Creating Your Funnel
So you have worked so hard in order to get users to your website, now what? What is it specifically that you want those users to do once they get to your site? Getting users to operating specific goals is referred to as your “Marketing Funnel” because, much like a regular funnel you have every web page hit at the top, and only a certain percentage of users ultimately end up completing the action(s) you want them to.
An important aspect to remember when deciding how your users will interact with your goal is that each layer, or step that you add for the visitor to do, the greater the probability there is that they will “abandon” your funnel for either more content or worst case scenario even leave your website entirely.
Goals
Before you get rolling, you need to decide what exactly you want your users to be doing on your website. More complex sites can have multiple channels for their users to start down individual funnels, but for this example let’s assume you only have one primary objective to achieve with your users; what is it?
Tracking
Once you have decided what needs to be happening to create value from your users on the site, trace the path that a user would need to take from landing on your home page to completing the intended action. Each click or decision should count as a “checkpoint” for this funnel in order to track where you need to improve the process.
Action
What action is worth value to you as a site owner/operator? If you are an ecommerce site you would be wanting customers to purchase a product. What about content sites? Maybe your funnel includes getting that user to sign up for a newsletter, or other action that makes them more ’sticky’ to your site to ultimately improve pageview counts, conversions into affiliate programs etc.
One you have nailed down this action, along with critical checkpoints along the way you will be able to start testing conversion rates and generate a value that each customer is worth. Start with trying to improve abandonment rates (i.e. reduce the number of users ditching your funnel at each step). A great tool for this is Google website optimizer, however it does have a bit of a delay on the data that will force you to take a little time in order to make the right decision.
Lead Value vs. Lead Cost
This is one of the last, but probably the most critical portion of your business that you need to understand. How much money is each lead worth to you after they have been pushed through the funnel at your best possible conversion rate? It is actually pretty simple to figure this out by taking the total amount of revenue calculated against your conversion rate.
For example:
If I had a funnel that starts with 100,000 leads that initiate the funnel with a 6% conversion ratio (to funnel completion) and that generates a total profit of $20,000; this would mean that as long as I spend less than 20 cents per lead I should be making money.
Now you may be thinking, “But I can easily just calculate what I am making per lead without knowing the conversion rate, why do I care?”. This is a valid point, but it is key to understand your conversion rate because this will be the most cost effective item to change in order to boost your profitability per lead and be more capable to scale your business. With a 6% conversion rate and $20,000 in profit as stated in the above example this would mean that for each per who converted was worth $3.33 cents in profit. Imagine if you could boost your conversion rate to 12%? Then you would be able to spend 40 cents in order to obtain a lead and still be profitable which puts you above the average costs for highly targeted PPC advertising and thus allows you scale more feasibly.
So now that you know the basics of a funnel, how to optimize them and what numbers should be driving your business building decisions, start figuring out how you can implement these steps as soon as possible so you are more effectively managing your business and producing results.
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The 5 Keys to Follow Through
It always amazes me how the simplest things can mean the difference between running a successful business, or running one into the ground. You would think that it is a common understanding for people to follow through with their promises in order to keep their customers happy. Aside from huge firms that can “afford” to lose the business of some clients, a startup or otherwise entrepreneur needs to make it their job to stick with the follow through.
Why is this such a crucial skill to have when building your business/brand? During the initial stages of your business, your clients will pick you almost entirely based on their relationship with you; this means that any misstep reflects poorly on your organization even if it appears to only be something small. Forget to call that customer back on time? Did that extra quote or minor tweak slip your mind? That may effect your ability to reinvest in your company so that you could grow and get the extra help that you need.
So we all forget things, and we have all procrastinated at some point. How do you get around this and make sure that clients you have worked to get in the frist place, remain loyal and build a last relationship with you?
Engagement
This could easily be a fulltime job depending on how much effort you wanted to put into it, and how lengthy each response would be. However, this is always the most rewarding experience for potential and current customers when establishing yourself/your new business; especially with your online presence.
By taking the time to respond to questions on Twitter, company forums, e-mails and comments on company blogs you will be establishing the perception of attention to detail. These factors are sometimes hard to quantify for clients but will make them more at ease with choosing you for their business. Your level of engagement also can sometimes offset a price ware between you and the competition. The same old business rules apply, you build your business on relationships plain and simple.
