Today someone asked “How do you know what numbers to pick for your business targets?”

(This was asked in response to an earlier post, If You Don’t Have This, You Don’t Have A Strategy.)

In that post I talked about how people who succeed generally have some form of a concrete plan, with specific checkpoints and numbers included.

For example, they’re going to get their list to 2,000 subscribers before they launch their first product. Or they’re going to write two books and then get on the speaker circuit. Or they’re going to build a platform of 25,000 people and then try and use that as leverage for a book deal.

Included in today’s question was “How do people know what numbers to pick? They kind of sound like they were picked out of thin air.”

That’s a very good question.

The answer is, successful people pick numbers out of thin air all the time.

Nobody knows what exact number they need to achieve a certain result.

Do you need 2,000 subscribers to launch your first product, or two books to get on the speaker circuit, or 25,000 people on FaceSnapTagram to achieve your goals?

Probably not. The odds of those numbers being either too large or too small or just right are about the same.

But! Something about the number seems to make sense to the person setting the goal. It seems, for whatever gut reason, to feel like it’s in the ballpark.

Play a little imagination game with me.

Imagine you were going to buy a new car. ‘Bout how much do you think you need for the kind of car you’d be happy with?

Now imagine you were going to buy a used car. Around how much cash would you expect to need to get something reliable?

Now imagine you were going to buy a house in your area, the kind you’d generally like. Not one that has a yacht in the backyard (unless you currently have one, and you want to move it to your new digs). What’s the ballpark amount you’d need to have access to for that house?

The specific numbers are irrelevant. What’s relevant is your gut feeling on what seems reasonable for success.

Spending $50 on a used car would probably get you something you couldn’t drive off the property. Spending $250? Same deal. But you have a number in mind on what seems reasonable. Your gut tells you at what dollar value it seems possible for you to get a car you’d be okay with.

That’s how the people who are succeeding pick their numbers. It’s just a ballpark guess at the threshold number that makes things possible. Not “guaranteed” – but POSSIBLE.

That is why “more” is not a business plan.

The person who says “I need to get more people on my list”, and “I need to get more products in my store”, and “I need to get more traction on social media” is not setting themselves up for success.

The reason for that is they will forever be chasing shiny objects and distractions that promise “more”. And they’ll never know when enough is enough, so back to “more” they’ll go.

That’s a recipe for a very dysfunctional, very scattered way of doing business.

But the person who has a number in mind starts thinking concretely about how to get to that number.

The person dead set on getting 2,000 subscribers thinks very hard about their specific strategies. They also don’t dilute their efforts by also trying to get a bunch of products in the store. One main goal at a time.

And that tends to lead to a lot more focused effort, and a lot more daily action towards that goal without all that pesky distraction.

And lo and behold, they get their 2,000 subscribers before everyone else does.

You could argue that setting a target is arbitrary, and you’d be right.

It may be true that setting those arbitrary numbers acts like a placebo. For that person in the example, the 2,000 subscribers might not be what leads to their success.

It might be the fact that they took their business very seriously and focused on a goal that led to their success.

But I sure like placebos, provided they work.

If your current business plan is to get “more” of the metrics you care about, you may want to consider setting a concrete number.

Just a thought.

About the author: Naomi Dunford started IttyBiz in 2006. In her free time, she likes to… ha! Free time. You’re adorable. Learn more about her here and catch up with her on Twitter or Facebook.

Welcome to “I Don’t Get It” Wednesday, where we take a marketing-related topic that everybody’s talking about and explain it using short words. In today’s edition, we tackle “warm traffic.”

What Is Warm Traffic?

The very short answer is that warm traffic is what we call visitors who have some level of familiarity with you. Cold traffic, on the other hand, doesn’t know who the hell you are and couldn’t pick you out of a lineup.

(Warm traffic may not necessarily be able to pick you out of a lineup either, but at least they’ll have some memory of having heard your name before. “Oh, that guy. Yeah, I think I remember signing up for his list or something.”)

Here’s What Warm Traffic Really Means.

In general, you will benefit by targeting warm traffic differently than cold traffic in your ads, promotions, and emails.

If you’re sending warm traffic from your list to a sales page or a webinar signup form, for example, these people know who you are. They got on your list, whether it was with confident intent or something they did one night when they were surfing the web wondering if they should drunk dial their ex.

So whatever you send these people to would be written with the assumption that they’re familiar with you.

