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Last year we published a list of 20 Social Media Monitoring Tools. One of the more popular tools on that list is Hootsuite. Today we give you a deep dive into Hootsuite:  what it is and how it can make you more productive with social media.

If you are looking for a tool that lets you manage all of your social media accounts and presence in a single place, and collaborate as a team on them, then Hootsuite should be at the top of your list to investigate.

Hootsuite is a Web-based tool (although it also can be used on popular mobile devices- see screenshot above).

You take a few minutes to set up a Hootsuite account;  then connect your various social media profiles.  After this one-time setup, you will be able to use it.  Here are 4 essential functions that Hootsuite performs:

1. Manage Your Social Accounts in One Place

You do this from the Hootsuite dashboard, without visiting each site separately or using a multitude of different mobile apps.  This includes replying to others, retweeting, “liking,” sharing and responding to private messages, and otherwise carrying out activity on your social accounts.

The activities that you can perform vary by social media platform. You won’t be able to do every single thing for your Facebook Page, for instance. But we’ve found that we can do 90% of our day-to-day social activities from within Hootsuite.

You can manage Facebook, Twitter, Foursquare, LinkedIn, Google Plus, MySpace, WordPress and Mixi — individual profiles and business pages.

2. Schedule Updates

The built-in calendar is one of the most important features. Use it to schedule posts to your social accounts.  In other words, you can keep your accounts active. More importantly, you can be efficient by scheduling all your social updates at one time for, say scheduling once a day or once a week. In other words, you can “batch” your work. Then you aren’t constantly interrupting other activities to update social accounts throughout the day or week.

There’s also an auto-schedule feature that will automatically schedule your tweets and updates to go out at optimal times.

Running a marketing campaign and have a lot of updates to make over a period of say, two weeks?  You can actually upload a CSV spreadsheet for all the messages.

If you prefer “set it and forget it” automation, you can add RSS feeds to automatically update social accounts every time a new article goes out from your company blog, for example.  You can set it to post one item at a time (recommended) or more.  You can direct it to check for new items in the feed and post them, once per hour or up to once per day.

3. Communicate and Collaborate as a Team

You can assign tasks, such as responding to a tweet or a private direct message, to a team member, as seen above.  No emails or separate instant message instructions needed. Assignments are right there within the Hootsuite dashboard.

Also, because multiple users can use Hootsuite, everyone can “see” what activity is completed or hasn’t been done yet.  Again, no communicating via email or messaging programs to find out if someone followed up on that Twitter customer complaint yet, or not.   How many users you can have depends on which product level and upgrades you have purchased.

4. Get Analytics and Reports

Fragmented results here and there don’t do much to help you analyze and understand how well social media is working — or not.  For that, you really need to see a bird’s eye view of activity over a period of time, and be able to compare it.

Many social media platforms now offer analytics.  But who has time to run and grab those analytics from Facebook Insights, or a multitude of other social sites?  Hootsuite’s built-in analytics and reports  give this kind ability to track your progress and understand what’s working best, in one place.

Best of all, you can get weekly reports emailed to you.  These are extremely helpful.  For instance, here at Small Business Trends we review the analytics reports in staff meetings from time to time.

What I Like About Hootsuite

The company keeps investing in enhancements to its platform.  Hootsuite just keeps getting better.  And that’s not always true with products.

Here are two aspects that are particularly impressive:

Integration / Interoperability With Other Marketing Applications

You’re not limited to managing just the 8 social media platforms Hootsuite currently covers. You can extend capabilities to other social media sites and even other programs, by adding “apps” from the Hootsuite Apps Directory.

For instance, you’ll find apps for social sites such as Instagram, Tumblr, Flickr, Scoop.it, YouTube and several more (see screenshot below).

Then there are apps that offer some level of integration or interoperability with popular marketing and CRM programs that businesses use.  There are apps for ConstantContact, Nimble, HubSpot, Salesforce, ZenDesk and more.  What exactly the apps allow you to do with Hootsuite varies by app.  For a description of one such app, see our write-up about the Batchbook and Hootsuite integration.