Objectives
When bidding on a project, or working with clients on new projects make sure that you help define clear objectives and timelines for completion. Don’t be shy to ask your client for some effort in accomplishing the task because they have a sincere interest in seeing the project come to fruition as much as you do. Your motivation is getting paid, and theirs is to build something useful for their business (equity, software, utilities… anything). Establishing these objectives not only help keep the economic structure of the project in check but will allow for your relationship to shift if any previous unknown variables arise.
Calendars
If you don’t use a digital calendar then you are doing something terribly wrong. This is true because you either a) are not busy enough to need one {unrealistic if you are going to stay in business} or b) you ARE busy, but are just missing things that don’t seem important but are ultimately damaging your relationships with clients. I am sure you already have a gmail account, and if you don’t… go get one RIGHT NOW. The calendar is free, easy to use and has alarms with to-do’s to keep you on track!
Attitude
In the Tech industry, it is common place to say “what did you do to break it?” when a customer has a machine that isn’t not operating correctly. While it is true that often times it is a PEBKAC or (problem exists between keyboard and chair), it is important to realize that these customers are the very reason you have a job. Instead of patronizing them for whatever they may have done, you need to take a genuine service approach, “feel” for their problem and offer a satisfied resolution for their needs. This is what will keep them coming back, paying more and referring you to their friends.
Follow Up
Haven’t heard from a customer in a while? How about trying to re-engage them to make sure they are still satisfied with the service you last provided. This will not only keep you in their top of the mind awareness but it will help resolve any potential issues that the customer may have felt were bad enough to move along to a new provider/product but not quite bad enough to come and complain about it. Encourage feedback from these users to better your business, keep them as a customer and make sure you giving the highest possible product/service.
This customer centric philosophy is exactly why Amazon paid so much money for Zappos.com not too long ago. It wasn’t necessarily that the company was absolutely crushing their market segment, but rather that they understood their customers came first and the rest would fall into place.
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4 Reasons Why Small Business Will Win in 2010
Think big businesses are the only ones able to make serious money in America? Do you think the Fortune 500 companies are too big to fail? Nothing has proven those theories more wrong than the past two years in American business. Big businesses are slow to innovate, have extreme overhead costs as well as a high cost of maintaining their brand image within the marketplace. Not to mention that such a complex organization has so many chances for things to go horribly wrong (from a public relations standpoint), that small business in many cases actually have the upper hand.
While it is true that 50% of small businesses fail within the first year of starting up, your business does not have to just be another statistic. In fact, 2010 may prove to be your best year yet and lead you into prosperous growth and sustainability. So what is going to make this year so much better than the last? There are four main principles, that if followed will make it all come together.
1. Innovation
Easily the biggest advantage that small businesses have over their larger counterparts is the ability to innovate at an incredible speed. When small firms see an opportunity or are able to find something that works they can capitalize on such events much quicker than the larger organizations can due to policies, chain of command etc. If you are a small business who can compound this effect over a period of time, your products and/or services will be so much more advanced than your competitors that a customer would have no logical choice than to choose you.
2. Relationships
Small business lives and dies off of its tightly knit customer base. Customers know this and appreciate it when firms/startups are able to provide stellar customer services that the big guys just don’t care about. Are you an unhappy customer who pays (i.e) Verizon thousands of dollars per year? It is doubtful that such an organization would be able to make any substantial leeway to earn your business. However, take that same amount of revenue in contrast with a small firm and your patronage makes up a much larger percentage of their income… you can bet they will listen.
3. Social Media
Want to get a quick answer to your question about how to get in touch with a representative at a company? Have you tried their Twitter account? Chances are that if you hit up Dell’s Twitter account you will get limited to no responses… Have you tried your local startup? I bet they reply right from their smartphone. Small firms are more connected and foster the warm feelings in which customers need to stay loyal to your business. When customers feel like they are a part of the conversation or movement, they then create an emotional investment within your firm that is not easily transferred.
4. Under Dog
Who do you root for in the SuperBowl? You may put your money on the team who is supposed to win, but most people want to see the under dog win the game. It is a more rewarding experience to see those who fight for something win it big time. This feeling is further compounded if it has the added benefit of allowing a customer to say “I used (product name here) before Oprah did”. Granted this can’t help you forever (or if it does you have bigger problems), but it should however help catapult your business into much more sustainable revenue levels.
So what is the moral of the story? This is the year to connect with your customers, make serious innovations and let your customers conversation drive your business. To all the startups out there.. 2010 is our year.