Your sales page, for example, would not have a “Who am I and Why Should You Trust Me?” section. Your webinar registration page would not have a video saying “Hi, I’m Bob McThatGuy, and I run a business called ‘The Daily Cat Video’ – and it’s super great! 10,000 people watch it every week, because there are videos! Of cats!”

Why? Because it would look weird. And looking weird to people who know you generally doesn’t do your conversion any favours.

Conversely!

If you’re sending cold traffic (from a pay per click ad or a sidebar ad you put on someone else’s website), you write your copy with the assumption that these visitors are starting from scratch.

They don’t know you, they have no reason to want to pay attention to you at all, and they’re trying to figure out when, not if, they’re going to click away from what you sent them to. (After all, a friend just told them about The Daily Cat Video. 10,000 people watch it every week, can you believe that?)

The bottom line is that if your traffic is warm, you don’t have to put on as much of a dog and pony show in your marketing to them. You don’t have to prove yourself as much. They’re familiar with you, they’ll be more likely to hear you out, and the strength of their loyalty to you will mean you can take a softer tack.

So what do you need to know about warm traffic?

Warmth occurs on a spectrum. And where traffic falls on that spectrum determines how a) how much you have to explain who you are and b) how hard you have to market to them to keep their attention.

If someone has bought everything you’ve ever made, they aren’t warm, they are hot. You could send them an email that says “Send me $47 right now. I’ll tell you why later”, and they’ll probably do it because they trust you from past experience.

If someone has bought some of your things but not all of your things, they’re still very, very warm. You have a lot more leeway to sell strongly to them, because you don’t have to prove yourself so much.

If someone has bought one of your things, they’re pretty warm. They’ve given you money and not asked for it back. You can comfortably sell to them without having to make the case for your existence.

If someone is on your list but has never bought, you can consider them just warm. They haven’t unsubscribed, even after you accidentally sent out that blank email, followed by the SORRY ABOUT THE BLANK EMAIL email, followed by the email with broken links, followed by you hiding under the covers and playing Candy Crush for the rest of the evening and fantasizing about an exciting career as a cocktail waitress. In Texas.

(For those living in Texas, just pretend we said “Cincinnati.”)

Back to what I was saying – for non-buyers on your list, consider them warm. You don’t have to give them backstory, and you can be more casual with them.

For referral traffic, warm is in the eye of the beholder. It really depends how much the person linking to you said about you. The referrer can do a lot of warming for you, and may have already talked about you to their audience. If that’s the case, then that traffic is warmer.

But what it really means to you is that if you’re selling something, or trying to get traffic to take an action, it’s usually a good idea to have two separate pages of copy. One for people who don’t know who the hell you are, and one for people who do.

You simply talk to each audience differently. That is all you really need to know.

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Thank you for joining us for the Wednesday “I Don’t Get It.” If there’s something about marketing that you don’t get and would like explained in short words, send it on over, and I’ll help you out.

About the author: Naomi Dunford started IttyBiz in 2006. In her free time, she likes to… ha! Free time. You’re adorable. Learn more about her here and catch up with her on Twitter or Facebook.

Raising your rates – whether you’re a freelancer, service provider, product maker or coach – always seems to bring out the squeamish side of people.

I can see why. However, I’m not interested in dwelling on money issues and hangups. They do no one any good.

So, let’s get practical and look at what it will take to raise your rates confidently, without fear of alienating your customers, going broke and/or dying in a gutter (alone).

We will traipse through this process by asking a bunch of questions. Let’s begin!

1. Are you under-charging right now?

“Raising your rates” is not the same as “Charging fair market value already”. It is completely normal to charge 50-60% of what the industry is charging when you are a beginner and trying to get some paid experience under your belt.

If that’s you, then the first thing you can do is change your frame away from “raising rates” and start seeing yourself as a qualified professional. If you’re a chiropractor charging $20 a session when everyone else in town is charging at least $50, then you don’t have a rate issue, you have a “treating your business like a business issue.”

You don’t have to get empowered, or “charge what you’re worth”, or “claim your power” to play on the same field as everyone else in your industry.

To get more confident in this area, you have to look at why you don’t feel like you, personally, can treat your services with the same respect you treat the average provider in your industry.

You are not a special case who deserves to get underpaid because “you just can’t see yourself the same way as you see them.” You’re a competent professional, and even if you’re just average, you can charge what average people charge.

Go talk to someone you know is supportive and tell them you have a self-confidence issue, not a rate issue. They will help you feel better about market-correcting your rates.

