10 mistakes of referral marketing

“Referral is the highest form of flattery” This is the by-line of Majestic

interactive and has become the cornerstone of what we do. In fact, this is what
my seminars and the Majestic Network are achieving every day in ways that
will bring tears to your eyes. Unfortunately, what nearly all businesses don’t
understand is that referral marketing must be a formal process. In other
words… you need to measure it.
So, here are the top 10 mistakes that South African businesses make in their
viral/referral marketing initiatives:

They don’t understand the concept. Referral marketing is about leveraging
trust from one person to another. It is inherently the purest form of business
honestly one can have. Referral marketing is NOT just some scam to bring in
business for free.

They think that referral marketing just happens. Less than 10% of
referral business “just happens”. People DON’ T want to talk about you or your
product at parties and they DON’T want to run around telling all their mates
how great you are.

They don’t formally measure it. If you don’t have a formal process to track
referral leads, then don’t bother.

They don’t report on it. You need to show the person who referred you what
the result was (especially if there is commission owing). You also need to know
at a glance who referred who and where each person is in the sale process.

They don’t ask for referrals. It’s unbelievable, but nearly all businesses are
too scared to ask the simple question: “could you please give me a referral?”

The timing of their request for referrals is bad. If you ask for a referral
before the relationship is strong enough, then you don’t have much chance of
success. However, ask at the right time and you may just get more business
than you can handle!

They run campaigns that rely solely on referrals. Referral initiatives are
there to SUPPLEMENT other marketing initiatives, not REPLACE them. They
should be part of the campaign, not the campaign itself.

They don’t make a referral process part of their day to day business.
Referrals should be part of your life, not an occasional flurry when your
business is having a bad month.

They let the referee down. Someone puts their name on the line for you and
you don’t have the courtesy to follow it up? Or worse, you provide shocking
service to the lead?!? This makes me want to get violent.

They don’t offer commission (or are unwilling to pay for leads). For
crying out loud, this is BUSINESS. Business is about money. Referral
commissions are the most critical element of the whole show. They’re not
always necessary, but you’ll lose out if you don’t offer it. Don’t believe me?
Amazon.com is built on referrals – that’s what makes them number one in the

All this leads into the concept of lead generation and ROI (Return on
Investment) marketing and one of the key lessons in my book: do not spend
money on marketing, unless you are guaranteed a return on investment.

By |2018-07-18T15:04:59+02:00July 18th, 2018|Strategy|0 Comments

The VAT Effect

One of the most common buzz words in South Africa right now is the VAT increase. Individuals and corporates are wondering what effect this will have on the bottom line and if they will be able to cope with the consequence. We discuss the basic history of VAT and implications of this increase and how the VAT system works.
The origins of VAT date back to 1919 in Germany. France later introduced production tax; a form of VAT which was replaced with the producer’s income-based tax in 1948 and consumption tax in 1954.
The Statement of Standard Accounting Practice (SSAP, 1993) defines VAT as “a tax on the supply of goods and services which is eventually borne by the final consumer but collected at each stage of the production and distribution chain.”
VAT is charged on the supply of all goods and services made in the course of a business by a taxable person unless they are specifically exempt. VAT is levied at each stage of the supply chain, from the manufacturer to the wholesaler, to the retailer, taxing the value added by businesses at each point in the chain. For instance, raw wheat becomes more valuable as it moves along the supply chain to eventually be manufactured into bread or whatever the end product may be. This reinforces the principle that VAT is a tax borne by the end user in the economy, which are households. The increase in VAT from 14% to 15% increases inflation, as every supplier in the value chain adds 1% to their price, and thus the end user bears the brunt of that multiplied price increase.
Businesses are required to register for VAT if their turnover of taxable goods &/or services is above a given threshold, which is currently R1million. A registered business will pay input tax; which is VAT on its purchases and in turn, charges Output tax; which is VAT on its sales. VAT is not a business expense for a registered vendor, but a cost that is ultimately passed on to the end-consumer when they buy the final product. Vendors thus act as collection agents, collecting the tax on behalf of the government.

