Everything that can be metered should be metered

As with many other parts of North America, we’re in the middle of a heat wave. I love it because I’m usually very cold so this heat wave for me is probably what most people feel as a normal temperature.

Not surprisingly, the heat wave created a surge in demand for electricity to run air conditioners and there was a major blackout to a large part of the city. In my neighborhood, it lasted 6 hours for repair crews to get things back on line.

It reminded me of an article I wrote recently about, which described a Philadelphia Energy Company that can control the air conditioners among enrolled houses so that air conditioners in homes throughout the neighborhood can cycle rather than run continuously. This is a smart way to keep houses cool while automatically managing the power demand.

Our power is metered – the energy company reads how much power we use and they bill us at specific rate. On my bill, it’s just one rate, a price per kilowatt. But here’s the thing: Energy is a commodity and it doesn’t always cost the same thing to make one unit of energy as it costs to make another. For example, when demand is high during the day, costs should be higher. When demand is lower during the night, costs should be lower. How hard would it be to add that one more element into our power bill’s metering to measure not just how much power we used… but when we used it?

The same goes for water. Water is supposedly a scarce resource but if you look around my neighborhood, we’re all watering our lawns and filling our swimming pools and washing our cars, and we’re charged the same whether we’re turning on the tap during the day or at night. How hard would it be to measure when we get our water and charge more during the day.

The same goes for car insurance. Per-mile insurance already exists in some areas but it’s not widespread. It could be… and it should be. After all, it makes more sense for the person who is on the road all the time to pay more insurance than the person who barely uses their car. (That’s not the case where I live. I pay the same as someone else who drives every day even though I might use my car once a week).

The same goes for internet usage. I’m ALWAYS on the internet and I should pay more to access it than someone who is never on the internet.

Now that I’m on this rant, why not do the same thing for my curbside trash collection?

The concept of metering isn’t foreign to us. We use a form of it when we use our mobile devices – sometimes a service provider will give discounts for calls made after a certain time (during off-peak hours). Heck, my parents still call me after 6pm because they used to get a discount waaaay back when the phone companies gave one. Even the fuel in our car is a type of “metering” – a usage charge for the amount that we travel. Toll roads are another form of metering. So is sales tax.

Everything that can be metered should be metered. The technology is there (maybe it’s not integrated into every household power meter, for example, but the technology exists). It will benefit service providers and utility companies by helping them to level out demand. And if consumers can tie their actions to a specific dollar amount, there might be an increased motivation to save water, throw out less, run the dishwasher when everyone goes to bed, or drive less.

Learn how to be a freelance writer — Step by step

Every month or two, someone contacts me and asks me how to become a freelance writer. I love it and I’m happy to coach someone along that path.

Recently, someone else asked me for some help and as I was replying to them, I thought to myself: “I’ve written this out before… several times”. So last week I gathered my notes and “system” together and published it on a Squidoo lens in a step-by-step format that someone can follow.

Check it out!

LEARN HOW TO BE A FREELANCE WRITER — STEP BY STEP

Feel free to leave a comment on that lens and let me know if there is any information you’d like me to include!

3 tips every business should know about copywriting

Most online businesses understand the importance of strong copywriting: They know that strong copy grabs the fleeting attention of prospects and then slowly builds credibility and desire and urgency until the prospect desperately wants to hand over their money to the business in exchange for the value promised.

Businesses know that. Unfortunately, we don’t see it in practice as often because there are other important copywriting truths that online business owners don’t realize.

1. THE MESSAGE IS ONLY PART OF THE EQUATION

Good copy is vital but good copy directed toward the wrong audience won’t convert prospects into frothing-at-the-wallet buyers. It’s just wasted money. Businesses that want to grow successfully by using copy need to first target their marketing messages to the right audience. (Check out these 55 questions to help you determine your target market). Once the right audience is identified and thoroughly scrutinized, only then can the most effective copy be written that will actually work to generate more prospect-to-customer conversions and, of course, more sales.

