How to Sell Online Backup Services (part 4)
The Online Backup business is booming. Independent Service Providers like most of us are benefiting from a rising tide of public awareness in Online Backup as an inexpensive and better alternative to tapes and CDs. This article is Part 4 of the chapter, “How to Sell Online Backup.”
The Online Backup Guide for Service Providers is a complete 196-page guide on starting and operating an Online Backup Service – the latest revision of Rob Cosgrove’s industry defining RBS Book originally published in 1987. The entire book is being published here, chapter by chapter.
Email Marketing
Email marketing is one of the most effective and least expensive ways you can keep yourself fresh in the minds of your customers and prospects. You can send monthly newsletters and notices of special sales. You can send surveys that can help improve your service level.
Be careful to avoid sending too much email, though. For existing customers, once every couple of weeks is about as much as you should send. Once a month is probably just about right. During the initial sales cycle, you can send more, but no more than every four days or so.
Your regular email software (such as Outlook or Thunderbird) is inadequate for sending mass email. For that you need specialized software or better – an email service like one of the ones I mentioned earlier.
My favorite software for sending mass email directly from the desktop is called WorldCast by Fairlogic (www.fairlogic.com). WorldCast is a list manager and mass emailer in one very intuitive package for about US$49.
WordCast can be used in conjunction with a little SMTP server called Advanced Direct Remailer (www.mailutilities.com/adr/).
Many Internet Service Providers object to you running your own SMTP (outgoing mail) server, and may even have strict policies against using it, and against sending mass email. You should read the fine print in your Internet contract before risking having your service disconnected.
If your ISP will not let you send mass email, you will have to use an online mailing service. I have used both of the two I mentioned earlier, and recommend them. You will typically get a much higher delivery rate using a commercial mailing service.
Autoresponders
Autoresponders are software packages that read incoming mail and respond automatically. There is a wide variety of autoresponders with different features. They can be hosted as online services such as AWeber (www.aweber.com) and you can also buy and host your own right on your own computer.
My favorite desktop autoresponder is the PromoSoft AutoResponder (PSAR) (www.autoreplying.com). This is a programmable and versatile autoresponder that can automate your email handling like none I have ever seen. We have been using it for years at RBS.
If you have ever received what looks like a personal email from someone at RBS following up on a purchase, a tech support case, or just checking in because we haven’t heard from you in a while, that was very likely our PSAR autoresponder. If you reply to the email, it goes to a real person’s inbox, who can then reply personally.
You can use your autoresponder to automatically answer an email inquiry from your web site. It can be as simple as, “Thanks for your email, a live person will get back with you soon.” You can set it up to automatically send a series of follow-up emails at one week intervals to people who sign up for a trial account at your website. You can have it maintain your mailing list, and even send your mass mailings. It will do follow-up for your sales people, triggered by the telemarketer’s initial email.
I strongly recommend that you automate your email using an autoresponder. It will save you time, and your customers and prospects will appreciate your tenacity and personal touch, even if it’s that of an email robot.
Want to try out an autoresponder now? Send an email to: info@remote-backup.com with “Hi Rob!” in the subject line. Night or day, you should get a reply within 2 minutes.
Direct Mail
Direct mail is expensive and has a lower ROI than anything I’ve mentioned so far. It has not been proven to be an especially effective way to promote Online Backup Services. Colorful and professionally produced post cards have shown a reasonable ROI when they contain a discount code.
If you are going to use direct mail, here are a few tricks of the trade that can help you save money on your campaign, get your envelopes opened, and help you predict the future.
Direct mail may be the most pervasive approach to marketing ever. Direct mail has been used by so many companies for so long that there is a lot of data about it. In fact, a fairly exact science has developed around it based on reliable statistics. There are tables and charts, calculators and spreadsheets designed to boil direct mail down to predictable math.
Look at your own mail from today. You have a few bills, a magazine, a letter from your mother, a newsletter from your running club, an offer to change your long distance service, your official notice from Publisher’s Clearing House (congratulations!), and a white business-sized envelope with a first-class stamp and a return address you don’t recognize.