Most apps are free.  Some, like the app for Salesforce, require an additional monthly fee. But even the paid premium apps are relatively inexpensive. Apps usually cost less than $5 per month per premium app.

I like the fact that Hoosuite has been open to allowing these kinds of apps, through its developer program.  It makes Hootsuite more useful as a central dashboard and management tool.

Different Pricing Levels to Meet Different Needs

Another positive aspect of Hoosuite is that it offers different pricing and feature levels.

There’s a free level, for a single user to update 5 social profiles.  This is good for a really small startup or sole proprietor.  It’s also a risk-free way to try out Hoosuite.

The Pro version, currently $8.99  a month  – the price recently went up — can be used with a small team of two users.  Additional users can be added for a fee.  The added users can vary — anywhere from $10 to $15 for the third user, and $15 to $30 each additional after that.  It all depends on whether you are under the “new” pricing or old.

Note that some of the features in this review may only be available at the Pro level.

With Pro you can manage an unlimited number of social profiles.  You receive an enhanced analytics report, and can choose an unlimited number of apps.  There’s a 30-day free trial of this version, too.  The Pro version is what most small businesses likely will use.

The Enterprise version is for, well, large enterprises.  Pricing is not even available on the site for Enterprise.  The Enterprise version adds advanced features, such as advanced security, geo-targeting, advanced customer support. It also adds Hootsuite University, an online training program for social media and learning to use Hootsuite.

There’s a discount of 10% for annual billing instead of monthly, for some savings.

What I’d Like to See Hootsuite Do Differently

While I like the different levels of Hootsuite, some small businesses may consider it expensive to purchase certain add-ons ala carte.  The cost can really add up.

Hootsuite University is one such add-on I’ve heard people kvetch about.  Ala carte it’s $21 per month.  Small business teams really could benefit from training. But the pricing model poses a challenge.  Small business owners I’ve heard from are concerned that once you sign up for a monthly fee, if team members don’t use it, you could find your organization a year later paying for a service that’s rarely been used – just because somebody forgot to cancel it.  A one-time fee per user would solve that issue.

Another pricing issue is the limitations and expense of using vanity URL shorteners for brand enhancement of your links shared.  For instance, at Small Business Trends we’ve started using our own URL shortener of http://SBT.me.    Hootsuite allows custom URLs — but only if you sign up for Owly Pro.  That costs $49.99 per month.

Small businesses will be very cost sensitive about social media tools. Just 39% of small businesses say they get ROI from social media. Of those the majority isolate the dollar value to under $1,000 per year.

Still, at the base price of under ten bucks a month, Hootsuite Pro delivers excellent value. The base price should be affordable by most small businesses.  Just be careful about those add-ons!

At Small Business Trends we are paid customers of Hootsuite. We did not get any special consideration for this review.

More About Hootsuite

As mentioned, Hootsuite is a Web-based based app, and can be used from most modern browsers.  There are extensions (“hootlets” or “hootbars”) for Chrome and Firefox browsers.

Hootsuite offers mobile apps so that you can manage your social presence from an iPhone, Android devices and the iPad.

HootSuite Media, Inc. was founded in 2008 by Ryan Holmes, who is also the company CEO. Its headquarters is located in Vancouver, BC, Canada.  It has over 6 million users, who send 3 million messages a day through the dashboard.

Overall, Hootsuite is the gold standard today for managing your social media accounts.  It offers a strong affordable mix for small business users.

The post Review of Hootsuite: Manage Social Media From A Single Dashboard appeared first on Small Business Trends.

I’d guess that most of you that are reading this have either given PowerPoint presentations at one time or another or at least viewed one. Did you know that statistics reveals that listeners only remember 50% of what was presented just 10 minutes after a presentation is given?

The following day, it drops to 25%. A week later, it whittles down to just 10%. And this is if your presentation is good.

With over 350 PowerPoint presentations given each second across the globe, how does one go about making theirs  stand out from all the others? This infographic by Slideshop provides ten valuable techniques on how you can make your presentation stand out from the crowd.

[Click here for full size version]

The post Presentations: How to Make Your Message Stick appeared first on Small Business Trends.