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Network Marketing: You Already Do It
This is a guest post by Forbes Hansen who is a senior at the University of British Columbia in Canada. He is an Eagle Scout and an overall bright guy. He has recently decided to take up an opportunity with Mona Vie network marketing so I have asked him to submit a guest post. Please follow his new Twitter account @ForbesHansen
It is the goal of every investor… to find the next big thing and invest appropriately with the hope of large returns in the near to distant future. It is then appropriate to ask oneself, “What is the next big thing, and what do I need to know in order to capitalize on it?” Whether it was the ‘.com.’ boom in the early 1990’s, the belief in 401k’s and corporate pension plans for retirement, or the growing real estate bubble it is easy to see that popular market trends will eventually collapse.
As people lose their jobs and retirement capital from irresponsible stock brokers, and lose their confidence in the current establishment it can be a wise choice to go against the grain. What I mean by that is a new era in business investment which does not fit the status quo of decades past. The world has entered into a state of “Network Marketing” on a much larger scale than in previous years.
When people hear these words however many run for the hills and blacklist the ones who try to pitch their Network Marketing product. It has become second nature for many of us, but it is foolish to believe that the entire market is plagued with poor products, especially ones with lucrative compensation plans for those who want to build a business. In fact, with many of the financial conventions we have grown up we find that many have failed us, or we were too foolish to see reality and as a result many of us lost our shirts.. Now is the time to try something new, especially if you are trying to establish an effective cash-flow business. So where should you be looking? Try Mona Vie!
After reviewing the top earning companies among Fortune 500 companies ‘Mona Vie’ earned #3 in total revenue according to the ‘Inc. 500′ report for 2009. On January 1, 2010 they hit their 5th year anniversary and the success they have had is absolutely incredible. It is so incredible that Mona Vie reached over $1 Billion in sales faster than Microsoft and Starbucks during their infancy. In comparison to other Multi-Level Marketing Companies (MLM’s) Mona Vie is rocketing to the top with sustained growth leaving the rest in a cloud of dust. The ‘Inc. 500′ has even recognized them as #1 in the Food and Beverage category placing them at the forefront of the now emerging ‘Health and Wellness’ phase of worldwide business.
Many financial experts such as Robert Kiyosaki, the author of “Rich Dad, Poor Dad” and top economist Paul Zane Pilzer have urged people to put Network Marketing into their portfolio’s, especially in the Health and Wellness industry. Why?…because this is the next big wave to hit the public and those who jump on it now will have a better chance at finding success.
When it comes to Mona Vie’s corporate team they have been lucky at putting the right people in the right places such as Randy Schroeder and Henry Marsh. The founder and CEO Dallin Larsen was awarded the Ernst and Young Award in the emerging companies of 2009 category which is another incredible achievement for Mona Vie since no other MLM has ever been nominated. Along with a solid product and a great compensation plan the corporate social responsibility that Mona Vie has to the world is substantial to many other companies. Their dedication to the people of Brazil goes much further than just building the economy there. Mona Vie’s “M.O.R.E.” project has helped hundreds of children get off the streets in order to receive not only food and shelter, but an education that will help them for life.
With this is can be expected that Mona Vie will continue to grow for many years to come. At the moment it is spreading like wild fire throughout many parts of the world as they expand. Japan, Israel, Poland, Australia, Great Britain, and a number of other countries have now been added allowing for exponential growth to occur in the next few years. Our advice… to make sure you research the importance of not only Mona Vie, but the emergence of Network Marketing as a whole for years to come.
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Your Product Sucks (Or at least looks like it does)
We typically only talk about web technologies, and how to use them in order to build your brand, product etc. However there is an important aspect that too many of us overlook when bringing a product to market; how the hell does it look to the consumer?
Apple is notorious for discrete and sexy packaging that has drawn in buyers and changed our perception of the actual products inside. Apple does arguably make a quality product, but even if you disagree based on use of their devices your first impression is nearly almost always met with a “wow.. that looks cool”. It has even brought about videos of their product that are centered solely on the unboxing experience, which has since bled into other products but none garnish the number of views that Apple products do.
The sad part about the video above? It’s not even the fact that the guy opening the box is so taken back by the packaging, but the fact that this unboxing of a mouse has nearly 30k views! So what is the added value for Apple by putting more time and effort into a nifty package for this mouse? Think of all the people who sought out this video and then made a purchase (drives sales), talked about the mouse and it’s packaging (this blog post, discussions with friends) and even more importantly the customers perception of quality before ever actually using the device.