By |2018-03-15T13:56:13+02:00March 15th, 2018|Strategy|0 Comments

Do I have the right to Copywrite or should I Trademark?

Before we get into the meat of this discussion, let’s define what these two entities are: Copywrite and Trademark. Both are forms of intellectual property protection, but each protects different types of assets:
A Copywrite is used to protect the rights of an author or creator of one of the following: written stories, books, artwork, songs, films and radio or television programmes. The ownership of such items normally lies with the creator, unless a contract states otherwise and is valid for 50 years from the end of the year in which the item was created.
A Trademark is a legally registered ownership over a picture, signature, colour, numeral, shape, configuration, pattern, container or any combination of these. Normally a trademark will be used to protect a brand, product or related slogan and logo. A Trademark is valid for blocks of 10 years at a time.
A Copywrite protection can be issued by the creator or owner at any time simply by stating this on the works or by association to that creator or owner.
A Trademark needs to be registered with the Trade Marks Office and should or must be registered using a legal company to ensure that you file the correct forms and against the correct class of product group related to your item. There are 45 different classes under which you need to select from – see them here
The process will first require a detailed search of what currently exists, as any similar or conflicting applications will not be registered. You can do a preliminary search here: http://esearch.cipc.co.za/ first before you incur any legal fees and potentially waste your money on lawyers doing what you can do yourself.
Once the application is registered it can take up to a year for final registration. This is mainly due to the backlog and slow process of the registration offices. Once registered you have the right to use and prevent others from using your slogan or brand etc.
Is it a good idea to register a trademark?
Yes: if you have something that will be used to make money or that can be sold as an asset later. A Trademark ads value to the item and will be valuable in sale negotiations. But if you are just creating smaller items, products or brands, do not waste time or effort going through the process. It is best to chat with someone and get advice on your circumstances. Just remember that if you ask a Trademark Lawyer if you should register a Trademark, guess what they will say….
Please remember as, in all legal issues, there are exceptions to what I have stated above, so do not use this as a legal binding guide on IP.
Next week we chat about Patents and Designs.

By |2017-11-08T09:45:03+02:00November 8th, 2017|Strategy|0 Comments

When should I worry about Protection?

No this is not a blog about sex, but just as important: protection for your business idea. When do you need to start working on protecting your new product idea in order to maximise the capital return on your investment?

We start a new series today on an Intellectual property as it relates to small innovation businesses. Now, if you chat to different people you will get different opinions on what to do. Your IP lawyer will say, “File for protection for everything” – mostly because that is what they do to make a living. Your true entrepreneur will say, “First to market will save the day and beat out the competition”. Both are right, but careful consideration needs to be taken in providing a good cover and legal protection for your idea.
So let’s unpack some of the concepts:
Any new idea that will earn you money, whether it is a new product, service or just a way of doing something old in a new way is worth protecting. But not everything can be protected by law, and not everything that is protected can be enforced. So we need to tread a careful line here so that you do not end up spending millions on lawyer’s bills and end up with a bunch of papers that add no value to your business.
IP or Intellectual Property is an umbrellas term used for Patents, Trademarks, Copy write and Designs. Each has numerous categories and subcategories, each with a different process. We will unpack some of these over the next month in this series. But to start off with here are some basic rules to follow before you speak to a lawyer and spend money:
1. Is your idea unique in design or function – unlike anything else?

2. Is your idea worth protecting locally or internationally in order to make you more money?

3. Is the name you are using for your brand or product going to add value to the product in marketing and brand identification for your customers?