If you’ve been curious about the new Twitter advertising platform, you may have a good reason to try it out soon. But you’ll have to be a small business customer using one of Chase Bank’s financial products first. Twitter announced a partnership with Chase Bank last week aimed at trying to encourage use of its little more than a year-old advertising service.

Twitter advertising was launched on an invitation-only basis to select users in March of 2012 and was opened to all U.S. users in April of this year. The new program would award $1 million worth of free Twitter advertising credits in $100 increments to “eligible” Chase small business customers.

As part of the partnership between Twitter and Chase, the bank’s estimated four million plus small business customers, including those using Chase’s Business Banking, Ink from Chase credit card and Chase Paymentech (a system for merchants to accept credit cards on mobile devices, will get other benefits too. Some of those will include access to research, best practices and workshops about using Twitter to grow a business. No word yet on how many of these customers will be eligible for the free small business advertising credits, but Twitter has promised more details early this fall.

The popular social site will also be sharing customized content through a new @ChaseSmallBiz Twitter account.

On the official Twitter blog, Russ Laraway, head of small business for Twitter, wrote:

Our goal is to help small businesses build better customer engagement, increase sales using direct response techniques, and engage more followers with compelling content. We’ll be posting videos, infographics, white papers and a how-to guide developed by Chase and Twitter to help small businesses learn more about the value of Twitter.

This isn’t the first time that Twitter offered advertising credits underwritten by a sponsor.  Another program was rolled out in 2012.

Bottom line: the advertising credits from Chase won’t be available for several months yet. Stay tuned and we will update you when they are rolled out to small businesses.

Twitter Photo via Shutterstock

The post Twitter Announces $1 Million in Ad Credits for Chase Small Business Customers appeared first on Small Business Trends.

When you browse the Web on a cell phone, you want it to be fast. You may think that all you need is a faster connection to speed up browsing, but it could be something as simple as downloading a better Web browser built for mobile. This review of the Dolphin browser is for the increasingly-mobile business owner who wants to be more productive and is looking for lifehacks to get there.

I’ll start out by saying that I love the Dolphin browser on my Samsung S3 (courtesy of the fine folks at the no-contract cell phone team at Ting for Business who provided me with a long term loaner phone). I tried Chrome and other default browsers, but they were marginal at best. As a completely free browser, Dolphin delivers for Android, iPhone and iPad. You can even download extensions for Chrome, Firefox and Safari which will allow you to sync stuff with your mobile device.

It is hard to take a photo of your phone when that’s your only camera. So I’m using a press kit photo from the company’s website.

What I Really Like:

• Has gesture and voice control. For gesture, you click in the lower corner of the screen. You create your own custom scribbles or sketches or shapes to serve as shortcuts to specific websites. You click and draw that gesture to get to the site. For voice, called Sonar, you shake the handset and up pops a microphone icon. Start speaking and it takes you there. Sort of like Apple’s Siri or Google Now.
• Evernote add-on that lets me clip pages to my Evernote account.
• They have a battery saver app to help you conserve battery usage on your smartphone. I guess it is in their best interest to ensure you have plenty of battery for surfing the Web.

What I Would Like to See:

• Something that lets me know there is a history list to the left and an apps list to the right of the main browser window. Essentially, you have to grab the far side of your window and slide left or right to find these admin type areas. Useful to know, but I happened upon it.
• I honestly don’t have anything else. I think it is one of the best browsers on the market.

If you are on a mobile phone and find yourself waiting for websites to load, test out a different browser like Dolphin. Again, it is a free browser and you can get it for your Android-powered phone, the iPhone and iPad.

The post Speed Up Your Mobile Browsing with Dolphin appeared first on Small Business Trends.

If you sell directly to U.S. customers or provide marketing services to clients who do, pay attention. A recent report says a growing mobile market is already generating billions in U.S. sales. And businesses are also spending billions to market to customers via mobile channels.

The Mobile Marketing Association, a global trade association for the mobile marketing industry, says those numbers are only going to increase.

Consider that last year mobile marketing generated an estimated $139 billion in U.S. sales. This figure takes into account both business to business and business to consumer sales.

The association claims the “MMA Mobile Marketing Economic Impact Study” released last month, is the first comprehensive study of U.S. economic performance across the mobile marketing industry.

