Direct Response Part II: How To Generate the
Seven Revenue Streams of a Web Site

Dear Friends:

The end of the year is a funny time. You always think about what you have and haven't done...

That's the problem with goals; they don't always come true.

And if you take a deep breath, and grant me some time, I'll show you how that's the best part of the deal.

I received an email recently that gave a little twang to my own memory, as a subscriber shared her frustration with selling Web sites, titling her email, "Tell Me I'm Having a Bad Dream." She was struggling, over her head, and looking for me to put the final nail in the coffin by telling her to give up.

  --> I guess I must have forgot my hammer.

First, let me tell you that the person speaking to you wasn't raised with a silver spoon and has been broke. Five years ago I was living out of the back of a step van with my friend (now my wife); I remember the Chicago gang graffiti sprayed on the ceiling of our van explaining male and female anatomy in an, let's say, unusual way ;-).

That's what I went to sleep looking at every night, huddled next to a propane hibachi we'd light to keep ourselves warm. Who cared about fumes? We had no money, no heat, no running water, and lived in the outskirts of town because my five year old business had kicked me around - debt, stupid decisions, you name it, I mastered it - and I felt sorry for myself. I kept thinking about all the stress and debt piling up, cursing my situation.

After a particularly good bit of belly aching, my friend looked me in the eye and said, "One day you'll realize that this was the best thing that ever happened to you. It taught you how to do it right, run your own business and your own life. You just didn't know how to do it. But if you learn from what you did, you'll have more than any college degree could give you."

I thought she was full of it... I was broke and had nothing. But what matters is what you do when life stares you straight in the eye and says no... life, like the Internet. Trust me, you have to wake yourself up and take a look around. I was living in the hills, smelling like dogs, hungry, when I realized that no matter who I blamed, there I was. I couldn't do anything about the past.

All I could do is take charge of now, and slowly but surely build myself up. Not in some grandiose get quick rich scheme, but in a step by step plan. I started by opening up my America Online account in 1991, marketing my research and writing services from the back of that step van. I just turned my generator on, booted up my old Mac Plus computer, hooked my modem up to an ancient cellular phone, and I became connected.

Want to talk about the ultimate home(less) office? I ran my entire business via email, voicemail for my phone, and Federal Express. No one cared where I lived, they just wanted results. Without AOL and the Internet, I'd probably still be stuck on that hill. But with them, I have opportunities I could never have imagined just five years ago. I can honestly tell you that the Internet provides a really rare window of opportunity to jump start your business quicker than before. But these windows stay open only so long and yes, this one is still open...

If you know how to use it, which is what this issue is dedicated to; setting your dreams to a deadline by testing and invigorating your site with The Seven Revenue Streams that can make it grow as an investment year after year. By testing these Seven Revenue Streams, you'll find how to make the Web work for you. Not in some pipe dream of the Information Superhighway, but by using tested methods to start generating results. You can't get to where you're going without a plan. If that plan doesn't take advantage of what the Web has to offer, you won't succeed.

The Web isn't a dream, it's a marketplace waiting for your innovation. I won't tell you you're having a bad dream if your Web site isn't an immediate success. You can blame the Internet or figure out new ways to generate money.

Adapt or complain; it's your choice.

"A Goal is a Dream With A Deadline"; Remember that the Goal of Your Business Should Match With The Goal of Your Customer

Go out and try to shop online and what do you find? Lists, lists, lists! Every business has a goal of selling products and services, but online we want more than just a blatant advertisement. You can't create a Web site by trying to treat it as a magazine ad; the goal of your customer is to find the product they want and to be convinced of why they should buy it by directly acting, clicking their mouse to explore your information.

I've seen Web designers sell the fact that they will put in frames, Java, and special CGI scripting as a benefit. They don't bother to mention that these technologies won't sell, may slow the whole process down, and are expensive. The kind of expensive that will bury your business because it limits the customers that can visit. This kind of selling is also killing business for us all because it is a lie.

Think of it this way; if someone said, "I'll put up your ad in a magazine but don't worry about how you word it, I'll use BOLD TYPE! That's what people want, BOLD TYPE!" Would you believe them? I don't, I only believe in the right message delivered the simplest way.

In the beginning, you should plan how you can get your customer to decide to buy. Everything else should revolve around that goal. How can you quickly involve the visitor in the buying process and get them clicking? Your visitors should be able to poke around, but they also should be able to get where they want.