The consumer perception is everything when it comes to turning prospective customers into buyers and often times makes the difference between a products mediocre success and becoming an absolute start in the firms line up. So next time when you are putting together a physical product to add to your line, or creating a web service you need to remember that the presentation of the device is what does the selling. The quality of the product just continues your success… if no one ever buys it to start with it is hard for them to understand the quality.
This same principle is obviously applied to web development, if your website looks like crap but is rock solid; people are going to remember how it looked and be turned off without even realizing it. Having a clean web services that delivers on only a few key fundamentals is how you win the mind of consumers before they even consciously realize it. (Read more about the reptilian brain to find out about buying behaviors here and expect a follow up post this week)
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The Allure of Treasure {hint:It’s Shiny}
Do you want money? Duh, yes. How about the chance to win a brand new Tesla? Who could say no?
The idea of big prize giveaways are an age old practice that Las Vegas has been using for decades. {Anybody remember the National Lampoon where they win the Dodge Viper?} Jason Calacanis, the founder of Mahalo among other things has recently put snagged the Twitter handle @auto for automotive related posts. So how do you drive (no pun intended) a ton of followers to a new handle, and make sure they stick around for the long shot? Here is the Jason system:
- Have established success at building business
- Have enough money you can buy two Teslas (at put on order)
- Make people TRUST you, and that you are not a fly by night scammer
- Get some of the more influential people on Twitter to retweet the contest
- Voila! Instant follower growth, and likely won’t even have to give away the car!
Jason has built up his personal brand with loads of credibility, in todays social networking credibility most certainly holds the highest value. This point is driven home when you consider that according to Twitter (via @neilpatel) there are over 15k “Social Media Experts”, and in reality they don’t know anymore about the space that your boss who also thinks they are an expert 
So what exactly is his catch, and what is the most likely result?
To win the Tesla, you must first become a follower of the @auto account (the car would only be given away to one of the followers). Secondly, @auto has to become the #1 followed account on Twitter beating out @aplusk which would currently require in the neighborhood of 4 Million followers.
The likely result?
It is doubtful that @auto is going to become the number one followed account on Twitter even with titans like @kevinrose retweeting the challenge along with blog support. However, what @jason is likely going to end up with is a heavily followed account of over 1 million users… for essentially free. I believe that he would honestly give away the serial #85 Tesla S that he has pre-ordered because 4 million followers is worth that much, even @shoemoney with 85k followers was able to bring in close to $15,000 in one month due to clicks on advertisements to other peoples content. As any good marketer knows though, if someone else is willing to pay that much for clicks from your feed you are the ultimate sucker because the clicks are worth more than what they are paying.
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5 Trending Opportunities of 2010
2010 is not only a new year, it is a new decade. And with this seemingly normal step of New Years passing, everyone gets a sense of renewed energy with a new decade. If you take a look at the way the face of business has changed over the past 10 years it is pretty humbling to think what might be in store for us in the next 10 years. The last decade spurred the very idea of internet millionaires, eCommerce and has effectively killed off media outlets that don’t offer their readership methods of engagement (video etc.)
So what are the up and coming opportunities for 2010 and beyond? Thanks to new and empowering technologies like Android 3.0, a 4th generation iPhone and advanced cloud computing we are going to see more web based entrepreneurs this decade than every before.
1. Small Business Marketing
Over the last 10 years, only big brands or those with large amounts of capital were able to effectively push their brand and story online to grow their sales and/or clientele. With all the new technologies however that small business have available, but more importantly the aspiring marketers who know how to use them we will see an influx of firms looking to build their business online. Even brands like Pepsi who just announced that they will forgo their annual SuperBowl advertisement for the biggest social media push to date is just more validation around creating conversations about your brand.
The key success platforms will come in various forms depending on the objective, but include:
Social Media
Ad.ly : Arguably the most aggressive social advertising platform available for larger brands to reach their audience. They have recently launched a Twitter analytics tool to help Twitter accounts look at the demographics of their following. They currently give those people with Twitter accounts the ability to monetize their feed from big brands but are about to announce a self service platform. Check it out here: http://bit.ly/44xZT
Sponsored Tweets : An “Izea Innovation” by CEO Ted Murphy, Sponsored Tweets is the best currently available self service platform for aspiring marketers to deliver a brand message and conversation into the stream. http://bit.ly/6ihki3
Small Business Affiliate
Shoemoney Tools : Do you have a good understanding of your market? Do business such as your local dentist and car dealerships have an under represented web presence? Check out the Shoemoney Tools designed with the power user in mind. Check out the service for a rock bottom $3.95 trial. http://bit.ly/shoeoffer
2. Android
Right now the iPhone is dominating the charts, but being tied to one carrier that seems to be overwhelmed by the success and not able to deliver the results that consumers demand. So where is the opportunity? Currently developers for Android are wiping the floor by offering sub-quality apps at a premium price when compared to the iPhone. Applications that are awesome and sell for .99-1.99 on the iPhone are gimped on Android while getting away with $15-$20 price tags. Until more developers get on the platform to create amazing applications at iPhone equivalent price points there is a lot of money to be made my start up developers.