Huge Growth Projected

Most impressive is that this amount is expected to grow by more than half during the next two years. The report says sales generated through mobile marketing will top $400 billion by 2015, an amazing 52 percent rise.

But it’s not just sales that are increasing. The MMA study suggests the amount U.S. companies are willing to spend on mobile marketing is increasing too.

For example, in 2012 the study estimates retailers and marketers spent $6.7 billion to reach customers via mobile channels. That’s considerably less than the amount generated by mobile sales, but still represents a huge opportunity for businesses providing mobile marketing services.

The study projected that amount would also increase, reaching $19.8 billion by 2015.

Mobile advertising, mobile direct response or enhanced traditional media and mobile customer relationship management were all considered in that expenditure.

What it Means to You

While the MMA study was aimed at demonstrating the economic stimulus and job creation potential of mobile marketing, there is a clear message here for small businesses and entrepreneurs as well.

USA Today reported recently on how small businesses are already putting mobile marketing to work to generate additional sales.

We’ve reported previously on the importance of mobile technology to small business operations.

But the MMA study demonstrates the importance of mobile technology for growing your business too.

For many small businesses, this could include focusing on making sure you have a mobile friendly presence. It could also include focusing more attention on social media marketing, much of which is accessed via mobile devices by your customers.

You could also focus on developing mobile apps for your business. And, of course, if you provide marketing services to other business clients, it also means you should consider including mobile marketing services among your other offerings.

How is your business using mobile marketing to reach customers?

Mobile Photo via Shutterstock

The post Mobile Marketing Will Generate $400 Billion in Sales by 2015 appeared first on Small Business Trends.

If you are non-native-English-speaking man who runs a construction or real estate rental business, hires a tax preparer rather than doing his own taxes, and thinks that making money enhances social status, beware. Research by the Internal Revenue Service (IRS) indicates that you are among the sole proprietors most likely to cheat on your personal income taxes.

Running your own business is one of the best ways to pay less in taxes than you owe, a recent New York Times article explained. The IRS knows this, of course, reporting that sole proprietors disclose only 43 percent of their income on their returns.

To figure out which taxpayers might be underpaying their taxes and be worthy of a second look from its auditors, the IRS’s computers assign a Discriminant Function System score (DIF) to each tax return filed. These scores use information from the IRS’s database of past tax filings to predict whether a taxpayer is likely to have under reported income.

Determining which sole proprietors might be underreporting income isn’t easy. Most business pay all that they owe. Even if the IRS reassigned everyone currently responsible for evaluating non-profit status applications for all politically conservative organizations (a little topical humor here), the agency would still lack the resources needed to audit all sole proprietors. For returns filed in 2011, the tax authority “only” audited 1.6 percent of individual returns with business income.

That’s why the IRS contracted with Russell Research to conduct a survey of sole proprietors in the first quarter of 2012. The investigators divided a representative sample of sole proprietors into the most and least “compliant” (IRS-speak for willing to pay all of the taxes they owe) on their DIF scores for their 2009 tax returns. They then compared the most and least compliant fifths on the basis of their answers to a range of survey questions.

The results, which were published in a study released earlier this year, provide insight into which sole proprietors are most likely to be tax cheats:

• Men were less likely than women to be “compliant.” While males made up 59 percent of the more compliant taxpayers, they composed 65 percent of the less compliant ones.
• Twice the fraction of sole proprietors who speak a language other than English at home were less compliant in paying taxes (14 percent versus 7 percent).
• Owners of companies with more employees were less compliant (average employment of 6.6 versus 3.6).
• Owners of professional, scientific and technical service businesses, health care and social assistance, and arts, entertainment and recreation businesses were more likely to be compliant than owners of construction, and real estate and rental and leasing businesses.
• Owners of businesses with lower sales tended to be more compliant (average sales of $47,000 versus $87,000).
• Owners of businesses with lower expenses tended to be more compliant (average expenses of $12,000 versus $50,000).
• Owners who complete their own tax returns tended to be more compliant (32 percent of the more compliant sole proprietors do their own taxes versus only 21 percent of the less compliant ones).
• People who indicated that they were more willing to take financial risks, and those who reported that overall status depends on finances, tended to be less compliant.
• People who were more cynical about the tax system, those who had more negative attitudes about the IRS, and those who were more skeptical about the value of government activity, tended to be less compliant.