2. GOOD COPY IS NOT A CURE FOR POOR VALUE

Imagine that you find a great product that promises to do everything you need it to do. You spend your hard-earned money to own it. You put it to use. But if falls far short and doesn’t solve the problem you originally bought it for. All the good promises in the world won’t correct your disappointment at being “duped”. If your business is struggling to provide good value in the product or service you sell, getting a good copywriting is only a short-term fix. The good copywriter might be able to make your products or services look good… but if your business doesn’t back up that “talk” with the promised value then the long-term outlook isn’t good. You could end up losing money on returned merchandise and even negative word-of-mouth. Here’s a blog post about how to improve value so you can sell more.

3. COPY IS NOT THE SILVER BULLET YOU’RE HOPING IT TO BE

All too often, entrepreneurs who want to grow will look around at their struggling business and decide that better sales copy will solve their struggles. So they commission a high-priced copywriter to write their sales copy for them and then they sit back and wait for the money to roll in. They wait and wait and wait. What they’ve failed to realize is that good sales copy is only part of the equation. (Find out the better way to construct an offer). Businesses need to still drive prospects to their sales copy and they need to constantly test to make sure that the copy they’re using is the most effective copy.

Copywriting is an effective (even essential!) tool in the growth of a business. But hiring a copywriting to write a sales letter is only part of the formula for running a business. Next time you need expert copywriting, keep these tips in mind and ensure that you know your market, you provide good value, and your copy will be integrated into a larger sales funnel.

A primer on value: How to sell more by understanding these two types of value

Businesses talk about value a lot. But what does it mean and how can you use it to sell your products and services more successfully?

VALUE: MORE THAN JUST DOLLARS

When I say “value”, the first thing that might spring to mind is dollars and sense – such as how much money a prospect is willing to spend or how much money do they save by buying from you instead of from someone else.
But value is much more than that. Here’s what value really is:

People have problems and needs… Lots of problems and needs. These range from the simple and obvious ones like hunger and thirst, going all the way through to need for social acceptance and love. (Maslow’s Hierarchy of Need is instructive here).

People want these problems solved and needs fulfilled and they are willing to exchange some of their own “assets” to solve these problems and fulfill these needs.

The assets they’re willing to exchange can be broadly defined as time, money, and effort. (There might be others but let’s stick with these 3 basic ones for now).

People are willing to give some combination of these three things to solve their problems or fulfill their needs.

There are different factors that determine how much time, how much money, and how much effort they are willing to spend to solve their problems and fulfill their needs. Some of the factors include:

  • Availability or perceived importance of each asset (some people might have more time, others might have more money; some might value their money over their time)
  • Social pressure (peers might pressure someone to spend more money on something)
  • Choice of solution (some problems don’t have a lot of solutions)

(These are just a few; there are other factors as well).

Each of those assets (time, money, and effort) has its own varying amount of importance in the prospect’s mind, and so does the problem or need. Prospects are willing to give some combination of these things if they feel that the problem can be solved to a greater degree than the cost of giving up their assets.

My definition of value is: The importance of the time/money/effort assets compared to the perceived return on investment for the solution to the problem or the fulfillment of the need.

3 EXAMPLES OF VALUE AS PART OF THE BUYING DECISION

Let’s consider three examples:

Example #1: Bob and Jim are both hungry and since it’s lunch time, they are going to solve their problem with some food.

  • Bob is a busy dude with a lot of money. Since he has money but doesn’t have a lot of time and doesn’t feel like putting in the effort, Bob goes to a nearby restaurant and buys his lunch. He exchanges money plus a little bit of time (and zero effort) to get his lunch at a restaurant. His problem of hunger is solved with a combination of money and a bit of time.
  • Jim is pretty busy, too, but doesn’t have a lot of money. Since money is scarce, he has to spend a combination of time and effort to go home and make lunch. It’s cheaper but his problem is solved by a combination of time and effort.

