Yeah!!! Here’s another piece I wrote for the holy Brand Equity of the Economic Times that appeared today!! Full produced article after the image…
The 2% of Everything
When I started my first digital entrepreneurial venture – contests2win.com in 1998, I was an innocent fool. Coming from a wealthy Marwari family business that made hosiery (polite word for socks), I had assumed that things happened simply by asking. If asking didn’t work, they did by requesting. And if requesting didn’t work, then I got my way by demanding!
In my avatar as a digital entrepreneur, as I began to pitch to the large MNCs in India to use my free ‘Internet contesting’ site, I learnt a bitter lesson. My asking, requesting and demanding yielded no results. That, considering that I was offering a free service! After a terrible start, I learnt a rule that has always stayed with me. It was the rule of 2%.
How did I manage to survive in my digital business? In the first year, I cold- called 500 clients. About 300 came on the phone. Of these, 150 agreed to meet me. Of the 150 meetings, 100 asked for a proposal. Out of the 100 proposals, 10 finally agreed to do business with me (for FREE). I closed 10 clients out of 500. That was a success rate of 2 %.
I’m sure you’ve learnt the rule of 2% in your own professional (and personal life). Let me share some of the best know statistics:
– Out of 100 visitors to e-commerce sites, about 2% convert to buying customers.
– In the stone-age of advertising (think Mad Men), glossy envelopes mailed to targeted databases elicited a 2% response rate (think a reply or a mail order).
– In the highly cluttered world of Internet advertising, a 2% CTR (click through rate) on a rich, well designed, interactive banner is considered to be supreme!
– Zynga (a befallen gaming company) was able to sell virtual sheep, tractors, farmhouses and trees in a free virtual game to only about 2% of all its players. That game was called Farmville and the 2% made Zynga a multi-billion dollar company. For the record, the rest of the 98% (who didn’t pay) spammed all their friends on facebook and killed facebook game notifications forever.
– If I am reading your mind right… YES, only 2% of folks playing Candy Crush actually pay for more levels and power ups. The rest of them … well, they spam us all.
– The famous 2% rule amongst stock traders states that no trader will ever bet more than 2% of his worth on any trade.
Clearly, there is a fascinating 2% rule that pervades the operating plan of this planet. And yeah, it operates in real life too. Think – how many people do you randomly meet in a flight whose first name (that’s important) you can recall? About 3. That’s 2% of a flight of 150 passengers.
Now, what does 2% mean? Sadly, very little. It’s the 98% that slip away, that robs us of our profits. I mean think of how amazing it would be if 98% bought stuff on e-com sites or clicked on banners!
But the hard truth is that the 2% of everything exists. Now, if you accept it as it is, you’re toast. But if you find ways around it, you can be KING!
The UPSELLER – When only 2% of women bought virtual sheep in Farmville, Zynga did not fret. It leveraged that tiny 2% via the art of upselling. While most consumers bought 1 item of 0.99 cents in typical games, Zynga (using rocket science analytics), drove a typical 0.99 cents purchase up to US $9.99 and in some cases even US $99.99! Zynga was so phenomenal in its upsell to the 2%, that they more than made up for the ‘phokat’ 98% population that wanted ‘free ka maal’.
The STALKER – In this very newspaper, I cribbed about the menace of retargeting. However annoying, e-com websites hound the 98% ‘non-buyers’ by using cookies and chase them all over the web with ads of the sites they abandoned. Data proves that of the stalked, 18% converted to buy what they had left behind!
The HYPNOTIST – Have you bought a domain on godaddy.com? I bet that only 2% of visitors who look for a domain land up buying one. Now, once you have bought a domain, godaddy injects the fear of God into you. Even as you proceed to check out (takes forever), the site scares you about security, spam hosting, fraud, etc. etc. of your newly acquired website and keeps selling you services you don’t want. Godaddy hypnotises the 2% and makes them leave their wallets behind!
So, if you have a 2% situation, think of a clever way out of it. But for heaven’s sake, DO NOT send spam mails to your friends and clients saying, “I am a rich Nigerian widow of a Colonel who has 3 million dollars stashed away and need you to help me siphon it away…”
The famous ‘Nigerian Scam’ has a 2% success rate, but that’s a method I would seriously ask you to skip!