Note to those of you at the IRS who read my posts: I abhor risk; am very positive about the government and the tax system; and think you are doing a fine job, despite recent news reports.

Just thought you’d want to know.

taxes Photo via Shutterstock

The post Which Sole Proprietors Cheat on Their Taxes (According to the IRS)? appeared first on Small Business Trends.

It’s Small Business Week in the United States, and in honor of that we invite you to participate in a live Twitter chat on Tuesday, June 18, 2013 at 8 p.m. EST, presented by FedEx Office.

The topic is:  Startup Tips That Make the Difference in Success. We’ll be discussing what it takes to be successful when starting a business and growing it.

We hope you’ll join in and pose any questions you may have.  Or if you have any tips to offer other small business owners about startup success, we invite you to share them.  Be sure to follow @FedExOffice too.

Join The Twitter Chat: Follow #SmBizEdge

Be sure to join us for this live Twitter chat event:

TOPIC: Startup Tips That Make the Difference in Success

DATE: Tuesday, June 18, 2013

TIME: 8 pm EST (New York time)

LOCATION: Twitter.com: Just follow the hashtag #SmBizEdge to participate.

Be sure to follow me, Anita Campbell, at @SmallBizTrends too. If you’ve never taken part in a Twitter chat before and you need some pointers, be sure to read “How to Participate in a Twitter Chat.”

Disclosure: FedEx Office compensated me to participate as a small business expert during the FedEx Office Tweet Chat program and write this post. The ideas in this blog post are mine and not ideas or advice from FedEx Office.

The post Twitter Chat #SmBizEdge: Startup Tips That Make the Difference in Success appeared first on Small Business Trends.

You’ve received plenty of emails that ended with “sent from my iPhone” or another mobile email signature.

Whatever your opinion of these generic signatures, they do serve a purpose. When communicating with clients and business contacts via mobile, you may end up sending emails with typos or formatting errors.  Your message may be brief and sound abrupt, versus friendly.

A mobile email signature lets people know why. You’re sending from a smartphone!  Ah … that explains it.

However, there are more creative ways to tell your contacts that you’re using a mobile device to communicate with them. Some business people have figured out how to have a little fun with those mobile email taglines.

Blaming Technology

Certain smartphone features, such as autocorrect and voice recognition, are meant to make your life easier. But at times  they do just the opposite. Your colleagues and clients can likely relate to these issues, so making a note about them in your signature can be both helpful and funny.

Ivana Taylor of DIY Marketers has an email signature on her phone that reads, “Excuse any typos – darn autocomplete!”

And Mike Blumenthal of Local University, has a mobile signature that accomplishes a similar task, while placing the blame on a different smartphone feature.  It reads, “Sent from a typical smartphone. If this is illiterate, it’s the voice recognition’s fault.”

Missy Ward, co-founder of Affiliate Summit and FeedFront magazine, also pokes fun at the potential for typos.  Hers reads, “Sent from my iPhone.  Random auto-corrects and typos are my special gift to you.”

Claiming Smartphone Ignorance

Sometimes it isn’t the phone’s fault. Sometimes it can just be more difficult to communicate on the go or with such a small device.

Matthew Goldfarb of Corporate Renegade has a signature that jokes, “sent from my almost always misspelling iPhone.”

Becky McCray, co-author of Small Town Rules, contributes one used by Sheila Scarborough, of Sheila’s Guide. It says, “Sent from my phone;  if there are typos I will still be quite annoyed at myself.”

Even Small Business Trends’ own Chief Operations Officer, Staci Wood, has joked about creating a mobile email signature to highlight her minimal smartphone knowledge.  She said if she could figure out how, she’d change hers to: “Apologies for any spelling errors – sent from my stupid ‘smart’ phone.”

Having Fun With Siri

Siri, in case you’re not aware, is the voice-enabled command prompt and answering feature that Apple calls “the intelligent personal assistant.”  It’s available on the latest iPhones and iPads. Some people like to have fun with Siri in their email signatures on their iPhones.

