Most people when they think of creating a business online, they think of
creating a product, selling the product, and hope to make enough
capital to finance their next product idea. This kind of thinking is
short-term, and doesn't lend itself well to a long-term business
venture. When you stop and think about a longer-term business model,
whether online, off-line, or a mix of the two, you really need to think
about the bigger picture. What's really needed is a method to capture
leads, convert those leads into small-time customers, and gradually
build them towards customers that spend more with you in terms of three
factors: frequency, monetary value, and recency. In terms of frequency, I
think it is self evident that we want them to spend more money with our
business on a more regular basis. In terms of monetary value we would
like each transaction to be bigger, and have them spend more per
transaction. When it comes down to recency, ideally it would be better
if they purchased last week rather than five years ago. This makes them a
fresher customer that's more likely to purchase again soon, promoting
the other two qualities I just mentioned. There's also a fourth quality
that's rarely discussed. We don't necessarily care how they buy from us,
just that they do buy from us. However some channels of distribution
are significantly cheaper than others. Ideally then, media, or the
method you used to bring in the sale, becomes increasingly important. So
how do you turn a single product to product mentality into a thriving
long-term business? Well, to begin with, you need to have a viable
business model. And part of that business model absolutely must include
the "marketing funnel." This is where it comes into play.
