Cultivating your email newsletter list

Of all the types of marketing that we do at Po Campo, email marketing is probably the most successful in terms of ROI. Our e-commerce conversion rate for newsletters is 1.49%, the highest of all our marketing efforts. Our newsletter subscribers may only account for about 4% of our website traffic, but over 8% of our conversions, so they’re active and engaged visitors too.

Building Your Newsletter List
We get about $17 in sales from each newsletter for every hundred people on our list. Naturally, the more people on our list, the more sales we can expect. That’s why growing the list is always a priority. Focus on growing your list organically rather than purchasing or trading lists so that it remains high quality, resulting in higher sale conversion rates.

The two most successful ways we build our newsletter list involve, unsurprisingly, giving things away for free.

1) Offering something irresistible. Try a couple offers (called a “lead magnet”) before figuring out what your customers like. Before offering a $50 gift card to one lucky new subscriber each month, we tried free content about tips for city biking and a free $5 on your first purchase. The bigger sweepstakes of a free $50 worked best for us. We get an average of 65 new sign-ups each month once we started this practice. Read more on lead magnets here.

2) We offer a free reflector pin (value of $5) in exchange for an email address at all of our events. Few people can resist the pin, plus they don it almost immediately and then other people ask where they got it from and are directed our way. We can get upwards of 200 emails a day at busy events.

Maintaining Your List
The obvious goal is to send people emails that they enjoy receiving so as not to unsubscribe. You’d think that sales/promotion emails are the best, but while those probably generate the most immediate sales, we have found general lifestyle topics, company updates, tips and how-tos to have the lowest unsubscribe rate.

Po Campo sends an email about every other week on Thursdays. Creating an email marketing calendar ahead of time reduces the “So what do we write about this week???” syndrome, which almost always results in boring emails. By creating a calendar, you can make sure that your sales are spread out throughout the year and that you are maximizing the content that you are creating elsewhere (e.g. for your blog or for Facebook). Our average open rate is 30.1% and click through rate is 6.9%, which are both above average (17.35% and 3.0% respectively, according to MailChimp benchmarks).

Discouraging Unsubscribes
About .6% of our newsletter list unsubscribes with each email. That’s not super high but of course I wish it were zero. Recently I did two things to curb the unsubscriber activity, or at least to not lose touch with them altogether.

1) An option to receiver fewer emails. I know sometimes I open my inbox and go on a major unsubscribe binge, removing myself from pretty much every newsletter just because I’m sick of receiving them and having to devote energy to them. Of course many of our subscribers unsubscribe because of a similar feeling, not that they don’t ever want to hear from us ever again but because we were just one more email that day.

Hoping that we could keep people subscribed if we gave them an option to receive fewer emails, I created a group in MailChimp called “Newsletter Types”with three sub-groups:

  • “All, including tips and how-to’s, event announcements, sales, and new product debuts”
  • “Just Sales/Promotions (about 6 times per year)”
  • “New Product Announcements (about 4 times per year)”

Now, when people go to unsubscribe, we allow them to update their profile and change their newsletter frequency preference.

2) Ask to connect another way. I think most of us have email fatigue and prefer interacting with brands on different mediums, like facebook or Instagram. On our unsubscribe confirmation page, we ask one last time if they would consider connecting with us on one of our social networks, so as not to lose touch with them completely.

I hope this inspires you to build and maintain a healthy newsletter list. Do you have strategies beyond what we’re doing to do so? Please share in the comments!

Ways to Finance your Small Business

How do you finance your small business? It’s a good question.

Unless you are independently wealthy, you are going to need money. An early mentor told me that I would need twice as much money and time to grown my business than I thought. I vividly recall thinking, “Not me!”, but she was right. In fact, I would say that it has taken four times as much money and time as I had thought. So learn from my mistake and plan for it.

A recent feature in Crain’s Chicago Business discusses the current state of small business financing, and it’s worth a read. Here’s my take on the different sources for cash.

1) Your own money. Plan to use pretty much all your savings over time (guess who covers the cash flow crunches???), but try not to touch your retirement account, as that would be irresponsible.