Deborah Shane, branding consultant, has an email footer that reads, “Sent from Siri, My Personal Assistant.”

Small business author and all-around funny guy, Barry Moltz, also has fun with Siri. His reads, “Sorry so short … the keys are small on the iPhone 4S.  Uh, oh..there are no keys. Maybe Siri can help.”

Random Acts of Email Taglines

Just because you have a smartphone with access to email doesn’t necessarily mean you should have to respond to every single thing right away.  Ramon Ray of SmallBizTechnology.com has a mobile signature that says, “from my phone (hopefully not while I’m driving or with my family).”  It pokes fun at the over-reliance many Americans have on their mobile devices. But it also lets contacts know that there are times he may not be able to respond right away.

Joel Libava, who has created a trademarked brand around the moniker “The Franchise King” manages to continue the brand emphasis in his email tagline.  His reads, “The Franchise King®, Joel Libava, sent this from his Royal Droid.”

Brent Leary, technology analyst, conveys that he’s an equal-opportunity technology user. His tagline says,  ”Sent from my BlackBerry, … or iPhone.., or iPad… or… well you get the idea … .”

Making Jokes

But you don’t necessarily need to be specific about which device you use, for people to get the point. You can simply make a joke that lets people know you’re sending the email from your mobile device.

“Sent via carrier pigeon,” or “Sent from my rotary phone,” or “Sent from my payphone,” let people know that you’re communicating on your phone. But you’re making a joke about technology and isn’t misconstrued as snobby or exclusive.

On the other end of the spectrum, “Sent from my iPhone because I’m better than you,” or “Sent from my $400 smartphone,” poke fun at using certain mobile devices as status symbols. Just be aware that sarcastic email lines can be misinterpreted as gloating if others don’t “get” your humor.

What Mobile Email Signature Do YOU Use?

Have you come across any funny mobile signatures? Or do you use one yourself? Share it in the comments below – we want to hear!

Shutterstock: smartphone

The post Funnier Ways to Say “Sent From My Smartphone” appeared first on Small Business Trends.

In the context of business, “sunk costs” are when you’ve spent money already and will not recover it.  In other words, you’ve  ”sunk money into something.”

The problem comes in when you keep spending — even when whatever you’ve invested money in, is no longer a good idea.  Yet you keep throwing good money after bad.

This sunk costs situation happens much too often in business.  We insist on getting value out of the money we’ve already spent.  We become determined NOT to lose money.  We can’t — we won’t — let go.

However, by not letting go when something isn’t working, we can end up losing a lot more.  We keep pouring money, time and effort into something that has no chance of working or would lead to a poor result at best.  The project or initiative  keeps costing more and more.  Instead of cutting our losses, we compound them by hanging on.  We make our losses worse.

It goes against our nature to let go.

It’s called the sunk cost fallacy.

The BBC: An Example of Sunk Cost Fallacy

A perfect example of the sunk cost fallacy came to light just last month, in May of 2013.  The BBC revealed it was scrapping — finally – a £100 million technology project.  It had dragged on for 5 years.  The problem:  a stubborn desire on the part of the BBC’s Chief Technology Officer to continue building a custom system when commercial systems already on the market would have done the job at a fraction of the cost.  Add to that an overpaid, under-supervised enterprise consulting firm — and you have a sunk cost fallacy of epic proportions.

Instead of calling it quits, the project dragged on. Instead of admitting the money previously spent was sunk costs that would never be recovered, they poured more money into it.

Entrepreneurs and business owners can fall into the same trap. We get emotionally caught up a project, an employee, an initiative.  We want to make it work.  We think that somehow we’ll turn things around.  After all, it would be wasteful not to try to get benefits  out of money we’ve already spent, we think.

We keep pouring money into it in a misguided attempt not to lose our initial investment.  We continue long after logic and good sense suggest it’s time to pull the plug.

Pride sometimes is involved, too. Who wants to admit that something was a mistake? ‘Maybe if we keep working on it, we can salvage it,’ we think.

