A Systems Approach to Building Scalable Businesses

Everything around us is a system. Take the human body for an instance; our body is a system comprising of organs. Each organ operates independently of the cells that run the show. These organisms in turn are composed of even smaller bits of matter. And all this works without a hitch. Without systems, there is chaos. No meaningful growth can spurt without it.

mandelbrot

Why do majority of new businesses fail, yet most franchises succeed? Systems.

So, it comes as no surprise that well managed businesses have pre-defined procedures for handling sales, logistics, marketing, IT, customer service, and finance. Any process that may need to be repeated in the future should be systematized. Procedures are important because they can be repeated and scaled without re-inventing the wheel each time. It is the entrepeneur’s job to focus on creating and improving procedures so that the employees may run them.

And how do you build a system? Simply document each and every process. Documented procedures save time by templating the initial hard work. Here are some simple examples of systems I have applied in my own startups.

1. Create a template for the weekly newsletter. (i.e. CampaignMonitor)
2. Create a procedure for managing invoices, tax receipts and business expenses. (i.e. Freshbooks, SalesForce)
3. Use a CMS to update the website. (i.e. WordPress)
4. Create a cover letter template for all business communication.
5. Use a scripted greeting when answering phone calls. (i.e. Ringio)
6. Securely store all passwords in one software (i.e PassPack)

This sort of procedural approach makes it possible to refine processes based on the success and failure associated with each sub-system.

Algorithmically Determining a Customer’s Value

Data crunching can reveal a treasure trove of useful information.

For example, popular news websites, such as Reddit, use nifty metrics to decide which stories to promote on their homepage (Number of votes vs. Time since the story was posted).

Similar algorithms can be used by businesses to discover loyal customers. Special offers could then be extended to strengthen relationship with customers.

So, using a dataset from my own customers, I conjured four metrics that help determine the value of a customer:

1) Time since their last purchase (recency)
2) Number of times they have bought from us (frequency)
3) Total amount they have spent with us (totalC)
4) Proportion of how much they spent with us compared to other customers (totalA)

These four metrics act as a voting mechanism. The more a customer spends, the higher their score. Moreover, the value of a customer is depreciated if they haven’t made any recent purchases.

I pieced together the following equation to represent the above metrics:

Using this equation I was able to determine any customer’s value and scale it on a Netflix style star rating system within our customer management system (CMS):

Data mining is an untapped opportunity for businesses to provide customized solutions to their customers (i.e. at retail stores, call centers, etc). Some tweaking of the above metrics will help you extend these benefits to your own client base. Now that’s a win-win!

How to integrate Facebook Subscribe button in your website?

About three months ago, Facebook started allowing users to subscribe to updates from other members within the social network. The “Subscribe” button is similar to twitter’s “Follow” feature that permits a person to receive updates from other users without having to friend them. Following the successful launch of the subscribe button, Facebook went ahead and recently launched “Subscribe” button for websites. You can see it in action above this post.

It is easy to integrate this feature into your own website and allow others to follow your social graph. Just copy paste the following code and replace the username with your own:

<iframe src=”//www.facebook.com/plugins/subscribe.php?
href=https%3A%2F%2Fwww.facebook.com%2Fjawad.shuaib
&amp;width=450&amp;appId=APP_ID” scrolling=”no”
frameborder=”0″ style=”border:none; overflow:hidden; width:450px;”
allowTransparency=”true”>
</iframe>

Happy stalking!

iPhone Controlled Toy Gun

I spent most of yesterday shooting aimlessly around my house with an automatic toy gun I just bought.

Once bored, I decided to unscrew the chassis to tinker around with it. I thought it would be neat if I could wirelessly connect the gun with my iPhone so I could operate it from anywhere in the world.

iPhone controlled toy gun

To start off I drilled two holes just above the trigger to parse wires soldered directly to the motor – these two wires would essentially act as the gun’s trigger mechanism every time the circuit was closed. Next, I wrote a simple iPhone WAP application to send “On/Off” states to the gun’s trigger mechanism via an ioBridge connected to my server. This would in turn operate the gun’s internal motor and shoot. iPhone -> Internet -> ioBridge -> Relay -> Shoot Gun.

The end result was an iPhone controlled automatic BB gun.

Unfortunately, during the *tinkering* phase I somehow managed to damage the gun; so while the electronics interface and code is working just fine, the gun isn’t. Either way, I thought it was a fun project worth sharing.

The Social Media Renaissance

I was recently invited to deliver a full-day workshop on the emergence of social media at Humber College – Institute of Technology and Advanced Learning. Most of the workshop was centered around the practical and business use of emerging technologies for branding, monetizing, and syndicating content. The following presentation was used as supplementary material to provide a background on the technologies discussed during the workshop. I have decided to upload it since it might be of use to others.

View more presentations from jawadshuaib

How to Double Your Google Adwords Conversions

Google Adwords is, without a doubt, the heavy weight champion of search advertising. It is a tool that makes advertising possible for businesses of any size. Google Adwords packs a powerful set of tools to make marketing campaigns successful despite being inexpensive and easy to use.

The idea behind performing well on Adwords is to see advertising success as conversions not traffic. By default, Google Adwords will point all ads to a generic homepage. This is fine for small sites; but for online businesses, it is vital that each ad reach a specified page to ensure high conversions (i.e. product sale, subscription, contact lead, facebook fan, etc).

So, the trick to improving Google Adwords conversions is to land visitors on the exact pages they seek. Now this can be time consuming if you were to set up an ad for each product on your website. Fortunately, Google Adword’s Dynamic Keywords targeting makes this easy for someone with a bit of web development skills.