4. Do you have resources to pay for protection?

If the answers of any of the above questions are Yes or Maybe, then I urge you to come chat to one of our team and see if there is a case of IP for your idea. It is better to be sure than to find out later that someone has copied your idea and is now making all your money for themselves. And yes, it does happen.
But for now: do not talk to anyone, if you do, sign a Non-disclosure Agreement and keep copies of everything: designs, emails, sketches, models and related documents.
Next week, we unpack the Trademark vs. Copy write issues.

By |2017-11-01T12:23:09+02:00November 1st, 2017|Strategy|0 Comments

Our final business growth strategy for you

This week concludes our four-part series on business growth strategies. In this video, we chat about some of the myths and strategies in small businesses for both processes and money. You may be surprised at what you believe to be true and again how easy it is to get things right and back on track to develop a mindset of growth in your business.

By |2017-10-27T08:59:07+02:00October 27th, 2017|Strategy|0 Comments

Performance Management –overview

Last week we looked at how to measure performance in the service industry. Today we conclude the Performance Measurement discussion by looking at Performance Management –overview; a summary overview of the main issues covered

Performance management is the process of identifying the objectives of the organisation, setting targets, measuring performance against targets and taking action to improve the sub-standard performance.
Potential Benefits of Performance Measurement Systems
· If managers understand the organisational objectives and motivate employees towards achieving these, goal congruence within the organisation will be achieved.

· Assist in developing agreed measures of performance within the organisation.

· Enables comparison of different organisations.

· Enables accountability of the organisation to its stakeholders.

Potential Problems
· Tunnel Vision –an obsession with maximising measured performance at the expense of non-measured performance, e.g. sacrificing quality for quantities produced.
· Myopia (short-sightedness) –maximising short-run performance at the expense of long-run success, e.g. reducing production costs at the expense of product quality which will affect market share in the long run.

· Manipulation of data- creative accounting, window dressing accounts at the end of the reporting period.

· Gaming –building slack into budgets, slowing down production at the time of setting the targets.

· Incongruent goals –managers have different goals to the organisation, e.g. a project might be profitable for the company but reduce the profitability of the branch and thus the manager is unlikely to accept it.

Solutions to Potential Problems
· Involve staff at all levels in the design and implementation of the system.
· Encourage a long-term view among staff, e.g. company share option schemes.
· Ensure that the system of performance evaluation is audited by experts to identify problems

· Regular system review

· Audit data used in performance measurement to prevent/detect manipulation.

Performance Measurement in Non-profit Sector
Objectives of non-profits are more difficult to measure because:
· They are difficult to quantify e.g. measuring healthcare performance in the public sector.
· Many non-profits of multiple stakeholders with conflicting objectives

Value for Money Objectives
Value for money attempts to evaluate the performance of non-profits and other non-commercial organisations. The framework focuses on how well the organisation has achieved its objectives given the funding it has received.

The 3 E’s of Value for Money are:
1. Economy –minimising inputs

2. Efficiency – maximising the output/input ratio

3. Effectiveness –achievement of objectives

In addition, non-profits and public organisations may also use:
o Zero-based budgeting –a budgeting system that starts from scratch and looks at how much is needed for the organisation to fulfil each objective.

o Benchmarking – comparing the performance of a public sector enterprise with for example a commercial organisation

o League tables –use of institutional rankings in areas of health, policing and education. For instance, ranking schools bypass rate or police teams by crime statics in their areas.

By |2017-10-25T11:33:13+02:00October 25th, 2017|Strategy|0 Comments

Business Growth Strategy IV – Process and Profit

We conclude this series this week with a look at two areas of business that are often ignored by entrepreneurs: the processes and the profits.

Most small businesses are started by one person or a small team. As the business grows, processes are generated on the fly and often made up when and where needed. This is great as it supports the entrepreneurial mindset and fast-growing nature of the business. But as things develop and other people join the team, they are left alone and often confused about what to do when and by whom. They refer things back to the original owners, who then just do things themselves, mostly because it will take too long to explain things to others and get them to do it, so they take it upon themselves to do it. Faster, easier and cheaper – Yes? Well actually NO.

