9.3 Coins International

Research can only take a company so far. Educated guesses can be made for likely traffic and conversion rates, but more is often needed, particularly when using the pay-per-click search engines for marketing, where charges soon mount up. Companies commonly test their proposition by setting up a test website with a dummy ordering system, monitoring results carefully for changes in:

1. Goods offered.
2. Presentation of goods.
3. Site layout.
4. Keywords targeted.
5. Marketing through the larger ppc search engines, the smaller ppc search engines, price comparison search engines, eBay and other auction sites, banner ads and box adverts in trade periodicals.

A tall order? It certainly takes time and money, but becomes necessary in many cases.

The Coinage of Yuan China

Ronald Chan is the world's leading expert on the cash coinage of Mongol China, and proposes to write a book on the subject. He sends off his carefully-crafted proposal to the specialist publishing houses, but cannot convince them that sufficient demand exists. He then proposes an ebook, but the response is the same: you'll be wasting your time. How can he demonstrate to himself and others that sales will be adequate?

He presents his proposal as a fait accompli, as practically written already. Either on a social site, free blogsite or eBay, he:

1. Crafts his profile, stressing his expertise and qualifications.
2. Adds a few pages of interest to fellow collectors and curators on cash coins.
3. Experiments with promotion through natural and pay-per-click search engines.
3. Presents his book as almost completed.
4. Monitors conversion rates at various prices and book details.
5. Takes advance orders.
6. Encourages feedback.

If results are positive he can either contact publishers again, or self-publish with some expectation of success.

Harold Ingleton: Fine Coins

Consider Harold Ingleton, a New York coin dealer with a small shop, a dwindling clientèle and increased exhibition costs at coin fairs. Many colleagues have gone on line, and are doing (so they say) reasonably well. But Harold knows that competition is fierce, and that conversion rates need to be high to justify what the ppc search engines charge. Conversely, to get a good listing in the natural search engines he has to develop a good site and/or branch out into less popular lines. He sets out the various factors:

What's best? He can continue with USA issues, but realizes the markups may be too small to cover click-through charges. World gold will cut down on the drudgery of posting low-value items, but the market is specialized and inventory costs will be high. Perhaps he should brush up his Arabic/Persian for Islamic issues, traveling extensively to get supplies? All have their pluses and minuses. On balance, Ancients (Greek and Roman issues) looks safest, but he has to beat the competition and cover marketing costs.

Practicalities

Crucial are conversion rates, and Harold therefore does the following:

1. Obtains a domain name for testing purposes: $12.

2. Builds a test website, either:

    a. through an all-in ecommerce hosting service,
    b. free service or an 'out-of the box' software package: $200 - $600 (but can be reused for the real site later).

Or:

    a. Uses third party ecommerce service like Yahoo merchant.
    b. Sells through eBay.

3. Installs split-testing software: $30 - $200.

4. Installs software to manage ppc bids and monitor results: $50 - $500/month.

Total bill: $1000 - $5000, plus time or staff salaries.

To offer coins he doesn't actually possess, Harold will have to sell other dealer's pieces on commission, monitoring conversion rates carefully as changes are made — from pieces offered for sale, through site layout and sales copy, to using different ppc search engines. It's a lot of work, but at the end of the period Harold will actually know — probably far better than his competitors — what works and what does not work. He will have the right strategy for managing bids at the ppc search engines, and will know how to design and promote his site using the natural search engines or banner ads. Since $5,000 can easily be spent on a good-looking but ineffective website, these expenses could indeed prove a sound investment. As marketing professionals say: there are those who test continually, and those who go out of business.

Business Model

The business model covers all elements of the business, but the element of interest in both cases is the value proposition: what value propositions can the writer or dealer deliver that will interest his customer segment(s)?

Ronald Chan is using his key resources (knowledge) and key partnerships (museums and other dealers) to offer his value proposition ('The Mongol Coinage of China') to his customer segments (Yuan cash coin collectors, numismatic booksellers, dealers and museums). Just spelling out the last identifies three market segments he has so far overlooked. A detailed letter to numismatic booksellers, dealers and museums is certainly worth considering, and indeed the larger dealers and museums do sometimes finance important studies for a share of the revenues.

Harold Ingleton's case is a little different. He is using his key resources (knowledge) and key partnerships (other dealers) to offer his value proposition (coins) to his customer segments (coin collectors, other dealers and museums). But here he has to research:

1. Customer segments (who will buy what, and at what markup).
2. Key partnerships (dealers supplying stock: critical, sometimes more important than customers).
3. Customer channels (Internet coin purchasers, and what they look for).
4. Cost structure (how much is the web site and its marketing going to cost?)

Running a trial website becomes even more important.

Questions

1. What does this page focus on?
2. Provide hypothetical examples in a market sector familiar to you.