2) Friends & Family. Nobody really wants to do this, but you’ll probably have to, as you’ll run out of your own money at some point. I only asked people for money who met three criteria: 1) Had money that they didn’t really need to survive; 2) Knew me and trusted me; 3) Liked the idea of supporting an entrepreneurial venture. A handful of former colleagues and close family members met this criteria, and they all gave. I asked for a loan rather than an investment; it seemed simpler and better fit the spirit of the request, as people wanted to help me more than get rich off my company.

3) Microloans. Non-profits like ACCION lend to small businesses that would be refused by traditional banks for various reasons. The loan amounts tend to be smaller (under $50,000) and interest rates are higher, but they are accustomed to working with non-bankable businesses, and therefore are much more understanding and creative in their approach. I have had two loans with ACCION and found the process to be painless and almost enjoyable, as I really feel like they are rooting for me.

4) SBA Loans. Banks don’t want to lend to small business: too risky. The government’s Small Business Administration (SBA) will guarantee a bank’s loan to minimize its risk. These are almost easier to get as a start-up than as a young business, because if you’re the latter, you’ll need to show positive cash flow (i.e. profit), have collateral and have good business credit, most of which you probably won’t have. I’ve been turned down by seven banks, despite having year-over-year growth, so I haven’t really found this to be a doable option. Plus, each application takes hours and hours of paperwork so it can feel like a major waste of time if it doesn’t work out. Not to mention that the bankers will treat you like a big loser, which sucks.

5) Crowdfunding. Kickstarter, Indiegogo, and the like, is probably where new product companies go for the first round of capital nowadays. It make sense, because you can pay for your first production run AND get your first customers. Some people keep going back to the crowdfunding well for more money, but it seems like you’d eventually hit a point of diminishing returns. Po Campo did a Kickstarter campaign for our Bike Share Bag in May of 2013. It was successful, but was so much work that I can’t imagine it would pay off as a longterm strategy.

6) Alternative sources. These run the gamut and some can be kind of loan shark-y, so be careful. A common method of funding is to pay back a loan with a portion of sales, plus interest. You typically can get the money quickly, but if you can’t pay it back quickly, then it can turn out to be incredibly expensive. I think it’s best for companies that sell a lot daily, like a restaurant. Online sales take a long time to build up so this isn’t a good option if you’re just getting going. Paypal Working Capital offers this for existing customers, which I haven’t tried yet but might in the future. Bolstr is a Chicago company with a similar approach, using investors’ money without giving up equity. We did a program with them last year. I thought it was a lot of paperwork for just $10K, but could be an option for you.

7) Angel Investors. Typically this is the next step in major funding (think $100K+) after the friends and family stage. A characteristic of angels is that will buy into your vision and will offer guidance and mentorship to get to the next level. This isn’t a philanthropic donation however. They will take a share of your company and will expect to see a return on their investment, usually when you sell your company down the road, or during a future fundraising round. Po Campo has no investors, but I’m looking. You can’t just look angels up in the phone book, so it’s lots of networking to find someone that’s a good match.

8) Venture Capitalists. VCs focus on high growth companies, which pretty much isn’t you if you are making a tangible consumer product. There are exceptions of course, but high growth companies are in the tech field, as this interview with venture capitalist George Deeb succinctly explains. VCs get all the attention in the media, but this is probably your least likely source of capital.

As you can tell, I’ve tried most things. None of it is very pleasant but seems to be just a fact of life of a small business. I’d love to hear your take on the different methods in the comments.

Creating an Environment for Work/Life Balance

One of the major draws of starting my own business was to create a work environment where people like me could thrive. I craved an atmosphere that honored introvert tendencies (enough with the constant collaboration and open floorplans already!) and that trusted its colleagues enough to let them structure their work days in a manner that best suits them.

Now I have that! At Po Campo, we each have our own space that gives us a place to focus and get work done. We have a flex schedule that allows for remote working, so you can structure your life how you want it.