Right away you are going to discard the newsletter, the long-distance offer, and the Publisher’s Clearing House letter without opening them. Why? Because you already know what’s in there, and you are not interested.
The pieces of mail you didn’t immediately toss are going to get your valuable attention, at least for a few seconds. You’ll open the white business-sized envelope with a first-class stamp first because you are curious – it’s the only one who’s contents you aren’t sure about.
And THAT’S the one that contains a message from the Online Backup Service provider who’s going to save your business next month after a water pipe breaks and trashes your Server room.
Direct mail is all about getting the most people to read and respond to your advertising message for the least cost, and in the most predictable way. As such, direct mail has been used to test marketing concepts and products before spending money on full-scale coordinated campaigns and production schedules.
Test, Test, Test
Direct mail can also be used to test the effectiveness of your direct mail itself. Here’s an example, and a few figures.
The average percentage of people who respond to an offer made through direct mail is .015. That’s 1.5 percent. So, on average, 15 people will request more information or buy a product presented to them for every 1000 mailing pieces. This average is based on doing a few things right – things that most marketers know through common sense, like presenting an attractive and reasonable offer.
But, what constitutes a “reasonable” offer isn’t an exact science. It can, however, be tested for. In a very simple test, you’d send out 1000 letters advertising a product for $20, and 1000 letters advertising the same product for $19.95. You code your response vector so you know to which offer a prospect is responding. An example of this is when you list a telephone number with an extension number. Offer “A” goes out telling people to phone 555-5555 Extension “A” while offer “B” goes out telling people to phone 555-5555 Extension “B”.
After you calculate your response rate for each offer by dividing the number of responses by the number of mailing pieces (1000) you’ll know which offer pulls better. Now do a mailing of 10,000 with the one that worked better.
Now you can see how doing a simple and inexpensive test can make you more money. Suppose the response rate for example “A” was 2 percent, while “B” was 4 percent. If you had just assumed the public would respond to a $20 price adequately, you’d have missed twice your amount of sales. In this example, using the “B” mailing for the big 10,000 piece campaign made you $7,980 instead of the $4,000 you would have made with your first idea. The numbers get really high as you send more mailings.
You can test all sorts of things this way. Test the size and shape of your envelopes. Test their colors, their weight. Test days of the week, zip codes, SIC codes. Put a splash of color on a white envelope and test that. After a while you’ll come up with a perfect combination of mailing piece and offer that you can use for a while.
Don’t assume you can use the same mailer forever, though. They DO get stale. It’s best to test, test, and retest. Most good marketers test constantly, even during their main campaigns using hundreds of thousands of mailing pieces.
Your Built-In Crystal Ball
Now, here’s how to tell the future. You can calculate how many responses you are going to have halfway through your response cycle. This will save you days, even weeks deciding if a mailing worked. After you send out your mailing, it will take a few days for it to get to its targets. When you start receiving responses, count the number you get each day.
Suppose you get your first two responses on Monday. Four more come in Tuesday, and fifteen on Wednesday. Thursday sees eight responses. Your mailing peaked on Wednesday, because Thursday was the first day you saw a decline in responses.
Now, count the number of responses you received up to and including the peak day. In this example, it’s twenty-one. This represents half the number of total responses you are likely to get to this mailing. So, three days into your response cycle you know you will have forty-two responses to this mailing, and that you will likely get very few responses after Friday.
This example is a very short time period. Usually you can expect a response cycle to be more like two to three weeks.
Tricks To Increase Response Rates
There are a number of things you can do to increase your response rate, and more are being discovered all the time. For the best up to date ideas, watch your own mail and pull out pieces that get your attention. Companies spend millions of dollars testing and refining their mailings. You can learn from what they do.
- Add a splash of color. With an inexpensive color printer and blank labels, this is an easy thing to do. You can spruce up a number ten white envelope with a small red and yellow label placed at a jaunty angle on front.