Google Adwords Dynamic Keywords lets you set up a set of keywords, such as “Nike Shoes, Adidas Shoes, Reebok Shoes, Aldo Shoes ” that will be dynamically injected into your ad copy when the user searches for relevant terms. For example, a user will see an ad for “Nike Shoes on Sale” if the specified keywords for the ad include the search term “Nike Shoes”. In other words, all you have to do is come up with one ad and let Google do the rest.

Click here to learn more about Google Adword’s Dynamic Keywords.

Now for the tricky part; in order to increase conversions, you will need to redirect the traffic for the individual dynamic keyword ads to product specific pages. For example, the “Nike Shoes on Sale” ad should redirect the user to the product page containing Nike Shoes; similarly, the “Adidas Shoes on Sale” ad should redirect the user to the product page containing Adidas shoes. This is possible to setup using some back-end code on your website. I am going to show you how to do this using PHP.

We are essentially going to build a search and redirect script. Our script will look for the keywords, and match them to the database containing the products. The user will then be redirected to the corresponding page based on their original search query.

1) Pass the ad specific keyword to the URL from Google Adwords. (i.e. http://example.com/product.php?search={Keyword:Shoes}

2) Use PHP to grab the product requested. Search the database for this product in order to determine its ultimate destination.

3) Redirect the user to the product page. (i.e http://example.com/product.php?p=Nike)

All you’re doing here is switching from a generic homepage ad to dynamic keywords that redirect to the pages most relevant to the user’s original query.
Once this is setup, you will essentially funnel traffic from your ads to product specific pages. The visit is more likely to turn into an actual sale since the user won’t have to spend time looking for the said product. I saw my Google Adwords conversions more than double once this system was implemented on my site. Use this technique for targeted sales with a smaller marketing budget.

Regression to the Mean

Rail travel at high speed is not possible because passengers, unable to breathe, would die of asphyxia.
- Dr. Dionysus Lardner (1793-1859), Professor of Natural Philosophy and Astronomy

Airplanes are interesting toys but of no military value.
- Marshal Ferdinand Foch, French military strategist and World War I commander.

There is no reason for any individual to have a computer in their home.
- Ken Olson, President of Digital Corporation, 1977

The Internet will catastrophically collapse in 1996.
- Robert Metcalfe, Inventor of the Ethernet

Computers in the future may weigh no more than 1.5 tons.
- Popular Mechanics, 1949

There is nothing new to be discovered in physics now, All that remains is more and more precise measurement.
- Lord Kelvin, 1900

We have reached the limits of what is possible with computers.
- John Von Neumann, 1949

I think there is a world market for maybe five computers.
- Thomas J. Watson Snr., IBM Chairman, 1943

Using Pareto’s Principle to Maximize Sales

“What gets measured gets managed.” – Peter Drucker

One of my favourite chapters from The 4-Hour Workweek is a passage describing Vilfredo Pareto’s discovery. An Italian economist, Vilfredo Pareto, in the early 20th century observed that 80% of the land in Italy was owned by 20% of the population. More interestingly, he found this distribution to be inherently common in nature. This observation is now known as the Pareto’s Principle.

The principle has the potential to save businesses tons of time and guess work when, for example, reordering inventory. A business owner could use it as a guide to allocate capital towards the 20% of products that generate 80% of the profit. In other words, the Pareto’s Principle can be used to seek maximum outcome from minimal effort.

I wrote a script to determine the Pareto distribution for a sales forecast system. A CRON job was employed to periodically funnel the 20% of products generating most of the profit – the end result was a report indicating a list of goods that the business must keep in stock in order to maximize sales. Here is a simplified version of the script you can use in your own projects to build similar applications:

Script for Pareto's Principle

The Pareto Principle could be useful for any number of businesses. For example, a telecommunication company could use this algorithm to determine the top 20% of subscribers that generate 80% of the headaches, etc.

Some other interesting applications of the Pareto Principle can be found on Wikipedia.

Improve E-Commerce SEO with Google Base

Search Engine Optimization has become synonymous with Google search. But really, optimizing for any source of organic traffic can be considered SEO. One such overlooked source is Google Products Search. This site is basically a massive directory of e-commerce products. People who search this directory are often pre-sold on products and browsing for a source to purchase them. Therefore, Google Products has the potential to organically increase your store’s online revenue.

Unfortunately, submitting your goods on Google Products Search is not as simple as submitting your website’s link. That is why I wrote the following code to get your website indexed on Google Products/Base. The data feed basically contains a list of all your products in a structured XML format. You will need to submit the data feed using the Google Merchant Center once you have modified the code to include your own products.

Here is the code for Generating Google Base Data Feed with PHP (link to XML feed). Good luck,

geoCHAT: Geo Location Based Chatting

geoCHAT: Chat Room + Geo-location (Try It)

A couple of weeks ago I wrote a post on geo-coding addresses in order to determine map coordinates: it is a useful technique for leveraging the user’s location when building a web or mobile app. I built the following geo location based chat application as a demonstration of what is possible to build. The basic idea behind the application is to allow users to visualize other members on a map in order to provide a more interactive experience.

Screenshot of geoCHAT

The application uses jQuery to abstract Google Maps’ horrendous JavaScript API implementation. AJAX and JSON are used to request new chat messages from the server every second. As a result, the application will display the incoming message on the map whenever a new message is detected.

I had a lot of fun building this, I hope you enjoy.