highway billboards.  And unfortunately it is rapidly becoming the next incarnation of the the old interrupt-and-repeat advertising model (the previous incarnation being television and radio advertising).  People go to social media to get away from all that, not to find another way to receive it.

Just my 2¢.

Why the US Economy Benefits Fewer People Today Than It Used To

What follows is a very simplified version of how the US economy changed from one in the 1950s and 1960s that generated widespread prosperity to one that, since the 1980s, has focused most of its gains on a smaller and smaller segment of the income ladder.

After World War II, the production capacity that had been used to produce war materiel was converted to the production of consumer goods.  A key element of manufacturing back then was that it required lots of people.  For the most part, these workers did not have to possess special skills, only the ability to learn, which they could do on the job.  The US education system cranked out millions of people that fit perfectly into this system.  A virtuous cycle developed where people were hired to manufacture products, and the wages those people earned created demand for more products (and services), which in turn required more people.  Among other things, this also caused tax revenues to increase as more people earned more taxable income, bought homes, paid sales taxes and so forth.  This made more money available for education, which fed the system with more workers.  Fact:  From the late 1940s through the mid 1970s real household incomes for every quintile in the income ladder doubled (i.e increased by around 100%).

That all began to change in the late 1970s when, 1] foreign companies began marketing products in the U.S. of at least the same quality as American-made products, but with cheaper labor and lower prices, and then ultimately 2] computers and robots began to replace people on the assembly lines.  Some of the jobs lost in manufacturing were replaced with jobs in the service sector, but low-skill service jobs jobs did not match the pay of the lost manufacturing jobs.  Also, the surplus of available labor caused by the decline in the number of manufacturing jobs pushed wages down further.  Today we are in a situation where produce many more workers than manufacturing needs (looked inside a factory lately?) and the service sector cannot pick up the slack.  Fact:  Since the late 1970s real incomes for the bottom 80% have barely changed.

In other words, we simply have too many workers competing for low-skill jobs.  That keeps wages down and slows down recoveries.

Business Plan Tip: Keep it short.

I had a guy -- an experienced businessman -- tell me that business plans are supposed to be at least 60 pages long, and preferably 80.  Baloney.  A business plan only needs to be long enough to cover the essentials:  Problem, Solution, Demand, Business Model, Marketing, Competition, Funding, Management.  If you can do that in 20 pages, great.  Anyone who reads your plan will thank you for being brief.

A Word on the Housing Market

Having worked in the residential development business I thought I would comment on the sometimes conflicting news stories we get these days on the state of the housing market.

Basically, the housing "recovery" we're reading about does not mean that the housing market is returning to its pre-recession normal.  Instead, a significant part of what we're seeing in the housing market today is the release of demand that was pent up during the Great Recession.  This is not unusual, and it is typically interpreted as meaning that the housing market is starting to recover.  However, things may be different this time around because of another factor that has not gotten nearly as much news coverage.

That other factor is that we have run out of financial band-aids to compensate for real household incomes that have been stagnant for the past 40 years or so.  Bringing more wives into the workplace, working longer hours and increasing household purchasing power with easy debt all propped up incomes for the past few decades and allowed the middle class to buy homes and other things which kept the housing industry and the larger economy growing.  But those band-aids are all used up and we don't have any others on the horizon.

In summary, there are some fundamental realities that need to be addressed before our housing market can return to the old normal.

Business Plan Tip: It's not just an investor pitch.

A lot of people seem to think that the reason they need to write a business plan is to raise money.  Wrong.  You write a business plan to plan how you are going to establish, operate and grow your business.  I can see how this misconception originates:  Before they invest or lend, investors and/or lenders often want to see the business plan to get an idea of how the business operates.  From that fact some people gather that the first step in raising money is to write a business plan.  That's wrong; Raising money is a secondary use of a business plan.

Tweet Tip for Branding

If you include a link in your tweet make sure the target page is relevant.  I received a tweet recently that said something like, "Check out our new designs."  I clicked on the link and was taken not to a page with designs, but to a page with various links.  None of the links was labeled "New Designs" or "Designs," so I guessed.  I guess I guessed right because I wound up on a page with various designs.  Unfortunately, there was nothing to distinguish new designs from others, and what was there were various black-and-white line drawings.  I closed out and returned to my feed.

Mistake #1:  If you're going to use "new designs" to hook me, then when I click on the link I expect to see new designs.