Example #2: After lunch, both Bob and Jim realize that they have transportation needs. They need to get somewhere and it’s time to solve those transportation needs.

  • Bob has money so he goes and buys a new car. It takes some money but very little effort or time. Since Bob has a lot of money, he might also ascribe some level of importance to the social status that his car might provide him. But he also considers the future effort of having a black car (which might show the dirt more clearly and need constant washing) versus a red car (which his wife loves and might want to drive all the time) versus a white car (which his neighbor owns and will think he’s copying him) versus some other color of car.
  • Jim considers his options: He could walk everywhere. It’s cheap but it takes a lot of time and effort. He could take the bus. He could ride a bike. It’s cheap but it takes slightly less time and effort (except when going up hills). He could take the bus. It costs a bit of money and takes even less time and effort than a walking or riding. He could buy a used car. It costs money (although it’s cheaper than buying a new car) and it will be faster (although it could take some effort if the car ever breaks down).

Example #3: That afternoon, Bob and Jim both experience nasty pain in one of their molars.

  • Bob has the money for the dentist, and he also has the time to take the afternoon off and go there… but he hates dentists and the effort of putting up with the pain is too much. It’s not worth the money and the time. So he puts up with the pain, buying increasingly large doses of pain killers to help him cope.
  • Jim doesn’t have a lot of money for the dentist and he doesn’t have a lot of time. He doesn’t like the dentist but he knows that the pain will last for days and could distract him from his work. The effort of putting up with the pain is more than the money and time and effort needed to go to the dentist. So goes to get his tooth pulled.

So in these three examples – of their hunger, their transportation needs, and their dental pain – we see how Bob and Jim consider the value of their solutions as being related to time, money, and effort.

HOW PEOPLE USE VALUE TO MAKE DECISIONS

Prospects don’t consciously weigh value in the way I’ve described above – it’s all unconscious and behind the scenes. Ultimately, every time a prospect realizes they have a problem or need and encounters a potential solution or fulfillment, the prospect unconsciously asks themselves three questions:

  1. Will this solution satisfy my problem/need?
  2. If so, what combination of my own assets can I use to gain access to that solution?
  3. Will the solution be better than the sacrifice of my time/money/effort assets?

Okay, we’ve seen how each assets time, money, and effort is ascribed its own degree of importance in the prospect’s mind, and they ascribe a degree of importance to the problem. When the cost of the assets are outweighed by the benefit of solving the problem or fulfilling the need, the prospect becomes a customer.

Think of this as two types of value: The Perceived Value (which is the benefit of solving their problem or fulfilling their need) and the Market Value (which is the amount of their time, money, and effort that they will have to give up).

THE VALUE GAUGE

The Value Gauge is a way for you to understand how perceived value and market value work together.

Perceived Value (PV, pictured as the orange box) is the value that a prospect and/or customer ascribes to your product or service. It’s the benefit they expect to get from your product or service to solve their problem or fulfill their need. It could be derived from a combination of marketing and sales presentations, social proof and word of mouth, and the prospect’s feeling of urgency about their problem or need.

Market Value (MV, pictured as the blue box) is the value that the prospect is willing to spend for your product or service. It’s the cost they will have to pay to get the solution. Remember: It’s a combination of time, money, and value. Market Value is derived from some of the following things: The price tag, the expectation that the customer will assemble the product themselves, the time required to implement the solution, etc.

Perceived Value is what your business gives and what your customers get. Market Value is what your customers give and your business gets.

There are really only 3 possible variations of the Value Gauge.

Some businesses charge a lot (Market Value) but provide very little benefit (Perceived Value). It’s important to note that the Perceived Value may only be lacking if the business isn’t doing a good enough job marketing and selling the product. Perhaps they are not highlighting the benefits of the product enough. But sometimes, businesses simply overcharge for what they promise. So sometimes this problem is solved by improving marketing and sometimes this problem is solved by lowering the price.