David Ariely, a behavioral economics professor and author of Predictably Irrational, points out that humans often think they will behave in one way (perhaps the way logic and reason suggest). But in reality we behave differently (perhaps  driven by emotion to keep throwing good money after bad).

We tend to focus on the money we will lose if we were to walk away.  Instead, if we were reasoning through the problem, we would be thinking about what we could gain by scrapping a wasteful situation — and finding a better solution.

How to Avoid a Sunk Costs Nightmare

As entrepreneurs and small business owners, what can we do?  Focus on your business goals and the end result you want.  In other words, you need to look to the future, not money spent in the past.

Put out of your mind the idea of  recovering on sunk costs. The money is gone.  Cut your losses.  Sweep up the mess … and move on to something more productive.

It’s also important to learn to recognize when you might be in the midst of a sunk costs problem.  We may not even realize that we are in danger of succumbing to the sunk cost fallacy. When we’re smack in the middle of it, it’s hard to see that we are putting more money at risk.

Get a second opinion from someone not emotionally involved in the past expenditures.  This is where a good accountant or CFO is worth his or her weight in platinum.  He or she will be more likely to evaluate the situation logically.

A smart business owner knows when to seek advice — and take it.

Shutterstock: wasted money

The post What Are Sunk Costs? appeared first on Small Business Trends.

Ryan White was a haemophiliac who contracted HIV during a routine blood treatment. He was diagnosed as HIV positive in 1984 and died six years later in 1990. In that six years, he skyrocketed from a regular suburban boy to a national star.

Why?

Because when he tried to go back to middle school, teachers and parents of his schoolmates rallied against him – despite the fact that doctors said he posed no threat to other kids. The media picked up the story and an outpouring of support soon came from all over the country. He collaborated with celebrities like Michael Jackson and became the poster child of HIV. Shortly after his death, Congress passed the Ryan White Care Act, making what was done to him illegal.

This is the story of Ryan White. But there have been many similar stories over the years. Most recently, there was the case of Aaron Swartz, who committed suicide due to excessive pressure from his prosecutors. He inspired a bill called “Aaron’s Law”. There was also Phoebe Prince, whose suicide inspired “Phoebe’s Law.”

And the list goes on.

The question is “Why?”

Ryan wasn’t the first victim of HIV; he wasn’t the first victim of HIV discrimination either and he definitely wasn’t the youngest person to die from the disease. People see the horrible statistics of various causes of deaths in the news every day…but they don’t feel an urgent need to act.

Do you?

Psychologists have a term for our tendency to offer greater aid to an identifiable individual, compared to say, a large group of people. It’s called the Identifiable Victim Effect.

Identifiable Victim Effect: Why You Can’t Help Ignoring Millions But Save One

To use the identifiable victim effect in marketing, we first need to understand the psychological underpinnings of this quirk. Here are a few possible explanations:

Emotion

When you read statistics, you activate the part of the brain called the prefrontal cortex. The prefontal cortex is responsible for high level thinking, like mathematics, but has no capacity for emotions. When you listen to a story about a person, however, you activate the limbic system, which is responsible for your emotions.

Certainty

If you take action when you read about the plight of one person, you feel like you’re making a real difference. You feel like if you don’t help, he/she is certain to suffer. Statistics, on the other hand, are probabilistic in nature. If you donate to a cause to save two million, it may or may not help. This quirk is related to our risk aversion – we are more likely to avoid certain suffering than we are uncertain suffering, even if the latter is potentially more painful.

Story

Humans are wired to gobble up stories and abstract statistics are not stories; they don’t captivate us. Stories about a fellow human being’s suffering, on the other hand, become the kind of thing we talked about back in the time we were living in caves. Stories were how we passed information around the tribe and ensured the species’ survival.

Fairness

There’s an innate need for justice in all of us. Psychologists have proven this by conducting an experiment called the ultimatum game. What they found was that people often sabotage their own welfare to see people who they view as their opponents suffer. This is despite the fact that they’d be better off if they had just let go.

How The Identifiable Victim Effect Affects Your Marketing

It is why charitable organizations use individuals instead of statistics in their campaigns. Like this one:

[Example Above]

So what does this have to do with your marketing?