3. Web Based Inventory (Small Business)
One of the biggest challenges for small business when it comes to selling online is the ability to track and manage their inventory when selling across multiple channels. This is something big business have overcome with proprietary databases and expensive merchant solutions. However, the first company to create inventory management that ties into point-of-sale computers as well as online transactions will be able to capitalize on a huge market! I feel that this is the most overlooked category of opportunity.
4. Mobile Transactions
The most talked about mobile commerce platform is easily Square ( https://squareup.com/ ) and many of the heavy hitters in the marchant business are taking notice. The last thing those big firms want is another PayPal situation on their hands, but the company who can effectively tie in the mobile application with quality hardware will win the race.
5. Cloud Storage
Consumers are tired of losing their data, and solid state drives can’t seem to get big enough or cheap enough… fast enough. Google knows that data and knowledge are power on the web and want to capitalize with their Chrome OS which will try and convince people that not managing their data locally is a good thing and that they should trust Google with their precious family photos. DropBox seems very poised to take this market, but any application developer who can overcome a “natural” feel to cloud based storage and syncing between local machines will likely be able to up sell customers from a fremium model.
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Want the new Google?
Gizmodo had a nice tidbit today on how to view the brand new interface that Google is hoping to roll out. The method is shockingly simple, and the results are actually pretty neat.
1. Go to Google.com.
2. Once it loads, enter this code into your web browser’s URL address field (as one whole string):
{Broken into 3 parts due to blog width}
Part 1
javascript:void(document.cookie=”PREF=ID=20b6e4c2f44943bb:U=
Part 2
4bf292d46faad806:TM=1249677602:LM=1257919388:S=odm0Ys-
Part 3
53ZueXfZG;path=/; domain=.google.com”);
There shouldn’t be any http://google.com in front of that. Just that code.
3. Hit enter.
4. Reload the page or open a new tab with Google.com and you will have access to the new user interface.
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The Sponsored Stream
Do you have a Twitter, Facebook or LinkedIn account? The answer is likely yes as these social platforms are dominating the internet and collecting users faster than my glass table collects dust. However, have you thought about the different ways people are monetizing this “stream” of information? There is a pretty divided debate going on across the internet right now about whether or not Twitter, Facebook etc. should allow their users to interject advertisements into their streams because they are afraid it will damage the overall experience that users have with the services. What the pundits don’t realize about these ads is that all other forms of content publication have been generating revenues for their efforts on blogs, newspapers etc. for decades and there is no reason that someone with a large following should not be allowed to create money from this new age audience as well.
In fact some streams are actually made more interesting with the addition of an advertisement as pointed out by 1938media’s Loren Feldman (a largely anti-social media member). These ads may actually enhance the stream because they offer direct value to the audience (a product, service, event etc.) as opposed to simply being the daily ins and outs of a celebrity. As a follower you may actually be more interested in a marketing platform than if your favorite online marketer has gotten his 3rd cup of coffee today.
The current media and social platform love child for monetization is Ad.ly which has paired “top publishers” with “top brands” for extremely successful payouts, and huge returns for the advertisers. These sponsored streams have garnished a high number of click throughs and a high level of follower trust regardless of their transparent and clearly marked “#ad” or “#spon” denomination. Some of the highest profile users include Internet celebrity “Shoemoney” or Jeremy Schoemaker who has been preaching the benefits of in-stream advertising since day one, including an endorsement for SponsoredTweets.com (an Izea company) even with their low payouts. In fact he has even mentioned that he would be entering the segment had he not signed a non-compete following the sale of his largely successful AuctionAds platform.
What are they doing right?
Ad.ly got it right immediately upon launch, they realized that in order to be successful they needed a volume of publishers (who were willing) and a high payout to keep these publishers motivated to push through the advertisers message. By going with higher profile publishers and advertisers they were able to get a large sample size, prove the model and take only a small cut in the process. This small cut has led to increased payouts to publishers who then wrote up rave reviews and even bragged about how they were absolutely killing it on Twitter by “Making 15k from 6 tweets in a month” etc. If Ad.ly can keep up this momentum (which is likely with their current 12% referral program) they should be able to confidently corner the market and either reap the benefits off of the advertising revenues or sell to a giant such as Google much like Ad Mob did just last month for $750 Million.