Some businesses charge very little but they provide a lot of benefit. This might seem like a smart customer acquisition strategy but it can be dangerous: If the price is too low, businesses run the risk of not honoring their financial commitments to vendors and employees. And, businesses set a dangerous precedent if customers love the ratio of Perceived Value to Market Value and then later resent the adjustment that the business needs to make to the price. (This is exactly what happened when Netflix tried to raise its price last year). Even if your Market Value is profitable and your Perceived Value is extremely high, you could create a “too good to be true” syndrome among your prospects.

Some businesses strike a balance between the benefit and the cost of the solution. This is the best option. They provide sufficient benefit for the amount of time/money/effort that the customer has to “pay”.

Within this optimal range, there is some flexibility – within a specific “sweet spot”. You can move your price higher or lower, as long as it is within this sweet spot. You find out what this sweet spot is by testing your price point and testing your marketing.

  • Both Perceived Value and Market Value are made up of a combination of time, money and effort.
  • The relationship between Perceived Value and Market Value is a kind of “tug of war” or zero-sum game one side always gives while the other side always takes.
  • Every prospect and customer will create their own Value Gauge for the product or service. (Some customers, for example, might perceive more value than another). Businesses who want to use the Value Gauge to help them will need to make some assumptions based on their average target market.
  • Perceived Value (PV) can be anticipated Perceived Value by those who have not yet bought the product or service, and it can be experienced Perceived Value by those who have bought the product or service.
  • Increasing your Perceived Value may increase your expenses if you add additional features to your product or service.
  • Improving your marketing will also increase your Perceived Value. Just remember that your Market Value needs to be in that sweet spot. If your Perceived Value is too great and your Market Value isn’t at an appropriate ratio, you could create skepticism in your prospects who consider your product or service too good to be true.
  • Your Market Value is best determined by testing different price points but that’s not the only way to adjust Market Value: Time and effort are also “assets” that your customer has to “spend” to get your product or service.
  • Ultimately, this is a tug of war with profit as the deciding factor. At the extremes, profitability drops.

Here’s a great example to understand how Perceived Value and Market Value work together:

When I was remodeling my kitchen, I explored a number of different options. My wife and I went to kitchen centers that specialize in custom-built kitchen cabinetry and we went to Ikea for a DIY option… and to some of the offerings in between (like those big box home reno stores). We looked at the Perceived Value and Market Value of each offering (although obviously we didn’t use that terminology!) and we decided that an off-the-shelf kitchen with a few customized pieces was the way to go. With the kitchen cabinetry stores, their Market Value was too high for our Perceived Value of what we were wanting in our kitchen. And the same with Ikea’s build-it-yourself models: The Market Value was too high (not in terms of money but in terms of time and effort) compared to the Perceived Value of what were getting.

So, how do you figure out the Perceived Value and the Market Value of your product or service?

DETERMINING VALUE

Start by listing the benefits of your product or service. List as many as you can. Don’t jump over some as being too obvious or because they’re a standard that everyone in your industry must adhere to. List everything. (Need help? Check out my blog post 9 easy steps to discover all of the benefits of your product or service).

Compare what others in your industry are pricing their products or services at and what benefits they offer to boost their offering’s Perceived Value. Add more to your Market Value if you have more benefits; discount your Market Value if you have fewer benefits.

Choose three Market Values and test them. Identify your sweet spot – the upper and lower points at which you remain profitable and can still offer a good balance between Perceived Value and Market Value. Remember that your Market Value is more than just price; it’s also influenced by the time and effort that your customer has to put into the purchase.

Value is such a HUGE topic! There is so much more to talk about. I’ll build on these concepts in future blog posts.

Improve your junior resource investing with this tool

Junior resource companies are like the many-headed Hydra: One dies and two more will take its place. Every time I turn around, another junior resource company is proclaiming that it has struck a bonanza-grade deposit of whatever resource it’s exploring for, the deposit goes ALLLL the way down, and they’re neighboring the greatest producing mine of all time.