2. Are you over-charging right now?

Caveat: If you’re wildly overcharging in the first place and you don’t have something to back up a price increase, squeamishness around raising rates is a good sign. It means you’re paying attention. You probably shouldn’t raise your rates, unless you can up your game to the point where you merit it.

For everyone else, however:

Charging a lot for what you do is not the same as over-charging. I’m sure brain surgeons charge a lot for what they do, compared to your average general practitioner. So do many other specialists. That’s because specialist stuff is usually harder than generalist stuff.

So first, check with yourself to see if you’re actually over-charging right now. There are two simple tests for this:

a) Are you charging more than most other people in your industry?
b) Does your customer/client get a value that’s worth your price?

That’s actually a trick question. The first one doesn’t matter. Only the second one does.

If the client is happy with the price they paid on the merits of the value they got, then all is well with the world, no matter how much you’re charging.

If they secretly hate you for charging the rates you do, then that’s another issue. Either you’re not making them happy, and you can change that, or you’re targeting the wrong buyers.

Truthfully, this whole section was a bit of a ruse. A lot of people think they are over-charging just because their rate is outside their own personal comfort zone, or because a customer (or potential customer) balked at the price on some occasion.

Over-charging is something that exists in the eye of the buyer, not the seller. The question is not “Am I charging too much?” The question is “Are buyers satisfied?”

3. Will your rate change surprise your customers in principle?

We’re all conditioned enough to commerce that we know rates change from time to time. You’re not exactly the first person in the world to consider boosting your prices. No one is going to be shocked beyond reason that your prices are going up.

In principle.

When rates go up – for business – it is very helpful for customers to have an intuitive way of internalizing why they went up. This way it doesn’t seem random or confusing to them, or like you’re making a cash grab.

If you were drastically undercharging and are now equalizing, they will intuitively grasp that.

If your physical location or web presence has shown noticeable improvements, they will intuitively grasp that you’re upping your professional game.

If there are specific, justifiable reasons (such as you’ve expanded and now have staff, or you’ve upgraded your qualifications), they will intuitively grasp that.

If costs inside your industry have gone up significantly, they will understand that, too.

It is helpful to make sure they’re aware of these improvements, in case they’re not paying that close attention. Sometimes you can gracefully explain it in an email.

But if you look at the way your business looks from the outside, and you can point to indicators that make a rate increase seem like a reasonable thing, you’re in a good position.

If you don’t have those indicators, however, you should probably invest in a few noticeable improvements. It will help customers feel more comfortable with the increase and probably help keep a fair number of people who would have taken their business elsewhere.

4. Are you personally prepared to handle the four customer reactions to a rate change?

Typically, customers tend to have one of four reactions to a rate change. (I just made this up. There could be twenty, for all I know.)

1) They bail. This is a risk everyone has to take at some point, and this means your customers are either extremely price-sensitive (they could barely afford you in the first place) or they weren’t that loyal. This is just the cost of doing business.

2) They ask (nicely) if they can keep their old rate. This you handle on a case by case basis. You can choose to do so or not, and you can set time limits on the rate extension.

3) They say “It’s about time.” This will be a common answer, because if your customers like you, they would like you to stay in business. If you’ve been undercharging, they know how good they had it and were aware that the gravy train would ultimately come to an end.

4) They say “How dare you! Who do you think you are?” This is extremely rare, and it is what the delete function is for in your email system. If someone gets angry or abusive with you, you are not actually required to respond.

HOWEVER.

This is all true only when your rate change seems inherently reasonable in principle.

5. Are you positioning your rate increase as a good thing?

No buyer is thrilled to have rates go up. However, they can be thrilled when they perceive that the rate increase is connected to an improvement they get to experience.

If you’re raising your rates and getting staff, that means you’ll spend more time and attention on me and less on filing paperwork. I win.

If you’re raising your rates and investing in some kind of improvement – a better online booking system, better equipment, whatever, then my experience gets an upgrade. I win.

You are not required to position your rate increase as a good thing. But if you can find some way to work it in, it helps make the process smoother for the customer.

Raising your rates requires a thoughtful execution.

It’s easy to say “This sounds scary to me!” and run back to Facebook. That’s true for raising your rates, and it’s true for most other things in business and life.

Saying “I’m scared” and leaving it at that is easy.

Thinking through your actual issues requires a bit more work.

But once you think them through, the answers tend to come more quickly than you’d think.

Hopefully all this makes it a little easier for you.

About the author: Naomi Dunford started IttyBiz in 2006. In her free time, she likes to… ha! Free time. You’re adorable. Learn more about her here and catch up with her on Twitter or Facebook.