Well, here are a couple of ideas:

People Want to Connect With Other People

I recently talked to a colleague who was in the process of launching her first start-up which was an online French bakery. She had asked me to review her site, so I did. She obviously invested a lot of time and resources into it, but there’s just one thing missing from it – herself.

In her own words, she wanted to appear “big and professional.” So her About page talked about her company, not her. Big mistake. If her patisseries are really good, her fans will want to know her. They will gobble up her baking tips. They will follow her like nothing any other company can hope to pull off.

Unless you have a couple of million bucks to “build your brand,” this is the easiest way to go straight to people’s hearts.

Emotions Are Stronger Than Logic

This one is common industry knowledge: People act because of emotions, and then they use logic to rationalize their behavior.

Just look at all high-end consumer products. Nothing in that area is sold based on its utility. A $500 pair of jeans is no different to a $50 pair (some surveys have found people can’t even tell the difference). A brand-name school teaches the same curriculum other schools do (and there’s no evidence they teach it better). And a $5000 DSLR camera isn’t for everyone – most people who bought them don’t need 20 megapixels, let alone know how to use the features they paid a premium for.

This also applies to what you might think are “rational purchases.” For example, properties. You’d think with what would be their largest purchase, people would think logically, but that’s not true. They buy based on emotions (you hear people say they “fell in love” with the property they viewed).

Even B2B purchasers aren’t rational with their decisions. As a small business owner, I often pay a premium for a more reliable contractor, even if after taking into account delayed projects, his less reliable competitor is much cheaper.

People Care for More Than Themselves

You’ve often heard of our selfish nature. That we humans care only for ourselves. But we all know that’s bull at times. Just turn on the TV. There, you’ll see volunteers help others in need when a natural disaster strikes. You see environmentalists fight oil tycoons. You see activists fight for gay rights. The list goes on.

In fact, according to some estimates, we now volunteer at a rate never seen in history. As people become more educated (which we are), we tend to be more empathetic and therefore volunteer more.

How can you get your customers to care for your business? Well, check out Eco Store’s example. Eco Store is a relatively small company in the household product industry – an industry notoriously difficult to break into because its consumers tend to buy on habit. (When was the last time you thought about which detergent to buy?)

Yet Eco Store, which aligned itself with the environmental movement before it was cool, was able to change people’s habits and thrive. They didn’t compete on price, which is the prevalent in the industry. Instead, they started with the “why.”

The business started in the co-founders’ basement but Eco Store is now exported internationally.

People Want to Make a Difference

Most people care about the environment, but they never do anything significant to help save it. Why? Because people generally don’t feel like one single person can make a difference.

To bridge the gap between ‘reality’ and what we ‘feel’, certain organizations emphasize how the customer’s money can make a difference. Grill’D, a national burger joint in Australia, gave out a bottle cap to every customer who graced their business. What for? So they can place that cap into one of three jars placed at the entrance of the restaurant – each jar representing a certain local charity:

The jar that gets the most caps at the end of each month gets the largest donation from Grill’D. Now think about it. Those amounts are tiny to a business like Grill’D. Yet its marketing effect is undeniably effective – Grill’D burgers are twice as expensive as some of its competitors, but since its founding in 2004, Grill’D now has 51 stores around Australia and was pulling in $67 million in revenue, up 68% from the previous year.

How would you adapt this for your company?

People Identify With Causes

It’s a human paradox that we want to belong to a large group, yet we also have the need to feel that personally we are “making a difference.”

The reason we help others in need isn’t because it’s fun to do. It’s because we align our identity with a certain cause. People feel what psychologists call a “cognitive dissonance” if they stand by and watch their beloved causes being trashed.

If you don’t think this works, just check out Dove’s “Real Beauty” campaign (which, by the way, featured a small group of women, not abstract statistics). The campaign didn’t “sell” Dove products, yet sales skyrocketed nonetheless. Dove doesn’t officially comment on this, but by some estimates, the campaign drove up sales by 6 to 20%, adding a whopping $500 million to their bottom line.

Their target market identified with the cause – and they bought Dove products because of it.

Identifiable Victim Effect Photo via Shutterstock

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