As an investor, it’s easy to get caught up in the hype and to spread yourself too thin as you look for compelling investments – in one day you might look at a gold explorer in the Abitibi belt and then a silver explorer in Peru and then a graphite company in Mozambique and then a rare earths company in China and then a uranium company in Saskatchewan.

I realize that I was almost overwhelmed by choice and it was actually making my investing less successful and less enjoyable.

What I wanted was a way to focus my research, tune out the noise, and figure out how to become a better investor.

So I put together this simple chart as a starting point. I created 2 columns, “Preferred” and “Not paying attention”, and in these two columns I sorted jurisdictions and resources that I was interested in paying attention to and jurisdictions and resources that I’m not paying attention to right now.

Here’s the chart:

Preferred Not paying attention
Jursdiction Canada

  • Alberta
  • Saskatchewan
  • Manitoba
  • Ontario
  • Quebec

US

  • Alaska
  • Nevada
  • California
  • New Mexico
  • Arizona

Mexico

South America

  • Peru
  • Argentina
Africa

Asia

Australia

Europe

Resources
  • Aluminum
  • Coal
  • Lead
  • Nickel
  • Rare earths
  • Molybdenum
  • Oil/Natural Gas

HOW A SIMILAR CHART COULD BE USEFUL FOR YOU

  • By identifying which jurisdictions and commodities you’re interested in, you’re helping to focus your attention on some of the things that best capture your attention, which is a great place to start when looking at different investing opportunities. When I hear about a new gold mining opportunity in Ontario, I’m giving myself permission to take a closer look because it’s the jurisdiction and resource that interests me, so I’m presumably more familiar with the details. (Even if I’m not an expert, I am at least starting from a base of familiarity). If you’re familiar in just a few areas, you can make better apples-to-apples comparisons of mines that explore near each other… compared to learning what makes a good uranium mine in Saskatchewan and then having to relearn what makes a good molybdenum mine in Australia.
  • By adding something to the “Not paying attention” column, I’m not sweeping an entire continent or commodity into the trash can, never to look at them again. In fact, I do own companies that mine in these jurisdictions or work in the resources listed in the “Not paying attention” column. However, this chart serves to keep my euphoria in check when I hear about an AMAZING new exploration story. If it’s an aluminum mine in Asia, the chart is a reminder to me that these aren’t in my “Preferred” category so I need to do an extra check during my due diligence because I might not be as familiar with the jurisdiction or the resource. In the case of Flinders Resources (TSX: FDR) it was in a jurisdiction I was not as familiar with but I invested in anyway… I just needed to do some extra legwork ahead of time.
  • This chart also becomes a curriculum to help me learn to be a better investor. I can identify some of the jurisdictions and resources in my “Preferred” category and learn more about them. For example, I can see by looking at this chart that I’m woefully uneducated in the states/provinces of Mexico, Peru, and Argentina so that might be a good place to start. Or perhaps I can build on my interest in gold and dial in more information about gold-copper-zinc plays. And, I can do the same in my “Not paying attention” category. If I feel that I want to range out into a new jurisdiction or commodity, I can be more strategic in deciding what to look at next. For example, perhaps I’m willing to take on a little more political risk in my portfolio so I could look at some explorers in Africa or Asia.

I should also note that just because something is ON the chart doesn’t mean I’m invested in it. Copper is a good example right now. But it does mean that I’m familiar with the resource and that familiarity helps me trade more effectively. And I’ll keep an eye on copper for when I might find another opportunity that interests me.

A chart like this helps you to sort through the barrage of exploration companies, tune out the noise, and find exactly the kind of companies you are most likely going to get excited about.

You don’t have to just use the two categories – jurisdiction and commodity – that I’ve done here. There might be other elements you can also include to help you focus even further: Some others I might consider would be: Type of company (explorer, developer, producer, etc.), business model (prospect generator, mine-to-mill, etc.), market cap, stage in the mine lifecycle,