Results online should be measured; see how many people visit what pages, test your marketing approaches to see which ones actually generate traffic, and adapt quickly. You have a natural feedback loop that will shape your site in the most unique and unusual way if you just listen and watch what your visitors do. They are the ones who should shape the site, not you.

The prime technology you need to think about is how to activate their brain synapses to pull out their wallets and start spending their money. Set your goals and deadlines; none of us really meet deadlines, but if you don't set them to see how you're doing, you'll never know. When I begin a site, I think of the Seven Revenue Streams and test them out with each business. These are the business models online that work and with time, can generate savings and revenue. If you are creating or selling a Web site, be sure to focus on these true tests of technology.

The Seven Revenue Streams Defined:
Why the Web Offers Much, Much More Than Some Glorified Ad If You Put Value Where it Belongs...In The Hands of Your Paying Customers

With the World Wide Web being so new, businesses want to know how to make money. The problem is, they are used to doing things the old fashioned way. We pay for advertisements in print, television, and radio that have a long term value of maybe 3 months. There are definite good exceptions, but for the most part the value starts depreciating with time. They accept this gamble of pumping money into marketing again and again looking for results.

Most people assume the same thing about the Web. They think of it only as an advertising medium, a way to sell products. And they miss the real value of a Web site, the Seven Revenue Streams which will allow you to build your Web site and prosper. In the early days, there are many more innovative ways to make and save money than just selling products. Why force the Web to adapt to what you are used to do, when you can find a way to make it work for you? Create investments, not one shot ads posing as a Web site. Build value with your customers that will grow year after year. Start building your Revenue Streams by focusing on results.

Revenue Stream 1: Generating Leads

Generating leads is the most realistic and immediate source of benefits online. If you are selling products and services to consumers, measure how you can expand the reach of your business from a local to regional, regional to national, and national to international audience. How can you keep in touch with your audience? Most of all, how can you use the site to generate more leads?

Many businesses with catalogs contact me talking about putting up some search engine cum Java Intranet mumbo jumbo. I ask them directly, what do you want to do with this expensive, four color catalog? Incur more expense by putting it online immediately or generate leads by getting your catalog mailed to target customers? The answer is simple; I can easily generate new customers and inquiries for the products.

Do you care if they buy online or from an 800 number or by fax? Money is money, no matter where it comes from; leads are leads, and the Web is a terrific place to generate them for your business and for related businesses. Generating leads can be achieved in a number of ways. The Web site can be a central referral point for a group of businesses, with success measured by leads generated. Compare the costs of generating leads for a business and offer cheaper leads online, at least testing to see if the medium is valid for that business.

If you have an industry, like the printing industry, begin by generating leads for each business.

Charge by the lead or charge by the actual sale, but whatever you do, track it well. Find out where the orders are coming from. If they are getting leads from you, ones that buy, they'll pursue the Web with you. If not, they've been able to try out a business online based on the simple model of lead generation. One Web seller actually guarantees leads because they are the most immediate and measurable response from a Web site. Most sites I've set up have seen a significant increase in leads generated.

Check out ( www.edmunds.com ) for a site that not only has customers, but generates leads for other businesses. They have an incredible book of automobile information (that's been published since 1966); instead of selling the book, they've given away the content and base their business on generating leads for an insurance company, the leading online auto dealer Auto ByTel, and an automobile parts store. Sounds like a free magazine with advertising doesn't it? Adding customers and lowering lead costs can contribute at least $5,000 for a business in a calendar year.

Suggestions

1. Test a specific product or service, counting Internet created leads to see what works.

2. Find related businesses your Web site can generate leads for (whether they are online or off, you can always fax them). Develop an incentive plan based on leads generated and percentage of sales from those leads.

3. Create a referral network among non-competitive, related businesses to generate leads. Even better, put them under one online network with a common goal.

Revenue Stream 2: Developing Mailing Lists and Testing Print Materials Online

When all the big companies test their latest products, they find some rich suburb to test the approach on. You can do the same thing online. The Web is like a rich suburb (how many poor people have $2,000 computers?) Test your headlines and sales letters online first and find which ones work.

