Timothy Ferriss - The 4-Hour Workweek - Escape 9–5, Live Anywhere, and Join the New Rich - Expanded and Updated

Fewer than 5% of the 195,000 books published each year sell more than 5,000 copies. Teams of publishers and editors with decades of combined experience fail more times than not. The founder of Border’s Books lost $375 million of investor funding with WebVan, 39a nationwide grocery delivery service. The problem? No one wanted it.

The moral is that intuition and experience are poor predictors of which products and businesses will be profitable. Focus groups are equally misleading. Ask ten people if they would buy your product. Then tell those who said “yes” that you have ten units in your car and ask them to buy. The initial positive responses, given by people who want to be liked and aim to please, become polite refusals as soon as real money is at stake.

To get an accurate indicator of commercial viability, don’t ask people if they would buy—ask them to buy. The response to the second is the only one that matters. The approach of the NRreflects this.

Step Three: Micro-Test Your Products

Micro-testing involves using inexpensive advertisements to test consumer response to a product prior to manufacturing. 40

In the pre-Internet era, this was done using small classified ads in newspapers or magazines that led prospects to call a prerecorded sales message. Prospects would leave their contact information, and based on the number of callers or response to a follow-up sales letter, the product would be abandoned or manufactured.

In the Internet era, there are better tools that are both cheaper and faster. We’ll test the product ideas from the last chapter on Google Adwords—the largest and most sophisticated Pay-Per-Click (PPC) engine—in five days for $500 or less. PPC here refers to the highlighted search results that are listed above and to the right of normal search results on Google. Advertisers pay to have these ads displayed when people search for a certain term related to the advertisers’ product, such as “cognitive supplement,” and are charged a small fee from $.05 to over $1 each time someone clicks through to their site. For a good introduction to Google Adwords and PPC, visit www.google.com/onlinebusiness. For expanded examples of the following PPC strategies, visit www.fourhourblog.com and search “PPC.”

The basic test process consists of three parts, each of which is covered in this chapter.

Best:Look at the competition and create a more-compelling offer on a basic one-to-three-page website (one to three hours).

Test:Test the offer using short Google Adwords advertising campaigns (three hours to set up and five days of passive observation).

Divest or Invest:Cut losses with losers and manufacture the winner(s) for sales rollout.

Let’s use two people, Sherwood and Johanna, and their two product ideas—French sailor shirts and a how-to yoga DVD for rock climbers—as case studies of what the testing steps look like and how you can do the same.

Sherwood bought a striped sailing shirt in France while traveling last summer, and upon returning to NYC has been continually approached by 20–30-year-old males on the street who want to know where to get their own. Sensing an opportunity, he requests back issues of NYC-based weekly magazines aimed at this demographic and calls the manufacturer in France for pricing. He learns that he can purchase shirts at a wholesale price of $20 that sell for $100 retail. He adds $5 per shirt to account for shipping to the U.S. and arrives at a per-shirt cost of $25. It’s not quite our ideal markup (4x vs. 8–10x), but he wants to test the product regardless.

Johanna is a yoga instructor who has noticed her growing client base of rock climbers. She is also a rock climber and is considering creating a yoga instructional DVD tailored to that sport, which would include a 20-page spiral-bound manual and be priced at $80. She predicts that production of a low-budget first edition of the DVD would cost nothing more than a borrowed digital camera and a friend’s iMac for simple editing. She can burn small quantities of this first-edition DVD—no menus, just straight footage and titles—on the laptop and create labels with freeware from www.download.com. She has contacted a duplication house and learned that more-professional DVDs will cost $3–5 apiece to duplicate in small quantities (minimum of 250), including cases.

Now that they have ideas and estimates of start-up costs, what next?

Besting the Competition

First and foremost, each product must pass a competitive litmus test. How can Sherwood and Johanna beat the competition and offer a superior product or guarantee?

1. Sherwood and Johanna Google the top terms each would use to try and find their respective products. To come up with related terms and derivative terms, both use search term suggestion tools.

Google Adwords Keyword Tool(http://adwords.google.com/select/KeywordToolExternal) Enter the potential search terms to find search volume and alternative terms with more search traffic. Click on the “Approx Avg Search Volume” column to sort results from most to least searched.

SEOBook Keyword Tool, SEO for Firefox Extension(http://tools.seobook.com/) This is an outstanding resource page with searches powered by Wordtracker (www.wordtracker.com).

Both then visit the three websites that consistently appear in top search and PPC positions. How can Sherwood and Johanna differentiate themselves?

Use more credibility indicators? (media, academia, associations, and testimonials)

Create a better guarantee?

Offer better selection? 41

Free or faster shipping?

Sherwood notices that the shirts are often hard to find on the competitive sites, all of which feature dozens of products, and the shirts are either made in the U.S. (inauthentic) or shipped from France (customers must wait two to four weeks). Johanna cannot find a “yoga for rock climbing” DVD, so she is starting from a blank slate.

2. Sherwood and Johanna now need to create a one-page (300–600 words) testimonial-rich advertisement that emphasizes their differentiators and product benefits using text and either personal photos or stock photos from stock photo websites. Both have spent two weeks collecting advertisements that have prompted them to make purchases or that have caught their attention in print or online—these will serve as models. 42Johanna asks her clients for testimonials and Sherwood lets his friends try on the shirts to get several for his page. Sherwood also asks the manufacturer for photos and advertising samples.

See www.pxmethod.com for a good example of how I have created a test page using testimonials from seminar attendees. Please note that it’s just a template for readers and not a live sales page. Free how-to seminars as recommended in the Expert Builder are ideal for identifying popular selling points and securing testimonials.

Testing the Advertisement

Sherwood and Johanna now need to test actual customer response to their advertisements. Sherwood first tests his concept with a 72-hour eBay auction that includes his advertising text. He sets the “reserve” (the lowest price he’ll accept) for one shirt at $50 and cancels the auction last minute to avoid legal issues since he doesn’t have product to ship. He has received bids up to $75 and decides to move to the next phase of testing. Johanna doesn’t feel comfortable with the apparent deception and skips this preliminary testing.