Mistake #2:  If you must use an intermediate page, then don't make me guess where to click to find the new designs.  People don't like uncertainty, so MAKE IT UNMISTAKEABLY CLEAR.

Mistake #3:  Make the target worth seeing in the first place.  This is where your brand gets sealed, so to speak.  If I follow a link to a page that is unremarkable, then you are unremarkable and the whole exercise was at best a waste and at worst detrimental to your brand.

Be aware that if your brand is shallow, it will not be able to withstand many of these.

Declining Median Household Income

Sentier Research recently issued its latest calculation for median household income in the US.  It stands at $53,043 as of the end of March, 2014.  Good news:  After adjusting for inflation, that's about $1,500 more than it was three years ago.  Bad news:  It's also about $5,000 less than it was 15 years ago.

Data from the National Employment Law Project provides some insight into these figures.  According to their research, from January of 2008 thought January of 2010 the US economy shed about 2 million low wage jobs (jobs that pay less than $13.33/hour), but since February of 2010 it added about 4 million low wage jobs.  On the other hand, during those same time periods the economy shed nearly 7 million mid-wage (pay up to $20/hour) and high-wage jobs (pay up to $32.62/hr), but has added only about 5 million of those jobs since February of 2010.  Put another way, our economy has shifted 2 million people from mid- and high-wage jobs to low-wage jobs.

Obviously, this is not the way to build a foundation for a stronger U.S. economy.  Not only does it limit economic prospects for those directly involved, but it also limits the ability of businesses to enact price increases.  That in turn has effects upstream and downstream, short term and long term.  The question is, Is this permanent?

Perhaps more importantly, how long are we going to wait to find out the answer?  Remember, we're already 15 years into answering this question.  How many more years of downward-trending median incomes will we need before we conclude that we need to reverse this trend?  How many?

Business Plan Tip - Keep the Main Sections Short

Few people enjoy being forced to read through 10 or 20 pages of esoterica.  And yet, many business plans end up being just that:  long-winded attempts at teaching science or demonstrating how smart the author(s) is/are.  If you find yourself in a position where you need to write a lengthy explanation of how a system works, insert a two- to four-page summary in the main body of the plan and put the remainder -- all the details -- in the appendix.  That way, your readers won't get bogged down in (or turned away by) a hard-to-read (possibly boring) explanation.

Think you don't have a brand? Think again.

You have a brand whether you know it or not.  Call it a default brand.  It's the brand that a company (or person) gets if it doesn't do any branding.  Doctors usually have a good default brand.  They are considered to be smart, valuable to society and are generally held in high regard.  On the other hand, used car dealers have a default brand that is not so good.  Doctors need to protect their default brand; used car dealers need to shed theirs and create a new one.

Do you have a default brand?  What does it say about you?  Food for thought -- and action.

Business Plan Tip - Every Section is Important

I just looked at a business plan written by scientists.  The plan is for a business that will manufacture and market a product based on technology that the authors invented.  The plan is 35 pages long.  16 pages of that is a (highly esoteric) discussion of the technology.  That's almost half of the plan spent on a section that very few people will finish and even fewer will come close to understanding.  Most of the remainder of the plan is either single-page sections or lists of fairly generic bullet points.

The technology behind a product is important, but it's not so important that nothing else matters.  In business, technology is important if it can be used to make or improve profits.  Therefore, the sections that discuss the market(s) and the marketing are just as important, and must be just as well thought-out, as the technology discussion.

Sometimes our strengths become our weaknesses.  This is one such case.  Remember, the various sections of a business plan are there because they are all important.

RE: Customer Service

Memo to customer service departments:  Please provide customer service.

I called a certain electricity company recently to ask about my account.  After the now-routine automated answer telling me that their options had recently changed, I was presented with one -- yes, one -- option:  "Select one to receive information about a $100 WalMart gift card."  This option was repeated four times, then the call disconnected.

I called again.  This time I selected one, and was transferred to a call center in Florida.  A female agent answered and asked if I wanted to learn how to get my $100 WalMart gift card.  I told her I wanted to discuss my account with someone.  She said that I needed to try the number again in 30 minutes or so and see if it would go through to the company instead of to the call center.

A new low in customer service.

Are everyone's call volumes up?

Is there any company out there whose automated answering system is not experiencing higher than expected call volumes?  Or for which the options have not recently changed?