If I did a direct mail test, I would likely run several different mailings, each one costing me money and even worse, time, and see which ones worked. This is a time intensive approach, based on costly print materials for each individual to be reached. Why not try it out online, seeing which sales letter works and which doesn't?

When I started my newsletter, I put a free issue on America Online; the headline was so pathetic, "Web Letter's Guide to The World Wide Web", that it only received 100 downloads. I changed the headline to "How To Create a Web Page", and that has resulted in over 16,000 downloads. If I tried this only in print, I would have spent thousands and months and months of mailings. This took me one month and only cost my time. It helped me focus my business on what worked and allowed me to save time and money when I went to print.

An excellent example of testing direct mail pieces online and building mailing lists is Jonathan Mizel's Cyberwave Media Online Marketing site ( www.cyberwave.com ). He gives away free reports and samples of his newsletter in exchange for email and physical addresses. Not only has he built up an enormous mailing list for his products and services, he has tested it and knows what offers work. Now he can use this as a valuable business asset year after year, offering joint ventures or endorsed mailings to a group of people who value what he does.

Another example is Amazon.com ( www.amazon.com ), a bookstore generating over $10 million in sales (read about them in the Wall Street Journal); their direct sales (you can't measure success today in only sales, it's the ongoing contact and development of your audience base that counts) aren't as important as their mailing list. They sell books and ask you for your feedback on the books. They give you ways to get email about what you are interested in. Let's say you search for a particular subject; you can be notified about all new books relating to that subject automatically, via email.

What they are developing is a continual base of contact and a way to keep reminding people to come back for a visit. But even more importantly they are asking you to judge them on their merits and give them feedback, along with your email address. Publishers are busting down Amazon's door for this list. Think of it like Microsoft; are they powerful because they sell software, or because they own the most amazing computer mailing list in existence, the Windows operating system? If you want to reach 80% of computer users, you have to go through Mr. Gates.

The moral of this revenue stream is, if you don't ask for an email address and keep in touch with your customers by offering monthly tips, special reports, news from your Web site, updates, special bargains and offers, you are cheating yourself and them. If you don't give away something to mail to them physically, so they can hold it in their hands, you'll never know where they live. The more you know about your customers and the more they want to keep in touch with you, the more powerful you are. Testing direct mail and print ads online, along with mailing lists, are an untapped resource of long term revenues.

Suggestions

1. Give a catalog, newsletter, or special report away to gain email/mailing lists.

2. Provide a way to keep in touch via email by providing monthly updates, an online newsletter, or weekly tips to promote awareness about your Web site.

3. Before your next print campaign, test out the headlines and text online; compare this test to your efforts in print in terms of cost.

Revenue Stream 3: Market Research

Imagine if you were to find a focus group to study. You'd have to pay them and set up a time to get them in a physical location. You'd have to hire a professional to run it and study the results. What you study are generalizations of one expert about a group, drawn by a scientific cross section. Online you can find people interested in what you are selling and ask them what they need, adapt your approach to their likes and dislikes, and make your customers an active part of building your business.

Why not visit the online discussion groups and conduct your own market research? Or even better, start contests and surveys that make your site a center for market research? I don't mean studying the trends that exist, but listening to your audience and having them give you the trends. Let them guide you to what they need. Use this to create products and services, or even better, adapt your current approach to fit their needs.

By being in direct contact with your customers, you learn the trends as they are happening. They provide the ideas via email feedback, you create the product. Compare the cost of this to a focus group study or hiring a market researcher to cull through numerous publications trying to figure out what the competition is doing. Online, you can find that out immediately and even better, stay ahead of the competition by watching what they do as well.

Market research will save you money, not only by keeping up with your competition, but by letting your business set the trends subject to what your customers want. Think of the Netscape model; they built a browser and developed it around what people wanted. A bunch of academics sat around a table with another browser, Mosaic, hoping to build standards over time. Meanwhile the market demanded, and built, the standards, making Netscape the premier browser (for now).

Suggestions

1. Run a survey, or explore a specific niche and how the Internet applies to it. For instance, a survey on how printing companies are reacting to online publishing. What are the advantages and disadvantages? Share your findings and build credibility.

2. Give away a prize for the best ideas and/or feedback about your product or service.

3. Conduct a treasure hunt on the Internet, putting strategic prizes in related Web sites, generating traffic for all and market research by giving clues in exchange for customer information.