What can they do better?
They are extremely sensitive to the fact that in order to become the defacto standard, they must also cater to the smaller scale publishers. Much like AdSense was able to do for small scale publishers in the traditional web content Ad.ly hopes to bring revenues into the long tail by using self service advertisements that allow any advertiser (most potentially affiliate marketers) and infuse their advertisements into a variety of publishers (or publishers based on keywords). These additional dollars will not only allow the small publishers a piece of the action but will allow for relationship control that is not managed by Ad.ly itself.
Arguably these self service platform could diminish the gigantic returns that advertisers and publishers have been seeing through the service, however it should bring enough new faces and dollars into the system that everyone should come out on top. If you are interested in checking out the Ad.ly program we have included a link below, as well as to SponsoredTweets.
For full disclosure, both links below are affiliate links; therefore any sign ups will benefit this blog.
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The Exclusivity Illusion
Have you every wondered how big box retailers such as Costco are killing in their space when they are simply budget retailers who specialize in quantity? Their executives would love to spout of at least 10 ways that Costco offers a supreme value, which would range from “friendly customer service” to “best prices on the market” when in reality that trait is also what their competitors are offering.
So what gives? How is Costco able to sustain growth and keep users interested? The exclusivity illusion.
Membership
Want to walk in and get the same prices everyone else is getting? Not so fast.. pony up the cash for your membership I.D. and then you can get those bulk deals. Haven’t been in a while? D’oh! I bet you feel guilty paying for that membership and not shopping there, and stats show that you are much more likely to become a regular of an establishment if there is a minimal monetary connection involved regardless if it is the most cost efficient option.
What about the community aspect of a membership? Sure there is not a network per say that users directly interact with that makes them part of Costco, but rather the connected feeling that users have when all of their friends are using the same services, shops and outlets. This is where friend recommendations drive further memberships, larger collective ecosystem and additional revenue for the business (e.g. Costco).
Levels of Access
This is where Costco really has the upper hand on their other big box foes. Guess who get’s to enter an hour earlier than the average Joe 6-pack membership? Yeah, the “Executive Membership” which not only costs more but has stipulations for qualifications. This is where the illusion of exclusivity, rarity and value all come into play, if you want to have access to the goods earlier you will need to step up as a consumer to a whole new level.
V.R.I.O. Customers (Instead of Framework)
The essence of what Costco has done for it’s membership program to drive sales is really the application of V.R.I.O. on the customer base instead of just as a business model as key resource. For those who are not familiar with what this means, it stands for Value, Rarity, Imitability & Organization. So how does restricted access through memberships use these traits to create the illusion of exclusivity?
Value
Costco offers the obvious value of bulk pricing, and their leverage with suppliers to arrange a good deal for the end consumer. This is the most easily imitated trait of Costco and is seen across multiple consumer channels, however it still offers a great deal of consumer value (positive brand correlation).
Rarity
The restricted levels of access through tiered memberships create a feeling of need to get a product before somebody else does. It creates that illusion that the product in stock is in high demand, that the deals wont last forever and only the “Elite” are able to get a hold of these products before anybody else.
Imitability
While the price efficiencies of Costco can be copied across multiple channels (e.g. Wal-Mart), the positive membership association with the brand, the products and the exclusivity create a strong dedicated community that will support Costco through a smoother revenue curve.
Organization
This is where the efficiencies of the community really come into play with the Costco business model. The fact that customers are not only willing to buy items in large quantities (much higher revenue per customer, let’s be honest; How often do you leave Costco under $100?), but they are also willing to pay a subscription for the privilege of doing so! To top it all off, that paid subscription is tiered to allow customer to buy up the chain as opposed to only bargain hunting. This type of consumer behavior where customers buy upstream in a product line is only imitated (recently) in the Apple product lineup where by offering lower cost goods your average selling price actually increases.
Take Away
So as a start-up business, you need to figure out how you can incorporate such a unique dynamic into your business model that not only draws the highest paying customers, but brings in customers who want to be a part of your audience, who want to build your community and positively correlate themselves with your brand. And if at the end of the day you can even convince your customers that paying for a membership is beneficial to them (levels of access) then you have succeeded as building a sustainable entry for hopeful long term growth.
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