- Print a “teaser” message on the envelope or on a label. Hint at what’s inside. Make your prospect curious.
- Hand-address the envelopes. This is tedious, but tests prove it’s good for as much as a two percent increase in response rate.
- Use a real stamp. Don’t meter your mail. Sure, it takes a little longer to prepare, but it’s good for a half-percent.
- Use first class mail instead of bulk. This is good if you want to maintain your mailing list for future mailings. First class mail is returned to you if it can’t be delivered. If you intend to send more than one mailing to the same list, you’ll save a lot of money by removing addresses to which your letters aren’t going. You wouldn’t know about these if you used bulk rates.
- Include a Business Reply Postcard. These are expensive, but well worth it if used properly. Contact your local post office for details.
- Use the entire ounce you have. Don’t waste that postage! You’re paying for a full ounce, use it. A single number ten business-sized envelope with two computer-generated labels and a stamp can usually deliver three pages of paper in just under an ounce. When you produce your mailing make sure you are consistent from beginning to end in the weight of your materials, and use a digital scale to make sure they are not heavier than one ounce.
- Make it look like it came from a lawyer. That is, make it look really professional. This isn’t a good idea in all cases, but you might try it. Again, look at your own mail. What do you open? What do you toss?
Speaking Engagements
I am not one of those people who can get up at the crack of dawn, put on a business suit and be chipper for a 7:30AM breakfast meeting with the Rotary Club. If you are, however, make the rounds of those clubs. Speaking engagements work.
Keep your presentation to less than ten minutes, and give out business cards or CDs with a trial account of your software. Network with everyone you know, and ask for referrals. Join your local Chamber of Commerce and other business associations. Make sure everyone knows what you do, so when they think of Online Backup, they think of you.
Blogging and Writing Articles
It’s easier to sell when your prospects consider you an expert in your field. Keeping a blog and contributing articles and press releases to your local newspaper and various trade publications read by your prospects can help do this. When prospects recognize your name or your company name, you are many points ahead.
Web Marketing
As an Online Backup Service Provider, you definitely need a web site. However, don’t expect your web site to be your ticket to the success of your company. Unless you spend tens of thousands of dollars a month for ongoing search engine optimization and Pay Per Click (PPC) marketing, the best you can hope for from your web site is for it to act as a brochure for your business, a way for your customers to download their software, and to contact you.
I have seen far too many new service providers with great potential waste thousands of dollars and many months of time building a web site instead of selling their service, expecting customers to flood into the site, credit cards in hand. It will not happen.
In my more than two decades in this business I have never seen an Online Backup web site that directly provided a substantial percentage of a company’s income. You could be the first, but I doubt it.
Instead, spend a reasonable amount of money on a web site with fewer than sixteen pages. Acquire a good domain name. Buy a template to save money. If you are going to deliver your service with full automation spend a little more money on systems integration (see “Delivering the Service”).
Print your web address on your business cards along with your email address. Include it with your press releases. Tweet about it. Talk about it on your Facebook page. It can’t hurt to hire a professional Search Engine Optimization company to fine tune your site to make it rise in ranks toward the first page.
Trade links with other web sites. If you are a consultant and a writer, start a syndicated blog and mention your web site with each blog entry.
Be sure to have a way for your web site visitors to add themselves to your email list. This can be done with a simple form that posts to your autoresponder, or you can sign up with one of the online email services like Constant Contact (www.constantcontact.com) and VerticalResponse (www.veritcalresponse.com), who both have sign-up widgets you can add on your web site.
Pay Per Click (PPC)
In Pay Per Click marketing, you pay for web surfers who are referred to your site from other sites. Search engines handle the bulk of the PPC traffic, and Google is at the top of that heap. PPC works, and it is very expensive.
Google ads cost more the higher they display on the page.
As I write this, near the end of January 2010, the top spot on Google.com (USA) for the key phrase “online backup” costs US$11.74 per click.