An unexpected outcome of this arrangement is that work doesn’t feel as urgent. We agree at the beginning of each week what needs to be done that week to keep us moving towards our business goals and then each person is responsible for completing their portion of the tasks. We check in with each other daily, but questions can take a little longer to be answered since you lack the immediacy of impromptu conversations, so you learn to be patient.

Going from the fast-paced environment of a design consultancy to the more easy-going environment of Po Campo took some getting used to for me because at first I worried we were slackers. Now I appreciate that we still get as much work done (if not more), just with a lot less stress. I’ve learned that treating work with less urgency does not mean you care about it any less, it just helps you fit it in to the rest of your life better, which in many ways makes you value it more. For the first time, an actual work-life balance feels attainable.

Removing Gender Bias from Job Postings

In 2013, I attended the National Women’s Bicycling Forum in Washington D.C. and sat in on the panel discussion entitled “Insight from the Industry: The Keys to Closing the Gender Gap”. In discussing different ideas for inclusion of women in the biking industry, Julie Harris from REI talked about how her organization changed their interviewing process after realizing it was predisposed to favor males. Their former process used to include questions that required applicants to rate themselves, but after learning that males tend to rate themselves higher than women do, regardless of ability, they decided to remove this practice from their employee selection process.

I was impressed that REI took responsibility for their process and did not fault women for answering the way that they did, as I often feel like the solution to problems like this is, “women just need to learn to be more confident!”. (Why never “men need to learn to be more modest!” WHY!?) I find psychology to be so insightful, yet so rarely do I hear about companies learning from its lessons and changing the way that they do things. Bravo REI!

Fast forward a year and a half and I’m toiling with the idea of adding a new person to my team. I started with writing a job description to make sure I knew exactly what I wanted this person to do (Simply “Help Us!” doesn’t work – I tried). I made a list of everything I wanted the person to do. Then I made a list of all the skills I wanted the ideal candidate to have, and then I made a list of certain personality traits that I think this person should possess to fit in with our culture. Much to my chagrin, in doing this exercise, I caught myself drafting a job posting that favors men over women.

There are very few people that would be able to “check the box” for all of these things, and almost certainly no one that would be willing to do it for the what I can pay. Rather, I was hoping that applicants would get the idea of what I was looking for, craft their cover letter and resume accordingly, and then I could pick who I thought was closest to the ideal candidate. Seems logical, right?

Similar to the illusory superiority cognitive bias that men possess and that REI corrected for, I am also aware that women tend to apply for jobs only when they meet 100% of the criteria, whereas men apply when they meet 60%. (This statistic is from a much-quoted research study from Hewlett-Packard). Since I already knew that there was likely no person that could fulfill 100% of the criteria I outlined in my job posting, wasn’t I biasing the application process towards men from the outset?

recent blog post on the Harvard Business Review by Tara Sophia Mohr debates the common conclusion that this disparity in behavior between men and women exists simply because women are not confident enough. Her study showed that the main reason men and women do not apply for a job is because they don’t want to waste their time and energy when they don’t have a decent shot at it. As Mohr succinctly concludes, “what held them back from applying was not a mistaken perception about themselves, but a mistaken perception about the hiring process,” and goes on to say, “For those women who have not been applying for jobs because they believe the stated qualifications must be met, the statistic is a wake-up call that not everyone is playing the game that way. When those women know others are giving it a shot even when they don’t meet the job criteria, they feel free to do the same.”

Equipped with this knowledge, I revisited my job description and job posting and rephrased some things to level the playing field somewhat, such as changing the standard “Required Qualifications” to “Desired Skills & Experience”. I also tweaked the description of my ideal candidate to include being “comfortable with challenging assumptions” to give her permission to break the rules a bit, to apply even if she doesn’t feel qualified. I just hate the thought of the perfect candidate being out there somewhere but not applying because she doesn’t want to waste her time, and I believe these small changes will make a difference.

Have you encountered gender bias in your workplace? In what way and how have you addressed it? I’m very curious to know! Please leave comments below.