Developing strategy for your internal processes is key to the development of any business from craft to enterprise. A clear set of processes that can be found and followed by anyone within the business and any new staff member, is key to growth. It also gives a sense of assurance to the business owners that things will be done and done according to the process.

Developing processes is also the key to creating internal models, frameworks and procedures that could be converted into sellable products in the future. A lot of what we coach our clients today started out as an internal process that developed into a workable model, workshop, coaching tool and online course.

The strategy around profit is just as important to the sustainability or your business. Turnover for any small business is the first measurement that we look at; but very soon, this needs to be expanded to include accounting items such as the cost of sales, expenses leading to gross and net profit. The big step for most business owners is to go from a cash business to one with proper accounting processes and reporting. It is also key to, as soon as possible separate the business money from personal money and then begin to manage the business based on profit, not turnover.

These and others we will unpack a bit more in the webinar on Wednesday. Join us HERE to be part of the live class or to watch the recorded version later.

By |2017-10-23T09:56:59+02:00October 23rd, 2017|Strategy|0 Comments

The Strategy of People and Products: YES or NO?

On Monday we opened up a can of worms by looking at what growth strategies need to be implemented in a business for the people and products you manage.

This has created some debate with some of our clients and colleagues with many different opinions and ideas. As we add to this conversation, here is a 30-minute video of the webinar mast class on this topic for you to watch.

I would love to have your opinion and ideas: please comment or email us.

By |2017-10-19T12:17:00+02:00October 19th, 2017|Strategy|0 Comments

Service Industry Performance Measurement

We continue discussing performance measurement and this week we look at service industry performance measurement.

It is quite difficult to measure performance management for service industries for several reasons:

·         Production and consumption of the service happen at the same time.

·         A service cannot be stored. It must be provided when the customer wants it.

·         Goods manufactured may be identical but the quality of service varies from service to service. The quality of a  service can depend on several factors; i.e., talent, skill, passion for the job, work environment, disposition etc. This makes it difficult to measure the quality of a service.

·         A service has no physical features. Customers can pinpoint physical aspects and attributes of a product that they believe add value. For example the slick looks of a sports car; the curves and contours, the headlights, brakes, exhaust and engine sound.

Fitzgerald and Moon came up with the Building Block Model as a framework for service companies. It helps in designing a system for performance evaluation. There are three blocks of this model; –dimensions, standards and rewards.

Dimensions are aspects of performance which must be measured. Organisations need to identify performance measures using six dimensions, which are similar to the four aspects of the balanced scorecard. These are:

1.       Financial Performance

2.       Competitiveness

3.       Quality

4.       Resource Utilisation

5.       Flexibility

6.       Innovation

Quality, resource utilisation, flexibility and innovation impact future results, whilst financial performance and competitiveness result from past decisions.

Standards: Targets are then set for managers based on three measures:

1.       Ownership –managers should believe in the targets. Participatory budgeting motivates managers to perform.

2.       Achievability –targets should be challenging but also achievable. If too high, managers will be too motivated. Those responsible for results will always push for easier targets so there has to be a delicate balance.

3.       Equity –standards throughout the whole organisation should be uniform. Managers or employees should not individually negotiate targets as those more persuasive will always end up having easy targets.

Rewards Schemes: Performance can be linked to reward schemes by paying managers or employees bonuses if they meet the targets. The following principles apply:

·         Clarity –employees must understand how their performance is being measured.

·         Motivation –bonuses should be adequate enough to motivate staff to perform and reach the targets.        They should be linked to performance so that they do not become an entitlement.

·         Controllability –managers’ performance should be measured within their locus of control.If they can’t    control an aspect of company performance, then it will be unfair to use it to measure their performance.

By |2017-10-18T16:27:15+02:00October 18th, 2017|Entrepreneurship, Strategy|1 Comment
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