This means that you are going to pay Google $11.74 every time someone clicks on your ad.
Here’s a simplified version of how PPC works on Google. Google runs on an auction system. You start up an account and fund it with your credit card by making a deposit. Enter the key words and phrases you want to bid on, and your maximum bid for each.
Google lists the highest bids first, and the lower bids further down the page. The highest three bids are at the top of the page, in almost the same format as the natural listings, on a background of very light yellow.
The light yellow background often looks like the regular white background on low-resolution monitors, so people using Google might not be aware that companies have paid to be there.
Even if they can see the yellow background and notice the very dim words, “Sponsored Links”, most people don’t know that it means the top three listings are paid ads, so many assume that the top three listings have the same relevance as the natural listings. I think this is an intentional deception on Google’s part, and just ever so slightly against their company motto, “Don’t be evil.”
The rest of the paid ads are in a column along the right side of the results pages. They are considerably less expensive than the top three, but “online backup” at position six is still a whopping $3.32 per click this afternoon.
Carbonite is at position three, at just under $10 per click, which is WAY too high for their marketing budget, but it puts them one position above Mozy, who owns the coveted number one spot in the natural listings for “online backup.”
I own the #1 spot for “remote backup,” one position above Mozy, and two above Carbonite, who are both obviously doing a lot of SEO (search engine optimization) to try to capture my spot.
As people click on the ads, Google draws down your deposit account. When they need more money, they send you an email and you can fund up your account. Or, they will gladly bill your credit card automatically.
There are safeguards built into the Google Adwords system to help you stay within your budget, and safeguards against abuse, so a competitor can’t use up your daily budget with repeated clicks.
In addition to the ads that show up on the Google search engine pages, you can have your ads show up on other sites that subscribe to Google AdSense. These are context sensitive ads that website owners place on their pages to earn a percentage of the ad revenue.
Yahoo and the other search engines also have PPC programs, and there are other companies who broker context sensitive and non-context sensitive text and display ads on other websites. Many of them are less expensive than Google, but also offer less exposure.
Of all of the search engines on the Internet, Google currently sends my sites the most traffic from natural listings – more than 70%.
Consultant-Selling
Any time you can establish yourself as an expert in your field, you increase your chances of landing a sale. Giving something free to prospects is also a proven sales tactic. Consultant-selling combines both into one effective sales technique.
The basic idea is to let your prospect know that you are an expert in Online Backup, then offer your expertise for free. You can establish yourself as an expert with your other marketing methods and by having an authoritative attitude. (It also helps to actually be an expert.)
I have included in this book a template for a Disaster Recovery plan and a Data Loss Risk Evaluation Survey, both of which service providers have used successfully to land big business accounts.
Every business needs a Disaster Recovery plan. They are often expensive and time consuming to complete. A proper Disaster Recovery plan takes a lot of time and expertise to complete. The template I have included here is very simple, and can serve as a “foot in the door” of new prospects.
You can offer either of these tools as a free service – an incentive to gain an appointment with a prospect.
Keep in Touch with Your Customers
The easiest people to sell are those who are already sold – your existing customers. They are also your best source for new customers through referrals. Keep in touch with your customers through an emailed newsletter, or send a periodic email containing the results of their backup sessions.
RBackup can generate customizable emails that go to your customers, which are triggered by various events.
You can sell other products and services to existing clients. You can ask them for referrals, and offer a free three months of service or more storage space for each referral that turns into a customer.
Rob Cosgrove, CEO Remote Backup Systems
Rob Cosgrove is the President of Remote Backup Systems, founder of the Online Backup Industry, and a vocal advocate for maintaining the highest standards in Online Backup software. His latest book, the Online Backup Guide for Service Providers: How to Start and Operate an Online Backup Service, is available online now, on Amazon.com, and at bookstores.
Remote Backup Systems provides brandable, scalable software and solutions to MSPs and VARs enabling them to offer Online Backup Services.