Revenue Stream 4: Public Relations

A Web site is an important public relations tool. A company's image is enhanced by simply having a Web site address. Talking to print media, radio, and television becomes easier when you talk about what you are doing online with your business. I've received thousands of dollars in free publicity by getting interviewed, having articles published in different trade journals, and focusing all my publicity on what I do online. Press releases may get read and followed up on; the Web is a way to open up doors to markets just because of what you are doing online.

A Web site is an excellent starting point for any marketing campaign. Use it as a central referral resource, such as "For more information visit www.writething.com 24 hours a day. We're always open." Free publicity is still available; don't forget to include your Web site and email address on all promotional materials, like business cards.

Suggestions

1. Announce via a press release the opening of your Web site and your target goals for making it convenient for customers to work with you.

2. Approach the Internet marketplace and provide insight via a survey into a specific niche, like dentists online. Share your results online and off-line.

3. Develop a promotion that requires people to go online and register; encourage people to communicate online at a specific time and promote the event with various countries to show an international aspect. I had 15 people participate in a free WebChat online; over 3,000 other people visited because of what those 15 people actually did.

Revenue Stream 5: Customer Service

This boring word is fast becoming the most important part of any business. Trying to start your own customer service department is difficult. Depending on a telephone limits access because of busy signals and the inability of personnel to be able to address the vast number of questions. Customers want 24 hour access, which is beyond most small businesses. Training, evaluation, and overhead costs with managing such an operation can easily go into tens of thousands of dollars.

Online customer service is the wave of the future because it's always open and subject to email for inquiries, with the benefits of an 800 number but not the costs. When people write, they have to focus their questions; you can respond in a few minutes, rather than a twenty or thirty minute phone call where money is being paid for simply communicating (your phone charges you by the minute, online it's usually one flat fee for access). What could be quicker than writing a note? Compare that to a telephone call, where the talk continues and it's tough to save time. When people ask questions via email, they are brief. Use this to your advantage.

Suggestions

1. Provide customer support materials, frequently asked questions (FAQs), print manuals, and a place to write your office at your Web site.

2. Use autoresponders to give immediate feedback to your inquiries. Indicate that it is an automated response noting that the message has been received. Use this approach to sift through qualified leads and develop automated online marketing.

3. Provide links to specific software and businesses online that can benefit your public, then promote working relationships with those sites via links and possibly paid banner advertising. Become the resource for your sector by using your judgment; don't link to hundreds of sites, link to those you recommend and limit them.

Revenue Stream 6: Creating an Online Network of Resellers, Advertisers, and Joint Ventures

With so many Web sites around now, this niche will quickly become the most profitable way to create and maintain a site. Many companies have groups of businesses they work with, such as vendors. The Web site should be a focal point for their network, their circle of influence. The hardest thing for people to do now and in the future is find specific Web sites. Set up alliances, almost like mini Chambers of Commerce, where people can visit and get referred to related businesses that fulfill their interests.

A company could use the Dell Computer model and use its site as the central meeting place for a network of agents nationwide or worldwide. Franchises can use it as a central reference center for all their franchisees. Advertising and promotions can be shown at the site from allied businesses. Joint ventures with other countries, other businesses, distributors, and consumers are becoming the fastest growing business model online.

Off-line, the fastest growing markets worldwide are now in Asia. Online ventures can penetrate those markets, possibly create joint ventures, and expand the influence of any small company to a multinational level simply through cooperative agreements and a Web site. The cost savings and revenue generating possibilities are limitless.

Suggestions

1. Set up a network of one specific market sector. For instance, printing companies could be located on one site, with each company acting in a different state. They wouldn't compete and could provide a central point that made each small business a part of a national network, or group of businesses. Make it easy for small businesses to get online by providing a network that meets their interests, then generate revenue through leads generated, sales, or advertising. Hook up to national magazines or organizations to increase exposure.

2. Turn any business into a network by making your visitors, whether they are consumers or distributors, the hub of the Web site. Let them register to be in your network and give them bonuses for participating. For instance, I met one gentleman who had original drawings from the movie King Kong. I suggest he create the King Kong fan club and invite visitors to join. What would they want to buy? His drawings, t-shirts, and whatever products he could joint venture from others to access his network. But they'd visit for the fan club.

3. I've set up a telephone company, an appraiser's network, and an artist online. All of these received immediate inquiries for joint ventures from Asian countries like the Philippines, Singapore, Japan, and even China. Not one of these companies did a thing to promote themselves to these markets. Imagine if they did. Why not start networking with individuals, agents, and businesses in foreign countries who can sell your products and services there?

Revenue Stream 7: Barter

Trading space online for print advertising is a sure fire way to generate advertising dollars. Exchange empty space or even a Web page as an advertisement with a newsletter or trade journal. Use space as a way to introduce people to the online world. One Web publisher on the West Coast created a Web site for a radio station in exchange for radio advertising and a link from their heavily trafficked home page. A roughly $5,000 investment of time and resources to create the Web site was multiplied exponentially into radio ad time and Web advertising time.

Trade value for value online, not only with other companies online with whom you might exchange banner ads, links, or even content, but with companies who are not yet online. Ask them for content and a small fee to test promote their efforts at your site.

Suggestions

1. Create a system of trading to develop your online niche, measured by participation in content development, or generating traffic; the Internet Link Exchange has an interesting model where banner ads are exchanged. The more your site shows ads from others, the more yours is shown at other sites.

2. Look at traditional advertising like newspapers, magazines, trade journals, newsletters, and offer to publish their materials online in exchange for an advertisement, interview, or promotion. Trade a Web site or Web advertising space for an endorsed mailing. Why not find someone with a large group of clients, or a network of business associates, and suggest an alliance. You become the online expert in exchange for access to their audience; offer financial incentives and you'll open doors.

What About Sales?

Notice how I didn't even include sales? That's the mysterious eighth revenue stream that is a trickle right now. It is growing, but in the short term, focus on what is really saving and generating money. Savings increase revenue. Sales will come, but these streams can create immediate returns.

Many people come online thinking they will just hawk their wares. The Web is much more than an advertising medium, it is a means to keep in touch with your audience, to offer them more products and services, and to give them reasons to keep in touch with you. Why waste your time on one revenue stream, sales, like everyone else? You can use the Seven Revenue Streams to generate money now and if the sales come, it will be another stream.

The true goal is not to think of your business in terms of one product or service, but to diversify so you have alternative revenue resources. If one dries up, another compensates. A Web site offers a multitude of values that can solve a variety of problems. The Seven Revenue Streams are also a consulting tool to teach people how to use their Web site. If you are selling Web sites, what better way to open doors than to counter the traditional online approach of selling technological tricks no one understands and the advertising aspect of the Internet. Why not sell the real benefits that can help people start making and saving money right now.

The World Wide Web is moving beyond the pioneer stage. We've seen the brave leaders jump into the business, crash and burn. How many companies have you read about losing money? High tech is a business based on losses for a few years. But online, the entrepreneurs making money don't look at it that way. We apply the Seven Revenue Streams to milk our sites for money. You should too. We're not high tech...we're for profit.

An Offer to My Subscribers

You need to open those doors to your customers with information. Many of you've emailed me saying that you're not writers. Where do you get materials that are worth sending out, that you can put your name on, pass on, incur no extra cost, and not run into the mediocrity of some pseudo online expert who doesn't know what's going on?

I've received tremendous feedback to my request for your questions, which will form the basis of the next issue of The Web Letter coming in January. Until then, I know you have businesses to promote, Web sites to sell, and goals to reach.

  --> I've got an insider's secret that I'm willing to share with you for free.

That's right; these Seven Revenue Streams are the key to understanding how to run a business on the Internet. I've created a complete study of the Seven Revenue Streams, the real benefits of a Web site, that I will be distributing for free to all my subscribers. You will receive camera ready copy of this special "white paper" report, including detailed suggestions of how to put these in action and case studies of businesses succeeding online.

To get a copy, send me your physical mailing address; that way I can insure my one request, that you don't alter the copy at all. It is designed for you to distribute as a special report, with room for your own promotion on the back. I will also be open to posting them at strategic Web sites and in digital form. Bottom line, I'm interested in helping businesses online.

My goal for 1997 is to build my business and to help you build yours. Give me a call, fax, email, or send me a letter; I respond to all of the above. And to all who are working with me on the What You Absolutely Must Know To Open Locked Doors of Profits and Make Money Selling Web Sites Volume I, I'm building a special site where we can brainstorm online. You'll be hearing from me in November.